\n\u00a0<\/p>\n

I\u2019ve researched and written a new book about the future of Britain\u2019s bus industry and the risks and opportunities that lie ahead. Here are some of my reflections<\/h5>\n

\u00a0
\nGreater Manchester\u2019s franchised Bee Network<\/em><\/p>\n

\u00a0
\nAs so often in the past, any discussion about the bus industry\u2019s future falls into two time periods: the near-term, covering the next five years, and the longer-term, from 2030 to 2050, already the focus of much attention because of the Net Zero targets.<\/p>\n

Not for the first time, it is difficult to be optimistic about short-term prospects. There is funding uncertainty about BSIPs (Bus Service Improvement Partnerships) and Enhanced Partnerships, whilst the crisis in local government finance threatens even existing levels of service, especially in those areas where BSIPs were not funded by the Department for Transport in the first round.<\/p>\n

The longer term can look very promising, but it is extremely difficult to see how to get from one to the other \u2013 especially when the risk of further short-term damage could make the longer-term transformation even harder.<\/p>\n

There are four key tasks that will determine future outcomes: <\/p>\n

Improving performance;
\nIncreasing service levels;
\nDecarbonising the fleet;
\nDelivering modal shift to help deliver Net Zero targets.<\/p>\n

The four are inextricably linked: successful delivery of the first three is an essential prerequisite to achieving modal shift. All four will require significant additional funding.<\/p>\n

Performance improvement<\/strong><\/p>\n

Performance improvement can only be delivered by investment in better infrastructure to give buses priority and improve the journey experience. Also crucial will be the ability to recruit and retain the right calibre of front-line staff. <\/p>\n

Reducing congestion is key to delivering reliable and predictable services and will require capital spending. Faster journeys are more productive for users and operators alike and can help to keep fares down as well as attracting extra users.<\/p>\n

Recruitment and retention requires investment in management, staff training and wage levels \u2013 keeping them attractive in local labour markets to offset the downsides of shift work and unsocial hours. There is also a need to develop skills and standards amongst local authorities and to ensure that their transport specialists are part of the authority\u2019s key decision-making processes.<\/p>\n

Increasing service levels<\/strong><\/p>\n

Increasing service levels to meet accessibility needs and customer aspirations requires up-front funding, even if patronage growth could over time reduce the costs or even eventually make them self-funding. In my new book, Britain\u2019s Buses in a New Era: The Opportunities and Risks Ahead, I have attempted to provide some estimates of what these costs might be, looking at four different scenarios in each of six separate market sectors.<\/p>\n

Each scenario has been costed for both revenue and capital spending. The sums required range from a relatively modest \u00a3310m a year to extend the operating day by an average of an hour in areas outside London, right up to \u00a32.7bn a year to restore all the cuts made since 2010. Since the fleet size across the country has shrunk by over 30% over the last 14 years, ramping service levels back up would also come with a capital expenditure requirement of between \u00a33.0bn and \u00a33.8bn to provide the necessary vehicles.<\/p>\n

Decarbonising the fleet<\/strong><\/p>\n

One of the biggest tasks the industry faces is decarbonisation. This means getting rid of older, more polluting vehicles and ultimately moving to zero-emissions sometime between 2035 and 2040. <\/p>\n

In the book, I discuss how the industry\u2019s financial problems since Covid have added to an investment backlog that was already building, and our analysis showed a rising average fleet age. In 2023, this was in excess of 11 years in England outside London and in Wales, reducing to nine in London and Scotland. The result was a backlog of more than 10,000 more heavily polluting pre-Euro 6 vehicles in service in March 2023.<\/p>\n

Altogether, if a target of 100% zero-emission buses by 2035 is to be reached, it creates a need for some 26,000 new zero-emission buses at current service levels, all to be delivered by 2035, at an estimated cost of \u00a313.7bn \u2013 \u00a39.8bn in the markets outside London and another \u00a33.8bn for the capital. The repowering option could be used to convert up to 5,700 existing diesel buses to an electric drive train, saving around \u00a31.4bn of capex in the short term.<\/p>\n

Delivering modal shift<\/strong><\/p>\n

The fourth task concerns modal shift as part of a move towards the targets set by the Climate Change Committee in the fifth and sixth carbon budgets. In writing the book, I wanted to offer a fresh and more nuanced analysis of what achievement of the targets might mean in terms for bus patronage, considering different journey lengths, durations and journey purposes. In summary, we suggest that:<\/p>\n

a 5% switch from current levels would result in growth of 668 million passengers from 2022\/23 levels, taking the total to 4.41 billion, leaving the national total still well short of the pre-Covid total in 2018\/19 of 4.79 billion;
\nunder a 9% switch scenario, growth of 1.2 billion would take patronage to 4.95 billion, a total last seen as recently as 2017\/18;
\na 17% reduction in car use could really make a big difference, taking bus patronage to just over six billion, a figure last seen in
\nthe early 1980s.<\/p>\n

The threats<\/strong><\/p>\n

There are several threats to the future of the industry, most of which will be familiar to those who follow its fortunes:<\/p>\n

Continuing growth in car ownership, leading to increased traffic levels and congestion. The DfT\u2019s 2022 set of National Road Traffic Projections, had a core scenario envisaging a 22% growth in traffic between 2025 and 2060, whilst congestion was predicted to increase by 27%;
\nContinuing resistance from the public towards measures which reallocate road space away from the private car or seek to impose additional charges on motorists;
\nThe continuing pressure on local authority budgets which is likely to lead to further cuts in service levels as LTAs cut back on discretionary spending;
\nThe future of local government finance in the light of concerns over the viability of Council Tax and the government\u2019s plans for more devolution, especially to Combined Authorities;
\nA growing disconnect between revenue and costs. Pressures to keep fares \u201caffordable\u201d are in stark contrast to the recent surge in costs. That and the continued shortfall in passenger demand is creating a large funding gap, not least in London. Setting fares in isolation from operating costs is a recipe for even greater dependence on Treasury largesse, with no certainty that this will be forthcoming.<\/p>\n

Short-term threats to ongoing funding of the industry, in the light of the current fiscal position and other high priority calls on the public purse. Specific uncertainties at the time of writing include:<\/p>\n

The future of the fare cap in England, now to be \u00a33 during 2025, and customer reaction to the 50% increase from \u00a32 to \u00a33. Conventional demand elasticities would suggest a loss of between 21% and 35% of affected passengers;
\nBSIP spending \u2013 precise details of the \u00a3925m announced this week, including the split between the LTAs and between revenue and capital spending;
\nWhether there will be further rounds of government funding assistance for the introduction of zero-emission buses;
\nThe future of other funding, including concessionary fares and BSOG (Bus Service Operators Grant) which were both already under review by the DfT before the 2024 general election.<\/p>\n

Answers to these may come in the chancellor\u2019s budget this month, and will have a decisive effect on the future of the industry over the next five years.<\/p>\n

In the end, it all comes down to money. It is idle to pretend that new legislation alone will deliver the required outcomes in the four areas we have discussed without funding to go with it<\/p>\n

A question of money<\/strong><\/p>\n

In the end, it all comes down to money. It is idle to pretend that new legislation alone will deliver the required outcomes in the four areas we have discussed without funding to go with it.<\/p>\n

Others suggest that franchising can be funded by central government and additional borrowing. It is argued that profits made from successful services could be used to cross-subsidise other less successful routes. However, since busy routes tend to be used by people on lower incomes, whilst less successful routes tend to run in more prosperous areas, this raises significant questions about social equity and income redistribution.<\/p>\n

Franchise proposals published thus far favour the gross cost model and envisage the tendering authority owning both vehicles and depots \u2013 creating a huge ongoing capital expenditure commitment alongside the commercial risks being shouldered. <\/p>\n

In looking to the future, authorities should not overlook two important experiences:<\/p>\n

the London model, where the private sector has funded the huge investment made into the bus fleet, in partnership with TfL for the last 30 years;
\nthe Jersey experience, in which the government moved away from the gross cost contract model to an innovative net cost model several years ago.<\/p>\n

If the private sector is still deemed to have a role, then a policy platform needs to be developed that gives stability and certainty to incentivise investment, alongside a regulatory framework that permits investors to earn a return. Giving local transport authorities a permanent right to adopt a franchise model on a single committee or cabinet vote at any time would undermine this. There would be no stability to allow long-term investment decisions to be made, whilst there would be a risk that such uncertainty would drive the remaining SME operators \u2013 already nervous of the costs and risks of zero-emission vehicles \u2013 out of the industry. <\/p>\n

Meanwhile, the chancellor of the exchequer is seeking significant reductions in government spending and signalling significant increases in taxation. She is trying to stimulate private sector investment in a revived private finance initiative approach to delivering investment in infrastructure. <\/p>\n

Operators have repeatedly made it clear that they are ready to work with authorities in whatever regulatory regime is in force to deliver the improvements. They just need a stable framework in which to do so. <\/p>\n

Britain\u2019s Buses in a New Era: The Opportunities and Risks Ahead is published by Passenger Transport Information Services, price \u00a325 plus P&P. For further information visit www.passtrans.co.uk<\/a>.<\/em><\/p>\n

\u00a0
\nABOUT THE AUTHOR: Chris Cheek<\/strong> has worked in public transport for 52 years. After joining the National Bus Company as a senior management trainee in 1972, he held several line management posts in bus and coach operations, later moving on to marketing and tourism. He was a director consultancy firm The TAS Partnership and helped to found and then run Transport Events Group, organiser of the UK Bus Awards. He was recently awarded a Lifetime Achievement Award by the Bus Centre of Excellence <\/p>\n

\u00a0
\nThis article appears in the latest issue of\u00a0Passenger Transport<\/em>.<\/strong><\/p>\n

DON\u2019T MISS OUT \u2013 GET YOUR COPY! \u2013\u00a0click here to subscribe!<\/a><\/strong><\/p>\n

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The post Britain\u2019s buses in a new era<\/a> first appeared on Passenger Transport<\/a>.<\/p>\n

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