Bus services after the Spending Review

Buses are the most available and frequently used mode of public transport in England, carrying two thirds of all passenger journeys, yet they remain a comparatively undervalued mode of transport. The Government’s 2010 Spending Review included three decisions with implications for the funding of the English bus industry: first, a 28% reduction in local authority revenue expenditure, second, changes in the formula for concessionary travel reimbursement, and finally, a 20% reduction in the Bus Service Operators’ Grant (BSOG)

from 2012–13. Our inquiry examined the funding of bus services in England (outside London) in the light of the Spending Review.

The combination of the reduction in local authorities’ revenue expenditure and changes to the Department for Transport’s concessionary fares reimbursement guidance in 2011–12, with the 20% reduction in BSOG in 2012–13, has created the greatest financial challenge for the English bus industry for a generation. The combined impact of these funding changes will, in some parts of the country, have a disproportionately adverse impact on the provision of local bus services and the level of bus fares.

As a result of these budgetary pressures, over 70% of local authorities have already decided to reduce funding for supported bus services. The extent of the reductions varies considerably, although, in general, rural, evening and Sunday bus services will be most affected. In the most extreme cases, some local authorities have decided to withdraw all their subsidised bus services. Some local authorities have withdrawn services with inadequate or no consultation. The evidence we have received from bus users around the country demonstrates the anger and concern that people feel about the impact of these decisions on their everyday lives. Some of the most vulnerable people in society, including the elderly, will be most affected by these changes.

We recommend that the Department for Transport, in conjunction with the Local Government Association (LGA), collate information about the decisions taken by local transport authorities in respect of tendered bus services in 2011–12 across England. The Department should seek information about the provision of alternative transport modes, such as community transport, in those areas where local authorities have scaled back tendered services, due to budgetary reductions. The Department should identify examples of best practice of local authorities that have responded innovatively to budgetary pressures to provide a cost-effective, flexible mix of local transport services, which provide an acceptable level of public transport for people who might otherwise be isolated. The LGA should play a key role in disseminating these examples of best practice across local authorities.

The evidence is unclear about the impact of the Spending Review on commercial bus services. The facts need to be established for the effect of these policy changes to be accurately measured, and for future decisions to be soundly based. The Department for Transport, in conjunction with the LGA, should compile details from local authorities about the impacts of the Spending Review on commercial bus services in England, outside London, in 2011–12. A similar exercise should be conducted following the implementation of the reduction in BSOG in 2012–13. We welcome the Department of Transport’s 4 commitment to review the arrangements for BSOG more broadly. As part of this review, the Department should consider whether targeting BSOG in a different way, possibly through greater devolution to the local level, would improve the current approach.

Bus services are often an integral part of the local community. It is only right, therefore, that local people should have the opportunity to voice their opinion if the local authority or integrated transport authority proposes significant changes to bus services that it supports.

Some local authorities have faced very significant reductions in their revenue budgets, but it is important that local people are properly consulted when significant changes are being proposed to their bus services. Local people should have the opportunity to give their views on the relative importance of different bus services and to suggest innovative approaches.

We call on the Department to task Passenger Focus to develop a ‘consultation toolkit’ for local authorities within the next six months. This should provide best practice guidance on how local authorities can hold meaningful consultation processes with local communities about bus service proposals.

The growth of the community transport sector could mitigate, to a degree, the effects of the loss of subsidised bus services. We welcome the Department for Transport’s decision to allocate £10 million to rural local transport authorities to encourage the growth of community transport in their area. However, the evidence suggests that community transport schemes are unlikely to replace more than a small fraction of withdrawn local authority-subsidised bus services. Community transport operators are themselves often reliant on public funding. If the Government genuinely wants to encourage the growth of the community transport sector, it should legislate to permit the use of the concessionary pass on a wider range of community transport services.

There is evidence of some potential for local authorities to reduce costs through better co-ordination, planning and delivery of different types of transport services, including public buses, community transport, education, social care and health. The Government should identify ways to overcome the barriers (including regulatory or legislative barriers) to co-ordination, drawing on good practice around the country. It is also clear that closer partnership working between local authorities, bus operators and community transport operators will be necessary post-Spending Review, in order to better utilise diminished resources. We encourage local authorities and integrated transport authorities to use the provisions within the Local Transport Act as means to achieve better partnership working, where necessary.

We endorse the Government’s commitment to protecting the entitlement for free bus travel for elderly and disabled people. It is obvious that the concessionary fares scheme is highly valued by users and the evidence suggests the scheme provides a number of social, economic and environmental benefits. There is likely to be scope for further cost savings in the management and administration of the scheme, particularly with advancements in smartcard technology, and there may be a case for a one-off payment for the card. We strongly believe, however, that the provision of free bus travel for the elderly and disabled is to be valued. We recommend that the Department of Transport commission further detailed research into the benefits, and usage, of the concessionary fares scheme.