If cheap fares are scrapped, some hard-pressed families will face extra costs running into hundreds of pounds a year to send their children to school by bus
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Cut-price child fares could be in the firing line following a cash crisis over concessionary travel.

If cheap fares are scrapped, some hard-pressed families will face extra costs running into hundreds of pounds a year to send their children to school by bus.

The problem has arisen in Tyne & Wear, where children can travel on the public transport network for 60p a trip or £1.10 for a day ticket under a scheme supported by councils and the transport authority.

But the funding crisis affecting free bus travel for pensioners and the disabled means transport chiefs may have to look for cuts elsewhere, including subsidised children’s fares.

The child fare scheme is safe until 2015 but if it’s scrapped families would probably have to pay between £100 and £300 extra a year for each child using the bus for school.

Public transport provider Nexus and the Tyne & Wear Integrated Transport Authority must by law operate the free bus pass scheme for 240,000 pensioners and disabled people.

Money is provided by the Government to the five Tyne & Wear councils which is then passed on to the transport authority via a levy.

The scheme costs £40m but there is a £17m funding gap expected to rise to £20m and if this is not plugged members of the ITA will have make cuts.

The subsidised child fare scheme, which is discretionary and believed to cost around £3m, is one target along with subsidised bus routes, including school, work, weekend and evening services

About 40,000 youngsters between five and 16 have Pop cards which cost £5, entitling them to cut price travel on the transport network including buses and Metro.

If the scheme is scrapped they would have to pay around 80p to £1.30 for a single bus ticket.

Coun David Wood, chairman of the ITA, said they have met MPs and he has personally raised the matter with the Transport Secretary Patrick McLoughlin, but they will have to consider cuts if the funding gap is not sorted out by 2015.

“Members are horrified that this could happen,” he said. “The impact on families who are already struggling financially would be horrendous. We have to support concessionary travel for pensioners and disabled people by law and what money is left is used for other services.

“If we don’t get enough money we have to look at other areas which are not statutory including child fares and secured services.”

At the heart of the problem is a funding formula which dishes out money based on the number of elderly people in the area but does not take into account overall bus use.

Coun Greg Stone, a Liberal Democrat member of the ITA, said: “The concessionary travel funding formula has been problematic for a number of years under both the previous and current governments.

“The concessionary fare scheme for older people is a national government policy but it falls on local authorities to fund and the formula grant provided doesn't cover the full cost. As this is a national policy, I feel there is a strong case for the cost being met directly by national government via the Department for Transport. Regrettably, both the previous and current governments haven't seen fit to do this.’’

A delegation led by Newcastle City Council leader Nick Forbes met Mr McLoughlin in May and told him that unless the Government funding formula changes services will be lost.

Coun Forbes said: “We have always been strongly committed to supporting children’s travel on public transport and it would be a hugely backwards step if that concession was lost as a result of Government cuts.’’

Nexus already spends two-thirds of the total money it receives from local councils on concessionary travel.

Source: The Journal

(08 Jul 2013, 5:03 pm)Andreos1 wrote The only way Nexus can survive going forward is to take this QCS by the scruff of the neck and generate a turnover/profit to reinvest into services.

(08 Jul 2013, 7:32 pm)eezypeazy wrote And how do you think GNE invested in the vehicles for the TEN, the forthcoming Mercs for the M1, the Versas for the 58, and the Angels (excluding the bit paid for by Green Bus Fund - ie., the difference between the cost of a diesel bus and the hybrid gubbins), the new Riverside depot... and Arriva are investing in buses and depots, too...

(08 Jul 2013, 7:32 pm)eezypeazy wrote The 'profits' ARE being reinvested. Nexus' financial difficulties are a self-inflicted wound - while costs have been going up, the ITA froze the levy on the five districts and refunded to them some of Nexus' reserves, as well as having to fund the shortfall on the Metro reinvigoration project. Oh, while Metro ridership has been falling and 3 millon extra passengers were carried by bus.

(08 Jul 2013, 7:32 pm)eezypeazy wrote The whole reason Margaret Thatcher privatised buses in the first place was because the metropolitan areas like Tyne and Wear were spending money like it was going out of fashion. And they still are. The 'battleship grey' buses that I see carry fresh air through country fields - at my expense! Metro gets 'reinvigorated' yet can't cover its costs and fewer people use it - at my expense!

(08 Jul 2013, 7:32 pm)eezypeazy wrote At least when I buy a bus ticket I can see how GNE, Arriva and Stagecoach are spending some of it on better buses - I wouldn't trust our local councillors to do anything other than spend my hard earned dosh on their own pet projects (ie., a money-hungry tram system that I never use). Nexus' idea of reinvesting profit is to dip into bus fare payers' pockets to give the money to Metro passengers.

(08 Jul 2013, 7:32 pm)eezypeazy wrote Oh, and another thing - while council workers have had their wages frozen for the last four years, bus drivers have had modest (below inflation) increases. If we go for contracts, the austerity will seep from our councils into the bus system. Expect a wage freeze for bus employees, followed by service cuts when the councils run out of money (which they inevitably will).

(08 Jul 2013, 8:14 pm)citaro5284 wrote All you seem to talk about it Shareholders.......You may not think Shareholders have a place in the bus industry but that is life and it will not change. In this day in age, most successful companies are floated on the Stock Markets around the world and people can buy shares. Let's be honest here, pension funds are main players when it comes to share buying so it pays for pensions. If these pension funds did not buy shares and then get the dividend from these Companies what would happen???

And yes, I am a shareholder!

Go-Ahead on track with bus profit target

Link: http://www.insidermedia.com/insider/north-east/92665-?utm

Go-Ahead has said it is making good progress towards its target of growing operating profit from its bus division to £100m by 2015/16 as it prepares to post full-year results in line with expectations.

In a pre-close update, Go-Ahead, which has significant operations in Newcastle, said trading across the group had remained resilient and overall expectations unchanged, although it expects a greater proportion of group operating profit to come from its bus division.

"I am pleased to report continuing resilience across our operations," said group chief executive David Brown.

"Both our bus and rail divisions have seen improved growth in passenger numbers in recent weeks, following the effect of adverse weather previously reported in the third quarter.

"Our bus division continues to trade well and is on track to deliver a better than expected result for the full year as we start to see the benefits of cost initiatives coupled with continued revenue growth. We are making good progress towards our target to organically grow bus operating profit to £100m by 2015/16.

"In rail, our team is working hard to deliver strong bids for both the Docklands Light Railway and Thameslink franchises. We also look forward to working with the Department for Transport in the coming months to agree terms for the full franchise extensions for Southeastern and London Midland announced in March.

"Whilst our overall expectations for the full year remain unchanged, we now expect a greater proportion of group operating profit to come from the bus division."

(08 Jul 2013, 9:54 pm)AdamY wrote

Go-Ahead on track with bus profit target

Link: http://www.insidermedia.com/insider/north-east/92665-?utm

Go-Ahead has said it is making good progress towards its target of growing operating profit from its bus division to £100m by 2015/16 as it prepares to post full-year results in line with expectations.

In a pre-close update, Go-Ahead, which has significant operations in Newcastle, said trading across the group had remained resilient and overall expectations unchanged, although it expects a greater proportion of group operating profit to come from its bus division.

"I am pleased to report continuing resilience across our operations," said group chief executive David Brown.

"Both our bus and rail divisions have seen improved growth in passenger numbers in recent weeks, following the effect of adverse weather previously reported in the third quarter.

"Our bus division continues to trade well and is on track to deliver a better than expected result for the full year as we start to see the benefits of cost initiatives coupled with continued revenue growth. We are making good progress towards our target to organically grow bus operating profit to £100m by 2015/16.

"In rail, our team is working hard to deliver strong bids for both the Docklands Light Railway and Thameslink franchises. We also look forward to working with the Department for Transport in the coming months to agree terms for the full franchise extensions for Southeastern and London Midland announced in March.

"Whilst our overall expectations for the full year remain unchanged, we now expect a greater proportion of group operating profit to come from the bus division."

(09 Jul 2013, 12:02 pm)Andreos1 wrote

(08 Jul 2013, 9:54 pm)AdamY wrote

Go-Ahead on track with bus profit target

Link: http://www.insidermedia.com/insider/north-east/92665-?utm

Go-Ahead has said it is making good progress towards its target of growing operating profit from its bus division to £100m by 2015/16 as it prepares to post full-year results in line with expectations.

In a pre-close update, Go-Ahead, which has significant operations in Newcastle, said trading across the group had remained resilient and overall expectations unchanged, although it expects a greater proportion of group operating profit to come from its bus division.

"I am pleased to report continuing resilience across our operations," said group chief executive David Brown.

"Both our bus and rail divisions have seen improved growth in passenger numbers in recent weeks, following the effect of adverse weather previously reported in the third quarter.

"Our bus division continues to trade well and is on track to deliver a better than expected result for the full year as we start to see the benefits of cost initiatives coupled with continued revenue growth. We are making good progress towards our target to organically grow bus operating profit to £100m by 2015/16.

"In rail, our team is working hard to deliver strong bids for both the Docklands Light Railway and Thameslink franchises. We also look forward to working with the Department for Transport in the coming months to agree terms for the full franchise extensions for Southeastern and London Midland announced in March.

"Whilst our overall expectations for the full year remain unchanged, we now expect a greater proportion of group operating profit to come from the bus division."

£100 million profit?! Would love to see the dividend shareholders get from that! Whilst us poor passengers are saddled with even higher fares and an even limited service.

(09 Jul 2013, 2:02 pm)Andreos1 wrote Like the monopoly that exists in most parts of the region now or a different type of monopoly?

(09 Jul 2013, 2:02 pm)Andreos1 wrote I must admit, I was impressed with the 91% satisfaction rate, even though those sorts of statistics can be manipulated etc. Obviously when you read the report, it is pretty obvious how it has indeed been manipulated. It is on these forums somewhere if you haven't read it already.

(09 Jul 2013, 2:02 pm)Andreos1 wrote It's obvious when you think about it - if Nexus can run the service to a similar standard, generating similar levels of profit, without having to syphon a huge chunk off to investors...

(09 Jul 2013, 2:02 pm)Andreos1 wrote ... there are transport organisations the world over owned by local authorities making millions, which is then reinvested into the service, .... Why cant Nexus do the same?

(09 Jul 2013, 2:02 pm)Andreos1 wrote ... about passenger levels, ... Passengers on a bus being counted 4 times on a return journey to work rather than the twice prior to the direct journey being axed...

(09 Jul 2013, 2:02 pm)Andreos1 wrote ... Like you, Im not an expert...

(09 Jul 2013, 4:07 pm)Andreos1 wrote @AdamY No, there probably isn't.

It's a bit like the 'privatised' rail network... But that's a whole new discussion for another time

(09 Jul 2013, 6:14 pm)eezypeazy wrote No, I'm saying that BSOG is the ONLY subsidy; in practice, it's a refund of part of the fuel duty that bus companies already pay. I think I read in The Journal last week that it only accounts for about 5% of bus costs; I seem to recall a Tyne and Wear figure of about £12 million before it was cut by 20%, which would make it about £9.6 million today. Railways and airlines don't pay any fuel taxes - now that's a huge subsidy!

End of fuel subsidy 'will wipe out bus company profits'
But low-income households will be hit hardest if fares rise and services are cut

Link: http://www.guardian.co.uk/politics/2010/jul/25/bus-companies-fuel-subsidy

Four of Britain's biggest bus companies could lose more than £200m in profits under plans to axe public spending on transport. The government is considering scrapping a scheme that allows bus operators to reclaim around 80% of what they pay in fuel duties.

But City analysts says that if the government abolishes the Bus Service Operators Grant (BSOG) in one go, it could wipe out most of the profits of stock market-listed bus companies. These include First Group, Go-Ahead, Stagecoach and National Express.

Analysts at JP Morgan Cazenove say it is more likely that the grant will be frozen or phased out, as the consequences of sudden abolition would be dramatic, but one broker warned: "Abrupt cuts would be very negative for the immediate earnings outlook."

The grant is worth £500m to the bus industry as a whole, and £235m to the big four, according to JP Morgan. In June, ministers signalled concern at the profit margins of the largest public transport groups, but dozens of independent operators would also be affected by changes to BSOG, as would Arriva, which is being taken over by Deutsche Bahn and is not included in JP Morgan's research.

The broker added: "Uncertainty will weigh on the relative share price until there is greater clarity. However, we believe this is reflected in current valuations, which we view as cheap."

Bus operators could compensate for the loss of the fuel subsidy by reducing services and hiking fares by around 7%.

Simon Posner, chief executive of the Confederation of Passenger Transport, warned that outside London the bus is the main form of public transport, and is relied upon most by low-income households: "If we want to cut carbon, give jobless households the means to access work and ensure that our cities keep moving, we need to ensure buses get their share of government support."

Earlier this month the government was caught up in a row over free bus passes for the elderly. Sources in Whitehall denied ministers planned to raise the qualifying age from 60 to 65.

However, JP Morgan said: "A change to the qualifying age, the use of smart card technology or the requirement to purchase the annual bus pass are all possible ways of limiting expenditure."