Thought it would be useful to have a press cuttings thread, rather than having to start a new thread for every other article regarding public transport in the North East. Mods: Feel free to split/rename/etc if you disagree.

"Cut-price travel for children in Tyne & Wear under threat".

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
Share on print Share on email
A Metro train A Metro train

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

If the commercial operators care about their passengers as much as they say, rather than lining their shareholders pockets - Nexus would not need to step in and subsidise the services they do.

Yes, they need to generate some sort of profit, but when a potential funding shortfall is snowballing out of control, maybe something will prick their conscience and they will step in to ease the burden on funders....
Oh, who am I kidding, of course GNE, Arriva or Stagecoach won't step in and have a loss leader running. I mean, imagine them running a local service, serving communities and making a small loss, but generating buzzfare tickets and feeding into the more popular services - it's almost sacrilege to even think it!

I really worry about what will happen if this isn't sorted out by 2015. It would be unbareable if Tyne and Wear suffered the same fate as County Durham residents; where commercial operators choose to exploit the times kids are travelling to and from school, where villages are without decent services, and some villages are without services at all depending what day it is..

I really can't see the concessionary travel scheme lasting the duration of this government - which is a shame. However, I'd rather see it ended and mirrored with the a scheme similar to what Nexus provide for the Under 16s. It makes more sense than one concession getting nothing, and the other getting everything.

I've said time and time again though that the formula behind it is insane. It's also (why I believe) that the likes of short hop fares, returns, and bus to bus tickets have become a thing of the past. The higher your average ticket price the more of a reimbursement you get.

Just a little bit of personal info (won't share too much, but enough to give you a perspective of my position).

My eldest son from a previous relationship is going to a Comprehensive School in Tyne & Wear, but just 2 miles from the Co Durham border.

I live just inside Tyne & Wear, so he has a POP card giving excellent value fares.
The direct bus he could have got from my house to his school has ceased running at the behest of GNE.
His alternative is to get two buses each way(staying in T&W) and pay £1.10.
If goes to school or comes home via Co Durham, his POP card is invalid and it will cost a small fortune.

His mam lives in Co Durham (nearer the school than me). The direct bus he could have got from there to school has also stopped running at the behest of GNE.
He will also need to get two buses to school and two buses home, paying a small privilege to hang about waiting for connections.

If the CAT funding stops and he can't use his POP card, I dread to think how much it would cost to get him to/from school - unless he has a multitude of dentist and doctor appointments every day, before and after school to counter the rip off peak fares, it wouldn't be feasible for him to use public transport... Exactly the opposite of what we are being encouraged to do and makes the Nexus employee visiting schools and encouraging uptake of public transport and the POP card redundant.

This isn't me demanding GNE (or whoever else) put these services back on and let him travel from door to door (even though the services were popular) it is me stating how much of an impact these funding shortfalls will have on a real persons education and our pockets.

And lets not forget that more and more schools are becoming academies. Therefore ran as a business rather than a traditional primary, secondary, or middle school. The LEA at councils will soon to cease existence. You can understand that, as there's little point when there's a no more than a small handful of schools left in LEA authority. The reason why mentioning this is important is because schools are going to be in the same positions as commercial operators. They aren't going to fund a school bus service if it's not commercial sense to do so. It actually raises questions about the current provision of scholars services too.

Totally agree.
Wer'e getting onto another subject, but a business isn't going to subsidise a scholars bus if it isn't commercially feasible.

Tesco don't pay for a staff shuttle to get their staff into Kingston Park. Why would a school do it for their pupils?
Why would Nexus fund a scholars service for the minority if they have been left in the position they have by sackless formulae and funding shortfalls?

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.

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.

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...

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.

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!

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.

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).

What percentage of profits are GNE investing? Obviously when you get take into account the big wedge shareholders get (it will be interesting to see the % increase they get compared to the drivers...) the actual amount invested into new vehicles and the depot will be a fraction of that.

Now if you discount the shareholders and imagine they aren't there, how much more money can be reinvested?

Or would you rather your taxes went towards the costs incurred as Nexus have to to subsidise the massive missing gaps left by GNE as they move onto pastures new chasing the dollar to line their shareholders pockets?

We have already clarified that Metro numbers were dropping due to the massive line closures and that bus companies passenger levels are increasing due to the same person being counted four times a day for a trip to work and back, rather than the two prior to their direct services being axed...

I personally bring shareholders into the conversation - because bus companies seem to care more about them, than they do their passengers.

Generating a massive profit, with excessive fares, cutting & reducing services - isn't for my benefit is it? It isn't benefiting the old lady across the road either.

As a result of the money chasing, shareholder loving bus companies, my taxes, your taxes and my next door neighbours taxes are having to subsidise the services Nexus fund, because GNE don't see enough profit in it.

Raising capital from these shareholder investments, was the only way GNE could grow as a company following de-regulation. Unfortunately, the passengers who are vital to the company succeeding, aren't seen as that by the company...

Me having to subsidise Nexus to run a bus service and then paying sackless fares to get my eldest to school, isn't anyones fault but the bus companies...

Hope you don't mind me breaking your thread up eezypeazy, but it's a bit easier for me to respond to some of your points in a clearer form.

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...

Every business replaces it's fixed assets on a life cycle. Bus operators aren't the exception.

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.

It's hardly self inflicted. At least two thirds of their money has to go back to commercial operators to pay for concessionary travel. That's central government's rules. Not a local PTE. Not to mention the huge budget reductions that have been imposed on local government, with most (having their hand forced in) taking the attitude that the service won't exist if it's not statuary.

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!

I agree that the Nexus Buses shouldn't be running. The commercial operators should be running the said services. The whole point in that woman deregulating bus services outside of London was to encourage a free and open market. We've never had that. Operators work on 'turf', with any real competition being resolved behind closed doors after a short time. So we're left with a situation that operators do what they want, and the local PTE is forced into picking up the shortfall. I hate that too.

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.

You can change your local councillors - that's democracy for you. Whilst I agree that the make up of councils is not ideal, at least they're accountable to their electorate for what they do. Just because you don't use the Metro doesn't mean that it doesn't serve a purpose to others. The scrutiny of each business case they have to raise to get the money for such projects is insane, but it's done to make sure it's 100% accountable and transparent.

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).

It's a crying shame that the public sector are still under a pay freeze, and I'm of course disappointed when anyone doesn't receive a cost of living pay increase. It's the bare minimum anyone should get in my view. However, I do think it's jumping the gun even discussing that at this stage. Baring in mind the crap pay offer was made despite bonuses for senior managers and directors. I wonder how generous they were with the fuel bonus payment this year?

---

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!

This has flew way off topic, and certainly not the intention when I originally posted the thread. It was to have a more diverse discussion about recent articles in the press that didn't fall into current threads.

To answer your point on pension schemes though. I take it that'll explain why most DC pension schemes in the UK (and Europe for that matter) are running dry then, if not in deficit? Is that success?

Go-Ahead on track with bus profit target

Link: http://www.insidermedia.com/insider/nort...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."

Another interesting debate!

I guess it depends on what you believe a bus service to be. A public service? Or a service for the public? I'm in the 'Service for the public' camp, and have been since privatisation. 'Tis a commercial world we live, rightly or wrongly.

Re the points about concessionary travel - yes, it is a mess. If the Government of the day wants it, then the Government of the day should pay for it. It's not a subsidy to the bus operator, it's a reimbursement of a fare. If anything, it's a subsidy to the consessionaire.

I do have a lot of sympathy on the price of child fares though, especially cross border ones.

Go-Ahead on track with bus profit target

Link: http://www.insidermedia.com/insider/nort...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.

Go-Ahead on track with bus profit target

Link: http://www.insidermedia.com/insider/nort...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.

But what about all that investment? The new buses, the bids for the DLT and Thameslink franchises. Oh, you and your shareholders again, lol.

Andreos1 really does seem to have got stuck on the same message, doesn't he?

Look at it another way: Successful companies get to be successful by doing the right things,at the right price, for the right customers. Their investors (shareholders) have loaned them their capital in the hope that they'll get it right. Success isn't guaranteed - it's a risk. Some risks work, some don't - probably why the OK1 is being withdrawn. So the profit - however modest or outrageous - comes as a result of success. Apply this to buses and it becomes obvious: if you don't run buses at times people want to travel, you won't be successful. And equally, unless there's a break-even bus load, you can't make a return and you will go out of business. And, if you try to charge customers fares that are too high, either new competitors will join your route (reckoning they can make enough to survive at lower fares), or you'll not attract enough customers (a bit like First in some areas!).

In practice, route costing systems allow bus companies to know where they can make a decent return and where they lose money, and analysis of things like season ticket use allows these to be apportioned, too. If profits from a good route are used to subsidise a poor route, neither makes a profit. And there's a limit as to how often you can do this before the entire network fails to make a return.

Quality contracts are not a guarantee of success, I'm afraid. And, as we read on this forum recently, bus patronage in Tyne and Wear went up by three million trips in the last full year without one!

Certainly have eezypeazy, but everyone is entitled to their own opinions aren't they?
Im not the only one who has brought up 'that word' on these forums and until someone can convince me otherwise, my opinion of them and the brown nosing companies and organisations do to keep them onside, will not change.
To worry more about what they think and do over customers, is a pretty sad state of affairs to be in.

Imagine the panic these investors (used a new word just for you ...) would have if figures changed? How high can fares go, before passenger numbers start dropping? Investors sell shares out of panic, the value drops and GNE have less profit sloshing around their bank accounts?
Does that lead to further service reductions? Higher fares? An increase in your taxes to subsidise Nexus as they step in to fill another area, deemed not profitable enough for commercial operators?
After all, these investors need keeping sweet and we all know what you think about your hard earned taxes paying for the battleships!

Speaking of being stuck on the same message how many times have you mentioned about bus passengers going up?

My point is, Andreos, it’s not about what the bus companies “think and do over customers”. It’s about bus companies that, on the whole, do a pretty damn good job at keeping their customers satisfied that matters. If they can get customer satisfaction right (and Passenger Focus results seem to suggest they can), then they’ll be successful – you can’t be successful by ripping people off (unless you’re a local authority that introduces a quality contract, whereupon you put in place a ‘monopoly’ that actually allows you to charge bus passengers as much as you can so you can use the money to prop up you toy tramway!).

Now, Andreos, there are no quality contracts in place anywhere in the UK, so to a certain extent we’re both speculating here. However, I’d love to see any evidence, from anywhere in the world, of a system where a local authority takes control, puts in less public money and improves services... ‘cos despite my searching, I’ve yet to find one!

And it’s not me that claims bus patronage in Tyne and Wear has gone up – it’s Nexus!

Like the monopoly that exists in most parts of the region now or a different type of monopoly?

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.

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 - that the service can be just as good. If they reinvest the massive dividends that GNE, Arriva or Stagecoach can't AS WELL AS any profit - imagine how good it could be?

Like you, Im not an expert, but there are transport organisations the world over owned by local authorities making millions, which is then reinvested into the service, without huge chunks being sent off to investors. Why cant Nexus do the same?

Your right, Nexus did mention (again referred to in another thread on this very forum) about passenger levels, but again, you don't need to be an expert to analyse why they have gone up on the bus or down on the Metro. Line closures? 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...

Like the monopoly that exists in most parts of the region now or a different type of monopoly?

There are no monopolies in the bus industry at the moment - the Competition Commission proved that!

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.

Please provide evidence to show that Passenger Focus, an independent government body, manipulates passengers' opinions in favour of the bus (and rail!) industry.

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...

Huge chunk? There's only one operator in the north east that makes double-digit returns, the other two make returns that are well below the industry norm

... 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?

Could you be kind enough to provide us with a list of these transport organisations? I'm not aware of any such system, anywhere in the western world, that doesn't need large amounts of public money.

... 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...

I think you're laying this on a bit thickly, really. Bus companies don't "axe" journeys unless they're not carrying viable loads, so the effect of "double counting" will be pretty minimal...

... Like you, Im not an expert...

Agreed, but we're both entitled to our opinions. So please, don't make sweeping, generalised statements unless you're able to produce some evidence to back them up!

Kind regards

eezypeazy

Sweeping, generalised statements? That a bit sweeping and generalised of you to say that mind.

Anyway: By definition, monopoly is
characterized by an absence of competition, which often results in high prices and inferior products. Source investopedia.com

If you read my comment, rather than making sweeping generalised comments yourself, you will see I didn't accuse the independent Government organisation of anything.
A survey can be compiled (in this case the majority were OAP pass holders, travelling outside peak time) and from the results a 91% satisfaction survey was gleaned. The ABC1 passengers were not very satisfied. Unfortunately, only a small percentage were asked their opinions of the GNE service.

Huge chunk - by definition, that is a vague comment by myself. But surely you can't dispute that the dividend could be used elsewhere?

A transport organisation owned by a local authority? Notts City Transport, Blackpool and Lothian jump out from the top of my head. Various European cities also have them - for instance the fantastic tram, ferry, bus and metro network in Amsterdam are owned by GVB (including a period during the second world war).
They are all owned by public organisations, authorities etc. All require investment and all generate profit - without (exluding Notts) any investors to keep happy.

Laying it on thickly? Another sweeping generalisation. Lets just use Fencehouses as an example with driving through it before.
Prior to the 2006 changes, 3 buses an hour ran to Newcastle. Two via Chester and one via Washington. The 21a was curtailed at Chester and replaced by the 71 (still twice hourly) and the X94/X3 cancelled completely, but the route is covered by the 6 hourly M1. From 3 buses an hour in either direction, there are now 8 buses. They can't blame it on lack of passengers? Surely? Locally between Houghton and Fencehouses (as well as those 8), you also the 20a and 35a, each running 3 times an hour in either direction.
There can be no other justification other than to force people to change buses at Chester, Houghton or Washington and purchase day/week/month tickets - costing twice as much per day as it did prior to 2006.
Then if you look at the map of Washington Aureolin has also attached to this forum, maybe this double counting is a bit more common that you realised?

So as you were saying...
Proof enough? Enough figures, links, facts etc for you?

Kind Regards

Andreos1

edit: Public Transport in Amsterdam was privatised a few years ago. Just been made aware.

One thing I like about Lothian's set up is its cheap fare structure. As I've said in the pricing thread, I'm very much in favour of a 'flat fare' structure rather than a zonal one. Cheap fares offer an incentive for people to use public transport. A 'flat-fare' makes the fare easy and simple to understand. Lothian combine the two resulting, as of March 2013, a cheap flat fare is £1.50 with a day ticket costing just £3.50. A night ticket costs just £3.00 and is valid for multiple journeys. A weekly pass is just £17.00 a week and is also valid for use on night services.

Just a shame that this sort of simplicity doesn't exist elsewhere.

Re monopoly: The industry had a huge investigation into this, and, generally, the Competition Commission had very few recommendations to make. Pure competition in the industry would require each bus depot to have an equal sized competitors’ depot alongside it, and that’s simply not how the bus industry works. There’s no evidence that operators exploit their geographical positions; if anything, we end up with a ‘Mexican stand-off’, where operators make reasonable returns doing what they do, but don’t feel tempted to risk trying competing services; this isn’t ideal, but it doesn’t make a state-controlled monopoly ideal, either.

Re manipulation of survey results: that was your word, not mine. Are you now calling into question the sampling techniques used by Passenger Focus? You seem to me to be hell bent on discrediting their work.

Re dividends: without reasonable dividends, the shareholders wouldn’t be prepared to lend the bus companies their money. Without dividends, there would be no money to invest in transport. In a state-run system, local or national government would have to raise the money instead; and instead of paying dividends, they’d pay interest and have debt on their books. And the UK can’t afford more public debt. Under a quality contract, the winning bidders would still have to make enough of a return to justify any investment required; so I can’t see it driving costs down to any great extent.

Re “a transport organisation owned by a local authority”: I’m sorry, that’s not what I was looking for; I am sure there are many of those. I should have made the question clearer. I was looking for examples of local authority control that don’t require public money to prop up the system. The three you gave – Nottingham, Lothian and Blackpool – are poor examples, I’m afraid. Nottingham’s and Blackpool’s trams need public subsidy; and as for Edinburgh, well....!!!

I’m pleased that you admit that Amsterdam’s public transport system needs public investment, because that proves my point. here in the north east, Nexus is pursuing a quality contract not in order to put more money into the system, but to take money out.

Re Fencehouses: well, you’ve got me there. I’m afraid I don’t know the local circumstances (it’s a foreign land to me). If there’s a real demand for through services to Newcastle, have you thought of suggesting this to GNE? If the demand’s there, I’d hope they’d consider it. I’d be surprised if they had done this sort of thing to “force” people to change just to keep the patronage figures up, though. I’ve always thought that people don’t like changing buses, and this would drive people away, thus reducing patronage rather than inflating the numbers.

We will agree to disagree on the other points - just going around in circles.

With regard to Fencehouses. Nobody likes changing buses, nobody likes hanging around the poor 'interchanges' at Houghton, Chester or indeed the Galleries and Concord.
Nobody likes seeing fares increased massively either.
However, taking 3 double deckers off an hour and replacing them all with 13 single deckers in each direction per hour, forcing them to change buses along with the location of the village in relation to the buzzfare and county boundaries only tells me one thing... And it has more to do with increasing buzzfare ticket sales than it does anything else.

Washington is the same. Several services that worked through the villages of Washington going to Newcastle, Sunderland or beyond have been cancelled, with replacements all feeding into the Galleries or Concord.

Wonder if they would have done that if there was competition in those areas?

Are there any examples of privately-owned bus companies operating in the UK which don't require public subsidy?

@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

@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

Hold on, I think I've found the perfect solution.

The private bus companies can run services based on market-demand without any of the subsidisation they currently enjoy.

And local authorities, using the BOSG and any other available funding on offer, can continue to provide services to areas overlooked or under-served by privately-owned bus operators.

Because bus companies evidently care a great deal about their passengers, a framework for multi-operator ticketing can be thrashed out and implemented using an organisation such as the NEBOA. And Nexus can create their own ticketing, valid only on the Metro, trains between Blaydon and Sunderland, and any contracted bus services.

Everyone's a winner.

I was actually going to bring up the case of the railways before, but, as you say Andreos, that's a different argument for a different time.

We truly live a commercialised world, albeit one that has huge amounts of public subsidy attached to it.

Please don't confuse 'public subsidy' with 'paying for concessionary travel'.

Let's try a flight of fantasy...

Suppose that, one day, the government decides that every pensioner in the land shall be entitled to a free pasty once a day. Greggs (and other bakers) are forced, by law, to give them out and claim reimbursement on a 'no better, no worse off' basis. The government guesses how much money it will cost and gives the money to local councils; but then, the local council's money gets bundled up into a single lump from the government and reduced by ten per cent per year.

Greggs sends its bill to the local council, based on the government's formula; but the local council hasn't got enough money.

Two questions arise:

1. Whose money is it?
2. Who is the beneficiary?

Remember, Greggs have supplied the pastys 'up front'; they've paid for the ingredients, the overheads of the shops, the wages, etc. All they want is paying. To me, it's Greggs' money that the government and the council are dithering over paying.

And the beneficiary is the pensioner, not Greggs. Greggs make no extra profit, because the formula leaves them 'no better, no worse' off, even though they've already paid out for their costs.

Next, imagine that the price of cheese on the world cheese market doubles overnight. Greggs main ingredient cost has gone through the roof, their costs have gone up, so using the government's formula, they ask for more money (and the retail cost of the pasty has jumped too!). But the council's budget is frozen and they can't pay any more money. Greggs can't afford to just give away the pastys, so what do they do? They close their shops in the little outlying villages, where the returns had been marginal to start with.

In this scenario, there's little point in having a free pasty entitlement if you haven't got a pasty shop!

And so... 'concessionary travel reimbursement' is simply the councils' fulfilling their obligation to pay for something that bus companies have already provided. It's not 'public subsidy', just as the councils paying their electricity bills for their offices isn't a 'subsidy' to the energy companies. Strip out concessionary travel from Tyne and Wear's bill, and you're left with about £10 million of public money buying bus services - split roughly one third on school buses, one third on early morning/late evening and works services, and one third on the 'battleship grey' services. You can't avoid having to run school buses; you might be able to avoid some of the rest, but these are services that we, as a 'society', decide are worth having. And I'll bet there'll always be some services like this, that will never be able to cover their costs from fares.

To me, we have a crazy system that simply leads to an increasing conflict between the bus companies and local councils, from which there is no easy escape. When I become Britain's first Benign Dictator, my solution will be simple: Concessionary travel costs about £3 per pensioner per week. So, instead, I'd remove the entitlement, but give every pensioner £3 a week more in their pension to do with as they please. I would encourage bus companies to make use of the concessionary travel smartcards by selling a simple £3 weekly, £10 four weekly off-peak multi-operator ticket for pensioners. The net effect on the Treasury remains the same: what they save on concessionary travel they give away on pensions. The effect on pensioners is either neutral or beneficial: they can pay the same (or slightly less) for their travel, or use the money as they wish. In all likelihood, some would choose to travel a little less and spend a little more at their local shops, so there would be a downside for bus companies but an upside for the local retail economy ... but that, in itself, could provide enough of a boost to lift bus patronage (more money to spend in the shops = more people working in retail).

The bus companies find themselves free from the political shackles that concessionary travel entails. They are essentially selling a commercial ticket, but at a price linked to pensions. If there aren't enough pensioners (and other passengers) willing to buy tickets, then, like any other service (bus or otherwise!), it gets taken off if it can't cover its costs. If it needs some council support, then that's up to the council to make that decision, but the maths is rather more clear cut than present arrangements.

Oh, and I must admit, I'm not a fan of BSOG, either. Take it away, make bus fares reflect true costs, and let local councils support services where required.

Sadly, I'm not likely to be offered the job of Benign Dictator very soon!

(Edited for typos)

Are you saying that the BSOG is not a form a public subsidy?

Also, while I'm asking, what about the Green Bus Fund?

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!

Green Bus Fund isn't really a subsidy to bus operators - it's a subsidy to the manufacturers of green buses. The bus companies get part (but not all) of the difference between the cost of a diesel bus and the cost of the green bus, so the maths of the bus company's investment case stays about the same. The other beneficiaries, though, are the local people who get better air quality as a result.

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!

Granted, this article's a bit out of date now. But The Observer reported in July 2010, when the BSOG first came under threat, that the profit margins of bus companies would be wiped out if the fuel subsidy was withdrawn.

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/...el-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."

If that was true back then, and if what The Journal reports is true now, then it might appear to some that the BSOG has been used, not to lower fares, but to help prop up the share price as fares continue to rise.