The Transport Select Committee has announced an inquiry into the prime minister’s flagship National Bus Strategy, called ‘Bus Back Better’, one year after it launched. With a key deadline coming up, the strategy now looks more like a way of managing decline.
According to official guidance on Bus Service Improvement Plans (BSIPs) under the strategy, by the end of this month, local transport authorities (LTAs) should either have in place an Enhanced Partnership (EP) with local operators or be following the statutory processes to implement bus franchising, or both.
While both models would see services provided by private operators in most areas, EPs are, as the name suggests, partnerships between operators and LTAs while franchising would see authorities take a more prescriptive, London-style approach to fares, routes and timetables.
The Department for Transport (DfT) has not concealed its preference for the EP model and has made it a condition of BSIP funding, even where authorities – i.e. mayoral combined authorities – are pursuing franchising.
The strange case of the disappearing funding
Boris Johnson makes a Covid announcement, May 2020
While ministers clearly hope councils will follow the money, the problem is, there isn’t a lot of money left to follow. In 2020, Boris Johnson announced £3bn for buses over this Parliament as part of £5bn for buses and cycling.
The strategy itself, last March, stated that ‘transformative funding’ would be worth the same £3bn. However, a huge chunk of that cash seems to have been spent just keeping services going as the pandemic and lockdowns hit passenger numbers and revenues.
Working out where the money has gone is tricky, but for starters it’s worth pointing out that the strategy noted that by the end of 2020 around £1bn had already been spent subsidising services. The £3bn was on top of that and the strategy stated that most of this cash would be spent from April 2022.
However, even before the strategy was launched, the Treasury had put pressure on the DfT to divert some of the £3bn towards COVID support.
In August 2020, DfT permanent secretary Bernadette Kelly told the Pubic Accounts Committee in relation to new COVID support that could cost up to £928m by the end of the financial year that ‘HMT have requested that either the Department funds this from the £3bn announced by the Prime Minister for buses in February or we make a saving of an equivalent amount to this latest bus funding package, identified from existing DfT funding. We are reviewing this as part of the forthcoming Spending Review.’
The Spending Review that December, which covered only 2021-22, referred to ‘£300 million in 2021-22 to drive transformation of bus services’. However, it added: ‘This funding will be drawn down in the first instance for any further COVID-19 support that may be required, while progressing reform to deliver better outcomes.’
Similarly, the national bus strategy referred to: ‘Supporting new and increased services – with at least £300m of funding to support the sector recover from the pandemic in 2021/22’.
COVID support of up to £800m for that year will have done for any hope of ‘new and increased services'.
Now the DfT says the £3bn ‘includes’ Covid support funding, which it now says has totalled £1.7bn. There is now just £1.2bn for ‘bus transformation deals’ although there is also £525m for zero emission buses and ‘over £500m from the City Region Sustainable Transport Settlements that will directly fund bus infrastructure’.
Overall, these figures appear close to the £4bn cited in the strategy, although the total cash to improve services rather than just keep them going has shrunk to around £2.25bn.
And that’s to ignore the fact that the DfT’s August 2021 guidance on the City Region Sustainable Transport Settlements (CRSTS) states that it ‘sits alongside other local funding streams, such as our £5 billion commitment for buses and cycling and our £4.8 billion Levelling Up Fund, which will still be available to these 8 regions’.
The clear implication of this is that CRSTS funding is separate to, and should not be counted as part of, the £3bn for Bus Back Better.
A shrinking network?
Recently, a couple of botched announcements have further muddied the murky waters of improvements funding. The Levelling Up White Paper named a number of councils that were due to get cash under the funding stream.
However, when Transport Network looked into it, it became clear that the DfT had not decided for certain that even these authorities would get money, let alone how much they would get. An announcement on which BSIPs have been approved and the extent to which they have been funded is still awaited.
Then, with less than a month to go before current COVID support runs out, the DfT announced a final tranche of cash to support bus and light rail operators up to the end of September, but without stating which sector would get how much of the £150m promised. Almost all of this money, £146m, is for buses.
While it appears that this further subsidy for buses comes through the Bus Recovery Grant, the DfT seriously confused the picture by linking it to the aims and processes of the strategy. It is unclear whether the cash – however much it is – comes from the remaining money for improvements, was already counted under the £1.7bn to keep services running or is genuinely additional money.
What was however most worrying about the announcement was the statement that the cash was ‘dependent on local areas and operators co-designing a financially sustainable and passenger focussed public transport network, that works for changing travel patterns post-pandemic’.
The reference to a ‘financially sustainable’ network appears to be code for a slimmed down network and there are fears on the local government side of the sector that operators are looking to cut back to core routes and that the DfT has accepted this as the new reality.
The reality of the pledge to Bus Back Better appears to be that the promise of cash to improve and expand services has been overtaken by the need to adapt to an anticipated future of falling revenues.
Losing control
This brings us back to the situation that LTAs find themselves in as they await decisions on funding for BSIPs. Where EPs were expected to use government BSIP funding, for example for bus priority measures, to lever in reciprocal contributions from operators, it looks like the pool of available cash from each side has significantly diminished.
With legal attempts to block franchising in Greater Manchester having failed, two recent decisions from mayoral combined authorities have highlighted the dilemma even for others taking the slow and steady route to franchising.
Firstly the South Yorkshire Mayoral Combined Authority decided to pursue bus franchising, but that also to establish an EP in the meantime, on the basis that the Government has made this a condition for receiving BSIP.
However, Liverpool City Region Combined Authority (LCRCA) has decided to carry on with plans to implement franchising without an EP, on the basis that it was not worth it.
A report to local leaders noted that LCRCA had considered an EP developed in conjunction with the two leading bus operators in the city region in late 2021, but that that the model was ‘reliant on increasing levels of public sector funding, including BSIP funding and Zero Emission Bus funding'.
It added: ‘The Combined Authority has already set out ambitious investment in bus priority measures through the City Region Sustainable Transport Settlement.’
This is where the deals struck by city regions come into their own. If they receive funding for bus infrastructure through a CRSTS, they have little need for – and are unlikely to get – further cash through the BSIPS process, although they are technically entitled to it
Wither bus services?
In the short term, the DfT has the challenge of making a reduced pot of cash for improvements go a long way. Even before the cash was cut, bids were estimated to total around £7bn.
But looking further ahead, it’s hard to get beyond the DfT’s vision, not of ‘new and increased services’, but of a network that is financially sustainable in the context of significantly less revenue.
