Bus Industry Performance (2)

Deregulated Bus Services

Bus services in Great Britain (outside London) were deregulated under the Transport Act (1985); D-day itself was 26th October 1986. Since that date bus operating companies, while under strict quality and other supervision, have been  free to run what services they wish (though they have to give several weeks notice of route or timetable changes). These “commercial services” are eligible for Bus Service Operators Grant, and for Concessionary Fares Payments, but not for “Public Transport Support” from Local Authorities. Commercial services run by different operators may compete on the road.

If a Local Authority judges that the level of service provided by commercial services is insufficient, they may invite tenders for operation of additional “tendered” services which they specify. In general, these services should not run alongside commercial services.

Note that Northern Ireland is not part of Great Britain, and was not affected by the 1985 Act.

Privatisation of bus operators in Great Britain

Before the Transport Act 1985, virtually all operators of scheduled bus services in the UK were publicly owned – either by municipalities (including passenger Transport Executives – PTEs), or by two major nationalised groups; the National Bus Company (England and Wales) and the Scottish Bus Group. The 1985 Act provided for the sell-off of these two groups, and strongly incentivised municipalities and PTEs to sell off their bus operations – only eleven municipal operations now exist (see Wikipedia for more details). Even these latter have to operate in the commercial arena.

The transition to private ownership happened over a period starting in 1985, largely completed in 1991. Unlike the case of deregulation, London Buses were included in privatisation.

Concession Fare Entitlement

Concessionary fares for older people have been a feature of public transport in the United Kingdom for many years. Before 2002, all schemes were administered by local authorities; a statutory minimum half-fare scheme for women over 60 and men over 65 was introduced in England in June 2001.

In April 2002, nationwide free bus travel was introduced for over-60s in Wales; a similar scheme was introduced in Scotland in September 2002, except that travel was restricted to the user’s home council area (32 councils cover Scotland). The Scottish scheme was extended to nationwide free travel in April 2006. (Scottish pass-holders cannot travel free in England or Wales, and vice versa.)

Also in April 2006, a scheme was introduced in England giving free travel (although not before 09.30 on weekdays) to all over-60s, within their home council area; in this respect, England is divided into over 250 areas (though some councils made joint arrangements). This scheme was extended “nationwide” in April 2008, although the morning peak restriction still applies. Some councils give more than the basic concession.

All these schemes also include people with disabilities (subject to eligibility criteria).

Note that rail services are not included in the statutory scheme, although free or discounted rail travel is available in London and some other areas (Wikipedia has some details).

Concession Fare Reimbursement

Local Authorities in England, and the devolved national governments in Scotland and Wales, are responsible for reimbursing bus companies for the revenue lost under the Concession Fares scheme, after deduction of an amount relating to “generated traffic”, but supplemented to cover any additional costs incurred (such as provision of extra buses). Bus operators are supposed to be “no better or worse off” as a result of the scheme. (In England, the Local Authorities receive extra central government funding to support the scheme.)

However, it is very difficult to establish how many pensioners would travel by bus in the absence of the scheme, thus leading to seemingly endless arguments over the correct level of reimbursement. In Scotland and Wales, this level is established by the respective governments and is standard across the country; in England it is calculated by the various local authorities according to a guideline formula established by the Department for Transport, and is different for each authority.

The level of reimbursement is generally expressed as a percentage of the adult single fare, or as so many pence in the pound. (The establishment of the appropriate “adult single fare” is itself a matter for disagreement – what account should be taken, for example, of discounts for return tickets or season tickets?)

In Scotland, the reimbursement rate was originally established at 73.6%, but was reduced to 67% in April 2010. In England, rates differ but are significantly lower, typically of the order of 50%.