What should be in the national bus strategy? PART 2
Without an uncongested road, none of the rest of it matters much
Yesterday we focused on the areas of the National Bus Strategy in which the DfT should look at its own culture, at road pricing and at the way the planning system enables better infrastructure and bus-friendly housing policy.
These are the main areas for the National Bus Strategy. Without uncongested roads, none of the rest of it matters much.
But there are also points pertaining to the bus industry itself, and that’s the focus for today.
Note that this is separate from the question of Covid Recovery Partnerships, which I’ll come onto in future.
“First, do no harm”
River Tamoor Baig, one of my Freewheeling Podcast guests, voiced a plea for an end to changes to industry structure:
What we’ve got right now is this kind of whipping effect where we look to the left, we look to the right and we don’t really get anywhere as a result because we’re constantly changing the structure.
The Bus Services Act 2017 is less than four years’ old: the strategy must not change structure again before the previous set of changes have had time to bed down.
Stay local
A guiding principle of the strategy must be that decisions about buses should be taken by the people closest to the customer. It’s a good thing that the DfT is creating a bus strategy as it will create a framework for decision-making in future. But it must not be the case that this strategy justifies a Whitehall power grab.
Self-sufficiency
OK, here’s an interesting one, and you’ll need to follow me for a few minutes so I can explain what I mean.
A principle should be that buses make money.
Now this doesn’t mean that Government should instruct operators to increase fares above the rate of inflation in an attempt to reduce subsidy. That has been the DfT approach to railways for most of the last two decades and is not one I recommend.
No, what I mean is this. As a goal, the bus network should pay for itself. Not because the fares are higher. Nor because the network is smaller. But because the buses are used.
Sometimes there seems to be a sense that it’s a good thing for buses to need to be treated as a public service. I’m not sure I agree. The golden age of public transport was when it was paid for by its users. This beautiful poster by McDonald Gill from 1914 is full of wit and charm. I have it on the wall at home and it summarises perfectly how transport should be. The caption round the edge says:
By paying us your pennies you go about your business in trams, electric trains and motor-driven buses in this, largest of all cities, Great London by the Thames
Isn’t that just a perfect summary of why we all come to work?
(by the way, isn’t it amazing to recall that only a century ago, London was indeed the largest city on earth. It is now 37th)
In 1914, of course, those motor-driven buses had the streets largely to themselves, and were profitable.
Just as no-one argues about who should be subsidising the lightbulb market (because the amount people are willing to pay for lightbulbs exceeds the cost of producing them), so we should target the same for buses.
To reiterate (as this is really important), I am not saying that the bus network should shrink to the level that would be commercial with current levels of demand. I am saying that our goal shouldn’t simply be to subsidise more empty buses; it should be for more passengers to pay for full ones.
This is a key strategic issue as it removes the risk of subsidies being cut. If we can get to the point where the network pays for itself, then we never have to worry about austerity again. That’s a prize worth having.
Improving information
The most important tool for making the bus network pay for itself is information. I don’t mean passenger information (though this is obviously important); I mean information in the sense economists use the term: consumers’ knowledge that the product exists.
I’ve gone into this in detail previously (both here and here), but a big issue for buses is their lack of a shopfront. The solution is open data so that customers can find out what buses are actually like and other people can provide fares and timetable sales. The industry needs to move much faster on this and it would be hugely preferable for the industry to take responsibility and lead on this.
But the Government should go further and fund proper marketing of bus services. That has two benefits: firstly, it reduces the information barrier and, secondly, it makes it easier and more cost-effective for new entrants to launch new services. And given that Government spends hundreds of millions supporting bus services, it is surely better to instead spend money getting passengers to fund the bus network (i.e. a ‘multiplier’ effect).
It’s been done before…
Bus Out to Help Out
Helpfully, the Government set the precedent last year that it is willing to subsidise private businesses’ products if it achieves a wider social good.
(Whether or not encouraging people to congregate for long periods indoors in socially-mixed groups during a pandemic was a brilliant first experiment is a question for someone else’s blog…)
Eat Out to Help Out was a tactical response but the idea of Mobility Credits has been discussed for a while, and the bus strategy is the perfect place to move them on.
The insight is that there are certain life moments when new habits are formed. If people can be helped to form habits that don’t rely on private cars at these moments, they are likely to stick with them for the whole of that life stage. These moments include leaving home, moving house and starting a new job.
Moreover, they can be tagged onto an existing system, namely concessionary travel reimbursement.
Concessionary travel reimbursement
OK, let’s open this one to the floor. What should be done about concessionary travel reimbursement?
In one sense, concessionary fares are an old incarnation of what has become a modern policy. Mobility Credits are the new name for the same idea. The idea of funding following passenger decisions is a much more attractive idea than simply subsidising services based on the whim of a central planner. Users get the services they’re willing to vote for with their feet.
However, there is a downside. The way concessionary fares reimbursement works at the moment, it is tied to the fares that a typical user pays. That means that there is a real incentive to drive up fares to maximise concessionary reimbursement, even at the expense of customers who would otherwise have been willing to pay a more reasonable fare. This then creates a vicious circle: a route that is largely used by the elderly ceases to have any passengers that would be put off by a fare rise, so fares get pushed up again. But, of course, it makes growth beyond the established user base almost impossible.
What is the alternative? A flat reimbursement rate doesn’t work as the cost of providing a seat on an urban corridor double decker is, of course, dramatically different to taking a minibus across the Somerset Levels. But a central algorithm to work out costs feels fraught with horrors. Any readers with the answer? Add your comment on LinkedIn.
In summary…
The big issues for the bus strategy aren’t about buses. They’re about road pricing, housing and use of road space. We covered these yesterday.
Beyond that, DfT should focus on its own approach to funding and on facilitating open data.
Only when it’s finished that lot should the focus turn to the actual buses. This should not take the form of structural change but on intelligent reform of concessionary fare reimbursement, mobility credits and supporting marketing.
