Bus Funding

Baroness Randerson Excerpts

Tuesday 19th November 2024 Lords Chamber

[Lord Moylan (Con)]

My Lords, another week and another highly operatic Statement from the person in the other place who wishes to be known as the passenger-in-chief. But, unlike the Statement we had last week, this one has some substance. Its purpose is to announce how the Government are going to spend on buses the approximately £1 billion allocated for that purpose by the Chancellor in her Budget a few weeks ago. About £750 million is to be given to local authorities and the other quarter to bus companies.

There is an important methodological change in this that I would like to explore with the Minister, which is that the Secretary of State announced that previously councils had to compete for funding—wasting resources and delaying decisions. In making that statement she puts her finger on something that has come to the attention of quite a number of noble Lords, not least those who are members of the Built Environment Select Committee of your Lordships’ House, which I have the privilege to chair, which is that the widespread use of bidding by local authorities is time consuming, costs money and is particularly wasteful for local authorities that bid and receive nothing at the end of the process.

Perhaps there is a case for something being done about this—perhaps. I also understand that Governments want to know that the money they are allocating will go to good projects that stand up to scrutiny, so there is a balance to be struck. None the less, the right honourable Lady has made a point of interest. She has said that funding will be allocated based on a “formula”, saying:

“We are taking a fundamentally different approach. We have allocated funding based on local need, population, the distance that buses travel, and levels of deprivation”.—[Official Report, Commons, 18/11/24; col. 43.]


I know what a formula looks like: it has pluses and minuses, multipliers and weightings, and it shows how money is to be allocated according to certain criteria. I would love to explore this formula and know more about it, but it has not been published. That is the most astonishing thing. We do not know what the formula is or how these criteria have been melded together to produce an outcome. Indeed, what do these criteria mean? Local needs—how many Governments are going to allocate money that is not related to local needs? Population—does that mean that areas with higher populations get more or less money? If it means they get more money, what is that saying to rural areas, which are very dependent on buses? The distance that buses travel—what does that mean? Again, in rural areas buses may travel very long distances. Does that mean that they get more money or less because it is the shorter distances that are being rewarded? Levels of deprivation—I think we have a reasonable idea what that means.

What does it all mean? Was it consulted on? I think we should know. Local authorities might have wanted to have a say in how this money was allocated and how a formula was developed. Was an independent assessment made of what its effects and impacts would be? Were alternatives considered by Department for Transport officials before this particular formula was alighted on? How crucially does it relate to what the Deputy Prime Minister might do when she comes to allocate money to local authorities? It is very likely that she too will say that the bidding system is discredited and she wants to move to a more formulaic allocation of funding. As I say, there is an argument for doing that but it depends fundamentally on the credibility of the formula used, which means that it has to be exposed to light.

Finally, I do not mean to be rude about anybody, certainly not the Minister or his Government, and I also know that £1 billion is just loose change for a Government who are determined to spend their way to growth. But we on this side of the House would still like to be assured about a formula that nobody can see, which depends on criteria that need to be interpreted and are not in any sense plain, and which could simply be a way of spending money to reward your mates. Is that what is going on here? There is every reason to think that it might be.

[Baroness Randerson (LD)]

My Lords, I am pleased to welcome the Statement made by the Secretary of State in the other place. Bus services outside London have been allowed to atrophy and die for far too long. They are vital to society and our economy. They are used by the poorest, the oldest and the youngest. Although we love to talk about trains here, buses are the most used form of public transport.

The funding information in the Statement, as far as it goes, is welcome, as are the commitments to reform. The situation with buses has been too complex, too fragmented, too short-term and too competitive. In practice, the competition has led to money going to, in effect, the councils that are best at filling in the forms rather than those most in need.

Courtesy of the Campaign for Better Transport, I have some illustrative statistics. Why should Swindon get £3.98 per head for buses and Reading, just down the road and not dissimilar in size, get £168.68 per head? No formula would explain that. Of course, Reading has extremely good buses as a result of extremely good funding.

There are currently six different funding pots. We need one single integrated fund with “long-term” written all over it, so can the Minister explain in more detail exactly how the current six funds will be amalgamated and repurposed?

I turn to the £3 bus fare cap and its impact. It is, of course, effectively a 50% fare increase in an industry that has already seen fares rise by 59% since 2015, so it will have a huge impact. Yet there were reports at the weekend that the Secretary of State had said that maybe it would be linked in some way to the rate of inflation. Will the £3 cap be applied in the same way as the £2 cap, or will it be amended in some way? What analysis have the Government made to lead them to abandon the £2 cap, which appeared to be working well?

In many areas, particularly rural areas, demand-responsive and Dial-a-Ride services are vital. I ask the Minister, because this is not mentioned in the Statement: what will the Government do to encourage these services to ensure proper co-ordination between local authorities, bus operators and other bodies, such as NHS trusts, so that rural areas get a better deal from the providers at various levels in their area and a structure that local people can rely on?

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

I thank the noble Lord, Lord Moylan, and the noble Baroness, Lady Randerson, for their comments on this Statement, which was made by my right honourable friend the Secretary of State for Transport in the other place yesterday.

I turn first to the noble Lord’s comments. He correctly identifies a methodological change in the way this money has been allocated. The formula used is simple but, the Government think, fair. It relates equally, in thirds, to the level of population, so the greater the population of the local transport authority the more money; to bus mileage, so the greater the bus mileage, the more money; and to the index of multiple deprivation, published by the Ministry of Housing, Communities and Local Government, which is the official measure of relative deprivation in England. That is a much fairer method of allocating money for a service that, as the noble Baroness said, is disproportionately used by people on lower incomes, women, the young and old, and is the mainstay of public transport in Great Britain.

The Government are entitled to make decisions about how they wish to spend money, but the point I most want to make is that the previous competitive system has all the disbenefits the noble Lord referred to—the time spent bidding, the costs, the use of consultants and the uncertain outcomes—whereas this method provides a much more certain way of allocating this money and is much fairer across the whole of England. Of course this money is not loose change; it is a substantial amount for a vital public service in Britain, but use of this formula is a much fairer way of allocating this money. In fact, a competition arbitrated by nameless officials on criteria that, frankly, have not been clear to the local authorities in the past is a much more likely source of rewarding “your mates”, as he refers to them, than this formula.

The noble Baroness, Lady Randerson, welcomed the Statement, and I thank her for that. There are, of course, differences in the allocations to local transport authorities, and I can probably account afterwards for the difference between Swindon and Reading. I will attempt to do so to her in due course. The allocations have been allocated by this formula and represent, in the Government’s view, a fair method of distributing a considerable amount of money. While there are some headings in the allocation—capital, revenue, some money for helping source officer help and so on—local authorities that receive the money are free to use it in the way they want. The principle the Government are delighted to have is that the capital sums can be used for new vehicles, bus stops, information systems or bus stations and the revenue can either support fares initiatives, in particular for the young—some combined authorities have kept the maximum fare at £2—or support services to enable a fair distribution of bus mileage throughout their towns and areas.

The reference the noble Baroness made to the £3 fare and the 50% fare increase is, of course, not so. Most bus journeys are short and are carried out in urban areas. With the £3 maximum, there are many fares that will not go up at all. The reference to inflation has been made by the Government to ensure that fares under £3 rise only by the rate of inflation, whereas the previous £2 limit encouraged some operators to put up their fares by far more than inflation to the £2 limit. The analysis of the effect of the maximum bus fare will be published by the department in due course.

Finally, the noble Baroness referred to demand-responsive transport and dial-a-ride. Local transport authorities that receive this money are able to spend it on bus services in the way that they want, so they are able to support demand-responsive services if those are the right way of dealing with their area. The principle is that local transport authorities know much better than government how the money is best spent. Therefore, this money has been distributed with great freedom to allow them to spend it in the right way for their area, to create economic growth and to support jobs and housing in the way that local transport does.