Rural Bus Services

Dan Poulter Excerpts

Tuesday 11th October 2011 Westminster Hall

[Brandon Lewis (Great Yarmouth) (Con)]

I appreciate the opportunity to speak under your chairmanship, Mr Caton. It is clear that we all understand the importance of bus services to our constituents across the country, especially in rural areas, but the coalition Government’s necessary deficit reduction programme is having a marked effect on the ability to maintain a viable rural transport network.

Almost half of all bus operator revenue comes from public funding, making bus services particularly vulnerable to the pressure on public finances that we inherited from the previous Government after the recent economic crisis. Three main funding streams are available to public transport authorities, all of which were affected by the 2010 comprehensive spending review. Taken alone, those tough financial measures might have been bearable for the rural shire counties and the transport network, and two together would have made life difficult, but the three combined have created a triple whammy that threatens the existence of many subsidised routes in some areas.

The first funding stream is local authority revenue expenditure, which was cut this year by 28%. Local authorities use that pot of money to subsidise some transport routes. Changes were also made to the Department for Transport’s formula for concessionary fare reimbursements. The special grant that accounted for approximately 40% of funding for concessionary travel in Norfolk has been rolled into the formula grant due to the comprehensive spending review. In 2010-11, the funding available to Norfolk districts was £11 million. In 2011-12, the funding attributed through the formula grant was just £7.228 million. The impact is that Norfolk county council’s statutory payment will substantially exceed the allocation, by about £3.5 million. In total, Norfolk is £4.2 million worse off, or £4.4 million on some figures. After negotiations, the county council has done an excellent job of working with bus operators and other transport providers to find another £1.2 million, reducing the gap to just over £3 million.

The funding allocation method from April 2011 uses a standard formula to distribute all funding related to the statutory scheme via the revenue support grant. The formula considers factors such as population density, the number of people over 60 without a car and the proportion of residents on incapacity benefit. Under that formula, Norfolk does not fare well in the funding distribution; it has the second highest shortfall of all county councils for 2011-12. That is on top of figures published yesterday by the BBC showing that public expenditure for the eastern region is the second lowest in the United Kingdom, at £7,300 a head. The north-west receives £9,500, and Scotland receives £10,500. Norfolk suffers for being cast as part of the prosperous eastern region, but figures for the region are skewed by the wealth and prosperity of areas such as Essex and Cambridgeshire. Norfolk has pockets of rural deprivation and, in areas such as Great Yarmouth, severe urban deprivation as well.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

My hon. Friend is making a good point. Even relatively affluent regions have pockets of deprivation, particularly rural deprivation, that need to be taken into account. A lot of people who live in more deprived rural environments, particularly older people suffering from fuel poverty, must travel a long way for key services. Is that not a point that he is trying to convey?

[Brandon Lewis]

My hon. Friend is absolutely right. His county of Suffolk has a shortfall of about £1 million. Rural areas are hardest hit, because people have the least opportunity to use public transport and the most need for access to it. I will come to that point in a moment.

Another funding stream is the bus service operators’ grant, which has been cut by 20% from 2012. That will have a huge direct impact on bus operators. The Select Committee on Transport report “Bus services after the spending review”, published in August, stated that bus operating revenue in England could be reduced by £200 million to £300 million. The impact of that reduction in rural areas must be understood in context: rural authorities already receive less Government grant per head of population than others. The Rural Services Network report by Local Government Futures found that urban authorities receive an average of £487 per head, compared with £324 in predominantly rural areas.

Councils are also exposed to more general increases in costs. Local transport authorities are exposed to the increased costs of providing the statutory concessionary fare scheme. To make up the shortfall, councils are diverting resources from elsewhere, such as previously available discretionary services. Interestingly, since this debate was granted, public discussion on the issue has widened to include concessionary travel more generally. I have been involved with that debate, as have the press in Norfolk. EDP 24 has covered it superbly and supported the Fair Fares campaign, and the BBC and Anglia TV have covered it as well. I will turn to concessionary travel in a moment.

The Transport Committee’s recent report noted that by June 2011 more than 70% of English local authorities had decided to reduce funding for supported bus services, and that the extent of the reductions varied considerably, although, in general, rural, evening and Sunday bus services were most affected, as is the case in Norfolk.

--- Later in debate ---

[Brandon Lewis]

My hon. Friend makes a very good point. In Great Yarmouth, residents from Lowestoft and across the Waveney constituency use the James Paget hospital and need transport to get there. However, there is a difference between that and the use of public transport for tourism. Legislation does give some protection in relation to that, but the system is so complicated that it is difficult to differentiate in some cases between tourism use and required local use. Were we to pursue that in the legislation, it might force the Government to become too deeply involved in the detail of a local system’s provision.

We need to consider, or at least discuss, the potential for reform of the system, so that it is targeted on our poorest or most vulnerable pensioners. We also need to discuss whether the concessionary fare pass should be issued at 60 or according to the retirement age. If we do not have reform, concessionary passes could end up being worthless. For many pensioners in rural areas, having a concessionary pass is useful, but only if there is transport to use it on. Some bus operators have already made suggestions, such as having a flat-rate 50p charge. In some areas, concessionary pass holders are already being asked to pay a voluntary fee and a flat-rate charge per journey.

[Dr Poulter]

I accept my hon. Friend’s point about the bus operators. Does he not also agree that the onus is on them to look at their services and proactively engage with local communities, particularly in rural areas, to make sure that they are more responsive to local needs? Far too often, certainly in Suffolk, the bus operators are not responsive to local needs. When a service is non-profitable, they cut the service and it is the frail elderly who lose out.

[Brandon Lewis]

There is an absolute need for operators to be looking locally and for local authorities to work with local communities and put further pressure on those companies. In Great Yarmouth, we have had examples of routes that have been considered for cancellation and, by working with the local authorities and the bus company, we have been able to restore a usable route that services residents. If a route is simply not economically viable, when money is scarce we need to consider alternative forms of transport that can provide the service that local residents need. That might not necessarily be a bus. We are talking about providing the transport service that is needed in a cost-effective way and that allows people to live their lives productively.

When I recently did an interview on BBC Radio Norfolk, I discussed the possibility raised by bus companies of having a 50p flat rate and an admin charge for getting a concessionary pass in the first place, and whether we should change the age of eligibility to retirement age rather than 60. I was pleasantly surprised because, despite expecting a barrage of criticism, we received some very positive responses. One resident said:

“In regard to the recent news of the deficit we are facing with the bus pass I heard you on Radio Norfolk and thought your opinions echoed mine and I am sure many more. I would be more than happy to pay 50p each trip which would more than cover the debt.”

Cornwall county council, for example, has called for legislative changes to allow pass holders to make a small payment for each journey. It has written to all the county’s MPs to ask them to lobby for such a change.