Local Bus Services: Funding

Richard Holden Excerpts

Wednesday 17th May 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Transport (Mr Richard Holden)]

Let me first thank the hon. Member for Blaydon (Liz Twist) for her speech. I did not quite gather whether or not she was in favour of our plan, but I will certainly address the points that she made. She asked whether it was a coincidence that I made a statement earlier today. I think the truth is that the Government were quaking in terror at the prospect of the Adjournment debate, and she has definitely driven this forward. However, I am genuinely grateful to her for her continued work on this issue, and for pushing the Government as well. It is nice to see someone on the other side of the House and from the same area who is as passionate about buses as I am, and I congratulate her on securing a debate on an issue that is important not just to our constituents, but to many constituents throughout the country.

The hon. Lady has often mentioned the importance of local transport services, not just in Adjournment debates to which I have responded but on many other occasions in the House. I fondly remember my first appearance at the Dispatch Box as the Minister for Roads and Local Transport, responding to an Adjournment debate on bus services in her own constituency. I am therefore delighted to have the opportunity to speak this evening about the support that the Government are providing for local bus services, especially in the light of my earlier statement.

As I think every Member would acknowledge, local transport networks and local bus services in particular are vital to ensuring that communities can stay connected, to helping many industries to operate, and, more broadly, to levelling up the country by giving people access to jobs, services and leisure activities throughout the country. That has never been more important than it is now, as we see recovery from the pandemic move slowly but inexorably in the right direction. The Government have provided unprecedented levels of support for bus operators and local transport authorities to mitigate the impacts of the pandemic—a total of more than £2 billion since March 2020, initially through the covid-19 bus service support grant and then though the bus recovery grant to help protect bus services—and that exceptional support will continue until 30 June, when we will move to a new formula.

Over the last few years, when patronage has been at a fraction of pre-covid levels, with passenger numbers across the country dropping as low as 10% on average, support for the bus sector has been crucial to significantly limit service reductions. The sector used to rely on roughly 40% support from taxpayers via concessionary fares, bus service operator grants and local support, but that increased to 60% for two years as commercial revenues took a huge hit.

Long-standing support of £250 million is provided every year to bus operators and local transport authorities through the bus service operator grant, to help keep fares down and services running that might otherwise be unprofitable. That will continue, as well as supporting council spending of around £1 billion a year to allow older and disabled people to travel on buses throughout England for free. We have ensured, as we have come out of the pandemic, that local councils have continued to pass that money on; otherwise, we would have seen far more service reductions.

While patronage by fare-paying passengers has recovered significantly, it remains significantly lower for concessionary passengers. There has been a strong recovery overall, though, in bus passenger numbers compared with some of the other public transport sectors. The London underground network, for example, is at roughly three quarters of where it was before. We have to accept, however, that travel patterns have changed to some degree since the pandemic, altered by emerging societal norms such as online shopping. It is therefore right that local bus networks adapt, but, as I made clear in my statement to the House earlier, the Government will not let our bus services fall by the wayside as this transition occurs.

We have always been clear—and I think the hon. Lady and I agree—that the cycle of short-term Government funding to prop up the sector is not sustainable for bus operators, local transport authorities or, most importantly, taxpayers and the travelling public. That is why the Government have taken action to deliver a longer-term approach that will ensure that we no longer talk about the sector’s recovery from the pandemic, but instead move on to its renewal.

I therefore confirm that the bus recovery grant will end as planned on 30 June. In its place we will provide approximately £300 million of new funding from June 2023 to April 2025 to help protect and maintain bus services and ultimately to deliver improved services for passengers. Of that funding, £160 million has been earmarked for local transport authorities through the BSIP+ mechanism, ensuring that local decision makers have the resources they need to work with bus operators to deliver better bus services for passengers, which is the central aim of the Government’s strategy.

That funding is in addition to the £1 billion allocated to 34 local areas to deliver bus service improvement plans, including £163 million for the North East and North of Tyne combined authorities, which will benefit the hon. Lady’s and my constituents. Some of those plans are already kicking in, as we saw a few days ago with the £1 single bus fare for the under-22s, which I am delighted that the Government have been able to support. The north-east plan is the biggest to have been funded in England—bigger than those of Greater Manchester or the west midlands. When the Government first awarded funding to help local areas to deliver their bus service improvement plans, we were unable to provide funding for all English local transport authorities outside London. In deciding how we should allocate additional funding under the BSIP+ mechanism, we have focused on local transport authorities that did not have large BSIP allocations. The remaining £140 million from that further package of investment in the bus sector will be provided directly to bus operators through our BSOG+ mechanism. This will benefit our area directly, because it will affect everybody in the country.

The package of funding that we have announced today will help to ensure that local communities who rely on their local bus services to live, work and travel can continue to stay connected and access the opportunities they need. We will be laying out more details of exactly how that will work. It is slightly different from the old BSOG, acknowledging that the pressures have been on rural and suburban areas, including pit villages in the hon. Lady’s and my constituencies, as well as on urban services. There is a slight change, and I will publish more information in the near future on the funding that individual areas will receive. Today we have given some allocative funding indications on the local authority side through BSIP+. BSOG+ is slightly different because there is so much more complexity when it comes to individual operators, but I will make that public as soon as possible because operators such as Go North East, which operates in both our constituencies, are keen to know.

Whether people are travelling to school, work or the shops, this Government are committed to helping them get around, and we know how important local buses are to delivering on our priorities in growing the economy. Today’s positive news is about the long-term support for which the sector has been asking, as the support for local authorities and bus companies will not end. Members who followed today’s statement closely, as I know the hon. Lady did, will know that we are extending the popular “Get Around for £2” bus fare cap. The scheme was introduced at the start of the year both as a cost of living measure and to promote bus services. It is showing positive signs of increased bus usage, with a recent Transport Focus survey of more than 1,000 people reporting that 11% of respondents are using buses more as a result of the cap. The scheme is also helping people to save on their regular travel costs, with the same survey showing that around 80% of respondents agree the fare cap will help people with the cost of living.

On a recent trip to Reed in Partnership in my North West Durham constituency, I was particularly struck that not only were the staff directly benefiting from the fare cap when travelling into Consett but the £2 cap was enabling long-term jobseekers to travel further. The £8 journey from Newcastle to Middlesbrough is currently capped at £2, so people can travel much further for much less outlay, helping them to reach jobs and opportunities beyond their local area without incurring significant extra costs. The cap was due to end on 30 June, but I am pleased to confirm again that it will now be extended to 31 October. To create long-term certainty on fares for passengers and operators alike, we will be introducing a £2.50 fare cap from 1 November 2023 until 30 November 2024, at which point we will review bus fares to support the sector in moving to a sustainable long-term footing.

We saw an increase in bus routes during the scheme’s first three months, from around 3,700 to 4,000. Around 95% of operators are currently taking part, and I hope to get closer to 100% now that it is a long-term scheme. I am grateful to the operators for working with us on the scheme, and I look forward to working with them over the next year and a half. My officials will work to confirm operators’ participation in the scheme as we continue to deliver measures that help passengers to save money, that encourage people to travel by bus and that help to grow the economy. This is just one of three schemes on road, rail and buses. With 5p off a litre for cars, vans and motorbikes, with this support for buses and with significantly below-inflation rail fare rises, we are doing what we can across the transport piece to help people with the cost of living.

The hon. Lady made a broadly cross-party speech, but it is not fair to suggest that the national bus strategy is in tatters. When the scheme was announced in 2019-20, the Government committed to spending £3 billion on the sector. Today’s announcement takes that up to £3.5 billion, which is a huge quantity of money to support the sector through what has been an incredibly difficult time. On the BSOG, I am happy to outline these things in more detail. On money distribution, the BSIP+ indicative numbers will be on the Government website within the next couple of days, if they are not there already. The hon. Lady raised an important question: what will happen to that post-2024? As I said in my speech, we will be looking at that in the long term.

As for projections of bus service numbers, we will have to see how the sector responds to the big announcements we have made today, particularly now we are securing money for the long term. On the north-east, with more than £163 million—more than £117 million of which has already been confirmed—I hope we will not need to see the reductions in bus services that she mentioned. We should, we hope, be able to see more services made available, given the extra cash provided for the area, again in a multi-year settlement. I hope to see more of the great things that were part of that plan brought forward in the near future, as we have seen in the past few years with the £1 fare and the £3 daily fare cap for under-22s.

[Liz Twist]

I want to press the Minister on this point about the BSIP. We all had great hopes about developments that we could make with that money. We can argue all day about the money, but a lot of us think that more money was promised at the start than has been available—nevertheless, it is there. But there is a concern that more of that money will go in preserving current services, in effect, at a higher cost, as local transport authorities have to put out the bids to run services. That was not allowed in the original BSIP. Is it correct to assume that it is allowed under this system?

[Mr Holden]

I do not want a situation where we are trying to play around with services in local areas; I want us to be flexible on the BSIP, at a time when there is huge pressure on bus services, particularly following the pandemic and the way they have recovered since. I am willing to speak to all transport authorities. Many may wish to modernise their schemes because of people’s changing travel patterns, for example. I will not hold a gun to their head and make them waste taxpayers money on things that will not achieve what they originally planned in their BSIP before the pandemic—that would be insane. I am definitely up for modernisation of some of their plans, but they will have to go through the Department, proper scrutiny procedures and officials. Equally, I do not want to hold people to plans that may no longer be viable.

Having said that, the hon. Lady can see from what we have done in the past few days, with that £1 fare, that some of the plans that we had at the start of the BSIP are coming through. I do not want to put handcuffs on local transport authorities that ask me whether they can tweak a scheme this way or that. I do not want to say that we will never listen to them and they must stick to what they had. That would not be a responsible use of taxpayers’ cash, and as a former member of the Public Accounts Committee, I would certainly call that into question.

[Liz Twist]

On that precise point, of course we want to see plans for our buses, for the infrastructure and for the services themselves—plans that are relevant today because it is 18 months since the original proposals were made. What we also want to see is the whole aim of that plan, which was to make a shift change in bus services for the future, so that our constituents, and people across the country, can step out of their front door and know that they will be able to get a bus and that the bus will be reliable.

[Mr Holden]

The hon. Lady and I are talking the same language. We both want to see improvements and, as we have said multiple times in this debate, one improvement that we have already seen is that lower fare. I hope to see further such things as we go through the plan, which will help to drive service improvements and to drive people on to the buses. Things may have changed in different areas over the past few years and we may have to make some tweaks but, again, I do not want to put a total straitjacket on authorities across the country.

Finally, let me reflect on a few of the hon. Lady’s points, which I thought were quite bold. She and the hon. Member for Washington and Sunderland West (Mrs Hodgson) said that Labour had a plan for bus services, which I thought was stretching it a bit. A plan requires cash, long-term funding and knowing what to do with it. Just saying that they might open up the scheme to municipal operators is not a plan, but an ideological step. I am not against municipal bus companies. We have them across the country, including in some Conservative local authorities and in some Conservative constituencies. I am not against looking at those in the future, as the Transport Committee recommended.

However, during the statement earlier today one Cornish Member mentioned how their enhanced partnership had driven up bus usage—probably better than anywhere else in the country—without having a franchise model. If we flip it and look at what has happened in London, we see that the figures are lower than the average in the rest of England with a franchise model. The taxpayer has to bear that risk. I am not sure whether a totally state-controlled, state-delivered, nationalised approach is always the right answer. That is all I will say to the hon. Lady on that. I am not against it in certain areas. Obviously, in certain areas the Government are working with local authorities to deliver franchising, but that is not a plan; that is an ideological end point. It does not have consumers, bus users and taxpayers at its core, as we can see from the way the Welsh Government have dealt with buses over the past two decades since they have been in office.

[Liz Twist]

rose—

[Mr Holden]

I am sorry but I will not take another intervention.

In closing, I again congratulate the hon. Lady on securing the debate. I hope that she will agree that the announcement the Government have made today, building on the £2 billion of bus support that we have already provided since March 2020—taking it to £3.5 billion overall—not only to protect bus services but, with our bus service improvement plan, to enhance them, demonstrates our commitment to support the sector and to address the challenges it faces now and well into the future. I thank hon. Members for their contributions today. I look forward to discussing this further with Members in the coming months as the Government seek to deliver on our ambition for everyone everywhere to have access to affordable and reliable bus services.

Question put and agreed to.