13 October 2016
Article by Eleanor Warren-Thomas, National Assembly for Wales Research Service
The Cabinet Secretary for Economy and Infrastructure will give a statement to plenary on the future of bus services in Wales on 18th October. This follows the closure of three Welsh bus companies, Silcox Coaches, GHA Coaches and Lewis Coaches over the summer. This blog post describes the current condition of the Welsh bus industry, discusses the evidence which emerged during an inquiry into bus and community transport services held in the Fourth Assembly, and outlines a Written Statement issued by the Welsh Government on 15th September 2016 about local bus services.
Declining bus service provision and use
Buses are the most widely used form of public transport in Wales, but service provision and passenger numbers (Figure 1) are in decline.
The Traffic Commissioner’s annual reports show that the number of registered local bus services in Wales fell by 46% between 2005 and 2015. The Enterprise and Business Committee in the Fourth Assembly published a report on bus and community transport services in Wales in March 2016, making 12 recommendations. Evidence received by the Committee suggested a range of possible reasons for the decline, which include consolidation of services by operators, reductions in public funding, increased car ownership and more stringent route viability assessments by commercial operators.
Regardless of the reasons, the Committee heard that loss of services has a big impact on those people and communities most dependent on bus travel, particularly rural communities, older people, those with disabilities, young people and those on low incomes.
Profitability and structure of the bus industry in Wales
Data published by Passenger Transport Intelligence Services suggests that the profit margins of bus operators in Wales (7.0% in 2014) are comparable to those across Britain (6.7%), non-metropolitan areas of Britain (7.2%) and Scotland (7.3%). However, these data only cover six larger bus companies. Evidence submitted (PDF 405 KB) to the inquiry by the Traffic Commissioner showed how Wales has more small bus and coach operators than other parts of Britain. He described the effect of this, saying:
The composition of the PSV industry in Wales features a significant portion of small family run businesses. These businesses are often the first to suffer in times of falling patronage or when exposed to an unlevel ‘playing field’ as a result of a lack of enforcement.
Professor Cole provided evidence (PDF 1.64 MB) suggesting that currently, Welsh bus companies’ profit margins are below the pre-1990s levels of up to 15%. He concluded:
profit levels of [Welsh] bus companies are below those required by most companies to prosper and grow
Public funding for bus services in Wales
The Welsh Government provides funding to Welsh local authorities to support bus services through the Bus Services Support Grant (BSSG). The BSSG, and its predecessor the Regional Transport Services Grant, have remained frozen at £25 million since 2013-14, representing a cut in real terms.
Local Authorities are also able to support “socially necessary” bus services through their core revenue funding. However, the Campaign for Better Transport (CBT) published Buses in Crisis 2010-16 (PDF, 5.4MB) in November 2015, which found that local authority funding has declined in recent years. The report found that funding from Welsh local authorities had reduced by 11.4% in 2015/16, the second highest reduction in England and Wales, and the highest outside the South East of England. It also found that a number of Welsh local authorities, such as Neath Port Talbot and Wrexham, no longer provide any funding for bus services from their own revenue funding. CBT has published a map showing reductions in local authority bus funding in England and Wales over the period 2010 – 2016.
Around half of all Welsh bus journeys are undertaken by disabled and older people as part of the All Wales Concessionary Fares Scheme. The Enterprise and Business Committee found that revenue from the scheme makes up 46% of income for bus operators in Wales. The current financial year, 2016-17, is the final year of a three year funding agreement for the concessionary fares scheme. The level of funding available for the scheme from April 2017 should be confirmed following publication of the Welsh Government’s draft budget on 18 October 2016.
Future bus policy and devolution of powers
The Welsh Government’s Programme for Government, Taking Wales Forward 2016-2021, contains a commitment to “deliver a more effective network of bus services once powers have been devolved”.
The Cabinet Secretary for Economy and Infrastructure, Ken Skates AM, stated on 15th September that he was keen to deliver a stable or growing bus network in Wales, setting out a five-point plan to support the sustainability of the bus industry. His plan includes:
- offering professional support to bus companies;
- asking local authorities to protect financial support for buses;
- putting in place strategies to respond to planned withdrawals of bus services;
- learning lessons from sustainable bus networks; and
- providing funding “for the establishment of the role of a new bus co-ordinator post within one of the North and South Wales local authorities”.
The Cabinet Secretary also announced a Bus Services Summit to be held in early 2017, designed to bring together local authorities, bus operators, Bus Users Cyrmu, the Community Transport Association, groups representing disabled people, and other stakeholders.
Appointment of a full-time Wales-specific Traffic Commissioner was announced in August 2016. The Commissioner began his role on 1 October. The Traffic Commissioner responsible for Wales has historically been based in Birmingham and was also responsible for the West Midlands. Traffic Commissioners are the regulators of the bus industry and the registrars in their Traffic Areas of all local bus services. They have powers to take action against operators who fail to run their services in accordance with certain standards. Appointment of a Welsh Traffic Commissioner is anticipated to bring improvements in bus safety and reliability standards.
The Wales Bill includes provisions which, once enacted, will devolve bus registration powers to Wales. Bus registration documents are currently processed by the DVSA in Leeds. Devolution of bus registration powers is anticipated to improve bus service standards, and the quality of bus network information provided to customers.