UK-wide bespoke support for the coach industry looks farther away than ever after a Transport Select Committee evidence hearing on 24 March examined COVID-19’s impact on the sector.
In the latter half of the session, Committee members questioned Under-Secretary of State for Transport Baroness Vere and Under-Secretary of State for Sport, Heritage and Tourism Nigel Huddleston MP on the government’s approach to assisting operators during the pandemic.
While Committee members displayed an understanding of coaching’s predicament, both ministers resolutely defended Westminster’s approach to the sector. That seemingly immovable position centres on a belief that operators should be pleased with money from the Coronavirus Job Retention Scheme (CJRS), and in England the Additional Restrictions Grant mechanism (ARG) despite its well-known foibles.
A stoic refusal to budge from that in front of the Committee will have added to the industry’s frustrations and failed to recognise the evidence provided by the three operators present.
Lady Vere and Mr Huddleston stress that coaching will benefit greatly from a wider recovery in the tourism sector and an associated re-opening of impacted parts of the economy. That was despite some probing questions from Committee members on UK-wide sector-specific support, with Lady Vere particularly robust in her defence of the government’s approach.
Coach industry puts its case forward at Select Committee hearing
Continued reliance on ARG and CJRS as proof of how Westminster has helped the coach sector is difficult to reconcile with evidence given to the Committee by industry members.
Candice Mason, Director of Business at Masons Minibus and Coach Hire, told how the Tring operator will have lost over £1m by the end of March. Skills Holidays estimates its pandemic losses so far at £3.2m, says Managing Director Nigel Skill.
Those figures illustrate that some businesses still face major challenges in bridging the gap to when tourism returns, although Mr Skill told the Committee that forward bookings in that sphere have been “brisk.”
Both ministers are keen to focus on an impending resumption of business as the best COVID-19 antidote. But Michael Pearson, Transport Manager of TM Travel, says that the North East operator is incurring monthly finance payments of £20,000 on its newer coaches. Grant or loan schemes that the coach industry has been eligible for in the meantime have only “scratched the surface” of those outgoings, he adds.
CBILS: Comes with significant strings attached, Committee told
Each operator represented at the hearing has faced difficulties in accessing what meagre support is available. Mr Pearson says that TM Travel’s path to grants was impeded by its sharing of premises with another operator. Its application to the Coronavirus Business Interruption Loan Scheme (CBILS) was also turned down.
Masons was more fortunate: It has received CBILS money. But repayments start soon and Mrs Mason views that with concern. Skills was also approved for CBILS. However, Mr Skill is scathing of an over-complicated application process that he says has cost his business around £50,000.
Mr Skill additionally drew the Committee’s attention to the fact that operators that have invested in Euro VI and PSVAR-compliant vehicles – in accordance with government agendas – stand to be the hardest hit by the pandemic.
He says that those businesses are exposed through finance payments and the cost of the tools and knowledge needed to maintain Euro VI coaches.
It is not likely that simple survival of the fittest will govern the industry’s future, Mr Skill adds.
Lady Vere accepts that Euro VI “is not going away.” She notes that while operators are not mandated to purchase Euro VI coaches or retrofit existing vehicles, the government “would expect” them to look to the cleanest coaches when upgrading.
Ministers do not rule out helping the coach sector to transition to cleaner vehicles – just not yet. The government is currently watching to see how much investment in rolling stock is made by the industry and whether intervention is required in the future. If investment from within the industry is not forthcoming, the government could step in. But Lady Vere says that presently, “there are bigger fish to fry in terms of helping other sectors to decarbonise more quickly.”
As part of her exchange with Committee members, Lady Vere also took the industry to task over PSVAR. She points out that the legislation in question is 20 years old. “Many operators took heed and did the right thing. Some did not,” she says, adding that the provision of temporary exemptions has been a “help” to the sector.
Grant fund difficulties addressed by ministers
Both ministers were quizzed on why coach tour operators in England have been excluded from Restart Grant support and why ARG approval by local authorities (LAs) has been inconsistent. The former is deliberate. Clear wording to that effect was included in guidance recently issued to LAs, which administer both funding streams.
Eligibility for ARG was cited as justification for the sector’s exclusion from Restart Grant scope. On earlier comments that ARG money (when awarded) does little to make up for losses incurred over the pandemic, Lady Vere says that it is “not feasible” for ARG to bridge that gap.
Despite ARG’s presentation by ministers as a saviour of sorts for operators in England, some have struggled to obtain it. Mr Huddleston reiterated his earlier call that LAs should consider the coach sector to be eligible, but he notes that it remains a discretionary fund.
The existence of ARG is also given as a reason for Westminster not having adopted Scotland’s sector-specific support package for eligible coach operators and extended it UK-wide.
Mr Huddleston says that ARG would be difficult to replace with an alternative form of support. He also claims that England has a clear pathway out of restrictions, while Scotland does not.
The Confederation of Passenger Transport (CPT) estimates that to extend the Scottish scheme across the UK would cost around £150m.
Lady Vere refutes CPT claims of ‘coach deserts’ possibility
In another testy exchange, Lady Vere refuted claims from CPT Chief Executive Graham Vidler that some areas could become “coach deserts” if more operators fail. At the start of the session Mr Vidler underlined CPT’s earlier suggestion that up to 40% of coach companies are at risk, adding that the sector will face serious challenges until a time when all work returns and social distancing requirements end.
Lady Vere says that the government “cannot save every business.” She also questioned CPT’s use of the term “at risk,” noting that such a position does not mean that those businesses are guaranteed to fail. Like Mr Huddleston, her focus has shifted to enabling the industry to reopen and operate profitably.
While pushed further on ‘coach deserts,’ Lady Vere dismissed concerns by telling the Committee that should they occur, businesses will naturally form or shift to take up any slack. Vehicles will still exist, as will the staff to drive them, she added.
Social distancing: Coach like bus, not aviation
Social distancing on coaches formed the topic of a further notable exchange. Lady Vere says that they will be grouped with buses for that purpose. Coaches will not be treated like aeroplanes, where all seats may be occupied. Aviation is “a lot different,” she says. Since the evidence session, a representative of PSV climate control specialist Airconco has clarified that the enhanced air filtration systems that can be fitted to coaches are actually more effective than those installed in aeroplanes.
Committee Chair Huw Merriman used the classification of coaches with buses for social distancing purposes to question whether coach operators would thus be entitled to support in a similar manner as their colleagues in the bus sector. They will not. ARG was once again cited as the reason. That mechanism will contribute to bridging the revenue gap introduced by reduced capacities until social distancing is abolished, says Lady Vere.
Representatives of the industry, and Committee members, did their utmost to illustrate the extent of COVID-19’s impact on coaching. But the message from ministers to businesses that are outside the scope of two devolved nations’ support packages is disappointingly clear. ARG and furlough aside, the sector is what some within it have thought for the past 12 months: On its own.
Video of the evidence session here.