Beeching of the buses?

Our man in Westminster hears that a presentation to ministers about the scale of cuts to subsidised services left Baroness Kramer rather shaken, with one local authority official commenting that if public expenditure cuts on the scale being quietly talked about come to pass, then we may see a ‘Beeching of the buses’.

I have mentioned recently, and the Chancellor’s Budget last week made clear, further deep cuts in public expenditure are inevitable after the 2015 general election if the country’s deficit is to be eradicated by the end of this decade. While capping the welfare budget may be one high profile option to achieve the level of cuts required, it is inevitable that public expenditure generally will continue to be reined in. Local authority budgets will be further squeezed, and cuts to public services will have to be made – including further cuts to subsidised bus services.

Discussions with some of my local authority contacts have revealed the extent of the cuts to services that may be on the horizon. I know of at least one local authority, serving predominantly rural communities, which has recently presented to ministers the scale of the cuts that might come – and I’m told that Baroness Kramer was left rather shaken.

One local authority official commented to me that if public expenditure cuts on the scale being quietly talked about come to pass, then we may see a ‘Beeching of the buses’. Of course, while he tried to blame this on deregulation, he ultimately had to concede that cuts to subsidised services would have to be made regardless of the policy regime in which the bus industry operates – this has nothing to do with regulation or deregulation, but everything to do with fixing a broken economy.

I was also struck by a comment made to me that the degree of consolidation in the bus market has not acted as a spur to innovation among the established operators.

My contact bemoaned that there had been no shake-up of the bus market to parallel, for example, developments in the short/medium haul aviation market. Where, my contact asked, is the Michael O’Leary of the bus world?

A good question. Actually, I can think of one or two people in the industry who are market leaders in that sense. But while we clearly need innovation in the bus industry, to keep pace in areas such as smartcard technology, comfort, performance and the like, we also need to keep our feet firmly on the ground. We are dealing with buses, not some kind of cutting-edge blue sky industry where technological innovation (Google Glass comes to mind) is a prerequisite for survival.

And I am not sure that consolidation is a problem, at least for passengers. It may worry those who take a purist view of market competition. But passengers really don’t care if the bus market is dominated by five big operators. Indeed, I am sure there is a strong argument which says that consolidation of the market around a small number of large operators gives a greater guarantee of securing services, because the operators in question have the financial strength to survive, which the small and medium sized operators may not.

Talking of financial strength, National Express has placed a large order for new buses with Alexander Dennis (ADL). Great news, I thought.

Then the cynic in me kicked in. National Express submits its bid to Transport Scotland for the next ScotRail franchise just before Easter. So placing a chunky order for new buses with a Scottish manufacturer, securing jobs in the process, is a timely way of demonstrating to Transport Scotland what a great company you are to do business with, and how Scottish interests are at the forefront of your mind. Nice play, National Express.