Iain Gray declared his intention to introduce a Private Member’s Bill to enable Local Authorities to regulate bus services in their areas with the avowed purpose of making contracts with service providers to provide groups of services, so enabling the costs of ‘unprofitable’ services within the group to be covered by the profitable ones.
Barry Hutton BA MSc DipTP MRTPI CMIT is a Chartered Town and Transport Planner. His book “Planning Sustainable Transport” is published by Routledge in April
I wish to make it clear that, although I have severe reservations about that intention, I would not wish to be destructive. Scotland would be the better if his Bill were successful and my comments are far from being ‘wrecking amendments’.
The need for objectives
I think legislation should have explicit objectives particularly when, as in this case, opponents may charge that it is driven by dogma or ideology. It would be all too easy for this proposed legislation to be labelled as an attempt to put the clock back and to re-impose regulation for regulation’s sake: any advocate of regulation must explain what it is that regulation is to achieve, how that is to be done and why it is necessary.
The regulation of transport has a long history but it has always been relatively untainted by ideology. It began in 1674 with the passing of the Hackney Carriage Act, an Act which, in all but name, still regulates taxis throughout the UK. The purpose was absolutely clear – to prevent taxi drivers from holding their passengers in the cab until they paid extortionate fares. The much later Road Traffic Act of 1930 moulded the whole industry and covered the work of Iain Gray and his employers when he worked as a bus-conductor. This Act regulated through a system of licenses: staff had to be licensed (in common with all operating staff, Iain would have worn a numbered badge enabling any passenger to complain should he have misbehaved and which he would have lost hadth e complaint been upheld), buses and their operators were licensed (and still are) and routes, timetables and fares were all licensed, although by specially appointed Traffic Commissioners rather than local councils. The Commissioners still exist and, amongst much else, are responsible for regulating heavy goods vehicles to ensure we are relatively free of the dangers of overloaded lorries with tired, overworked drivers employed by cowboy companies.
The 1930 Act had very clear, explicit objectives: first safety and second “the avoidance of wasteful competition” (sic), a phrase in the preamble to an Act passed by the ‘National’ government which, although it had a prime minister drawn from the Labour party, was a coalition including many Tories of the opinion that the Depression was best cured by cutting public expenditure. (It didn’t work but increasing public expenditure did: current MPs please note).
The next big change was the Nationalisation of the transport industry, mainly about a change in Ownership rather than Regulation, (the 1930 Act remained in place). Nationalisation was indeed ideologically driven. The Nationalised Transport Companies were less than a managerial success story. But, very, very importantly, when re-regulation was suggested a few months back, it was opposed on the grounds that it would require very expensive re-nationalisation. It would not: regulation and ownership are separate issues and great care must be exercised to keep them so.
The last big change, first mooted in the ‘Buses’ White Paper of 1984 and put into effect 2/3 years later was also driven by an ideology fuelled with fantasy. It imagined many, many companies, most of then running minibuses, all competing and driving down fares whilst improving service levels. The complete opposite has happened. The industry is dominated by just seven massive conglomerates plus the strange maverick of Lothian Buses and a handful of others. Last year Competition Commission (previously known as the Monopolies Commission, a change of name that George Orwell would have relished) spelt out exactly the same lack of competition as the Buses White Paper had done 30 years previously but recognised that this time, that it was due the large companies swallowing up all the small ones rather than the imposition of route licenses[1].
The need for bus services
Regulation has no intrinsic merits: it is merely the means to an end. The big, big problem in writing public transport policy is that it has two entirely different and conflicting purposes – two possible ‘ends’:
- To provide mobility for those without a car – a need to provide for all or most of the journeys of a particular group of people
- To provide access to those areas where the use of cars is inefficient of even impossible – the need is to provide for all or most of the journeys by most people to particular places.
In one sense these two purposes are identical – they are to provide an alternative to the car. In the first place it is to reduce the tendency to acquire a car and in the second to reduce their indiscriminate use. In both cases the battle is very difficult: cars are always available to their owners, giving a service of infinite frequency. And cars can go in any direction at any time, unfettered by timetables or routes. It is no wonder they are very attractive and the great majority strive to buy one, even if they can ill-afford it. The only alternatives are walking (which has many limitations, some real, some imagined), cycling (even more limitations which prevent them from being the sole means of transport for any one individual) and taxi (limited by expense).
Apart from the similarity in the need to provide an alternative to the car, the two major reasons for public transport provision are crucially dissimilar: to reduce the attraction of car acquisition, the bus service has to be spread over time and space, providing a broad service. To reduce the use of cars to particular places, the service has to be focused on particular times, destinations and corridors.
The very important, common attribute of both, is that they are inherently ‘unprofitable’ either in whole or in part. It is here that Iain Gray hits one nail firmly on the head: to provide effective, comprehensive services, the stronger parts of the network have to support the weaker. One of the major arguments in the 1984 ‘Buses’ White Paper was that such ‘cross-subsidy’ was abhorrent to economic theory because, it argued, the passengers riding profitable services would be paying a surcharge on their tickets to subsidise those riding on the ‘unprofitable’ services. It was a stupid extension of the Government’s crusade against subsidy. Stupid because cross-subsidy is an inherent part of marketing theory to be seen in loss-leaders, in BOGOFS[2], in cinema performances at times when only a few seats will be sat on, etc, etc. In public transport not all stages at all times are able to carry a payload and the good parts must pay for the bad. To set the objective of avoiding cross-subsidy was to enter an economic fairyland.
Nevertheless, the fantasy is still with us in the division of services into the ‘commercial’ and the ‘supported’, an apartheid in which good fairies in the form of the bus companies provide socially desirable commercial, profitable, services and the doubtful, expensive local authorities provide those supported, unprofitable, services seen to be a drain upon the nation’s wealth.
The prime fault of the ‘Buses’ White Paper and in the entire analysis of public transport is to misunderstand the nature of the ‘product’. The myth is that the ‘product’ is the journey from when the passenger (the ‘customer’) gets on, to wherever they get off. (In the transport planning jargon, the ‘trip’). This is self evidently wrong: nobody, but nobody, wants just to travel from one bus stop to another or from one railway station to another nor even from one airport to another. People make journeys from one address to another, composed of a string of stages including some walking, some interchanging (at the very least from foot to riding) and maybe a series of component ‘trips’, often including a return to the initial address. Even car journeys are not just the driving trip but involve finding, capturing and keeping somewhere to park and then walking to and from a specific address. All that implies the transport network is used as a whole and it is the transport network that is the ‘product’ we all consume, not separate ‘trips’. This view of the nature of the ‘product’ is confirmed by the relatively small numbers of tickets bought for individual, single trips rather than the returns, day and season tickets, network cards etc.
This redefinition of the ‘product’ bought by buying tickets must also change the nature of any ‘market’. In economic theory a market exists for the supply and sale for products which are mutually substitutable so that consumers are able to chose between goods or services which are all equally fit-for-purpose. This can never be true of transport services: each service is unique in its timing and its routing and cannot be readily substituted by another. It follows that ‘markets’ in the theoretical sense cannot exist. They demonstrably fail a crucial test of marketability – tickets cannot be bought and sold on e-bay.
So we now have two reasons why the transport network cannot be segmented into separate units:
- We all make journeys through a recognisable network of timetabled services, roads, car-parks, stations and bus-stops.
- Any one of those journeys is not substitutable by any other.
The model must be “Transport for London” where Underground, Overground and National train services, trams, waterbuses and even an aerial ropeway are all co-ordinated with a single ticket and fare structure. The services are provided by competitive companies but under co-ordinated regulation through an administrative and financial structure had been designed to map onto the public’s travel patterns and with the minimum of ring-fencing around each component in the system. The dreaded ‘cross-subsidy is rife to an extent that it is not even recognised and accounted for.
London is a good model for another reason. Over 90% of journeys to, from and within central London are by public transport. That is not because those travelling in London are too poverty-stricken to own cars – quite the contrary, Beemers, Rollers and Chelsea Tractors are rife. It is due to the space budget. A car takes 12 sq.m. on street and 20 sq.m. off. Offices have roughly one worker for every 10 sq.m. of floor: if everybody went to work by car, there would have to be two Canary Wharfs, two Shards, two Centre Points, dedicated to car parking – impossible financially and geometrically. The ONLY way that such places can exist and work is for them to be accessible by public transport. Rather less dramatically, the only way for Princes Street or the offices of central Edinburgh to function commercially is if they too are is supported by public transport. To put it into a simple nub, public transport is the solution to the otherwise insoluble parking problem.
That brings us back to the second purpose of public transport – to provide an ability for everybody to get to specific places, those places where full provision of car parking is financially or physically impossible. It also raises two important, subsidiary issues:
- How does the sustenance of the commercial viability of town centres count towards the ‘profitability’ of public transport.
- What happens if it fails
The first issue is crucial. It suggests that the ‘profitability’ of bus services is more than the difference between their costs and the ticket money – that there are benefits which are excluded from the simple cash-count. This is a very common, almost universal, problem in transport. The Edinburgh Tram or the Edinburgh by-pass cannot generate ‘profit’ in the sense that their income will exceed their costs. Somehow the benefits have to be identified and evaluated and set against the costs. That is a contentious, theoretical business at present covered less than adequately by the STAG[3] computer model which excludes land use patterns related to transport services
The second issue is linked to the first. The success of all commercial activity depends upon access by customers, by staff, by freight vehicles and by the pipes and wires that carry energy, information and waste. If that access is denied or restricted the activity will wane. In the 60s and 70s the lack of parking and the absence of adequate public transport as an alternative to parking induced many commercial functions then sited in city centres to relocate to places where large car-parks could be provided – places such as Fort Kinnaird and The Gyle. The irony was that the congestion and lack of access to city centres due to excessive use of the car was solved by the use of the flexibility of the car to go somewhere else.. The result has been the massive expansion of the geographical area taken by urban activity, not just in the decentralisation of offices and shops but in warehousing and factories appearing as single story sheds around the rim of the city and, most importantly, in new housing bolted on to country towns and villages. The original tightly packed Victorian city has morphed into the disparate, virtual city spreading for miles across the previous countryside.
That raises a further, co-lateral issue. Scotland’s government has embraced one of the most advanced policies in the world to control climate change – it could be said that it is so advanced to be beyond any capability to implement it. A major cause of the continued increase in CO2 emissions despite considerable improvements in the rates of fuel consumption per vehicle-kilometre is this constant urban expansion. An example is in East Lothian itself – an increase in residential population has not been matched by increases in local jobs – East Lothian is now part of Virtual Edinburgh with in-coming people having to find work in Edinburgh, perversely particularly in the Gyle / Airport area. That has created a surge in commuting and in vehicle mileage. There is a paradoxical conflict between climate change and development policies that needs to be addressed urgently. Public transport policy is a vital element in resolving that conflict.
It is here that I have my major reservation about Iain Gray’s proposal. Fragmenting responsibility for the definition of bus services across local authorities cannot produce the necessary coherence. ‘Transport for London’ is the model and ‘Transport for Scotland’ is the sensible medium through which regulation needs to be implemented, not for its own sake, but to sustain the urban structure and densities.
© Barry Hutton
20 Jan 2013
