Well, another year of crisis, and we’re all still here. A new ministerial team looking after us (or words to that effect) in Whitehall – but then what else is new?
We’ve had an emergency budget and a “comprehensive” spending review. Quite how something that fundamental and that swift can be described as comprehensive is beyond me: think what savings they might find if people really had time to concentrate and think things through properly.
But the world hasn’t ended: the buses are still running, and Brian Souter sprung another surprise deal on us.
So what can we expect in 2011? Well, more of the same really: more hand-wringing and protests from various groups who see their state handouts threatened by Government policy; the odd strike over wages and over the cuts, coupled with a steady, but oh so slow economic recovery. Oh, and not forgetting yet another doomed attempt to cut the costs of running our railway.
The biggest threats to the bus industry come in loss of revenue from those very same government sources: this year’s problems will come from concessionary fares and cuts in tendered services. Then there is the little matter of the Competition Commission inquiry, followed in 2012/13 by the BSOG cut.
On concessionary fares, the situation is quite stark: like it or not, the Department for Transport has signed up to make savings in the reimbursement formula and those savings will be delivered come hell or high water. Of course it is unfair; and of course it will impact on the industry’s profitability and on the size of the network operators are able to run.
The only way to stop that would be the ‘nuclear option’ of seeking a judicial review of the meaning of “no better off and no worse off”, and to spend the next few years paying lawyers to argue out the case. You’d have to be pretty confident of victory, because the costs – especially if it went all the way to the Supreme Court – would probably be astronomical.
On the other hand, my spies tell me that the formula and the work that underlies it is about as watertight as the Titanic after it had hit the iceberg, so there is plenty of room for argument.
Meanwhile, I do wonder whether the industry would not be better to concentrate on the opportunities available. What about carrying as many senior citizens as possible, coming up with cunning plans to add value to their journey experience, and in the process attract some direct revenue from them? Retailers would not complain about being presented with all the extra customers that free concessions have delivered since 2007, and would be less resistant to the idea of discounting to attract them.
The issue of tendered services is in some ways a more intractable one. With local authorities faced with reduced budgets, some cuts in the provision of tendered services are inevitable, and indeed are happening already in many parts of the country. The industry cannot therefore expect (if indeed it ever did) that deregistered commercial mileage will automatically be picked up and tendered by an authority: the chances are that the funds will not be available.
This leaves managers with some potentially more difficult choices and will inevitably place their decisions about network planning even more in the spotlight. In my view, the judgements made about withdrawals – particularly of evening and Sunday journeys on otherwise profitable routes - will need to be much more nuanced than has sometimes been the case in the past. Proper route costing systems will help with decisions about marginal costs and marginal revenue, whilst strong customer research will ensure that managers understand the revenue effects on the rest of the service of reducing periods of operation. Taking the advice of Passenger Focus about consulting widely before making changes would not go amiss either.
We have another 15 months of BSOG at current levels so this should not be an immediate issue. However, fuel prices generally will certainly continue to be, and have recently been creeping up again. Recent “green driving” initiatives have delivered considerable benefits to offset the rise in fuel prices, but realistically the savings are unlikely to be incremental, at least at the rate of the first year improvements achieved.
Therefore, fuel saving will have to be driven by vehicle design, both in terms of hybrid drive trains and weight-saving generally. Worryingly, there seems as yet little appetite amongst the manufacturers to grasp the weight-saving nettle, though it is possible that the ‘Borismaster’ may yet point the way forward in this regard. It would be nice to think that we could one day return to the 7½ tonne double decker, but I somehow doubt it!
Generally speaking, it seems to me that the bus industry has come through the last 28 months of economic turmoil in remarkably good shape – especially given the experience of previous recessions. All my discussions with industry managers lead me to believe that there is a recognition of this. There is a determination – particularly amongst younger managers - to ride out the current difficulties and to seize the opportunities that lie ahead, brought about by economic recovery, and by public consciousness about climate change.
Over the last decade or so, the industry’s exemplars have shown what is possible – by delivering partnership with highway authorities and transport planners, by understanding the needs and aspirations of our passengers and by delivering outstanding customer service.
There is still much to do to bring the whole industry up to the levels of the best, but let’s hope that 2011 sees everybody living up to those standards, and rising to the challenges that the world throws at us.
And Brian’s surprise deal for 2011? Well, I expect he’d still like to get his hands on Travel West Midlands. How about it, Dean?
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