We Must Drive Down Bus Fares

Will Straw (Associate Director for Climate Change, Energy and Transport, Institute for Public Policy Research), The Times, 9 October 2013.

Commuters reading their morning paper could be excused for thinking that energy prices are the main cause of the cost of living crisis.

The truth is that getting to and from work costs about three times as much as keeping the lights on and homes warm. Average households spend £65.70 a week on transport but just £20.20 on gas and electricity.

All political parties aimed to address transport during their party conferences but it was overshadowed by announcements on energy prices. George Osborne announced a further fuel duty freeze for motorists and Labour announced a slew of measures to address rising rail fares.

Bus policy got left in the manifesto depot. Although they make up a small proportion of overall family spending, buses are the most popular form of public transport: 5.2 billion passenger journeys were made on local buses in 2012 compared to 1.5 billion rail journeys. These users — particularly the young, old and those from poorer families — have been subject to the fastest price rises. From 1997 to 2012 bus fares rose 28 per cent above inflation compared to a 21 per cent rise in rail fares. Meanwhile, motoring costs have fallen by 6 per cent.

So how should politicians address the “cost of buses” crisis? Lessons must be learnt from the failed free market experiment of the 1980s. The 1985 Transport Act privatised and deregulated most bus markets with catastrophic consequences. Bus usage outside London is now a third lower now than it was at the time of the 1985 Transport Act.

Meanwhile in London, which was never deregulated, bus use has doubled over the same period. Public bodies were given powers to set fares, routes and service levels. London bus usage exploded after the decision by Ken Livingstone to use public funding from Transport for London to increase provision. Because London’s market is functioning, subsidy levels per passenger are lower in the capital than in the rest of Britain.

Outside London, the powers currently available to local authorities to intervene in bus markets have never been used properly, because bus operators use their market dominance (five companies have two thirds of the market) to threaten the withdrawal of key services. Creating new bodies with the scale to challenge operators and the powers to regulate prices would be the best way to increase quality and reduce prices.

For too long trains and automobiles have dominated political thinking on transport. It’s time for politicians to get on the bus.



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