To cap it all … a £2 limit

Sunday 3rd July 2022

Speculation is growing of an imminent announcement of a £2 cap on all bus fares throughout England to apply for six months from October as part of Government plans to help with the cost of living.

Such a plan has already been announced by West Yorkshire Combined Authority Mayor Tracey Brabin from September as part of an agreed plan with bus operators under their Enhanced Partnership arrangements and last week Greater Manchester Mayor Andy Burnham, not wanting to be left behind, also jumped on the £2 bandwagon by announcing he was bringing forward a similar plan he’d had for next year under the franchising proposals to also commence in September, assuming a reimbursement deal can be agreed with operators.

Now it seems Johnson and Shapps have seen the potential for eye catching positive headlines from an initiative of this kind throughout England so expect a conveniently timed diversionary announcement with the usual flourish (incorporating a visit to a bus garage with high-vis wearing poses for the assembled photographers) just as soon as the next Tory sex scandal breaks in a few weeks..

If the experience of delays in finalising detailed arrangements for the payment of Government funds for Covid Bus Service Support and Bus Recovery Grant are anything to go by, operators are going to have to show another huge dollop of goodwill that promised reimbursement arrangements will be paid as agreed to offset the loss of income, not least for those operators which choose to participate in the scheme and have many long distance journeys with fares well above £2.

Passengers won’t be concerned at details of any back office reimbursement arrangements; they’ll just be pleased buses have been thought of instead of the usual “hard pressed motorists” getting all the attention with a decade’s (plus) worth of frozen fuel duty and the more recent 5p per litre cut. Expect another fuel duty cut in the forthcoming announcement to really grab the headlines as I understand these plans are nothing to do with being serious about modal shift to tackle climate change, net zero, air quality and traffic congestion but everything to do with news headline manipulation to show the cost of living is being tackled.

Not wanting to look a gift horse in the mouth a properly (assuming it will be) funded temporary reduction in bus fares is to be welcomed as not only stimulating the market for bus travel but raising its profile as a mode really taken seriously by senior politicians – especially as Johnson’s public backing for buses previously has come across as a “bit of a laugh” (making model buses from wine crates and all that) and Shapps has vehemently denied he’s in favour of modal shift, only being interested in rolling out increased sales of more electric powered cars rather than traffic reduction.

I hope it will be possible to market the deal as a £2 “flat” fare as while this may deter short riders who may currently pay less, the simplicity of a one fare system offers huge potential for marketing as I found twenty years ago.

Just imagine if every operator does feel able to join the scheme and tells Global what it can do with its third party commercial advertising business during the six month period such that every bus in the country displays eye catching promotional messages about the £2 flat fare.

It’d be like Brighton in the years 2000 to 2002 all over again with high profile positive coverage in the media for bus travel promoting its simplicity and great value as illustrated throughout this blog.

However, there are notes of caution to express. Firstly it’s essential reimbursement arrangements are crystal clear so operators know where they stand before embarking on this. There’s history with the DfT and concessionary fares with incessant arguments over generation factors and we don’t want the same with this scheme.

Secondly operators need to work out what they’re going to do with daily and weekly (and longer duration) tickets or weekly cap levels so as not to render the £2 fare academic for existing regular passengers.

Thirdly the end game needs thinking through. I doubt the cost of living crisis is going to be over by next March when it’s said this scheme will end, so what plans are there to transition out of it? The Government took the PR hit when it came to withdrawing the £20 per week Universal Credit supplement during lockdown and bus companies need to be sure they’re not set up to be the fool guys when fares are hiked back up when this scheme ends.

Fourthly a strategy for dealing with the inevitable complaints pointing out bus routes have been curtailed or even withdrawn so what’s the point of a £2 fare offer?

Fifthly operators are going to be burdened with yet more form filling for the DfT in what is increasingly becoming spreadsheet overload. This scheme requires details of sales for each category of ticket (adult, child, single, return, daily, weekly, monthly etc) as well as yields for each type and revenue through the farebox including splitting the data for tickets under £2 and those over. And all of that for each four week period from April to June as well as forecasts for each period between October and March when the scheme is planned. It’s a lot of work for hard pressed managers already dealing with the pressures of dealing with failing targets for passengers and revenue.

Sixthly, there’s a real danger this scheme could undermine the previous comfortable assumption that running buses is a cash generative business with no fear of running out of cash to pay the wages on payday. However, with more and more funding coming from local authorities and particularly the DfT in arrears, and in some cases paid months and months later – one operator told me they’d been waiting a year for their BRG to be paid – there’s a real risk some operators without healthy bank balances could go under with the Government their largest debtor.

And finally I hear this is not new money gifted by the Treasury but is coming from the DfT’s existing budget. If that’s the case, is it really a wise move just at this time when Covid support payments through the Bus Recovery Grant are shortly to end? I’d have thought it better to keep BRG going for another six months with a major effort (and I mean major) to really promote bus travel – bespoke to each local network and tailored to local circumstances rather than the wishy washy slogans of Stagecoach’s current campaign.

With the £1 billion awarded to 31 lucky local authorities for their Bus Service Improvement Plans (propping up existing routes is not allowed), more DfT money going to this £2 fare initiative and the continued financial support for developing no hope DRT schemes it’s a postcode lottery like never before for passengers when it comes to whether their bus route will prosper or be summarily withdrawn this autumn.

Roger French

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