Coastliner Bus at Malton

Buses are Always a Footnote

In a footnote to Boris Johnson’s reconfirmation of the troubled HS2 railway megaproject, the Department for Transport announced additional funding for buses. £5 billion (less £350 millionor maybe a billion … for cycling) over 5 years, spread across “every region outside London”. Presumably within England, since local transport policy is devolved elsewhere, although in a nebulous style typical of the Prime Minister, the language is of “country” – however one chooses to see it.

Needless to say this “new vision for local transport” is extremely light on detail, as yet devoid of strategy, and still pending the appropriate Comprehensive Spending Review. We’d all be well advised to get it in writing first.

One billion pounds per year is not entirely insignificant – almost 50p per bus passenger journey (in England outside London) or just over £1 per bus vehicle mile operated. Potentially enough to buy aspirations for “higher frequency services” or “more affordable, simpler fares” on urban networks. But nowhere near enough to deliver “turn up and go” frequencies in small town, periurban or rural areas, where patronage and consequent farebox revenue would tend to be minimal. A but that will be the bane of this politically, since much of the electoral constituency of Johnson’s government is small town, periurban or rural, precisely the places where public transport does not deliver as much “bang for the buck”.

Capital for Revenue

The curiosity here lay in the 5 years. Only five? Frequency and fare policies require long term revenue commitments. Spend £5 billion over 5 years on fare subvention or de minimis contractual enhancements to bolster frequencies, and once the money runs out those fares and services will more than likely revert to the (largely commercial) market equilibrium they held before (that currently). Where are all the (2000 era) Rural Bus Subsidy Grant services now, you might ask?

However, all the indications from reading between the lines suggest that the government intends capital investment, not revenue, and that it expects £5 billion of capital to tangibly lower operating costs and/or inflate patronage such that services become significantly more commercially viable and operators are thus able to maintain the aforementioned higher frequencies or lower fares.

Which is extremely optimistic:

  • Capital investment cannot address the biggest traditional element of bus operating cost, the driver. Fast and specifically more reliable bus operation can reduce the staffing requirement of entire services slightly (because fewer buses need to be operated to maintain the same headway), but the scope for gains is not great on most routes. Automation technology may change all this eventually, but not in the next 5 years.
  • For now, capital investment can only reasonably raise passenger revenue and thus commercial viability. That means a lot more passengers – even more so if one expects lower fares (since each passenger generates less revenue when carried at a lower fare). While there is some evidence from the last few decades that investment in highway engineering can make bus services more attractive to users, it is farcical to expect sufficient shifts in patronage to allow tangible changes to frequency or fare to be sustained thereafter.

Policy Convulsions

Needless to say, the logical emphasis of capital investment should not be on buses… but on population density. Although there are regional quirks (Northern Britain out-performs Southern, which in turn out-performs Wales) local bus connectivity broadly correlates to population density (I should write more on that in the future). Invest to concentrate people together and the local public transport networks will follow. Naturally, sustainably. What do you mean you want to live in the countryside?

That population density pattern explains why one can’t just give everyone “better” bus services, where better will inevitably be defined as “like Inner London” – whose geography is nothing like most of Britain. And why commercial bus operators aren’t necessarily failing when there isn’t already a “better bus” – they were only ever going to be able to provide services roughly within the limits of this underlying (population density derived) market. In practice government only ever had the resources to skew this pattern slightly, and thus the only way the state can expect to manage the substantial differences in connectivity across Britain is to distract attention from these differences, not to actually “level them up” at all.

Meanwhile the prevailing policy agenda of national infrastructure only distracts citizens with a highly nationalistic perspective (where the “glory of Britain” dominates locality). As detailed in What is Connectivity?, national government necessarily favours the national agenda, meaning local bus policy tends to emerge as a counter to excessive national policy biases. A counter that national government is by definition unable to provide to itself.

Going for Growth

At root, local buses are revenue, not capital, intensive. Bus operations can still be more-or-less sustained on traditional commercial or civic/municipal investment models (which basically reinvest profits), even if economies of scale increasingly drive funding toward the multinationals. In contrast national railway lines, not least HS2, have always required initial access to super-normal capital sources (typically market speculation or state borrowing). One might therefore reasonably ask why a national government is planning to invest in local buses at all? Britain effectively has no local public sector system of taxation (even Council Tax is almost entirely spent on statutory services determined centrally) nor local public sector access to financial markets (except indirectly through Private Finance Initiative funded commitments where the debt is held commercially, even if the project is public), which explains why policy concerns default to the national.

So the question is why invest when policy appears to dictate revenue? Presumably this investment will be funded by (state) borrowing, and borrowing cannot be justified as revenue support, because such support has inadequate return (real or imagined) to convince lenders. And presumably one can borrow against a tangible asset such as a new bus, but not against a happier population. Even though it is unclear which of those is actually going to generate the most economic activity and thus bolster the national treasury to at least the point where the money can theoretically be repaid. Buses are, you see, in themselves not a good investment for a nation. Surely the state should be investing more directly in that which drives economic activity, so that the state can later raise the revenue it actually needs for better buses from the taxation of a larger economy, and thus solve a primarily revenue problem with revenue, not with capital.

Just a Footnote

So buses will surely always be a footnote for government policy, however important or otherwise they are for travel:

  • Substantive policy intervention implies revenue, yet government only does capital. Investment in buses does not obviously yield the revenue to sustain the desired improvements. Nor does the shorter-term nature of bus investment play into the long-term optimism of financial markets that routinely fund futuristic railways, limiting the scope to raise money for buses.
  • Buses are often cited as key to the development of local economies, especially when enabling those on lower wages to access higher waged jobs. But pure economic assessment invariably emphasises the needs of high wealth generators, both individuals and through inward investment, which tends to emphasise those places where public transport links are already strong, not least London. Economic assessment naturally, and entirely correctly, tends to favour places suited to buses.
  • So if “lack of rural services” or “excessive fares” or anything these that does not fit the underlying market pattern are genuinely policy issues, the case needs to be made for buses as a Social Good, to be funded from redistributive taxation. Altogether harder to justify than capital or economy, since this would frame buses against key government revenue spending with high political sensitivity, such as that on the National Health Service or social security. Don’t expect too many bus services to be funded through hospital closures.