It’s a curiosity, surely, that a Conservative government published a National Bus Strategy on 15 March which effectively brought the curtain down on bus deregulation outside London, a regime that has been in place since 1986. Then, on 20 May, it published a Rail White Paper (The Williams – Shapps Plan for Rail) which renationalises the railways, or at least that is the general spin placed on the White Paper by the media.
As far as bus policy is concerned, it is certainly true that the National Bus Strategy has ended deregulation, although the writing has been on the wall for some time. But the Rail White Paper has not in itself renationalised the railways – simply because the railways have been renationalised for some time. Network Rail was renationalised in 2013 while the private companies that run passenger services are so tightly constrained by the franchise contracts under which they operate that they are quasi-nationalised anyway. These highly specified contracts have been in place for some years now. And, in any event, when COVID struck and lockdown was imposed in March last year, the franchise contracts were at that point brought to an end anyway. Grant Shapps has described the rail proposals not as renationalisation but as “simplification” and actually that is probably nearer the truth.
The destination is clear, but the journey far from straightforward
Both the National Bus Strategy and the Rail White Paper are high on aspiration and ambition, but seasoned observers of the public transport sector will surely question whether these aspirations can be delivered. The bus strategy is backed up by £3 billion of funding over the life of this parliament – £1 billion a year. But this funding has to be divided among, potentially, over 80 Combined Authorities and local transport authorities. You don’t need to be a professor of mathematics to work out that the funding available to each authority is going to be woefully inadequate to deliver on the strategy’s aspirations. And there is currently no commitment to further funding beyond this parliament.
For the railways, the test will be how much subsidy the Treasury is prepared to give to support passenger services. Before lockdown, the government was in receipt of a net payments from all train operators of, I recall, about £1 billion a year. Now the Treasury is subsidising train operators to the tune of around £10 billion a year. That is a huge swing in the wrong direction and is surely not sustainable.
Of course passenger numbers will start to increase as we move out of the current restrictions. But nobody in either the bus or rail sectors believes they will return to pre-lockdown levels. Some train operators have said that they expect patronage to get back to just 80% of pre-lockdown levels and that it may take 4 – 5 five years to even achieve that. Forecasts for the bus sector are in the same broad area.
This surely means that unless the Treasury is prepared to carry on subsiding both sectors at quite significant levels, service cuts are inevitable. Of course, growth in passenger numbers will ease the pressure on the Treasury, but I doubt this growth will be sufficient to avoid cuts. This year’s sending review may give us some clues as to the Treasury’s willingness to fund public transport, and for the railways the negotiations with the Treasury on the size of the rail investment programme for the next five year control period (Control Period 7 from 1 April 2024 – 31 March 2029) will start in earnest soon. These are some key milestones which will start to show whether the Rail White Paper and the National Bus Strategy are deliverable or not.
Bus deregulation and rail privatisation were flagship polices for the Conservative governments of the day. But the swashbuckling days of deregulation and privatisation for public transport services are well and truly over -courtesy of a Conservative government. The government’s aspirations for both sectors are ambitious. Time will tell whether these ambitions are deliverable.
What the future holds
Certainly, Grant Shapps has made clear that the rail reforms will take some time to deliver in full and legislation is required in any event to implement many of the Rail White Paper proposals, so the White Paper is in itself only the start of a rolling programme of reforms. We can presumably expect to see a Bill published sometime in this parliamentary session. And on the buses, Combined Authorities and local transport authorities must now develop Bus Service Improvement Plans by the end of October this year (for implementation in April 2022) if they are to access any of the £3 billion funding for buses that is on the table.
The government also wants to see the sale of all diesel buses banned at some point (a date has yet to be agreed). This is in itself a huge challenge, dependent on what date the government sets. But there are 38,000 buses in operation in England, 66% of which are all-diesel. Should the government decide it wants to see all diesel buses off the roads by, say, 2040, then the manufacture of diesel buses must stop in 2025.
Grant Shapps can talk up the aspirations of the bus strategy and the rail white paper confident in the knowledge that he won’t be Secretary of State for Transport when the fat lady sings.