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UK public transport funding is on life support – it’s time to ‘scrub up’

06 July 2023

There’s no credible route to net zero without a sustainable and reliable public transport system, writes ICE trustee Jonathan Spruce.

UK public transport funding is on life support – it’s time to ‘scrub up’
Since January, the government has capped bus fares in England at £2. Image credit: Shutterstock

Around 15 months ago, the ICE held a panel debate on the next steps for public transport funding.

It focused on the need for a long-term, sustainable funding model for public transport, in a world where travel patterns have changed for good.

At the time, there was a looming cliff-edge in funding for bus services in England that could’ve seen drastic cuts in routes, services, and frequencies. This would’ve significantly affected sustainable travel options in many locations.

Since then, through three more emergency funding packages, the government has kept the bus industry on life support.

There have still been threats of service reductions as the end of each funding package has drawn near. Service reductions have taken place, but not at such drastic levels.

Bus use is recovering, but revenue is falling behind

Since January, the government has capped bus fares in England at £2 to boost use and support people with the cost of living.

Recently, the government extended the cap until the end of October. It will rise in November to £2.50 for another 12 months, providing ongoing stability before the next review.

The fare reduction has had some positive impact.

Research from Transport Focus suggests the cap has encouraged more people to use the bus. According to the Department for Transport, bus journeys have recovered to between 85 and 90% of pre-Covid levels.

While these signs are positive, these figures don’t necessarily translate to the revenue received by operators.

Overall revenue remains below 85% of pre-pandemic levels. Not all routes that contribute the greatest revenue to bus operators have recovered in the same way as others.

How and when people choose to travel is affecting revenue

Industrial relations issues on the rail network have also contributed to lower usage.

While some rail routes are seeing leisure travel at greater levels than pre-Covid, commuting trips across the working week are down – particularly on Mondays to Fridays.

As with buses, revenue return is lower than passenger return, because of how and when people now choose to travel.

This situation demonstrates that the issues with the current public transport funding model the ICE highlighted 15 months ago remain.

Indeed, they are perhaps even more acute. The reliance on revenue alone cannot continue indefinitely.

The ICE said that we can no longer keep treating the problem with a sticking plaster. There needs to be a proper operation to fix it for the long term.

Climate change should inspire action

The Climate Change Committee’s recent progress report highlighted the decreasing confidence in the UK meeting its medium-term net zero targets.

This should act as a catalyst to develop such a funding solution.

The CCC recommends the Department for Transport puts in place a new, transparent public transport fare structure that offers more affordable and reliable travel.

The CCC says this will create more fairness between public transport and more carbon-intensive choices, and a more interlinked public transport system between operators.

More generally, the CCC’s conclusion that the government’s decarbonisation strategy has considerable delivery risks – due to its over-reliance on specific technological solutions, including electric vehicles – highlights the urgent need to encourage people to use more sustainable transport modes.

A national transport strategy for England would help

The ICE has also recently called for the development of a national transport strategy for England that:

  • sets out the overarching vision for a sustainable, equitable transport network; and
  • establishes a set of principles based on this vision to prioritise transport projects.

Together, these provide the opportunity to think again about how we value public transport as a vital public service, contributing to our environmental, social, and economic objectives.

We can’t wait another 15 months

The fare cap and associated funding is due to run out in November 2024 – coincidentally (or not) around the time of the next general election.

That’s another 15 months from now.

Fifteen months on from the original ICE debate, some things have changed.

But some have not – above all, the fact that there’s no credible route to net zero without a sustainable and reliable public transport system.

Nor has the fact changed that the current model for funding public transport in the UK is broken.

We can’t waste another 15 months thinking a solution will come along. The patient is still on life support: we need to scrub up and get on with the operation.

The ICE’s latest policy paper shows how a national strategy can help deliver a more equitable and sustainable transport network in England.

Find out why England needs a national transport strategy

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  • Jonathan Spruce, director at Fore Consulting