With emergency funding dwindling and passenger numbers still below their pre-pandemic peak, what options exist to help ensure the long-term sustainability of public transport?
The degree and pace at which workers return to their workplace will have significant economic and policy consequences.
There are many questions in the space, but perhaps one of the most pressing is how can the funding of public transport sustainably adapt to changing travel patterns?
Last year, ICE published a discussion paper on this topic with a set of principles for what long-term public transport funding should be built on.
The briefing paper published yesterday draws on updated evidence since then, outlines how the pandemic has changed the public transport landscape over the past two years and asks the question – what next?
Are people returning to the workplace?
According to the latest data from the Office for National Statistics, about 1 in 8 UK working adults are currently splitting their week between the home and the office.
Given that only nine months ago over a quarter of the UK’s working adults were working exclusively from home, it comes as no surprise that public transport use has increased since then.
But while the trains and buses people have travelled on recently may be a lot busier than at any point in the past two years, passenger numbers are still around 20-30% lower than they were pre-pandemic.
As the world moves out of Covid-19 restrictions and flexible working becomes a blend of personal choice and business need, as opposed to a matter of public health, it is becoming clearer that pre-pandemic travel patterns are unlikely to be repeated.
How much has public transport relied on government funding?
Even a small drop in passenger numbers – and 20-30% is not small by any means – can have huge impacts on the operation and funding of public transport operators.
In an ironic twist, this means that operators who were the most successful pre-pandemic are now facing the most critical funding shortages.
The London Underground and Delhi Metro in particular were two of the most profitable mass transit systems in the world. This means the reduction in passenger numbers has affected their business models more harshly than other operators.
To plug the gap in revenue generation and ensure that at least a basic service was able to run, governments globally stepped in and subsidised public transport.
In New York, the US federal government provided a $6 billion grant to help the Metropolitan Transportation Authority recover from the effects of the pandemic.
In the UK, government funding for the railway sector increased by £10.4 billion in 2020–21, reaching a total of £16.9 billion after fare income fell by 83%. On top of this, about £2 billion of funding support has been provided to the bus industry in England.
While a necessary step, these levels of subsidy are clearly not a sustainable solution, and governments are increasingly tapering off emergency funding and demanding efficiencies from operators. But this risks service levels declining and public transport becoming a less attractive option to the public.
Public transport is crucial to meeting national and international goals
When public transport services are run well, they support the achievement of wider national goals such as net zero, climate change resilience, reducing air pollution and improving social outcomes.
National and local governments know this, and therefore, public transport was both heavily subsidised even before the pandemic and central to many capital investment programmes.
Public transport provides a vital service, but in reality, it has not evolved a great deal over past decades.
Operators often focus on efficiency and managing their bottom line, which reduces scope for innovation or implementing new technology.
How much we value our public transport systems could be a big test of ambition beyond the pandemic: could we use this opportunity to fundamentally rethink how we fund our transport systems and shape its outcomes to achieve national objectives?
What happens next?
There are still many outstanding questions in this space, some of which are outlined below:
- Will there be a continual need for further government subsidies or incentives, and will this be palatable to governments and the taxpaying public?
- Will operators need to find ever-greater efficiencies in providing their services, perhaps to the point where service levels decline? Will business cases for capital projects need to be re-evaluated?
- Will operators and authorities look to new funding models, such as road pricing, land value capture, and more diversified revenue sources?
- Will transport policies be considered more holistically, incorporating active travel and ensuring that hybrid working is integrated with sustainable access to work?
- Are there lessons that can be shared and applied internationally?
- Or is ‘do nothing’ a viable option – what if passengers begin to return to public transport in the same numbers as pre-pandemic?
We want to hear from you
ICE wants to hear views from across the sector when it comes to funding public transport post-pandemic.
Using the ICE Infrastructure Blog as the platform for debate, we are keen to hear opinions and thoughts on the main issues policymakers should be considering and addressing.
The briefing paper launched yesterday provides an initial starting point for this discussion, which will culminate in an online panel debate providing an honest look at options for what policymakers need to do next.Read the paper
Please contact the policy team if you are interested in authoring a guest blog on this topic or attending the panel debate.