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NBC services threat
Page 27
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THE NATIONAL Bus Company will have to cut back on its services or increase its fares above the level of inflation, according to the House of Commons Select Committee on Transport.
In its report on the Government's White Paper on public expenditure, the committee warns that the abolition of new bus grant and the loss of other sources of outside finance will cut NBC's Government support by 30 per cent by 1983/84.
This, it says, will "impose a financial straightjacket so tight that either they will begin to price themselves out of the market, or that they will have to make savage reductions in less profitable, but possibly socially desirable services."
The loss of bus grant will be NBC's greatest handicap, as it will have to finance its fleet replacement programme by other means.
The Government says the level of NBC's investment will rise by under 10 per cent by 1 983 / 84 but the company's external finance limit will drop by around 20 per cent, with only a marginal increase in borrowing.
The expenditure White Paper predicts that NBC's borrowing will fall, and says: -The Company will rely increasingly upon
internal resources to finance capital requirements."
Committee members found it hard to accept that NBC can increase its internal financing by a small amount, unless it is prepared to sacrifice standards.
They say either services will be reduced in both standard and range, or that there will be "exceptionally heavy" increases in fares to generate sufficient internal resources even to maintain proposed investment levels.
And it adds: "There must be serious doubt as to whether these levels are themselves adequate to guarantee the maintenance of existing services, let alone finance any desirable improvements in services."
Consequently, the Committee pours cold water upon the Government's predictions of reduced expenditure on NBC, and says it believes that the reduction in support is likely to be "considerably lessthan current forecasts suggest.