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BUS CASH OPTIONS LEFT OPEN BY DoT
Page 33
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BUS GRANTS may be phased out slowly until 1983 instead of finishing abruptly in 1980.
But the replacement of the grant cash by alternative methods of support to the bus industry is left open in a consultation paper just issued to trade associations by the Department of Transport. Some of the main conclusions of the paper were predicted in CM last week.
"If new bus grants ceased, it would be for consideration whether all local authority expenditure towards the purchase of new buses should be eligible for Transport Supplementary Grant in the same way as other transport expenditure," says the paper.
Decisions as to how this cash is spent would, however, be left to the local authorities themselves. "They might, however, prefer to support basic levels of service rather than invest in a modern fleet," suggests the paper.
On the surface, the paper is aimed at co-ordinating the demand for new buses with the manufacturing capacity available but some of its proposals will radically affect the whole financial structure of the bus industry.
Issuing the paper seems to have been largely prompted by worries from inside the Departments of Industry and Transport that new bus manufacturers were being tempted by a temporary bus shortage to enter a diminishing long term market for buses.
"It is important that there should be a firm understanding between the manufacturL ing and operating industries on the future pattern of sustainable demand."
The Department has apparently firmly decided the bus grant should disappear sometime arid gives three reasons for this.
• Grunts encourage the operator to replace vehicles before they usually would and thus cause a distortion in the use of resources by paying less than the cost of resources used in vehicle manufacture.
• The manufacturers' investment in new production facilities may be distorted by the distorted ordering pattern caused by bus grant.
• Financial assistance should be concentrated on areas of need rather than spread thinly in generalised support.
Forecasts made by the Transport and Road Research Laboratory quoted in the paper predict a continuing decline in passenger journeys of about four per cent per year.
Different estimates of the future reduction in fleet size are given in the paper but the consensus is an annual reduc tion of 11/2 per cent per year.
If bus grant were to be finished abruptly in 1980 then estimates show that demand for new vehicles could fall as low as 500 the following year before building up again to a figure of around 1,400 a year.
But if bus grant were to be slowly phased out to 1983 then demand could fall from its present peak of around 2,100 (the capacity of the bodybuilding industry) to around a continuing 1,500 or so in the early 1980s. "The intention of a phased withdrawal of grant would be to preserve stability between supply and demand by easing demand down to a level that would be sustainable without grant," says the paper.