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'Give us grants' plea

15th September 1972
Page 31
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Page 31, 15th September 1972 — 'Give us grants' plea
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Which of the following most accurately describes the problem?

report by Martin Hayes Delegates to this year's annual conference of the Association of Public Passenger Transport Operators — held this week in Eastbourne — heard two excellent papers. One was on the technical background to the development of the Leyland National bus and the other took the form of a plea for central Government aid to keep the bus industry alive.

AN OVERWHELMING argument in favour of "quick and generous central Government revenue aid for passenger transport was made by Mr. J. Brooksbank, director of finance and administration of the Merseyside Passenger Transport Executive. His paper was called "Don't be scared of a dirty word", the dirty word being "grant". It was as much a plea to operators to accept grant aid on its merits and not to look upon it as a reflection on their abilities as it was a cry for help to Government.

Mr Brooksbank began by examining the decline in the passenger transport industry between 1960 and 1970. Department of the Environment figures showed that in that time passengers on municipal buses declined by 30.7 per cent but that mileage was reduced by only 17.8 per cent. In those 10 years passenger receipts rose by 45.3 per cent and passenger receipts per journey by a staggering 106 per cent. The decade had seen a loss of 31 per cent of passengers but a doubling of fares.

Looking at the reasons behind the bus industry's decline, Mr Brooksbank agreed that the increased popularity of the private car was the main one. He quoted figures which showed the change in transport mode in passenger transport between 1952 and 1970 (1970 figures in brackets): rail 21.5 per cent (8.8); public service vehicles, 44.7 (13.4); cars, 33.8 (77.3).

Bus operators were unable to reduce their costs in line with the contracting market and Mr Brooksbank could see few possible savings once undertakings had fully absorbed the benefits of one-man operation and workshop bonus schemes. There would be little more that could be done to achieve increased output per man and "in the second half of this decade I can see little to make me believe that we shall be able to reduce costs otherwise than by cutting mileage, which is always terribly difficult", said Mr Brooksbank.

For varying good reasons it was obvious that private motoring would not become less popular and so disaster lay ahead if books had to be balanced purely by raising fares.

What would happen in the future if no remedial action were taken? Use of an "elasticity figure" showed that each 10 per cent fares increase would be accompanied by a loss of between 2.5 per cent and 3.33 per cent of passengers. Assuming inflation at 8 per cent and a 2 per cent annual natural loss in passengers Mr Brooksbank predicted that the cumulative effects over the next 10 years would be a 30 per cent loss in passengers and the remaining 70 per cent would pay fares that were 380 per cent of today's fares. The most optimistic assumption for the next 10 years is that "we' should lose about a quarter of our passengers and that the would be paying nearly three times as much per journey as at present", said Mr Brooksbank. He pointed out, however, that with increasing life spans and longer educational processes there would be a larger proportion of the population which was both dependent on public transport yet unable to pay higher fares.

Bus subsidies Mr Brooksbank said that as yet there was little firm evidence to show that a better return could be achieved from capital invested in bus subsidies than in motorways. However, a study in Liverpool had tried to show the costs of an increase of 1 per cent in rush hour commuters. Against an annual increased deficiency of £39,000 for the bus undertaking was a "staggering" total of £5.4m needed for increased car parking and road improvements if the extra numbers travelled by private car. Environmental considerations would probably also point to public transport rather than the car.

Discusing possible remedies to the situation, Mr Brooksbank said that though railbased public transport systems might be viable in the larger conurbations "for the majority of British towns and cities passenger transport is likely to continue to be synonymous with the use of buses". Legislation to deny the use of private cars was so unpopular that it would be years before it would be introduced and "the situation could become quite intolerable before drastic action is taken and by that time the cost of saving what is left of passenger transport could be enormous".

All in all there was only one solution, said Mr Brooksbank: "Whilst the traffic planning measures should go on and cost benefit studies of investment in various forms of transportation should be regarded as vitally necessary, some form of revenue aid for passenger transport should be given quickly and generously."

Mr Brooksbank dismissed as "insignificant" the present system of ad hoc Government grants. "Each is, of course, very welcome but in total they are inadequate", he said. Even fuel tax rebate accounted for only 4.49 per cent of Merseyside PTE's 1971 bus revenue. Fuel tax which was left to pay amounted to 3.87 per cent of total revenue,

or £550,000. Mr Brooksbank was disparaging about arguments in favour of passenger transport subsidies being met from local sources. It was far better that central Government should foot the bill.

Determining the level of public transport which ought to be provided for a particular area would be one of the most important tasks facing the re-organized county councils. Having determined levels it would be essential to provide modern buses, to maintain them to a high standard and to pay adequate wages "to obtain efficient contented crews".

Mr Brooksbank said that he realized "grant" was a dirty word within the industry. It was argued that if an operator received part of his revenue by way of a grant he would become lazy and inefficient. Mr Brooksbank said he could not understand why so many people in the industry not only accepted but repeated this argument without realizing that it was an "attack on their integrity and sense of responsibility to the public".

Looking at various means of financing grant aid, Mr Brooksbank said that there were numerous advantages in a revised form of fuel tax which could incorporate road fund tax and even some form of Stateowned insurance. This was one way of assisting buses. Another possibility which had become more popular in recent years was the block grant system but this was too complicated and tended to transfer responsibility from central to local Government where the private car lobby was more influential. Mr Brooksbank said he favoured grants for specific services and that although these had fallen into disrepute so far as buses were concerned they still worked efficiently for such services as school meals, civil defence and police. Such subsidies achieved their object without the services in question declining or stagnating. However, increased controls might be the price operators had to pay. In Europe 35-40 per cent aid was common but, for example, in Belgium wage rates in local undertakings could not be increased without central Government approval.

Mr Brooksbank said that there were three possible types of specific grants: a proportion of the deficiency; a proportion of operating costs; and a contribution related to a specific factor like passengers carried or miles operated. After quoting a series of examples Mr Brooksbank concluded that a subsidy related to passenger journeys would be best "because it both leaves with the undertaking the benefit of the economies which they have made and directly rewards any increase in passengers attracted as a result of effective marketing".


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