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State-run buses lose am
Page 26
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1970 'disastrous' a long, sad ta le ofwoe
• The National Bus Company ended its second year of operation with a deficit of £8.1m compared with a surplus of £800,000 in 1969, it was announced on Wednesday. However, in the terms in which many other bus operators record their results, NBC actually made an operating surplus of £3.3m.
Deducting the charge of £8.4m for depreciation, there was an operating loss in 1970 of 15.1m, though £1.1m was attributable to changes in the bases of accounting. The net deficiency of £8.1m was arrived at after taking interest on capital debt and taxation into account.
The actual revenue for 1970 increased to £163.7m (1969—£148.7m), but the expenses increased to £168.8m (1141.7m), leaving the operating deficiency of £5.1m (1969—£7m surplus). To this must be added a consolidated loss of £4.7m (£7.5m profit).
The company's annual report for 1970, published on Wednesday, (House of Commons Paper 440, HMSO, price 45p), is largely a tale of gloom, writes Derek Moses, penetrated only occasionally by a feeble ray of light. It commences with the bald statement: "The year 1970 was a disastrous one for the bus industry and the National Bus Company was affected ill much the same way as were other operators."
Factors on which the unsatisfactory results are blamed include more rapid wages and prices inflation, sporadic industrial action, Traffic Commissioners' procedures causing delays in the introduction of new fare increases, and disastrous results from the introduction of the new drivers' hours regulations.
Following settlements in other sectors, company employees received two wage awards within six months. Sporadic industrial action throughout the first eight months of 1970 and widespread overtime bans and one-day strikes in the autumn, in support of the busmen's claims, resulted in a direct loss of revenue of about £*1 (estimated). The delays in being able to implement fares increases brought a further estimated loss of £3m, while the drivers' hours regulations introduced in March led to a further direct loss of about Lim. The full financial consequences of the latter measure could not readily be assessed, however, the report comments.
Bitterness A certain bitterness can be detected from the report regarding the financial background to the establishment of the National Bus Company, and the target surplus, before payment of interest to the Minister, of £8m for each of the years 1970 and 1971. The financial performance of NBC in 1970 fell some £12m short of the target.
The target had been accepted by the members of the National Bus Company subject to major reservations about its possibility of achievement. In his letter of January 15 1970, to the then Minister of Transport, the chairman, Mr A. N. Todd, wrote: "I must make it clear that the achievement of the target will be dependent on a number of factors outside our own direct control."
These outside factors had been even more unfavourable than might have been expected, the report states.
Describing the profitable operatiOns of the Tilling Bus Group and the BET Group before the establishment of the NBC the report comments: "It was apparently believed that this could continue and that the merger would in fact strengthen the financial position to an extent that would always cover the costs of Government intervention, whether the bus companies were required to help to finance a Training Board, or to provide loss-making services when railway services were abandoned, or to. buy buses built to standards not of their own choosing, or to accept new working rules for drivers."
These current problems had tended to distract the managers of many bus undertakings from looking to the changes needed to adapt the bus industry to fulfil its proper role in the future, the report claims. At the same time the .past two years may well have brought many people to a view of the future role of the bus which is more limited than the underlying transport situation really requires, it adds.
Referring to the seriousness of the NBC's financial position in 1970, the report mentions the formation of the Company without any cash reserves, which had exacerbated the position. Subsidiary companies had deposits with their parent organizations of some £23m, but when created in 1969, NBC did not receive this cash from the Government, the figure being deducted from the initial capital dept. "A reduced capital indebtedness to the Government is, however, no adequate substitute for deficient initial liquidity", the report affirms. Faced with this serious financial situation the NBC had initiated corrective action in such fields as rural bus operation, cutting overheads and improving productivity. Capital expenditute was pruned or postponed. The Minister had agreed to lend the Company up to £6m to cover the cash needs of 1971, but these loans involved a higher rate of interest, the report records.
The unfavourable position of the NBC is compared with other public transport operators who were relieved of some of the costs of running their services, such as by rate precepts, and had relatively small capital debt—London Transport had been relieved of all its capital debt. It was against this background that the Company's action to overcome the serious financial difficulties with which it was now faced should be judged, the report suggests. (This situation also complicated negotiations with Passenger Transport Authorities and municipal operators for co-ordination of services, the report adds.) The first ray of light appears when the report surveys the future, and recalls that although bus travel had declined since the peak years of the early 1950s, buses and coaches still carried some 9,000 million passengers a year compared with 11,000m in 1938. In this time the .number of private cars had risen to about 12m from under 2rri in 1938.
It continues: "That there will be an important task for buses in the future cannot reasonably be doubted. The opinion is widely held that if a civilized environment is to be maintained a substantial network of bus services will still be socially necessary, even when car ownership has grown to the level so confidently predicted for the last two decades of the century."
Bright spot Passengers carried dropped by 10 per cent in 1970—a figure greater than the average of the past few years. But unreliability in services masked any trend in passenger decline. One bright spot, however, was the growth of extended tours services, which, the report implies, reflected their popularity both with customers and drivers.
The very necessary relationship between town planners and bus operators continued to develop in the course of the year. But there were still difficulties because many bus operators did not understand how planners worked and vice versa, the report continued on page 31