Could public ownership be the answer for Birmingham’s overpriced buses?

Birmingham has one of the most expensive bus services in the UK outside of London. The majority of services are run by National Express West Midlands, which accounts for 77% of all bus journeys made in the region.

Of the main bus providers in each of England’s core cities (the largest cities economically outside of London), National Express West Midlands has the highest fares, based on the cost of an adult annual pass and day ticket. An adult daysaver now costs £4.40 whilst an annual pass is £654.

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A comparison of bus fares across England’s core cities

And fares are continuously rising. The price of an adult daysaver has increased by over 15% in the past four years, whilst for an adult single ticket the increase has been over 20%, well above the rate of inflation. This is despite the fact that diesel prices were at a six-year low at the beginning of this year.

Meanwhile the price of taxis are falling and with the rise of companies like Uber it can be a similar price or even cheaper to take a cab for some journeys, particularly when travelling in a group.

This clearly has a negative impact on the city’s congestion and pollution levels. Birmingham has the ambitious target of reducing CO2 emissions by 60% by 2027, against 1990 levels. However, without an affordable bus service, the city’s residents are likely to favour less green modes of transport. This is reflected in the statistics. At the beginning of this year, it was reported that the number of bus passenger journeys in the West Midlands has fallen from 294 million journeys in 2010-11 to 275 million in 2014-15.

Under the current system, the council has limited control over bus fares in what is a deregulated industry. Supporters of deregulation argue it enables increased competition, bringing greater efficiency and lower prices for consumers. However in practice this has not happened in Birmingham or elsewhere. A 2014 report by the IPPR thinktank found that just 1% of weekly services outside of London face effective head-to-head competition over all or most of their routes. In the West Midlands, National Express accounts for 77% of all bus journeys.  Smaller companies like Diamond Buses also run services for certain routes but National Express has a monopoly on the vast majority.

The result has been rising fares for the public and dwindling passenger numbers. Since bus services outside London were deregulated in 1985, bus passenger journeys outside of the capital have fallen 32.5% as fares rose above the rate of inflation. London however, has retained a franchising system whereby companies bid to run the services on a particular route. With greater powers to regulate bus services, London has seen a rise of 99% in bus use since 1985.

The Bus Services Bill currently going through parliament may offer a glimmer of hope.

The bill aims to grow bus passenger numbers and improve services by giving areas with an elected mayor the power to introduce bus franchising, similar to the system in place in London. The bill could have a huge impact in the West Midlands, which will vote for its first regional mayor in May 2017.  Franchising would give the council greater powers to regulate bus services, enabling greater control over fares and routes. The system will also make it easier to provide consistency across different operators, for example by introducing an integrated ticketing system, similar to London’s Oyster Card.

The importance of the Bill has been stressed by Birmingham City Council leader, John Clancy who has argued it will promote economic growth and tackle air pollution.

But does the Bus Services Bill go far enough?

Clause 21 of the bill currently prevents local authorities from setting up their own bus companies in the future. However evidence suggests that the 12 local authorities who do still run their own bus companies are amongst the most successful in the country. With greater control over routes and fares, local authority-owned companies like Reading Buses and Nottingham City Transport have some of the highest passenger numbers outside of London and fares remain low. These publicly-owned companies are able to reinvest profits to improve services, rather than these profits lining the pockets of private companies.

Bus fares in Reading, Nottingham and Birmingham

Meanwhile in Birmingham, council tax payers’ money is used to subsidise unprofitable routes which are socially necessary, such as weekends, early mornings and late evenings. Operators have been paid more than £8m to run these services, whilst they are allowed to keep the profits from other routes. A council-run service would be able to use income from more profitable routes to fund less commercially-viable services, rather than the bill being footed by the taxpayer.

Whatever form the new Bus Bill ultimately takes it will provide an important opportunity for Birmingham to improve its public transport. With greater powers to regulate Birmingham’s bus system, the council could ensure public needs are prioritised over commercial profit. Franchising would certainly be a step in the right direction but a wholly publicly owned service could yield even greater results.