The United Kingdom's deregulated bus system and why it's a big flop, explained

Buses in the UK are the most commonly used mode of public transportation, with 4.44 billion trips being made in England in the 2016/2017 reporting period ending in March, with journeys inside London accounting for half the country’s total. Local bus services across the Great Britain — made up of England, Wales and Scotland — accounted for 59.2 percent of all public transportation trips, compared to only 20.7 percent for the National Rail network.

Passenger trips outside of London dropped by 0.8 percent, though, while inside the capital they dropped by 2.3 percent from the previous report. Even worse, funding by local authorities in England has slipped by £172 million since 2010/2011, a reduction of 46 percent. In Wales, spending has dropped by 39 percent in the same period to £15.8, down from £25.9 in the 10/11 reporting period.

Local bus trips across England in billions

Outside of London, bus markets were all deregulated and handed over to privatised, for-profit companies in 1986 which means that local transit authorities lost the ability to plan and manage their bus network These companies are focused on which routes can deliver the most amount of profit, leading to high levels of service on highly-trafficked routes and sparse service on rural routes that people rely on. The thought behind the legislation was that by deregulating local bus services, there would be more competition between companies for passengers, resulting in higher service and lower fares — but with only a handful of bus companies in operating in non-competitive ways, that’s not the case.

In London, however, the ability to strategically plan and manage the frequency, times and fares of buses was retained, allowing less-profitable routes to be subsidized by ones that make more money. London fought hard against deregulation and eventually won, with the government announcing an indefinite suspension of the process within the city and since then, ridership has almost doubled throughout the capital while it’s dropped by nearly half everywhere else. Having all the different transport modes, including buses, trams, Underground and Overground lines and DLR all under one roof allows for transportation across the capital to be organised to deliver better and more convenient service for all.

The 2017 Bus Services Act was an acknowledgement that the current system isn’t working well, providing local authorities the ability to create a method of partially re-regulating bus services by creating franchises similar to TfL. It prohibits them from creating companies that provide local service or directly compete with the likes of Arriva, FirstGroup, National Express, Stagecoach or others. Cambridgeshire & Peterborough, Greater Manchester, the Liverpool Region, Tees Valley, the West of England and West Midlands are the only regions that currently qualify.

In Manchester it was recently reported that Stagecoach, FirstGroup and Arriva have paid out £184 million over the last decade to shareholders, all while routes have been slashed and fares risen by 55 percent over the same time period.

Retail Price Index compared to local bus fares

Put simply, the privatisation experiment has failed drastically and goes to show that nobody knows what the public wants better than the public itself. Fares have gone up much faster than inflation and bus ridership is plummeting, creating horrible bottlenecks in city centres. Passengers pay fares to ride the bus but to keep operation of some routes going, local councils are forced to chip in or risk socially necessary routes disappearing. The market is dominated by a select few big bus operators, acquiring smaller ones who stand in the way of their profit and creating non-compete environments where operators stick to their own territories and don’t disturb the others.

When fares rise, service is unreliable or standards are too poor, there’s no other option for riders to choose from, resulting in protests in Bristol for more public control of buses in the city. In a 2016 HuffPost article, Labour MP of Cambridge Daniel Zeichner explained that while the retail price index rose by 77 percent between 1995 and 2016, bus fares outside London rose by 156 percent — proving that the promise of a market flooded with competition and benefit for the customer has not been delivered.

Buses run best when owned by the public — who knows the public better than the public? — because there’s no need to provide shareholders with a portion of the profits, allowing them to be directed right back into the operating budget. There’s several cities in the UK like this already, including Blackpool, Cardiff, Edinburgh, Ipswich, Newport, Reading and more and, in other parts of the world, publicly-owned transit agencies are the norm.

With private ownership, bus companies aren’t under obligation to treat their operations like a public service, don’t have to comply with Freedom of Information Requests and local authorities have no say over how, where or when buses run. They also get to take a healthy profit home at the end of the day: in 2014/15 Stagecoach had a 13.5 percent operating profit and Go-Ahead had 13 percent, going directly into the hands of corporate interest and shareholders.

By directing profit back into the operation of publicly-owned buses, we can improve drastically upon the existing service without having to pay a portion of the profit to corporate interests. Bus services can help tackle issues like social exclusion and loneliness, allowing people to participate in society or those without a vehicle access employment, education and healthcare in the city.

📈: HM Government (BUS0103) and HM Government (BUS0415A)