Fuelling the debate: what Britain’s bus crisis tells us about public ownership

31 March 2020

Michael Livesey - Doctoral Researcher, Department of Politics and International Relations, University of Sheffield

UK public transport is undergoing a crisis as bus networks across the country have seen huge cutbacks in service provision. What are the possible solutions?

In 1985, the UK Government passed the Transport Act: privatising Britain’s bus network, in the belief that doing so would drive up patronage and drive down costs. The 1984 Buses White Paper argued that

Without the dead hand of restrictive regulation fares could be reduced now on many bus routes and the operator would still make a profit. New and better services would be provided. More people would travel.

Three decades later, in its 2019 manifesto, the Labour Party asserted that privatisation had a ‘devastating’ impact on bus services nationwide. Labour pledged to municipalise Britain’s network, justifying this measure in exactly the same terms as had been offered for mid-80s privatisation: greater usage, and cheaper travel.

Britain’s bus networks are currently in ‘crisis’. 3,000 bus routes have been cut since 2010; there were 17.3 million fewer bus journeys in England last year, compared to 2017. The crisis has evolved silently. Bus policy enjoys a lower level of political capital than rail, and occupies a smaller space in our political conscience. And yet, more people travel by bus than any other form of public transport. Indeed, bus travel accounts for three times the number of passenger journeys as rail. Shrinking bus routes impact upon many groups – including disproportionate numbers of students, the elderly, the disabled, and those on lower incomes.

Some observers trace Britain’s network collapse to the Transport Act. The Institute for Public Policy Research recently described privatisation as a ‘public policy failure’. Meanwhile, the Campaign for Better Transport argued that ‘bus deregulation in the 1980s was supposed to improve Britain’s bus services, but it made them worse’.

The bus crisis, in these analyses, is set within broader debates about public versus private ownership. Proponents of public ownership argue that governments run services more effectively: with management decisions made on the basis of public interest, not shareholder value. Mariana Mazzucato concludes that public ownership guarantees sustainability and quality, since investments are dictated by long-term horizons rather than short-term profits.

Conversely, supporters of privatisation argue it enhances provision. The 1984 White Paper exemplifies this rationale, linking greater competition with lower costs and market responsiveness. This line of thinking came to dominate policy-making from the late 1970s: following the foundation of think tanks like the Centre for Policy Studies/Adam Smith Institute (1974/1977), and Thatcher’s election in 1979.

So, when it comes to bus services, which argument is right? In the following, I will use data from the Department for Transport to assess the impacts of private/public ownership on bus usage and cost of travel.

Bus usage in the UK has been falling for the past half-decade: from a peak of 14 billion passenger journeys in 1961, to a present-day low of 5 billion journeys. The Transport Act did not reverse this trend. In fact, the decline of patronage accelerated threefold after the Act’s introduction. The rate of decline tripled from 1.2 percentage points in the ten years before the Act, to 3.4 points subsequently.

What about the cost of fares? In 1984, the British Government predicted that privatisation would bring down the cost of travel. In actual fact, fares became more expensive (even when adjusted for inflation). In London, fares were falling prior to 1985 – by around 3 percentage points annually. After privatisation, costs rose dramatically: at a rate of 10 points per year. The same story of spiralling prices post-privatisation prevails outside London, with fare costs rising by 6 points per annum in these areas after 1985.

Contrary to the expectations of the 1984 White Paper, then, privatisation appears to have impacted negatively on patronage and cost. According to these findings, private ownership of bus networks is not associated with better usage or cheaper provision.

What about public ownership? The continued existence of a handful of publicly owned networks in Britain allows us to analyse the impacts of municipalisation. This data suggests that public ownership correlates with greater usage and better services.

The municipalisation of the London bus network through TfL in 1999, for example, coincided with a substantial increase in usage. Patronage was already rising in London in the decade before TfL’s creation – at a rate of 1.3 percentage points per year. But municipalisation precipitated a take-off in passenger journeys. The years 1999-2009 witnessed annual ten-point increases in passenger journeys in London, multiplying pre-TfL growth by a factor of 7.4.

There is a similar correlation between public ownership and patronage in the five non-London unitary authorities that also own their networks. According to this data, we can expect residents of a non-London authority which owns its network to take around 75 more journeys by bus each year. Nor do residents of these authorities suffer a lower quality of provision. In the last thirteen years, buses in these five areas were 10% more likely to arrive on time than those in the other non-London authorities

Privatisation of Britain’s bus network under the Transport Act did not lead to an increase in bus usage. Nor did it bring down the cost of travel. On the other hand, my findings suggest that there is a positive correlation between municipalisation and patronage. A policy facilitating municipal ownership may enhance usage of Britain’s buses, without compromising on fare prices or promptness.

Theories of public ownership and management for the public good, covered earlier, clarify these findings. In the UK’s five largest private bus companies (which run 70% of all journeys), dividend leakage amounts to 10% of total investment. By contrast, Reading Borough Council reinvests its annual dividend, providing a 15% boost to network funding. This discrepancy may explain why bus travel is up by 31.2% in Reading since 2010; and down by 5.6% in the rest of the country.

My analysis offers an impression of solutions to Britain’s bus crisis. Public ownership might encourage sustained investment in a quality bus network, providing for increased levels of patronage. Such outcomes are worthy of pursuit: facilitating reductions in carbon emissions; enhancing air quality; and connecting communities with vital services, like healthcare and high streets.

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