Written evidence submitted by Centre for Cities (BUS0054)


About Centre for Cities

Centre for Cities is the UK’s leading think tank dedicated to improving the economies of the UK’s cities and largest towns and the opportunities of the people who live and work in them, helping these places realise their economic potential. As an independent, non-partisan organisation, we produce rigorous, data-driven research and policy ideas to help cities, large towns and government address challenges and opportunities, from boosting productivity and wages to preparing for the changing world of work.


We focus on the UK’s 63 largest primary urban areas, or PUAs, (i.e. the measure of the built-up area of a city) rather than local authorities, given PUAs offer a consistent measure of the concentration of economic activity. We work closely with local leaders, government and business to ensure our work is relevant, accessible and of practical use, and our popular events programme brings together policymakers and industry thinkers to discuss key issues affecting cities.


Terms of call for evidence

The Transport Select Committee is scrutinising the implementation of the Government’s national bus strategy, Bus Back Better, and the challenges the bus sector faces as it recovers from the pandemic. We are particularly interested in receiving written evidence that addresses:


a) Challenges facing the sector as it recovers from the pandemic and the effectiveness of steps taken by both Government and stakeholders in response;

b) Progress against the ambitions and targets set out in national bus strategy including the effectiveness, pace and priority of the strategy’s implementation;

c) Innovation in the sector, including examples of new methods that have been trialled successfully;

d) Bus funding over the short and long term; and

e) Decarbonisation of the sector and modal shift from other forms of transport.

Centre for Cities’ response

Deregulation of buses is at the core of the UK network’s problems

Deregulation in 1986 as a result of the Transport Act broke the link between cities and bus operators, removed powers and weakened the incentives for cities to support bus services. Cities lost control of the routes, frequencies and quality of the service, the setting and collection of fares, and the ability to use fare revenues and subsidy to fund the wider network. Integration with other municipal public transport modes was weakened.


The net result is that a vital piece of urban infrastructure is not regulated by the cities that rely upon it, and operators are often ‘out of the room’ when decisions are made that affect them. Only the small number of cities that have retained ownership of municipal bus companies can be fully confident that the vision and incentives of their local bus operators will be aligned with those of the city council.


Deregulation opened up problems in local bus services that were absent before, i.e. as levels of cross-subsidy between profitable and loss-making routes have reduced and weakened bus networks. Cities can no longer use revenues from profitable routes to subsidise unprofitable routes in order to support a comprehensive city-wide bus network. Cities must directly support unprofitable services that private operators stop running, such as those early in the morning or at weekends. Some of the cross-subsidy that would support a more extensive, efficient and equitable bus network leaves the system as dividends to shareholders of private bus companies.


Bus markets are now local private monopolies. The market has consolidated into five major operators controlling 70 per cent of the national bus market with little overlap or competition between them. Their core territories, covering entire cities as in the West Midlands or Brighton, or large parts of them as in Greater Manchester, are largely no-go areas for other operators.


Without market regulation by cities or government, these local monopolies give existing operators the market power to set higher prices for passengers and provide a lower quality bus service for many residents away from profitable routes. The potential for new operators to compete for passengers outside of London is in practice limited. Challengers know that dominant existing operators will respond to competition by temporarily improving services or reducing fares to drive new entrants out of the market. Fares and service levels return to their original level once competition has been removed, outweighing the brief benefits to passengers.


Duplication has also developed on the most profitable routes. In the limited areas where networks overlap and routes have an extremely high density of potential customers, such as Manchester’s Oxford Road, competition can be sustained. Passengers at bus stops value convenience, i.e. the first bus that turns up, so the focus of operators is to run as many services as possible on these routes to be the first bus. It also brings down fares. But this can create overbussing, when the capacity and frequency of services exceeds that needed to satisfy demand so buses run emptier, leading to higher levels of traffic, emissions and worse air quality. This duplication initially saw bus networks expand after deregulation but they have since declined, while in London the network has continued to grow.


Integrated transport has also become more difficult. The main competitor for public transport should be the car because of the damage caused by congestion. But deregulation has left private bus operators in competition not just with cars, but with one another and other public transport. This reduces the efficiency of the public transport system because of duplication, and diminishes the quality of the transport offer without integrated and co-ordinated marketing, ticketing, pricing, timetables and routes. Metro mayors are responsible for improving local transport and already control some public transport services, for example local rail in Liverpool City Region, and light rail in the West Midlands and Greater Manchester. Integrating deregulated bus services into these networks when they have different incentives, organisational structures and finances is difficult.


Mayors and private bus operators are in competition for fares on the network, and this will only increase as light rail networks expand as planned and if rail devolution takes place. The potential to use revenues from light rail to cross-subsidise buses and adapt bus routes to make greater use of new rail links, as London did at the launch of the Night Tube, is not possible under deregulation.


Buses are key to levelling up and the Covid economic recovery

Centre for Cities has long argued that the government’s flagship domestic policy agenda of levelling up should focus on improving the economic underperformance of the UK’s largest cities and towns, through increasing standards of living and improving each place’s productivity potential. It is the underperformance of this country’s largest cities, excluding London, which is driving the North-South divide. The pandemic has created further risks of levelling down previously prosperous places, whilst inflicting the greatest damage on places like Hull, Blackpool and Birmingham which were already economically weak before its onset.


Strong local bus networks will be at the core of levelling up and help these places recover from the pandemic. Central to this argument is that public transport within (not necessarily between) cities is critical to the broader economy. Good urban mobility does not just enable quick commuting, but it increases the number of workers who can access the locations in which their jobs are located, particularly in city centres.


The resulting effect brought about by this clustering of jobs in dense places is known as “agglomeration”, where the exchange of knowledge, sharing of infrastructure and supply chains and matching of workers to firms lead to increases in productivity. The economies of scale are also significant, i.e. the bigger the city, the bigger these benefits. This concept is key to unlocking economic growth and therefore levelling up.


There are various ways to think about how buses can in practice connect workers to these areas of economic activity. For example, for those hardest hit by the pandemic and now looking for work, buses will be an essential form of affordable travel to allow these jobseekers to access opportunities; looking at pre-pandemic data from the Department for Transport’s National Travel Survey shows that in 2019, nearly 8% of all trips by those on lower incomes were by bus, compared to close to 4% for those on higher incomes (the figures are 32% and 45% for cars respectively).


The economic recovery will also involve connecting people to opportunities for upskilling and reskilling. Young people, many of whom will not have access to a car, will need to be able to access training at colleges, universities and other sites. Older people will need to travel to acquire new skillsets, with the government promising funding that will allow retraining at any age. Cuts to bus services therefore risk hitting students and pensioners particularly strongly.


Around 14% of jobs and 25% of all high-skilled jobs that offer the highest wages and drive economic growth are located in city centres. This is because city regions offer the widest labour markets that high-skill firms need and, as mentioned, their centres are home to dense concentrations of other high-knowledge (or “exporting”) businesses which drive productivity and economic growth as they are not confined to their local markets. Buses are critical to providing these businesses with access to a wide labour pool. Outside of city centres, jobs will also be located at business parks and technology campuses remote from most homes; the availability of buses will ensure people can access these workplaces.


It is worth also noting that buses increase the passenger capacity of roads while relieving vehicular congestion, which slows down commutes and shrinks labour markets; for example, up to 90 passengers who might otherwise require over 80 cars to travel can be carried on a single double decker-bus in the road space of fewer than three cars. As mentioned, we have written about why it is the lack of density in how British cities are built which prevents people from living near urban transport and ultimately hurts access to job opportunities.


Bus networks across the UK should be franchised

Over the longer term, local leaders should be given the powers and resources to control their own city’s bus services. Today, elected officials outside London have few powers to coordinate or make changes; as discussed, the deregulation of local bus services in 1986 changed the focus from providing city-wide networks to running only services that could turn a profit.


London serves as a well-documented example of the city which has bucked the bus trend seen across the rest of England, and that is because of the franchised model. The capital’s mayors have used control of the capital’s bus network and the revenues raised to establish the most significant pro-bus policies in the country. Operators in London, where there is competition to run routes and the mayor collects the fares, run services on a lower profit margin than they do elsewhere in the country where markets are largely monopolies and operators collect fares. The Mayor of London is able to invest the money saved into the network. More funding, more bus lanes and a congestion charge have supported more frequent and reliable buses, a 24-hour service, lower and more concessionary fares, cleaner vehicles and a new, integrated contactless ticketing system.


While an Enhanced Partnership approach, as encouraged by the Bus Back Better strategy, might seem the easier option as the next step towards reregulation, only franchising will allow mayors meaningful controls over cities’ bus networks. Without bus franchising, mayors cannot specify services to run where most needed to increase prosperity and encourage regeneration. Similarly, those mayors with the existing powers to franchise should do so imminently, rather than using the Enhanced Partnership approach as an intermediate step. Through this, mayors will also be able to decide how best to deploy newer, greener bus models.


The government should continue to support Greater Manchester, the Liverpool City Region and South Yorkshire, who are different stages in the franchising process, whilst encouraging other Combined Authorities to pursue full public control of their local bus networks.


The future of bus policy

This government has shown it believes in the importance of buses. The £3 billion national bus strategy, Bus Back Better, published in March last year acknowledges the role of local buses in improving social cohesion and avoiding a car-led pandemic recovery; more buses on our roads support the government’s net zero agenda, where the modal shift from cars to electric and hydrogen buses maintains mobility but cuts the number of vehicle journeys and harmful emissions cars produce. Reports suggest the pot available from central government has shrunk to less than £1.5 billion; government should maximise the funding available and ensure it is fully deployed.


Given the state of bus patronage as a result of Covid-19, with ridership still at 65 to 70 per cent of pre-pandemic levels (Figure 1), central government should work with local transport authorities to draft a longer-term plan on the future of bus services across the UK, considering how to encourage the public back onto bus services whilst adapting to changing passenger numbers.


It should be reiterated that developments towards local control do not lessen the need for continued funding from Whitehall; if anything, these new models will require additional central and/or local funding streams to be considered. The government recently agreed to extend the Bus Recovery Grant funding, introduced as a direct result of the pandemic’s impact on bus patronage, to October, and provide the “final tranche” of £150 million for affected services across the country. This is intended to cover costs where fares cannot, but there is still no detail as to how this emergency funding will be allocated by city region, whilst the sum of £150 million to cover the next six months is nowhere near enough.


There is no time like the present for government to restate its commitment to buses. With the ongoing debate on the Integrated Rail Plan (IRP) and the likelihood that most of its scheme will not materialise until the 2040s, alongside the discourse around how much investment in rail infrastructure really can “level up” the economy, buses are a comparatively quick-fix solution which should not be ignored.


The broader issues with UK cities and their underperforming transport systems

It is also worth framing the underperformance of the UK’s bus network in the context of the broader public transport system. Centre for Cities recently conducted research into intra-urban transport across the UK’s biggest cities (excluding London) and the subsequent effect on the economic performance of these cities. The transport networks going into the centre of the UK’s biggest cities were compared with their equivalents in Western Europe, as these networks see the highest demand for public transport. We looked at Belgium, Denmark, France, Germany, the Netherlands and Sweden.


Our research has found that at peak times, compared with Europe, fewer people can reach the centre of Britain’s big cities, indicating that they are much smaller in size than their populations suggest. Commuting by public transport to city centres from the suburbs is easier and faster in these Western European cities, as on average, 67 per cent of people can do it in 30 minutes, compared with 40 per cent in the UK. This reduces the benefits on offer to businesses that locate here.


The problem is not to do with city size; the area covered by public transport networks in large British cities is not always smaller than those in big European cities. In five of the nine largest cities outside London, the area within a 30-minute commute is similar in size to their European peers. The issue is related to British cities having poor public transport accessibility because they are not as dense as European cities. In all of Britain’s big cities, fewer people live close to the centre, so it is harder for public transport to accommodate large numbers of commuters. As a city becomes bigger, connectivity and congestion issues are likely to increase. In response to this, densifying larger cities allows people to share land more efficiently, which in turn supports demand for public transport in terms of capacity, frequency, and infrastructure, especially to city centre locations.


But in all of Britain’s big cities, fewer people live close to the centre, so it is harder for public transport to accommodate large numbers of commuters. European cities have a much more mid-rise built form and apartment living is more common, so a greater number of people reside close to public transport. British cities’ reliance on terraced and semi-detached housing has had the opposite effect, reducing commuting by public transport and the efficiency of the networks. Cities like Birmingham should be substantially denser than Liverpool, just like Lyon is denser than Toulouse or Nantes.


This decrease in the ‘effective size’ of big cities is estimated to cost the UK economy £23.1 billion each year. By reducing the size of the labour market for businesses, as well as workers’ access to high-paying, high-productivity jobs and activity in city centres, poor public transport accessibility in big cities diminishes agglomeration effects and, by extension, productivity and economic performance. For instance, Rome and Manchester are the same size but Rome is 55 per cent more productive, partly because a much larger share of its workforce can travel into the city centre by public transport.


The nature of the urban form of cities is also likely to shape the transport options available. Greater densities increase demand for public transport, which makes buses, tram or metro systems more viable. Without efforts to change the built form of big cities, expanding their public transport systems will not deliver European-style transport benefits.


Related Centre for Cities research

Please see below for more of our research which is most relevant to this debate:



April 2022