Capped
This government is on rapid fire with the ‘hand-out’ policy announcements, which does make one wonder when all the unpopular decisions are going to have to be made.
Today Andy Burnham announced the reintroduction of the £2 fare cap on buses. This will replace the £3 cap implemented by Starmer that followed a previous £2 bus cap introduced by the previous Conservative government.
There is a moderate amount of research on the subsidies towards public transport, including a full study on free public transport in the city of Tallinn, Estonia[1]. One interesting finding on free public transport is that it can lead to over-consumption in cases where other modes of transport like walking or cycling may be of better use for health and transport capacity. It is clear that it is negative if all the capacity on buses is used to replace walks that would be 5 minutes, when in reality bus capacity is more efficient and important for longer travels.
When the £2 cap was used in the UK previously it was found that it resulted in a “5% increase in bus” use, and that it was had a preliminary benefit-cost ratio of 0.71-0.90[2]. This is classed as low-value for money, as it returns less then £1 of benefit for each £1 put in. This does not include the knock on-effects of the policy, and is suggested to be at least 1.0 in actuality.
It may be of interest to look at previous changes in the public transport subsidisation. A comment on the deregulation and removal of bus subsidies after the 1984 Transport Act shows there was cost reduction and productivity increases in the bus services, but a large demand reduction and decreased welfare for the consumer[3].
This relationship between subsidy, demand and consumer welfare is key to consider. In addition if countries the benefits of buses being not only in saving people money, but all the knock on social benefits, such as reduced traffic, pollution, then increasing demand could be important for urban areas.
In the long-term this £2 cap will need to be controlled carefully, to ensure that efficiency, capacity and demand are all hitting their targets, and that capacity is expanding to meet the requirements of the areas buses serve, though not at the expense of other forms of healthy, sustainable travel.
If you have any thoughts, pro/con/any which way, please leave them below. I’d love to read, think about your point, and give you a response of some kind.
- Cats O., Reimal T. and Susilo Y. (2014). Evaluating the Impacts of Fare-Free Public Transport Policy: The Case of Tallinn, Estonia. Transportation Research Record, 2415, 89-96. DOI: 10.3141/2415-10.http://trb.metapress.com/content/vm0jx54u24846r7l/ ↩︎
- EVALUATION OF THE FIRST 10 MONTHS OF THE £2 BUS FARE CAP, A report prepared for the Department for Transport, https://assets.publishing.service.gov.uk/media/681b355b9ef97b58cce3e4e0/evaluation-of-the-first-10-months-of-the-2-bus-fare-cap.pdf ↩︎
- John Preston, Talal Almutairi, Evaluating the long term impacts of transport policy: An initial assessment of bus deregulation, Research in Transportation Economics, https://doi.org/10.1016/j.retrec.2012.06.015. ↩︎
