£167m for buses as virus destroys travel demand

Covid-19

Bus operators in England were thrown a financial lifeline by the DfT this week, with a £167m emergency fund to help them survive the Covid-19 virus pandemic that has seen travel demand collapse across all transport modes.  

The Covid-19 Bus Services Support Grant will be paid over the next three months at a rate of up to £13.9m a week. 

It comes on top of the Government’s commitment to continue paying operators Bus Service Operator Grant on the basis of pre-virus service levels. 

The DfT has also urged local authorities to maintain operator reimbursement for the English National Concessionary Travel Scheme at pre-virus levels, and to continue payments for tendered service contracts. 

The £167m will be paid to operators on the condition that they maintain services at a level sufficient to meet the much reduced demand. They must also allow adequate space between passengers on board to minimise the risk of the virus spreading. 

 Transport secretary Grant Shapps said: “We have been very clear during the outbreak that the best way to stop the spread of the virus and protect the NHS, is to stay at home if possible. 

“[But] Our buses are a lifeline for people who need to travel for work or to buy food – including our emergency services and NHS staff – and it’s vital we do all we can to keep the sector running.”     

Confederation of Passenger Transport chief executive Graham Vidler said the funding would “plug the gap between the cost of running essential routes and revenue being received, and will help the country through the outbreak, allowing critical journeys to continue”.

Travel demand has collapsed following the Government’s introduction of travel restrictions to control Covid-19’s spread. On 23 March the Prime Minister announced that people would only be allowed to leave their home to: shop for basic necessities; one form of exercise a day; any medical need; and for travelling to and from work, but only where this is absolutely necessary and cannot be done from home. 

Businesses including pubs, cinemas, theatres and casinos were ordered to close on 21 March. Shops selling non-essential goods were ordered to close on 24 March. 

Road traffic levels have slumped and passengers have deserted buses and trains. The London Underground was this week carrying just five per cent of the passenger volume it carried this time last year. 

The DfT has taken temporary control of all remaining rail franchises. It cannot take control of the buses because the industry is largely privately-owned. 

One bus operator this week highlighted the financial peril the industry would be in without a rescue package, telling LTT that patronage was down 90 per cent but service levels were down only 40-50 per cent. “There would be a point in time when we would all have gone bust. It’s just basic arithmetic.”

Stagecoach and FirstGroup have both put non-essential capital expenditure on hold. Stagecoach directors are sacrificing 50 per cent of their salaries/fees for a period of time. 

The pandemic is certain to delay FirstGroup’s plan to sell its North American businesses, which have also been badly affected by the virus. 

The Urban Transport Group is calling for Government funding for its members, who operate tram, Metro and Underground systems. The UTG is also doing some initial thinking about what the funding and organisational structure of England’s bus industry should look like once the virus has been brought under control. 

“We’re looking at an industry  that is going to be kept on life support,” a participant in the discussions told LTT. “Operators are going to stop investing in new fleet, so it doesn’t put them in a condition to come out all guns blazing after the crisis is over. It’s too early to say where all this leads.” 

The bus industry had appeared to be on the cusp of a renaissance with ministers announcing billions of pounds for bus priority in February and promising a national bus strategy.