Saturday, 17 March 2012

Reasons not to get BSOGged down

It is not very often that I use this blog to comment on topical issues. However, one subject has been troubling me greatly of late, so I am interrupting the usual stream of travelogues and whimsical observations on daily life in a bus company, to bring you my thoughts on the forthcoming cut in BSOG.

As most readers will know, the rate of Bus Service Operators’ Grant will reduce by twenty per cent from the start of April, as part of the government’s wider assault on public expenditure in all its forms.

The industry in England found out about this cut nearly eighteen months ago so we have had plenty of time to prepare for it.

However in the last few weeks, as the realisation dawns that this change is imminent, there seems to have been a sudden increase in the volume of protest, with much comment from industry insiders and observers predicting dire negative effects for bus companies as a result of this reduction.

I find myself unable to agree with those taking this position, and I really worry that this crescendo of dissenting voices could cause far more damage to the industry than the cut itself ever will.

Clearly it is always going to be difficult to swallow any reduction in support for our industry. We can all recite many reasons why a strong and prosperous bus network is an important feature of a well functioning society. While the industry cherishes the opportunity afforded by its deregulated status to innovate and attract new users, most would agree that interventions in the form of BSOG, support for socially necessary services and (perhaps more contentiously) concessionary fares, strengthen the quality and quantity of service provision overall.

However, there are many other industries whose fortunes rely to a greater or lesser extent on government funding, and all could no doubt put up an equally impassioned argument as to why that support should not dwindle.

In Norman Baker MP, Parliamentary Under-Secretary of State for Transport, it seems to me that the industry has a friend. I have not met him, but I have heard him speak on several occasions and been impressed every time. The impression gained from those who have regular dealings with him is that he is positively inclined towards public transport, and bus travel within that.

In the context of cuts faced by other parts of government, and recognising that prior to the October 2010 Comprehensive Spending Review there were widespread predictions that BSOG would be further reduced or would disappear altogether, my impression is that the industry has got away far more lightly than we might have done.

For Velvet, the reduction in BSOG will increase our total costs by two per cent. Unwelcome certainly, but hardly the end of the world.

From some of the comments I have seen whistling about in the last few weeks, you would gain the impression that this will bring the industry to its knees. Frankly, if the industry is in such a state that a two per cent increase in its costs will have that effect, we are in a very poor state indeed.

Yes there may be a need for some fare increases to bridge the gap – we are businesses after all and do have to balance the books – but these need hardly be at a level that will drive customers away in their millions. And to be honest, with eighteen months’ notice, I would hope that any commercially aware company would have been planning for this change long ago, and using the range of tools and skills at our disposal to improve our products and drive organic growth.

There are those who would argue that by accepting this cut with minimal protest, we send the message that we are an easy target for further cuts in the future.

By contrast, I would argue that by accepting that we cannot be exempt from reductions in public expenditure, by acknowledging that we have avoided a potentially far worse fate, and by adopting a positive “can do” approach to continuing to develop our businesses and attract more people to public transport, we will demonstrate to the minister, to government as a whole and to other observers that we can be trusted as responsible custodians of public money.

The alternative position – to resist and oppose this cut – will portray us as negative and uncooperative. If I were the minister faced with such a volume of opposition to what seems really to be a pretty tame measure, I might just be asking myself how much I would really want to place my faith in these private bus companies, and whether it might be time to look again at the commercial freedom we enjoy.

That’s why I cannot support those of my colleagues who have chosen to adopt a confrontional stance towards this measure, even though I hold many of them in the highest regard as individuals and respect them greatly. Instead I would exhort my fellow operators to invest our time in showing the watching world that we have the energy, spirit and self-belief to overcome the challenge that the reduction in BSOG represents, and that we will not allow it to deter us from our mission to showcase the bus as the mode of choice for the nation’s future transport needs.


  1. You are to be commended, Sir, for allowing facts and rationality to get in the way of a good argument.

    One query does however arise. Might one also assume that private operators have the freedom to use their grant as they see fit, thus negating any strategic influence that government might exert through their spending, or is it the case that operators whose endeavours most closely follow state objectives are be allocated a larger/tastier slice of the pie?

  2. There are two separate issues here - the reduction in BSOG on its current terms, and the wider question of whether BSOG is fit for purpose or whether it could be improved upon in some way.

    I deliberately avoided the second point because it's not particularly relevant to the 1st April reduction, and also because I didn't want to confuse the two issues.

    However there is clearly a legitimate debate about whether it is right simply to reward operators indiscriminately for running miles, or whether support might be targetted at operators and routes that best meet public policy objectives.

    I'm open minded about what the right answer might be, but I'm a great believer in keeping things simple and transparent, and those are both assets of the current system. There must also be the most direct relationship possible between the method of allocation of any funds, and the demonstrable achievement of the outcomes that they are designed to achieve.

  3. Dont i just wish all bus operators and their managers could talk plain common sense as you do.More power to your elbow.Well done.