While Covid-19 restrictions may be gone in England and the acute phase of the pandemic has passed, the bus industry is still very much within its grip and is embroiled in a perfect storm of reduced passenger numbers and funding, driver shortages and higher costs.
Of course, it begs the question as to how all of this has been able to happen when as recently as last year, the prime minister talked up the importance of the UK’s bus networks, questioned why the British public does not use them more, and earmarked them as a key facet of the levelling up agenda.
When Covid struck the UK and prime minister Boris Johnson announced the first national lockdown in March 2020, ministers moved to protect bus services by introducing the Covid-19 Bus Services Support Grant [CBSSG]. The grant provided commercial bus operators outside the capital with £1.4 billion to help ease the impact of lost revenue from reduced passenger numbers. A further £226.5 million in funding from September 2021 was then provided through the Bus Recovery Grant, which will taper off in April 2022 at the end of the financial year, which is now mere days away. It was assumed that when the financial support lapsed, passenger numbers will have recovered to pre-pandemic levels. However, this has not been the case.
The onset of the Omicron variant in December and the fact that many firms have been willing to allow staff to continue to work from home permanently or at least for part of the week has seen bus passenger numbers drop dramatically compared to pre-pandemic levels. The Guardian reported in January 2022 that bus patronage had stooped to under 60 per cent of pre-Covid levels after Omicron arrived, which left bus firms reliant on the recovery grants they were still receiving in order to run services. Now, these grants are lapsing, and many bus operators have had to cut service routes ahead of March 31 to help balance the books.
Little respite has been provided by the news that the government’s “Bus Back Better” strategy will also see cuts to funding. The strategy had waxed lyrical about the vital role buses had to play in helping get people back into work following the pandemic, avoiding congestion on roads and helping support the government’s climate goals. Yet, what was originally billed as a £3 billion strategy to level up buses across England has seen its funding shrunk to £1.4 billion for the next three years.
As this funding crisis unfolds, the bus industry is also having to grapple with the challenge of a national shortage of drivers which is pushing costs up further.
In November 2021, Unite the union published its own findings about the extent of the driver shortages, which suggested that they were even more severe than those previously indicated by the industry.
Unite’s survey of over 500 activists uncovered shortages at 99 per cent of bus garages, with 79 per cent of respondents reporting that vacancies had increased since the pandemic began in March 2020.
Almost half [46 per cent] of respondents said that their garage had lost 20-to-40 drivers, a fifth [18 per cent] recorded losses of 40-to-60 drivers, while four per cent lost between 100 and 200 drivers.
The survey revealed that the principal reasons why drivers were leaving were due to low pay [91 per cent], poor conditions [89 per cent] and long hours [68 per cent].
Indeed, to address the shortages, bus firms have had no alternative but to offer higher wages in a bid to entice workers, and the First Glasgow operator in Scotland even began to offer a £4,000 sign-on bonus to try and alleviate the pressure.
If all of this was not enough for the sector to contend with, the industry has also had to weather the cost of rising fuel prices, which, combined with all of the other challenges the sector is facing could prove to be the final nail in the coffin according to one operator.
Grant Palmer Ltd is a family-run bus operator which serves the communities of Bedfordshire and celebrated its 20th year in business in 2019.
UK fuel prices were already on the rise toward the end of 2021 in tandem with those across the globe, but these have skyrocketed over March 2022 following Russia’s invasion of Ukraine. Within just three weeks, the rising costs of fuel combined with reduced passenger numbers and the need to increase its wage offering by 12 per cent to try to alleviate the national bus driver shortage have seen Grant Palmer become a loss-making company having previously been profitable.
Founder and managing director, Grant Palmer, told The Leaders Council: “In simple terms the recent rise in fuel is having a huge impact on my business and has seen us go from profitability to loss-making in a matter of weeks. Our wage costs have also increased by around 12 per cent due to the national shortage of drivers and we are still unable to fill vacancies. With the increase in fuel to contend with alongside this, I fear will be the final nail in the coffin.
“Added to this, the bus industry remains in the grip of the pandemic with greatly reduced passenger numbers. Usually when fuel prices increase substantially, we see an upturn in passenger numbers to mitigate this, but we are not seeing this in the new normal. Concessionary travel has reduced and all five of the local authorities we deal with have reduced concessionary payments against ministerial advice. Meanwhile, the cut-off of support grants and people continuing working from home has meant certain services which have not been cut that rely on commuters have started to make losses.
“The pandemic has also brought about a loss of shops and businesses in our local area, meaning that there is reduced footfall in town centres and less people travelling into town by bus. Two of our main town centres are becoming ghost towns with empty boarded up shops due to the increase in online purchases.
The operator has strived to alleviate the effects of this perfect storm as best it possibly can, however, should the situation not change, Palmer feels that it could see many bus operators reduced to offering a minimalist service, or go out of business entirely.
He explained: “In an effort to mitigate the effects of all this, we’ve had no alternative but to join the swathes of other bus firms de-registering non-profitable routes and slashing services, switch to more fuel-efficient vehicles and pass the rising costs onto customers where possible through increased fares. We have recently renewed our fuel hedge, and it is more than double the cost-per-litre as our previous one.
“At this stage if prices remain where they currently are, I fear most bus services across the country will be vastly reduced in frequency or cease altogether. It is a very worrying time indeed for our industry.”
Photo by Johen Redman on Unsplash
