Rural buses and ticket prices under threat

Green campaigners and MPs have warned that cutting or reducing a £500m bus industry grant could push up fares and isolate rural communities after the government confirmed a review of the subsidy. The bus service operator grant (BSOG) holds down ticket prices and supports unprofitable services, but it is now under scrutiny as the Department for Transport braces for swingeing cuts to its £15.9bn budget. In an answer to a parliamentary question tabled by the Labour MP Angela Smith, the transport secretary, Norman Baker, confirmed the grant was under review. "The government will examine carefully the amount of subsidy paid to the bus industry, and the basis on which it is paid, to ensure that it offers the best value for taxpayers' money, and meets wider government objectives," he said. Separately, he also confirmed that without the grants fares would be 6.5% higher, bus services would on average be reduced by 6.7% and that it would have a disproportionate effect outside London. Smith, a Labour MP, said: "I would be incredibly concerned that local bus services would be severely threatened by this. Given that I represent an area where many people are dependent on bus services to get to work there could be a huge economic impact. It's a combination of fare increases and reduction in routes available and for many people the challenge of getting into work would be significant." The review could prove tricky for many MPs that serve rural areas who would be lobbied to safeguard local bus services, including Baker, who serves Lewes in East Sussex. Baker said last week that he recognised the "vital" role played by buses in local economies, but he may reform the way the BSOG is allocated by, for instance, using it to encourage the introduction of smartcards similar to Oyster cards in London. The Campaign for Better Transport group said scrapping or reducing the grant would hit rural areas and discriminate against people without cars. Stephen Joseph, CBT's executive director, said: "It will tip the bus industry into a spiral of higher fares and fewer services. Buses to rural areas and to housing estates would be the most vulnerable to cuts." He added: "Commercial services will get withdrawn and local authorities will not be able to replace them because they are dealing with budget cuts too. And this is not just about buses, this about people without cars being able to access friends and family, education and jobs." Last month the government signalled concern over the profits generated by the five largest public transport groups – Arriva, FirstGroup, Stagecoach, National Express and Go-Ahead – by publishing a report that showed they had higher profit margins than smaller rivals. An industry source, said operators were alarmed by the prospect of severe cuts to the BSOG, but were confident that the DfT realised the likely consequences of withdrawing the grant completely. The chief executive of National Express, Dean Finch, told the Guardian that cutting the subsidy was not the answer to the government's fiscal problems. "This is £500m in the context of an annual DfT budget that is approaching £20bn … they will not get the savings they are looking for by attacking that."