Public transport roundtable: The future of funding

Jason Hurst
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As the public transport sector continues to recover from the impact of the pandemic, its path to profitability remains fraught with challenges. Jason Hurst shares his reflections on our roundtable exploring the long-term funding strategies necessary for a resilient future for the sector.

Despite an increased patronage, supported by initiatives like the bus fare cap grant, the public transport sector's dependence on government support underscores a deeper vulnerability. Rising costs driven by inflation and labour costs further complicate the financial landscape. To consider how the sector can find a route forward, we brought together experts from across the industry to discuss the key challenges of the current model and possible alternative funding strategies. 

Dependency on government support

A recurring theme in our discussion was the sector's reliance on government support. While this support has been essential in maintaining operations during and post pandemic, their long-term sustainability remains uncertain, particularly with an upcoming election and currently unclear public spending commitments. Participants discussed whether continuous government intervention is sustainable in its current form and explored alternative funding mechanisms that could reduce the sector's dependency over time.

Sustainability of funding models

With the reduction and expiration of elements of support , the current funding models are under scrutiny. The need for revised baseline assessments to understand the impacts of funding changes was emphasised. Participants discussed various pathways forward, stressing the importance of innovative financial strategies to ensure the sector's stability without over-reliance on government support. It was recognised that there were lessons from across the sector that should be leveraged.

Long-term financial and strategic planning

The conversation highlighted the necessity for robust long-term financial strategies that can balance immediate revenue pressures with future capital investments. Participants underscored the importance of flexibility in setting objectives when planning for the long term, allowing for adjustments to meet short-term needs while staying aligned with strategic objectives. Key challenges identified included:

Financial constraints

The sector's reliance on support points to a need for sustainable funding sources that can support both operational costs and future investments.

Regulatory and policy uncertainty

Shifts in government policies and regulatory environments create additional layers of complexity in strategic planning.

Market dynamics and commercial viability

The focus on profitable routes can lead to service gaps in less economically vibrant areas, increasing transport poverty.

Technological and operational adaptations

Adopting new technologies and operational practices requires significant investment and careful planning.

Stakeholder alignment and public perception

Aligning the interests of various stakeholders and managing public perception of service delivery and broader sector changes are crucial for successful implementation and adoption.

Labour market issues

The shortage of skilled labour necessitates efforts to make jobs in the sector more attractive through better wages and working conditions.

Environmental and social responsibilities

Balancing operational needs with environmental goals and social responsibilities adds complexity to long-term planning.

Data and analytics constraints

Comprehensive data is essential for effective decision making, yet it remains a challenge to gather and utilise at both a national and local level.

Franchising as a strategic approach

The move towards a regional franchised network was proposed as a potential strategy and solution to ensure sustainable funding and network resilience. However, the tendering process adopted by early entrants has presented challenges, particularly for smaller operators. Participants emphasised the need for a more inclusive tendering process that accommodates operators of all sizes, ensuring a fair and competitive market.

Important considerations when setting long-term strategic objectives

As the public transport sector looks to the future, setting long-term strategic objectives requires a detailed understanding of the factors that can influence both short-term operations and long-term sustainability. Participants discussed the following key considerations which must be addressed to ensure the development of a robust, adaptable, and equitable solution to ensure the long-term sustainability and profitability of a thriving UK bus sector.

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Selective route profitability

The focus on running more profitable routes can exacerbate service inequalities, particularly affecting less economically vibrant areas. This trend risks increasing transport poverty by limiting access to essential public transport for the most vulnerable or more remote populations. A more equitable approach to service delivery is necessary to address these disparities, whereby ensuring that less profitable routes and communities aren't left behind.

Technological adaptations

The transition to smart ticketing and cashless operations offers numerous benefits, including increased operational efficiency and data which can provide valuable insights into consumer behaviour. However, this shift must be managed carefully to avoid excluding segments of the population who aren't integrated into digital payment systems. Ensuring inclusivity in technological advancements is paramount to creating a sustainable and modern bus sector that serves all segments of society.

Regional and localised strategies

Localised strategies, such as those being implemented in Jersey, Wales, and Greater Manchester, demonstrate the effectiveness of tailoring public transport approaches to regional needs by understanding the specific requirements of a fit-for-purpose bus network at the local level. These models and associated learnings could offer valuable insights for developing more responsive and sustainable transport solutions that can be replicated across the UK and be integrated with other modes. 

Increasing patronage

Addressing the legacy issues created by the pandemic, such as an increase in hybrid working and the perceived fear of using public transport, is crucial for increasing patronage. Initiatives, like Transport Scotland's free travel for under-22s aim to cultivate long-term public transport usage among young people. However, these initiatives must consider their broader social implications and balance the needs of each demographic. Encouraging behavioural changes across different user groups will require innovative thinking and targeted policy responses to boost patronage levels.

The outlook: collaboration is key

The roundtable discussion underscored the importance of continuous dialogue and adaptive strategies within the bus sector. As we continue to navigate the recovery, it's clear that a multifaceted approach—balancing immediate challenges with long-term strategic planning—is essential for sustainable success. By fostering closer collaboration between the public and private sectors and committing to inclusivity and adaptability, it's possible to build a resilient and thriving UK bus sector for the future that's integrated into a wider transport solution.

For more insight, get in touch with Jason Hurst. tracking-pixels