The Public Transport Management Act (PTMA) was passed in September 2008, just before the previous government lost power. As I have explained previously, the PTMA allowed for greater regulation of public transport services – in particular bus services. The most controversial part of the Act allowed public agencies to contract all public transport services in their area, should they so desire. It is this part of the Act which the current government is now reviewing.
Paul Mees’s latest book, Transport for Suburbia, dedicates a whole chapter to planning, markets and public transport. It has some very interesting points to make about the regulation of public transport. As a bit of background, in 1989 public transport was deregulated in New Zealand, creating a split between commercial services and subsidised services, and perhaps most importantly, removing any particularly strategic way of putting together bus and train routes – leading to the messy situation that we find ourselves in now.
Interestingly, around the same time the UK went through a similar process of deregulation – although London was excluded from this. The fact that London was excluded provides an excellent ‘case study’ for comparing the effects of deregulating public transport services. Mees picks up on this:
…the market model seemed very attractive to policy makers… and so bus services were deregulated in both Britain and New Zealand. However, even the Thatcher government baulked at applying the market to London: the British capital was spared, initially temporarily, but eventually permanently. London was required to competitively tender its bus services, but under the control of a public agency which determined timetables, routes and fares. Without intending to, the British government set up an experiment to compare market-based public transport with the planned variety, and the excellent data published by the UK Department of Transport enables the results to be assessed.
The near-consensus, which includes pro-market observers like the European Commission and Wendell Cox, has been that the London model dramatically outperformed deregulation. In the decade following deregulation, operating costs per bus were reduced, and the number of bus-kilometres operated increased, in both London and the other cities. This was due partly to wage cuts and partly to increased use of regular buses and minibuses instead of the traditional double-deckers. But costs per passenger did not fall in the deregulated cities, because patronage declined dramatically: the promise that deregulation would produce more customer-focused services was not fulfilled. In London, by contrast, patronage held steady so the cost per passenger was significantly reduced…
…Before deregulation, London produced about one-third of urban bus patronage in England; now it accounts for two-thirds, despite housing only 7 million people, compared with 12 million in the six metropolitan counties. But while only carrying a third of the passengers, the metropolitan areas consume nearly two-thirds of ‘concessionary fare reimbursement’ – a result that appears to be due to the higher fares charged and the increasing domination of ridership by those travelling on concession tickets.
British bus deregulation has not produced free-enterprise public transport at all; nor has it produced innovative services that respond to contemporary needs. Instead, it has produced a new version of the 1970s ‘British disease’ that Thatcherism was supposed to have cured: a mendicant, declining industry that relies increasingly on carrying ‘captive’ passengers at concession rates or even for free, and charging the government at full-fare rates.
Mees also talks briefly about the New Zealand situation, and what the PTMA meant:
Similarly disastrous result in New Zealand prompted the repeal of deregulation which was replaced by the ‘London model’ from 1 January 2009. Even the leader of New Zealand’s ultra-dry ACT party supported the change, pointing out that following deregulation ‘Auckland moved from being the second-highest user of bus transport in the Australia and New Zealand region to the second-lowest on a population-patronage ratio. Britain is now the only part of the developed world where the policy persists.
Unfortunately that might not be true for too much longer. We really can’t mess with the PTMA.