Report on Public Transport
Provision in Rural andDepopulated Areasin the United Kingdom

07

Discussion Paper 2015• 07
Peter White

University of Westminster,
United Kingdom

Report on Public Transport Provision in
Rural and Depopulated areasin the United Kingdom

Discussion Paper No. 2015-07

Peter WHITE
University of Westminster, United Kingdom

March 2015

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

Table of contents

THE INTERNATIONAL TRANSPORT FORUM ...................................................................... 2
Discussion Papers..................................................................................................................... 2
TABLE OF CONTENTS .............................................................................................................. 3
1. INTRODUCTION .................................................................................................................... 4
2. STRUCTURE OF THE PASSENGER TRANSPORT INDUSTRY IN THE UK .................. 4
Rail industry .............................................................................................................................. 5
Bus and Coach Industry ............................................................................................................. 5
Trends in the bus and coach industry......................................................................................... 8
Evidence from the National Travel Survey (NTS) .................................................................... 9..................................................................................................................................................... 11
3. DEVELOPMENT OF DEMAND-RESPONSIVE SERVICES ............................................ 11
4. THE APPROPRIATE ROLE FOR SMALLER VEHICLES ................................................ 12
5. TAXI REGULATION ISSUES ............................................................................................. 13
Main features ........................................................................................................................... 13
Overall trends .......................................................................................................................... 14
Likely factors behind the growth ............................................................................................. 17
The regulatory framework ....................................................................................................... 17
Effects of limiting numbers .................................................................................................. 20
Effects of deregulation on demand ...................................................................................... 22
Other issues in the British case ............................................................................................ 23
Experience of the changes introduced under the 1985 Transport Act. .................................... 23
The Law Commission proposals ............................................................................................. 24
Some broad conclusions on taxis ............................................................................................. 25
6. SPECIFIC INITIATIVES IN RURAL PUBLIC TRANSPORT PROVISION IN BRITAIN25
Postbuses ................................................................................................................................. 25
Volunteer-driven minibuses..................................................................................................... 26
Enhancement of commercial ‘conventional’ bus services ....................................................... 26
Government funding of service experimentation .................................................................... 27
Car sharing schemes ................................................................................................................ 27
Integration of public school and social services transport ....................................................... 28
7. ECONOMIC EVALUATION OF RURAL TRANSPORT OPTIONS ................................. 28

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

1. Introduction

In drawing lessons from experience in the United Kingdom, it is useful to firstly examine some ofthe overall differences between the UK and Finland, both in respect of aggregate statistics andstructure of the public transport system. The following statistics indicate the main comparisons.
Table 1. Comparative statistics on Finland, United Kingdom and EU
UK
Population (2012) (million)
Area (1,000 km2)
Population density (persons/km2)
GDP per head (Purchasing PowerParity, PPP) (2011)
Percentage population change 2011-12
Person-km travelled (‘000m) (2011)
Person-km per head (2011)

Finland

EU27 average

62.99
243.80258.40109+0.8%
767.5012.1855.40
338.40
15.95
115
+0.5%
77.40
14.331116.00
100
+0.3%

85.4%
5.9%
7.4%
1.4%
0.466

84.6%
9.7%
5.0%
0.7%
0.551

82.7%
11.2%
7.0%
1.6%
0.483

Modal split of motorised land transport (2011)
Passenger cars
Bus & CoachRail
Tram & Metro
Car ownership per head

Source: EU Transport in Figures: Statistical Pocketbook 2013. European Commission, Luxembourg, 2013. Tables 1.1, 1.5,
2.3.3, 2.3.4, 2.3.5, 2.3.6, 2.3.7 and 2.6.1

In many respects the main indicators are very similar (GDP in PPP terms, overall modal split, carownership levels), with the very striking difference in population density, that for Finland being lessthan one tenth of the UK figure. In these circumstances it is not surprising that car ownership per headis somewhat higher (by 18.2%), and likewise total distance travelled per person (by 17.6%).
An implication of these contrasts is that even areas regarded as ‘low density’ within the UK might
not be classified as ‘low density’ by Finnish standards, and this may affect transferability of results.

2. Structure of the Passenger Transport Industry in the UK

The term ‘United Kingdom’ (UK) refers to the whole of Great Britain and Northern Ireland, but
for most purposes this text will deal with Great Britain (GB), comprising the island covered byEngland, Scotland and Wales. The population of Northern Ireland is approximately 1.5 million. Thereis also a substantial difference in the structure of the industries, in that Northern Ireland retains a

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

largely state-owned structure through the holding company Translink, which operates the rail system,
rural and interurban buses & coaches (Ulsterbus) and the Belfast city network (Metro). In theserespects it has more in common with the adjoining Republic of Ireland than the rest of the UK.
Within Great Britain, the passenger transport industry has been largely privatised, and the bus andcoach sector also subject to deregulation.

Rail industry
Network Rail (NR): a state-controlled body owning the infrastructure (track, signalling, stations,etc.). Funding is derived from access charges paid by train operating companies, but an increasing
share comes direct in grants from the state. Hence, in order to estimate costs of different parts of the
network it is necessary to apportion the state grant to them. It is effectively ‘nationalised’ in that the
government guarantees borrowings, which are now made from the Treasury.
Train Operating Companies (TOCs): these operate passenger train services over specific parts of
the network for which they have franchise contracts with the Department for Transport (DfT). The
contracts specify a level of service to be operated, and a net grant to be paid to each company perannum based on its franchise bid (with adjustments to allow for other factors, notably variations inGDP). In a few cases a ‘premium’ is paid back to the state (i.e. total revenues exceed costs), although
this is somewhat artificial due to the element of direct grant support for NR’s costs (above). However,companies operating in low-density regions generally receive a large net grant (for example, Scotrail,
Northern Rail, and Arriva Trains Wales). In other cases, a mix of low-density routes and higherdensity flows are handled by the same franchise (for example, East Midlands Trains, covering theLondon – Sheffield main line and adjoining regional services).
There are also some open-access operators, which do not have franchise agreement with DfT, but
run commercially at their own risk on selected long-distance routes. Freight operators are important interms of track capacity needs in some areas, but constitute only a small part of NR’s access charge
income.
Rolling Stock Leasing Companies (ROSCOs). Almost all passenger rolling stock is owned byleasing companies, rather than the train operators themselves, who pay an annual lease charge for eachvehicle. Hence, TOCs incur very few capital costs (rolling stock being leased, and infrastructure
provided by Network Rail). A very small operating profit margin may thus suffice to give a high rateof return on capital.
The rail network has remained broadly stable since the early 1970s (following extensive closuresof low-density routes in the 1950s and 1960s), and a number of improvements have been made to ruraland regional services, notably in terms of frequency, rolling stock quality and opening of additional
local stations. In some cases, additional assistance has been provided by local authorities forenhancements, and the ‘Community Rail Partnership’ (CRP) concept has enabled volunteers to assist
with matters such as non-operational station staffing, and publicity. Some route reopening has also
occurred, the most substantial example of which will be the Borders Railway, running south from
Edinburgh to Tweedbank, due to open in 2015. From time to time, the concept of ‘micro franchises’
has been put forward, whereby low-density rural lines might be operated by a separate company fromthe main franchise holder for that part of the network, possibly with different staff working conditions& pay, and operating methods, but no such examples have emerged.

Bus and Coach Industry
In common with Finland, the British industry includes an extensive express coach networkcompeting with rail, as well as local and regional services.

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOMExpress coach services were deregulated in 1980, with both price and quantity restrictions being
removed. Subsequently, local bus services (except in London and Northern Ireland) were deregulated
from October 1986 under the Transport Act 1985. Much of the industry has been subsequently
privatised, but this process has not been universal. The two state-owned operating groups (National
Bus Company in England and Wales, Scottish Bus Group in Scotland) were privatised in the late1980s and early 1990s, and most of the urban operations owned by the local authorities have also been
privatised, although about 11 remain. There is also a substantial sector of the industry which has
remained in private ownership throughout, notably the smaller ‘independent’ operators often based inrural areas. These have always been particularly active in the ‘non-scheduled’ market (such as school
contract work and private hire) but also operate scheduled local public services.
Prior to deregulation, substantial growth had occurred in the net financial support provided to bus
operators via central government and local authorities, especially in some of the larger urban areas. As
part of the deregulation process, operators were required to indicate what services they would run’commercially’, i.e. those on which all costs would be covered by passenger revenue, fuel duty rebate
and concessionary fares compensation. The ‘fuel duty rebate’ was a rebate then paid of most of the
duty (80%) normally paid on diesel fuel – for example if the usual duty were 50p per litre, then 40p
would be rebated (paid back) to the operator. This applied only to scheduled local bus services, notlong-distance coach services, or private hire, etc.
Concessionary fares compensation is the sum paid to operators where the local authority requires
the operator to charge a lower fare (or no fare at all) to selected groups of passengers (mostly older
people). This is based on the principle of ‘no better off, no worse off’, i.e. the financial position of thebus operator should be the same as if they had charged the normal fare to that category of passengers(most of the compensation is to allow for the net revenue loss, but allowance is also included for extra
capacity costs where incurred: in most cases the concession applies only after the morning peak
period, and capacity costs are assumed to be marginal, making use of empty seats). Hence, a‘commercial’ service might receive about 80% of its income from passenger fares, the rest from theother two categories. Note that the fuel duty rebate has been replaced by Bus Service Operator Grant(BSOG), which serves a similar role, but also includes incentive payments for use of smartcard
ticketing, low carbon vehicles, etc. It takes different forms in Scotland and Wales, in the former now
being based on bus-kilometres run, rather than fuel consumed (this is of benefit to rural services,which tend to be more fuel-efficient: a criticism of BSOG is that it tends to favour urban services,which have poorer fuel efficiency).
It was accepted that not all services would be commercially registered, and that local authorities
would wish to ensure provision of other ‘non-commercial’ services, especially to aid the mobility of
those without access to cars. Prior to the deregulation effective from October 1986, operators wereasked to give several months’ notice of services they intended to register commercially (specifying
route and timetable, but not fares). Local authorities then had the opportunity to identify gaps in thisnetwork, and invite operators to bid for services to cover them. It was expected that most suchoperation would occur in rural areas, but in practice a more complex pattern emerged - for example, arural service between two towns might be registered commercially for operation in the Monday toSaturday daytime period, but not during evenings or Sundays. Even in urban areas, some services were
likewise registered on a part-day/part-week pattern. The effect, therefore, is that we do not findseparate ‘commercial’ and ’tendered’ services, but a complex mix.
The great majority of non-commercial services are secured by competitive tendering, in which thelocal authority specifies the service to be provided and invites bids. The lowest-cost bidder is (in mostcases) then awarded the contract. This may mean, for example, that one operator runs a route during
the Monday –Saturday daytime period, and another during evenings and Sundays. There is also
provision for ‘de minimus’ grants, where (within a fixed upper limit) local authorities and operators
can negotiate an agreed price, rather than a competitive tendering process occurring (for example, to6Peter White— Discussion Paper 2015-07 — © OECD/ITF 2015

REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

divert an otherwise commercial route via an additional village, rather than contract a separate service
for that purpose). About 20% of total local bus-km has been tendered in the period since deregulation,and 80% run commercially. The tendered percentage is generally higher in lower-density areas, as
might be expected (in 2012-13, 14% in metropolitan areas, 23% in the rest of England).
The Transport Act 1985 also introduced some other changes with potential significance for rural
areas:
Sections 12 to 16 reformed the regulation to taxi and private hire vehicle (PHV) services. Thesechanges potentially introduced a mode intermediate between ‘bus’ and ‘taxi’ in terms of regulatory
categories, which could be useful for low-density flows, especially in rural areas. However,developments to date appear to be very limited (see section 5 of this paper).
Sections 19 and 22 of the 1985 Act introduced wider scope for community transport operators toprovide scheduled public services, and clarified the legal position. Services run under section 19 do
not accept concessionary fare passes as they are not public transport services and do not have toregister a route or area of service with the Traffic Commissioner. They can now be used by membersof the public on the grounds of the remoteness of the area they live in, although people who use them
are normally members of a scheme (e.g. a registered charity offering Dial-a-Ride services). They are
typically used by people in really remote rural areas, or for intra-urban journeys by people withdisabilities. Section 22 services have to register a route or area of service with the Traffic
Commissioner (as for conventional bus services) and be subject to checks by the Vehicle and Operator
Licensing Agency. They must accept concessionary fare passes, and are marketed and advertised likea public transport service. Anyone can use them (so long as their journey corresponds with theregistered area of operation)
Prior to this, from the early 1970s, some services had developed in rural areas which were
provided by community transport groups, typically running minibuses of up to 16 seats, driven by
volunteers. These provide both private hire and local scheduled services open to the general public,
often in low-density areas not served by conventional bus operators (for example, the ‘Cuckmere
Community Bus’ in East Sussex). The Minibus Act of 1977 clarified their legal status, and also that ofminibuses owned purely for use by designated groups (for example, operated by charities to serve
particular categories of user, or schools for their won pupils, etc.). These not-for-profit organisations
are also able to employ paid staff, and bid for tendered services. However, this has raised concerns
about fairness of competition with bus and coach operators who have to meet the fuller quality
licensing requirements (for example, the EU requirement that each driver holds a Certificate ofProfessional Competence) who are also bidding for such services.
The term ‘demand responsive service’ is used to cover a wide range of services with flexible
routeing, which can be operated under the types described above, or as fully-registered bus services
provided by a commercial operator (although very few of the services themselves are commercially
viable and most rely on local authority support). Typically, smaller vehicles are used (8 to 16 seats)with all passengers pre-booking their trips in both directions. Some services are largely fixed routes
with minor deviations on request (for example the ‘Call Connect’ service between Louth andHorncastle in east Lincolnshire). A more common pattern is that vehicles circulate within a definedarea, usually centred on a market town, as applies to the great majority of the ‘Call Connect’ services
in Lincolnshire (a concept sometimes referred to as ‘many to one/one to many’). These provides links
into the town itself, and also interchange with trunk ‘Interconnect’ conventional bus services providing
inter-urban links (for example, at Spilsby and Horncastle on the Skegness- Spilsby - Horncastle –Lincoln route). An element of many-to-many links (e.g. from one village to another) may also be
provided. Almost all of rural Lincolnshire is now covered by Call Connect services where fixedroutes do not operate; the main exceptions being around Lincoln (see www.lincolnshire.gov.uk ).

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

Such services provide much greater flexibility than conventional fixed-route bus services,
enabling, in effect, a higher level of service to be provided over an area within a given budget.
However, there are some limitations, notably the pre-booking requirement which may be inconvenient
for some users in contrast to simply turning up at a stop for fixed-route timetabled service. A
distinction should also be drawn between demand-responsive services which provide door-to-door
links (e.g. calling at the homes of users), which may clearly be of great benefit to those unable to walkto the nearest stop, and those which serve a convenient picking-up point in a rural settlement (akin to a
traditional fixed-route bus stop).

Trends in the bus and coach industry
The overall effect of the deregulation was to encourage a radical reduction in operating costs (forall types of bus services), which eventually resulted in unit cost per bus-km in 1999/2000 being about
45% below those for 1985/86 (i.e. the year immediately before deregulation) in real terms. A numberof factors contributed to this:

Use of smaller vehicles, with lower capital, maintenance and fuel costsRadical changes in operating practices by existing operators, associated with the threat ofcompetition (both on commercial and tendered services). Sharp reductions were made inadministrative and engineering staff, and driver schedules made more efficient.

Greater variation in wage levels and working conditions. National negotiations with tradeunions were replaced by local negotiations, resulting in wage rates reflecting local labour
markets. This may have been particularly beneficial in some rural areas, in which a much
lower wage rate was still sufficient to recruit staff.

However, the shift to smaller vehicles was somewhat artificial, and in many cases has been
reversed, especially within urban areas. Nonetheless, many lower density and rural routes are now
operated by relatively small vehicles (such as the Optare ‘Solo’ seating around 25-30 passengers).
From 2000, unit operating costs in the industry have increased, notably due to the need for better
wages and working conditions to recruit staff (although large regional variations remain), butnonetheless remain approximately 25-30% below the 1985/86 levels in real terms.
The DfT publishes statistics at an aggregated level, rather than for individual operators. Data arealso published at a more local level, indicating bus trips per head of population by local authority area(but a substantial time series is not available). A separate ‘rural’ series is not available, but statistics
are provided for the ‘rest of England’, i.e. excluding London and the six metropolitan areas (the six
largest conurbations within England outside London). Note, however, that much of the bus ridership in
this category will be within urban areas rather than rural or lower-density areas. More recent data is for‘England outside London’, i.e. including the metropolitan areas.
Table 2. Bus Industry trends since 1985/86
From 1985/86 to 2007/08 inclusive
Rest of England
Passenger trips
Bus-km run
Real fare index
Real cost/bus-km
Real cost/pax trip

-16%
+ 42%
+30%
-34% (to 2006/07)+ 6% (to 2006/07)

2007/08 to 2012/13 inclusive
England outside London- 2% *- 2% *+ 8.2% *+17.7%+19.1%

Notes: Real’ changes to 2007/08 are measured at 2007/08 prices.
*still corresponds to ‘rest of England’ area.

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Changes to 2007/08 inclusive derived from DfT Public Transport Statistics Bulletins to 2008 incl.
Changes between 2007/08 and 2012/13 derived from DfT tables BUS 0103 (pax trips), BUS0407a(cost per pax trip), BUS0405 (fares index) (real changes being measured at 2012/13 prices). Separate
series are shown due to changes in definitions from 2008 in cost data.
The sharp decline in cost per bus-km is clear. The large increase in bus-km run was associatedwith use of smaller vehicles and improved frequencies. The passenger trips reduction is associatedprimarily with growth in car ownership over this period. Note, however, that the real fares index grewby about 30% to 2007/08, i.e. while competition (or threat thereof) may have affected costs, there has
been little direct ‘on the road’ competition, especially in rural areas, and even where this has occurred
has tended to focus on service levels rather than price.
The effect of the large rise in bus-km run and reduction in passenger trips was that the averageload carried per bus-km fell dramatically, and cost per passenger trip rose by 6% to 2007/08. It rose
further, by 19.1% between 2007/08 and 2012/13, but in this case mainly due to the rise in cost per buskm.
It should be noted that ridership trends have been affected by the large extension of concessionary
travel. From 2001 a compulsory national scheme was introduced in which the concession fare forolder and disabled users could not be more than half the fare otherwise charged. This was extended,
firstly in Wales and Scotland, to provide entirely free travel after the morning peak period, andlikewise for the local area of residence within England from April 2006. From April 2008
concessionary pass holders in England could travel throughout England free of charge during theeligible periods. There is strong evidence for a large increase in the take-up of passes, as well as forincreased travel by those previously holding a half-fare pass. It is likely that the extension of free
concessionary travel was the main factor, offsetting the effects of rising car ownership during thisperiod. Concessionary passenger journeys as a percentage of the total bus passenger journeys in the
non-metropolitan areas in England rose from 31% of all trips in 2007-08 to 36% in 2011/13 (DfT
Table BUS0105). However, a large increase in public expenditure has occurred as a result.
From the bus operators’ viewpoint, the composition of gross business income does not vary as
much as might be expected. For example, in 2009/10, the main elements were as shown in Table 3.
Table 3. Composition of Operator Income in 2009/10(percentages)
Category of region

Passenger revenue

LondonEnglish Metropolitan areas
Rest of England (inc. rural)

47
56
52

Gross support*

Conc comp
34
10
20

BSOG
12
23
20

6
10
9

Source: DfT Table BUS0501a (NB Discontinuity from previous series)
Note: * includes local authority associated expenditure (e.g. administration of service tendering process)Evidence from the National Travel Survey (NTS)The National Travel Survey (NTS) in Britain is exceptionally comprehensive, having been
conducted continuously since 1988, enabling both annual changes and seasonality to be monitored. Alarge sample of households is interviewed each year. A very good response rate (approx. 60%) is
obtained for a seven-day travel diary in which trips by all household members are recorded. All modes
and trip purposes are covered (apart from international travel). Until the end of 2012 (the period forwhich data below have been extracted) the whole of England, Wales and Scotland was sampled, butsince the start of 2013 England only.

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Data are classified by type of area in which respondents live. For this purpose, ’rural’ was defined
as settlements of under 3,000 people (which could include some smaller towns as well as villages andsmaller settlements). As one would expect, residents in such areas tend to have much higher car
ownership than in larger urban areas, even among the lowest income groups, and the public transport
market share is lower. Nonetheless, public transport continues to play a significant role.
Table 4 below shows an expanded version of NTS Table 9903, helpfully provided by DfT. This isbased on a broader definition than shown in the NTS published tables, by including within the ‘public
transport’ the category of ‘private bus’ (i.e. a bus or coach hired for use by a particular group ofpassengers, rather than carrying passengers at separate fares. Most of these are probably school
services, the provision of contract ‘works’ services for particular employers having declined markedly
in recent years). Trip rates are averaged over two successive years, due to sample size limitations. The
overall trip rate in rural areas by public transport has remained broadly stable, at 53-59 per person perannum, the net reduction being mainly in ‘private bus’. ‘Local bus’ has remained broadly stable(falling from 30 to 28). Growth in concessionary travel by bus will have affected trends during thisperiod (see above). Taxi/PHV use has remained remarkably stable at 5 or 6 per person per annum.
Table 4. Expanded data from NTS Table 9903 for rural areas (trips per person per year)
Year

Modes
Private bus

2003-04
2004-05
2005-06
2006-072007-08
2008-09
2009-10
2010-11
2011-12

12
11
12
11
10
10
10
11
10
9

Local bus
30
30
29
28
28
29
29
27
29
28

Rail

Taxi/PHV
9
9
10
10
10
9
9
9
9
9

Other pub
5
5
6
5
5
5
5
5
5
5

All public
3
2
2
3
2
1
2
2
2
2

59
57
59
57
55
54
55
54
55
53

Source: Special tabulations from DfT provided at author’s request, May 2014. NB Trip rate for each mode rounded to nearest
whole number.

In addition to recording trips made, the NTS also includes an interview with each household
sampled, in which general background data (such as car ownership) is obtained. This includes a statedestimate of walking time to the nearest bus stop, and the frequency of service provided. Published
NTS data then indicate percentages of the population living with given walking times of the nearest
bus stop, and also an ‘availability indicator’, defined as the percentage living both within 13 minutes’
walk of the nearest stop, and with at a least an hourly daytime service. As might be expected, a muchhigher proportion of the urban population lives within a short walking time of the nearest stop, andalso has a high level of service, but it is noteworthy that the rural levels have improved considerably inrecent years. The national average value for the ‘accessibility indicator’ for buses is very high, largely
influenced by levels in urban areas – the overall average rose from 90% in 2002 to 91% in 2012, but
the large improvement in rural areas, from 46% in 2002 to 61% in 2012, is noteworthy, probably
influenced by improved levels of rural services and especially demand-responsive provision (source:
NTS Table 0801).
Under the 2011 census, revised definitions for rural areas have been adopted (NB data above are
all based on the earlier NTS definition of settlements under 3,000 population), in which distinctions
are drawn between ’rural towns and fringe’, and ‘all rural villages, hamlets and isolated dwellings’.

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These have been used in an assessment of travel indicators by the DfT, drawing on NTS data from2008 to 2012 by area type1.

3. Development of demand-responsive services

The development of demand-responsive services has been stimulated by improvements in route
planning software which enables more effective and efficient planning of journeys in response tousers’ requests received at fairly short notice prior to trips being made. Replacement of low-frequency
fixed-route services by demand-responsive services circulating in the same area may provide better
service coverage within the same budget. The Lincolnshire example cited earlier is probably the mostextensive in Britain, both in the areas covered and periods of operation (typically about ten hours perday, Mondays to Saturdays). Elsewhere, such services tend to have more limited coverage, both spatial
and temporal.
However, unit costs per passenger trip are often very high, even when netting out fare receipts, inthe order of £4-£6 or even higher in some cases. They do not necessarily form a cheaper alternative tofixed route buses when usage (as distinct from area coverage) is taken into account – in other words,
demand-responsive services may enable a planning objective to be achieved more readily within agiven budget (e.g. that all residents of a rural area should be served at a given level of accessibility),
but on a cost per trip basis (taking usage into account) may still be very costly. An admittedly extreme
example is the case of the ‘Shropshire Link’ services, introduced in November 2008 to cover much of
the rural areas within that county, in replacement of fixed-route services (the proportion of the
population with a service at least two days per week rose from 57% to 95%)2. However, costs werevery high, in the last full year of operation (2011/12) totalling £571,000 versus income (including
concessionary compensation and school contract work as well as passenger fares) of only £64,000.
Average support per passenger trip was approximately £19 in 20133, and all services have now ceased(although some limited replacements have been provided in certain cases).
It does not necessarily follow, therefore, that demand-responsive services or other innovative types
are necessarily a cheaper option than conventional services (although this will depend on density ofdemand - see below) and when severe expenditure cuts are being made could easily be withdrawn.
A useful review of recent research on DRT services is provided by Loughborough University 4,‘DRT for DRT’ .This summarises the results of a project undertaken in the period 2010-2013. Anoverall review indicated 369 DRT schemes which had been operated during the period 1997 to 2012by 59 organisations in Britain. The number operating at any one time has risen sharply from under 50
in the late 1990s to a peak of over 250 in 2010, but subsequently had shown some decline, associatedwith funding cuts. The future could see either more cuts, or scope for a wider role as conventionaltransport declines, for example in response to mobility needs for an ageing population. Modelling of1.

Department for Transport ‘Transport and Accessibility to Services’. Report to DEFRA, January 20142.

Bus & Coach Professional 9 January 2009, p8

3.
4.

Bus & Coach Professional 2 August 2013.
Loughborough University. Developing Relevant Tools for Demand Responsive Transport: ‘DRT for
DRT’ final newsletter, Summer 2013.

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

demand (trips per user per week) for the Call Connect services in Lincolnshire (as described above)
indicated a negative relationship with population density, but positive for mobility impairment andtravel for work. An enhanced demand model was calibrated from two areas, one of which was rural.
This indicated a willingness for both car users and existing bus users to use a DRT service (providing
door-to-door access), at a higher fare than existing bus fares. The research also indicated potential newmarkets and products for DRT in rail station and airport access, workplaces outside the urban core for
employers, and an integrated DRT supply for the general public.

4. The appropriate role for smaller vehicles

As indicated in section 5 of this report dealing with taxis, there is extensive evidence of growth insupply and use of taxis Britain, but most of this appears to be of the traditional ’single hirer’ form,
rather than use of innovative service types such as shared taxis or taxibuses which could be of value inrural areas.
There is also extensive experience of demand-responsive services, although in many cases theseincur much higher total operating costs (and public expenditure) per passenger trip) than the averagefor conventional rural bus services.
Scope for wider use of taxi-based options was examined in a report published by the former
Commission for Integrated Transport in in 20085. This reviewed demand-responsive and shared taxi
schemes in a sample of UK rural areas, and also elsewhere in Europe (especially the ‘Traintaxi’ and‘Regiotaxi’ in the Netherlands). It proposed a county-wide experimental scheme in Britain, integratingtaxi, community transport and demand-responsive services. It also noted some of the constraints on
taxis, notably the small licensing areas in which they are permitted to operate, the application of Value
Added Tax (VAT) to taxi fares (which does not apply to bus fares) and lack of eligibility for BSOG.
Work undertaken in conjunction with this study is described by Mulley6, especially in respect of thescope for shared taxi services, indicating lower unit costs elsewhere in Europe than in the UK.
Clearly, one problem which arises in making comparisons between the different options available
is that density of demand will affect unit costs. Demand-responsive and taxi-based modes may bemuch more expensive than a supported bus service due to lower densities of demand which they areserving - conversely it would be illogical to use them to substitute for a fixed-route bus service wherethat was cheaper - so some form of like-with-like comparison is needed. In this respect, a very useful
synthesis has been provided by Wright7, drawing on experience of a number of experiments in the‘FLIPPER’ pilot projects in Europe. He examined costs per passenger trip, as related to density ofdemand, deriving the following broad guidance:

5.

Commission for Integrated Transport ‘A New Approach to Rural Public Transport’ November 2008

6.

Mulley, C. ‘Promoting social exclusion in a deregulated environment: extending accessibility using
collective taxi-based services‘ Research in Transportation Economics Vol 29 (2010), pp 296-303.

7.

Wright, S. ‘Designing flexible transport services: guidelines for choosing the vehicle type’ Transportation
Planning and Technology 2013 (Vol 36, no 1) pp 76-92

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

Table 5. Indicative guidance for vehicle choice related to density of demand
Trips per vehicle hour x trip length[i.e.passenger-km per vehicle-hour]Less than 10
Between 10 and 20

Suggested vehicle choice
Taxi
Taxi(s) or flexible minibus – choice will depend on availability andrelative costs locally
Flexible minibus, with lower degree of route flexibility at the higher endof the range
Largely fixed route bus, with limited deviations

Between 20 and 50
Greater than 50

Source: derived from Wright 2013, Table 4

5. Taxi regulation issues

Taxis in Britain form a substantial part of the total public transport market, especially when
considered in terms of revenue rather than physical passenger trips. Their current role in rural areas
appears to be limited, but potentially they could play a more substantial role as a mode intermediate
between bus and private car.

Main features
Some basic definitions:

A taxi (‘hackney cab’) is a vehicle licensed to ‘ply for hire’ on street, with a metered farescale. There are usually some quality controls on drivers & vehicles (in addition to the usual
legal requirements for driving licences, vehicle insurance, etc.), and sometimes on the quantityof taxis licensed in a specific area. A ‘taxi’ is a vehicle of up to 8 seats.



Private Hire Vehicle (PHV) – or ‘Minicab’ in London. A vehicle offering pre-booked trips
only, not metered. The price is agreed between the operator and the customerOutside London, these distinctions are less marked (as many taxis are pre-booked by phone
call, for example). Some terms are used more generally e.g. ’cab’, to cover both types ofservice, and users may not always distinguish between them (hence in the National Travel
Survey they are combined in a single category). The growing use of mobile phone apps also
makes the distinction between the two categories less meaningful than before.

In Britain, quantity licensing never applied to PHVs, but was applied extensively to taxis, andremains in a number of areas (discussed further below).
There is a wide range of quality controls, from very strict in London (covering driver licensing,taxicab design, and extensive understanding of the inner London road network, known as ‘The
Knowledge’), to very minor elsewhere.
Several market sub-sectors may be defined. ‘Taxi ranks’ are places set aside specifically for taxis
to pick up customers, usually at points of concentrated demand (airports, railway stations, town
centres, etc.). Vehicles queue in order of arrival. ‘Street cruising’ describes the case where empty taxis
may run along streets, with a sign indicating that they are available for hire, and pick up passengers at
the roadside on request. This is most common in central and inner London, and other large cities. The

Peter White — Discussion Paper 2015-07 — © OECD/ITF 201513

REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM‘pre-booked’ market is probably the largest both for taxis and (by definition) PHVs, with bookings
made by calling at an office, by phone, etc. ‘Radio circuits’ provide a means by which calls from awide range of potential users can be offered to individual taxi drivers, identifying the driver closest to
the point from which the customer wishes to be picked up. Many taxis are run by owner-drivers orvery small businesses, and these provide a means of efficiently combining calls from many customers.
It should be noted that efficient and profitable operation of taxis and PHVs rests on securing a
succession of calls during the period of a driver shift, which may be aided by use of radio circuits, etc.,
and are most likely to arise in areas of high-density demand. Hence, while taxis and PHVs may appear
attractive in rural areas by virtue of vehicle size, demand density makes this difficult to justify
commercially.

Overall trends
Overall trends in Britain indicate a large increase in supply of licensed taxis over the last thirty years.
Table 6. Trends in taxi licenses in the United Kingdom
Year
LondonEngland & Wales (outside Lon.)

1981
12,60017,800

1992

2005

17,60031,800*20,80047,2002011
22,60050,4002013
22,20055,700Note: * 1991 figure: all districts licensed only from 1986

More drivers than taxis are licensed in London. This a traditional feature, linked with doubleshifting and part-time working: for example, an owner-driver might drive their own vehicle for one
shift, then rent it to another driver for a second shift within the same day. In 1981 the ratio of drivers
to vehicles was 1.41, but this fell to 1.15 in 2013. Outside London, more taxis than taxi-only driver
licences (37,600 in 2013). However, there are also many cases of ‘dual’ taxi/PHV driver licensing
outside London (78,300 dual licences in 2013).
As can be seen, usage peaked in 1998/2000, and has fallen slightly since but still remains well
above the level of 1985/86. Hence growth can be seen in both in supply and use, higher in the former.
A supplementary expanded tabulation of NTS Table 9903 has been helpfully supplied by the DfT,
giving a breakdown of the trip rates per person by each mode, by type of area; from 2002/03 to
2011/12 (two years’ data are combined, given limited sample size from a single year). This indicatesthat taxi/PHV trip rates are typically highest in metropolitan built-up areas, followed by London andlarge urban areas, but substantially lower in small urban (3,000 to 25,000 population) and rural areas(under 3,000), as shown on page 18.

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

Figure 1. Number of licensed taxis and PHV’s by region in 2013

Sources: Transport Statistics Great Britain 1992 table 5.9 [data for 1981 and 1992] and Department for Transport Statistics
table ‘Taxi0103’ [2005 to 2013], from which the chart below is derived

It should be borne in mind that the number of vehicles licensed in an area may not be bestindicator of supply – for example, as taxi numbers grow from a low base, double-shift working may be
reduced. Hours of service operated (e.g. vehicles x hours per vehicle per day in operation) is a more
useful indicator, but not usually available.
Trends in PHVs are less clear than for taxis due to lack of comprehensive licensing in the past. The
total in England & Wales (excluding London) was 84,500 in 2005 (versus 47,200 taxis) and 102,700
in 2013 (versus 55,700).
Operators are licensed separately for PHVs, as well as drivers (for taxis, licensing applies toindividual drivers and vehicles only). In 2013 in England & Wales there were 16,100, including
London. PHV-only drivers totalled 88,300.
In London, in 2005 there were 2,300 PHV operators, 40,000 vehicles, and 38,000 drivers licensed(Full licensing was only introduced in 2004). In 2013 there were 3,200 operators; 49,900 vehicles; and67,000 drivers (This growth being an effect of the full roll-out of the licensing system, and real
growth. There is also high driver turnover). [Source: DfT Table ‘Taxi 0103’].
In addition to the growth in the supply of taxis and PHVs, their total usage has also grownstrongly. NTS data (for taxis and PHVs combined) indicates the following average rates per person per
year.
Table 7. Average usage rate for taxis and PHV’s
Year
1975/6
1985/86
1998/2000
2008
2009
2011
2012

Trips

Miles
n/a
7
13
11
11
10
10

13
27
63
54
56
55
53

Sources: NTS 2008 tables 3.1, and 3.2, and earlier years; tables 0304 and 0305 in 2009, 2011 and 2012.
Note: Published data are rounded to the nearest whole number, which particularly affects the number of ‘trips’ shown. The
National Travel Survey (NTS) is a very comprehensive household-based survey, covering all household members and allmodes of travel, which has run continuously since 1988

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

As can be seen, usage peaked in 1998/2000, and has fallen slightly since but still remains well
above the level of 1985/86. Hence growth can be seen in both in supply and use, higher in the former
A supplementary expanded tabulation of NTS Table 9903 has been helpfully supplied by the DfT,
giving a breakdown of the trip rates per person by each mode, by type of area; from 2002/03 to
2011/12 (two years’ data are combined, given limited sample size from a single year). This indicatesthat taxi/PHV trip rates are typically highest in metropolitan built-up areas, followed by London andlarge urban areas, but substantially lower in small urban (3,000 to 25,000 population) and rural areas(under 3,000). For example, in 2011/12 these were:

London Boroughs

8*Metropolitan Built-up areas18

Large urban areas (over 250,000)

12

Small urban (3,000 – 10,000)

5



Rural

5

*This figure may be affected by lower response rates in London
The pattern in previous years from 2002-03 was similar (rural never exceeding 6). It would thus
appear that rural taxi/PHV usage is lower than the national average, rather than this mode acting as a
substitute for other public transport.
The national average trip rates indicate a substantial share vis a vis local buses, which had 75 trips
and 408 miles per person per year in 2009 (including London) – taxi & PHV rates as a percentage ofbus rates were thus 13% on both indicators (for rural areas, the trip rate share was marginally higher at
17%, but note effects on trip rates of rounding). In terms of user expenditure, due to much higher cost
per passenger trips for taxis and PHVs, these modes are of similar importance For example, in 2001
user expenditure per trip was approx. £3.30 (from NTS), giving a total taxi/PHV revenue approx.
£2320m (versus £2900m for local buses). In 2002/03 about 18% of all weekly household nonmotoring transport spending was on taxis/PHVs (versus 17% for bus & coach fares, excluding
combined bus/rail tickets). The overall average trip length for taxis/PHVs was 4.7 miles (7.5 km) in
2009, similar to that for local bus.
Given the higher cost per trip for taxi/PHV than local bus, one might expect usage to beconcentrated mainly in higher-income groups. However, this is not the case. Higher use is found inmembers of non-car-owning households: in the 2002-2003 NTS, 28 trips per person per year for these
respondents (of which 7 were for shopping), versus 7 for members of car-owning households (ofwhich less than 1 was for shopping). NTS data also indicates a concentration of taxi/PHV use among
younger age groups and females. The peak demand occurs late night on Fridays and Saturdays,
associated with leisure trips, especially those returning from urban entertainment centres.
Only a very small proportion of people use taxis/PHVs at high frequency. 2007 patterns fromNTS data for the whole sample indicate:16

3 or more times a week2%Once or twice a week8%

< once a week, > once or twice a month5%Once or twice a month13%< once or twice a month, > once or twice a year

14%Once or twice a year

15%

Peter White— Discussion Paper 2015-07 — © OECD/ITF 2015

REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOMLess than once a year, or never43%

Likely factors behind the growth
The interesting question that arises is why a labour-intensive mode in a high-income country
should experience both increasing supply and increasing usage. One would normally expect suchactivities to be associated mainly with countries in which low real incomes are found (note the role of’paratransit’ in many developing countries), but as car ownership rises, a reduction in such labourintensive activity might be expected. A number of factors may explain these trends:
1. Supply-side effects. Due to loss of employment in traditional industries, unemployed workers
may have sought taxi/PHV driving as an alternative occupation. This may be found in areas
such as those in which coal mining or steel-making employment declined in the early 1980s,
for example. More recently, a general growth in ‘self-employment’ has been noted in the
British economy (of which taxi/PHV driving can be seen as one example), following effects ofthe economic recession.
2. Changes in bus service provision, following the Transport Act 1985 (see discussion below).
There was a period of unstable provision of bus services (even though total bus-km run
increased), and cuts were made in evening and weekend services (when leisure demand is at
its highest). Although greater stability has returned to the bus network, evening and Sunday
services levels in many areas remain low.
3. A growth in the ‘night time economy’, following relaxation of rules on licensing of premises
serving alcoholic drinks. There has been a rapid growth in total drinking activity (especiallyamong young adults), and also later into the night (previous licensing rules typically imposed
closure at about 2300, but this is now later in many areas, with a demand for return trips homearound 0100-0200). Even when better evening bus services were operated, they did not run atthese times (and very few areas outside London offer substantial all-night public transport
services).
4. Increased awareness of the dangers of ’drink driving’ and enforcement of regulations,
resulting in those who have drunk alcohol being unlikely to attempt driving their own cars.
5. Some ‘trading up’ from bus to taxi travel as real incomes rose (prior to the recession) - forexample, someone shopping by bus may find it convenient to travel to the shops by bus, butthen return home by taxi with their load of shopping (hence high taxi/PHV use for shopping
trips by those in non-car-owning households, above).
6. Concerns re personal security, especially for late night travel (this may apply, for example, toemployees of restaurants and bars, as well as customers returning home).

The regulatory framework
The regulatory framework for taxis and PHVs stems from a number of laws, and there has been nocomprehensive reform so far. However, the Law Commission has undertaken a review, results ofwhich were published on 23 May 20148, discussed further below.
The main law regulating taxis outside London is very old-established – the Town Police Clauses
Act of 1847. PHVs were not formally regulated until Local Government (Miscellaneous Provisions)
Act of 1976. Furthermore, these laws were permissive (i.e. enabling local authorities to exercise
licensing powers, but not compelling them to do so). Generally speaking, licensing powers are applied
8.

The Law Commission. Taxis and Private Hire Services. Report to Parliament, published 23 May 2014, available at
http://lawcommission.justice.gov.uk/areas/taxi-and-private-hire-services.htm

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at the lowest level of local authorities (districts within two-tier authorities, Metropolitan Boroughs in
the larger cities outside London, and unitary authorities where there is no two-tier structure). This
results in each authority covering a relatively small area. London is a marked exception, with a single
licensing authority (Transport for London, TfL) covering the whole Greater London area (over 8
million people).
The Transport Act of 1985 was designed principally to reform the system of control for local bus
services, introducing the concept of ‘deregulation’, but as part of this change it was desired to
introduce powers to permit shared taxi and taxibus operations. This made it necessary to make taxi
regulation compulsory for all districts (a small number, mainly in more remote areas, had notpreviously exercised their powers to do so). The main changes were as follows:
Section 10: Taxi sharing at separate fares, i.e. in which the driver would charge a separate fare toeach passenger (as distinct from passengers sharing the costs among themselves). Previously only one
person was deemed to be hiring the taxi (the ‘single hirer’). However, the impacts of the changes
appear to have been very small.
Section 11: Permits advance hiring of Taxis and PHVs at separate fares (likewise, impacts appear
very limited).
Section 12: Permits ’taxibuses’ (in which vehicles licensed as taxis can run scheduled local bus
services, charging separate fares for each passenger, without the need for the full licensing
requirements that apply to bus and coach operators). Routes can be registered by the operator as acommercial venture, or as a tendered service for a local authority. The Local Transport Act of 2008
extended this to PHVs.
Section 15: Enabled extension of licensing areas to match those of current local authorities(previously a number of examples existed where smaller authorities had been merged to form a single
authority, but the inherited licensing powers applied only within each of the areas of the former
authority, rather than over the whole of the new authority’s area). Once such areas have been merged,
it is not possible to reverse this process.
Section 16: Enabled licensing authorities retained right to limit numbers where ‘no significant
unmet demand’ was observed. This was in marked contrast to the general approach of the 1985 Act,
which completely removed previous quantity licensing for local buses, and it might have been
expected that similar limits would have been removed for taxis. While authorities wishing to retain
such limits had to establish a case for doing so, unlike buses, no timescale was set for making changes,
or to justify the status quo. It was not possible for authorities not already imposing quantity limits tointroduce them, but where a quantity limit has been applied, an authority had the options of retaining
it, raising the limit, or abolishing it altogether. In a few cases, authorities who had removed quantity
limits later re-imposed them, as indicated in the Law Commission’s report9. Note that London, while
applying strict quality controls, has never imposed a quantity limit on the number of licensed taxis.
Note that PHV licensing was still not comprehensive.
These changes potentially introduced a mode intermediate between ‘bus’ and ‘taxi’ in terms ofregulatory categories, which could be useful for low-density flows, especially in rural areas. However,developments to date appear to be very limited.
The effect of encouraging removal of quantity limits has been very gradual. Data for all taxi
licensing authorities in England and Wales (excluding London) is regularly collected by the DfT. The
latest data covers the situation at 31 March 2013. Excluding those not responding to the DfT survey,
220 authorities imposed no limit, but 86 did so (71.9% and 28.1% respectively). Higher proportions
9.

The Law Commission. Taxis and Private Hire Services. Report to Parliament, published 23 May 2014, available at
http://lawcommission.justice.gov.uk/areas/taxi-and-private-hire-services.htm

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

imposing a limit can be observed urban areas, and in the North West, Yorkshire & Humberside, andSouth East regions (inferences by the author from DfT table ‘Taxi 0106’). Ideally, it should bepossible to observe whether there is correlation between removal of such limits and greater-thanaverage growth in taxi usage. However, given the very complex pattern of small districts taking
different approaches to licensing, it would be difficult to match NTS data to such areas (due to sample
size limitations). It is therefore not practicable to identify growth in use due to removal of quantity
limits from the broader factors discussed above.
Another means of looking at supply of taxis and PHVs is to examine the absolute number oflicensed vehicles, expressed as an average rate per 1,000 population. At March 2013 these were (forEngland and Wales [E&W] as a whole):Taxis as such – E&W average 1.4 (London 2.7, major urban 1.1, large urban 1.3, lowest inrural areas at 1.0 to 1.1)

PHVs as such 2.7 (London 6.0, major urban 3.8, large urban 2.3, rural 1.0-1.6)

Combined total of taxis & PHVs 4.1 (London 8.7, major urban 4.8, large urban 3.6, rural 2.32.7)

Definitions are based on district characteristics (i.e. the level at which taxis and PHVs arelicensed): ‘Major Urban’ districts were defined as either 100,000 people, or 50% of their population in
urban areas with a population of more than 750,000.
‘Large Urban’ are defined as districts with either 50,000 people, or 50% of their population in oneof 17 urban areas with a population between 250,000 and 750,000.
’Rural’ encompasses a range between ‘significantly rural’ (districts with more than 26% of their
population in rural settlements and larger market town, to ‘rural-80’ – districts with at least 80% of
their population in rural settlements and larger market towns. Differences between them are relatively
small, except that ‘significant rural’ has a higher ratio for PHVs, at 1.6.
It can be seen that the rural levels are generally substantially lower. Rather than taxis/PHVs being,in aggregate, a substitute for conventional public transport, there is positive association between highlevels of taxi/PHV provision and also of conventional public transport provision and use in the larger
urban areas.
Given that taxi numbers have been limited in some areas, but no such limits apply to PHVs,
examples can be found where compensating growth has taken place in PHV numbers to offset a lower
limit for taxis as such.

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

BOX. A case study: Maidstone
Arising from earlier work at the University of Westminster (and its predecessor, the Polytechnic of Central
London), the district of Maidstone can be used as an example. Maidstone is district of 155,000 population (2011census) in the county of Kent (south east of London). The district includes the town itself (the majority of the
population), which is the administrative centre for the county, and also covers an adjoining rural fringe area, theoverall district population density being relatively lower at 390 per sq km (2011 census). A taxi user survey was
firstly undertaken in 1986 (coincident with a study of the effects of bus regulation under the 1985 Act), at a time
when the taxi supply was very limited, only 24 vehicles (approx. 1 per 4,000 population within the urban area).
Hence, under the ‘no significant unmet demand’ criterion, a survey was carried out to see whether this limit
could be justified10. Observations were made at taxi ranks, operators were interviewed, and taxi users wereinvited to fill in a self-completion questionnaire. In addition, household surveys were carried out at six clusters
within the district (including two within the rural fringe) to examine both bus and taxi use: none of the rural
residents in the sample reported taxi use.
It was found that little on-street hiring took place except at ranks (railway station, shopping centre). There
was large overlap in the roles of taxis and PHVs in meeting phone requests – both types of vehicle were often
run by same firms. About 90% of the taxi trips were within the town and its suburbs.
There was little evidence of problems caused by the low supply (e.g. customer queuing time at ranks, orexcessive time waiting for a vehicle after a phone request). However, it may be the case that users’ expectations
adjusted to the low level of taxi supply.
In principle, the best way test whether demand is being suppressed may be to increase the number oflicences and monitor use (but the latter is very rarely done). In practice, a small increase was granted by council,
but even so taxi numbers had only reached 39 in 2005.
However, Maidstone also displayed a high ratio of PHV licences to population, such that the overall (taxi +PHV)/population ratio by 2005 was similar to the then national average of about 2.8 per 1,000 (on the samedefinition as the figure for 2013 for ‘other Urban’ of 3.5). It may thus be the case that high PHV provisionoffsets some of the problems created by low taxi numbers, although some problems may still persist due toinability of PHVs to ply for hire on the street.

Effects of limiting numbers
A consequence of limiting numbers, as found in many countries, is that not only are users affectedby limited supply, but other factors also arise. The driver and/or vehicle licences (known as ‘plates’,’medallions’ etc.) are limited in number by the public authority. They thus acquire a scarcity value,
and may be ‘traded’ (unless that practice is specifically prohibited). In effect, entry to the market
becomes attainable by purchase of an existing plate from a currently licensed operator. This could beseen as prima facie evidence of suppressed demand, since a large operating surplus may be needed tofinance the cost of such a purchase by a ‘new’ operator. Possibly the highest price at present is that fora New York ‘Medallion’ at around 640,000 USD11.
This pattern may become self-perpetuating, in that new operators who have bought plates thenhave a vested interest in ensuring that scarcity value remains, so that they in turn sell on a plate in due
course to another new entrant.

10.

11.

20

R.P.Turner and P.R.White ‘Taxis into Buses: determining ‘unmet demand’ for taxis: a case study ofMaidstone’ ATCO [Association of Transport Coordinating Officers] News, no 40, April-May 1987, pp
16-18
T.Cetin and K.A.Eryigit ‘The economic effects of government regulation: Evidence from the New York
taxicab market’ Transport Policy Jan 2013 (Vol 2) pp 169-177.

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However, cases have arisen where such restrictions have been abolished overnight, notably
Dublin, as described by Dr Sean Barrett12. This occurred following a legal decision abolishing theprevious strict limit applied since 1978. The total number of taxis went up from 2,722 in 2000 to 8,609
in 2002 (+216%), and with similar impacts in other Irish cities (i.e. to approx. 6/1,000 population,
approaching the very high London taxis/PHV ratio of 8.7 quoted above).
Prior to this, the licence plate price had reached 90,000 Irish Pounds (approx. 80,000 GBP) in
2000. This could be seen as a loss of an ‘investment’ by those who had ‘purchased’ licences. A‘hardship fund’ was set up to handle this problem, although in practice used to only a limited extent.
Unfortunately, little data appears to have been collected on taxi usage (which probably grew less than
the supply), but one indication is the cuts subsequently made in all-night bus services in Dublin(previously extensive queuing for taxis had been observed at such times).
Total taxis/hackney cabs in the Irish Republic from 11,239 in 1998 to 29,053 in 200813: based on a
population of about 4.5 million, this gives a ratio per 1,000 population of about 6.3.
There is also evidence from France, where strict price and quantity control applies in all cities,
with little growth in numbers in recent years. Studies by Bacache-Beauvallet & Janin 14 indicate an
estimated average weighted value per licence 100,000 euros, equivalent to an economic profit of 7,000
euros per year to each driver. They estimate that if demand were wholly inelastic to volume of supply(number of taxis), an increase in licences of about 20% would eliminate this. In practice, demand willgrow as licences increase. Estimates were derived from a large sample of cities with a secondary
market for licences, indicating that a 1% increase in the number of licences depreciates their value by
0.3% , giving an estimated elasticity of demand of 0.78 (passenger trips with respect to the number oflicences).
Work by Richard Darbera 15 has examined Paris as an example of imposing continued strict
quantity limits on the number of licensed taxi (and with no equivalent to PHVs). He estimates taxis+PHVs per 1,000 population in Paris 2.63 (compared with 8.47 in London at the time of his study).
Equivalent ratios for taxi + PHV drivers were 2.76 and 8.60 respectively. These supply differenceswere correlated with average taxi + PHV trips per person per year at 6 and 14 respectively. A
particularly marked relationship was found when examining use by income group quintiles. In
London, approx. 12 trips/head/year in were observed in the four lowest quintiles, and about 18 inhighest, but in Paris, about 4 in the four lowest and 12 in highest. A wider mix of trip purposes was
also observed in London.

12

13.

Papers at ECMT Round Table 133, Paris, April 2005 ‘(De)Regulation of the Taxi Industry’ (publishedMarch 2007)
Sean D. Barrett ‘Regulatory capture, property rights and taxi deregulation - a case study’[Dublin
example]Peter Bakker ‘Deregulation of the taxi industry : Experience in the Netherlands’
Jon-Terje Bekken ‘Experiences with (de-)regulation in the European taxi industry’ [case studies from
Norway, New Zealand, Netherlands, Sweden)
Denis Cartier ‘Quebec : the role of taxis in public transport]
Catherine Liston-Heyes and Anthony Hayes ‘Regulation of the Taxi Industry : Some Economic
Background’
Coach and Bus Week 21 Oct 200914.

Maya Bacache-Beauvallet and Lionel Janin ‘Taxicab licence value and market regulation’ Transport
Policy Vol 19, Jan 2012, pp 57-62

15.

Richard Darbera ‘Taxicab regulation and urban residents’ use and perception of taxi services: a survey ineight cities’ Paper at World Conference on Transport Research, Lisbon, July 2010

Peter White — Discussion Paper 2015-07 — © OECD/ITF 201521

REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

Effects of deregulation on demand
While correlations can be found between levels of supply and use (as in the London and Pariscomparison above), establishing a cause-and-effect relationship when specific changes occur inlicensing policy is more difficult. As indicated earlier, an Increase in the supply of vehicles and/or
drivers is not necessarily proportionate to service level offered (for example, there may be less doubleshifting, shorter hours worked, etc.).
In the case of cruising and rank availability service level offered is a function of the number incirculation at any one time. Hence user benefits may be observed through shorter waiting times (andalso, less directly, in response time to phone requests).
In many markets, one would expect deregulation to produce price competition, as well as anincrease in supply. This would give direct financial benefits to existing users, and also stimulate
additional demand from new users. However, even where taxi numbers are not limited, taxi fares still
generally regulated, at least for the permitted maximum fare for a given distance, etc. (for example, inthe London case). This may not be so much a form of direct economic regulation as desire to protect
the user from exploitation.
Even where price controls are lifted, there is, to date, little evidence of spontaneous pricecompetition. One problem is that of the user effort required to ‘search’ for price differences – forexample to make comparisons between different vehicles in a rank. The perceived effort involved may
offset the monetary saving to the user. A parallel may be drawn with the outcomes of local bus
deregulation in Britain following the Transport Act of 1985. Most competition has taken the form of
frequency and quality of service, rather than directly on price, partly because a bus user foregoing theuse of an ‘expensive’ bus which arrives first at a stop will experience additional (and possibly
uncertain) waiting time for the following ‘cheaper’ bus. Unless the price differential is very large, thetendency is to board the first bus to arrive.
Within the taxi/PHV sector, price competition may be more effective in pre-booked and phonemarkets, than on-street or at ranks. It is also noteworthy that mobile phone apps are now being placedon the market which enable users to make quicker price comparisons (and also between taxis andPHVs), which could result in substantially greater scope for price competition in future, although there
is little evidence on impacts to date.
A possible outcome of deregulating both price and quantity could be that more taxis/PHVs areoperated, but each secures a lower average utilisation (trips/vehicle/day) if demand does not grow pro
rata. Operators might then have to increase fares to maintain total revenue. This outcome could
produce a high service level at high fares, with benefits to customers with a high income and thus ahigh value of time, but losses to low income customers. Efficiency of vehicle use would decrease.
The ECMT Round Table (no 133) in Paris in 2005 (4) provided a number of observed outcomes:
Work by Bakker examined outcomes of deregulation in the Netherlands: a rise occurred in taxi
numbers, but vehicle hours offered fell, and real fares increased. Usage remained approximately
stable.
Deregulation in Sweden in 1990, as analysed by Bekken, produced an increase in fares, and more
vehicles, but with fewer trips per vehicle (i.e. similar to the indicative outcome described above).
There was little effective competition in rural areas (where taxis play an important role in contract
services for school and social transport, and hence competitive bidding would be of benefit to publicauthorities).

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

Bekken also analysed the case of Norway, where fares had been deregulated in 2000, but quantity
control retained. Competition was observed between despatching centres rather than driver-operators.
Fares had generally increased, but with substantial differences between firms.

Other issues in the British case
Since many of the regulatory powers are permissive, inconsistent quality requirements are often
seen between different local authority areas, and there may be a case for a more consistent minimum
standard.
The position regarding quantity limits remains ambiguous. As mentioned above, about 28% ofauthorities in England and Wales still have them. Should there be a general encouragement to remove
the remaining quantity controls, and if so, on what timescale?
Many local authority boundaries cover only a limited area, especially among the smaller unitaries.
If taxis and PHVs are limited to picking up and setting down only within these limited areas, thisreduces potential driver and vehicle utilisation.

Experience of the changes introduced under the 1985 Transport Act.
The changes introduced under this Act (described above) enabled a number of service innovations
to be made. The extent to which these have been adopted is highly variable, and while many press
reports document the introduction of such services, their duration, and levels of use, are much lessclear. Overall, it would be fair to say that the vast majority of taxi use is probably still of the ‘single
hirer’ form in which one person is deemed to be the customer, and relatively little use is made ofshared taxi and taxibus provision. However, a number of examples have developed:‘Taxibus‘feeder services to Chiltern Rail in Bicester – running fixed routes at peak times,
flexible routes off-peak (these were successful within the town, but not in the adjoining ruralarea). By late 2003 these were carrying 50,000 passengers a year16. Chiltern Rail is an operator
running routes North West from London, on which rapid growth in usage has been observedin recent years, associated with enhanced service levels. Bicester is a town which hasdeveloped as a commuter settlement for London, but station parking capacity imposes
constraints on use of car as a mode of access.

Stagecoach Fife ‘Yellow Taxi’ experiment. Stagecoach Group is one of the major public
transport operators in Britain, owning many regional bus companies, including that covering
the Fife region (north of the River Forth) in Scotland. This is connected to Edinburgh via theForth Road Bridge, over which frequent bus & coach services are operated. The ‘Yellow Taxi’
was an 8-seater shared taxi, offering a service to Edinburgh at a premium fare to the same
operator’s buses, aimed at a new market segment. It began in August 2003. However,profitability was poor, and the service was withdrawn in September 2005, despite carrying
about 1,000 passengers per week17. A similar service was introduced at Petersfield in Southern
England in November 2004, as a feeder service to the South West Trains rail service (also a
Stagecoach subsidiary) linking that town to London. This was also unviable commercially,
carrying only 20 passengers per day and was withdrawn in 200518.

16.

London Transport Users’ Committee, Performance Monitoring Report on National Railways in the
London Area for quarter 3, 2003-04 (Oct-Dec 2003), published May 2004

17.

Transit, 29 August 2003, p5; Transit 23 September 2005, p 5

18.

Transit, 9 September 2005, pp 1,15

Peter White — Discussion Paper 2015-07 — © OECD/ITF 201523

REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOMTaxibus feeder services to Oxford – London coach services at Lewknor on the M40
motorway. Very frequent express coach services are operated between Oxford and London by
two operators (Stagecoach and Go Ahead), and a spontaneous form of ‘park and ride’
developed at Lewknor, a minor junction on the motorway in a rural area, at which coaches callon request. Development of car feeder traffic encouraged several flexibly-routed taxibus
feeders, which commenced in 2005, but these largely reverted to a fixed route operation: theservice from Stokenchurch ceased in January 2007, although a service from Watlington
continued until replaced by a fixed route in June 2007, as was a service from Little Milton
and Garsington 19

Taxibus feeder to Peterborough station, on the London – Newcastle main line, operated inconjunction with the GNER franchise from July 2006, but ceased at the end of that franchiseabout one year later20.

Development of commercial airport – hotel minibus feeders on a fixed timetable but withflexible routing should be an appropriate role for taxibus or shared taxi operation, and can befound in many other countries, but impacts of services under the 1985 Act appear limited. A
service was operated for some years between Edinburgh Airport and the city centre by the
public sector local bus operator (as a premium fare direct alternative to its own airport express
bus service), but was abandoned due to poor financial performance, and a private buyer could
not be found. National Express coaches operated its ‘dot2dot’ demand-responsive service
between Heathrow Airport and central London hotels, but this was also financially unviable. It
was sold to another operator in 2009, but no longer runs as a scheduled service.



A Taxibus service between Liverpool city centre and its airport, launched in early 2014 by alocal taxi firm, following a similar service to a major football ground (Anfield) in August
2011. An hourly off-peak service was offered (since reduce in frequency) at a fare lower than
the airport bus service.

In addition, a number of public authorities and rail operators have developed websites and/or
mobile phone applications which enable users to order a taxi or PHV to access a station, or to provide
a feeder trip from a station. These provide the user with greater certainty of service availability, andpersonal security (through ensuring that only licensed operators are used). Examples include Transportfor London, and Abellio Greater Anglia’s ‘Cab & Go’ service (which requires booking at least twohours in advance). However, they appear to be mainly or entirely for single-hirer bookings, rather thantaxi sharing as such.

The Law Commission proposals
As mentioned earlier in this report, the Law Commission has recently completed a study reviewing
taxi and PHV regulation in England and Wales, and has proposed a new Parliamentary Bill to
introduce a harmonised and consistent approach. They propose retaining the taxi/PHV distinction
based on method of booking the journey, with a requirement that bookings should be made through a‘licensed dispatcher’. Cross-border working (crossing local authority area boundaries) would be madeeasier, and national minimum standards introduced, although local authorities would still remain
responsible for licensing, and be able to set taxi fares. Taxi operators would be able to use vehicles ofhigher capacity (up to 16 seats) in certain cases. The Commission envisages that authorities should
continue to be able to set quantity limits on taxi licences, and that in cases where such quantity limits
already apply, that transferability of licence plates should be permitted to continue. It also proposes
19.

Omnibus Society Southern Area bulletin, March 2007 (p9) and May/June 2007, pp 15,16

20.

Transit, 22 July 2006, p2; and Coach & Bus Week 23 July 2008, p6.

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

that areas not currently imposing quantity limits should able to do so (but without enabling trading ofplates in such areas).

Some broad conclusions on taxis
The British experience of taxis and PHV operations in last thirty years indicates that, despite rising
car ownership, a substantial growth has occurred in both supply and use of this mode. This may havebeen encouraged by removal of quantity restrictions on taxis in some areas that previously applied but
disaggregating this effect from wider factors is difficult.
Broad international evidence also suggests weak case in principle for maintaining quantity limits,which may restrict user choice and result in artificial profits being made by incumbent operators.
However, the case for removing price regulation is much less clear (although growing use of mobilephone apps may stimulate more price competition in any case, by reducing the distinction between
taxis and PHVs).
The reforms in Britain under the Transport Act 1985 enabled a number of innovative service types
to develop, including shared taxis and taxibus operations. Potentially, these could fill gaps in meeting
low-density demand, especially in rural areas. However, the extent to which they have done so isvariable. While there are many examples of such services being introduced, the extent to which they
are sustained commercially (or found worthwhile as tendered services) appears highly uncertain, andvery little data has been collected on their level of use. A further factor is that the overall supply oftaxis/PHVs in rural areas (per 1,000 population) is much lower than in urban areas, reflecting thelower density of demand and hence scope for commercially-viable operation, but this in turn meansthat relatively few taxis/PHVs are based in such areas from which innovative service types could be
developed. It may be the case that further initiatives, besides those initiated by individual operators,
are needed to stimulate such activity. For example, it may be in the interests of a public transport
operator such as a railway to improve feeder services to stations in low-density areas, or for publicauthorities to encourage alternative means for providing access to health facilities, etc.

6. Specific initiatives in rural public transport provision in Britain

A number of initiatives have been introduced in recent years, with varying degrees of success

Postbuses
In some countries the postal service operator is also a major bus operator (for example, in
Switzerland). In Britain, it has never played a major role, but from the 1970s a considerable number ofservices were operated. There were provided by using existing postal vehicle runs, normally thosecollecting post from local post offices, public mail collection boxes, etc. and taking them to theregional sorting office, typically in a market town. This might provide 2-3 runs per day (fewer on
Saturdays), dependent on the frequency of postal collection. Initially, such services were provided
largely at marginal cost, replacing a small van with a minibus. Availability of grants in the 1970s (fuelduty rebate, and also a 50% grant toward the cost of a new bus) largely covered the extra costs
involved. However, a later shift to a more realistic costing approach by the Post Office, andwithdrawal of the new bus grant, made these services less attractive financially, and local authority

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

support was required for continuation. The routeing of services was often indirect, resulting inunattractive journey times. In some cases, a demand-responsive service is now provided, giving users
a much wider choice of journey times and potentially more direct journeys (for example, replacing thePost Office routes in Lincolnshire), and the few remaining examples are found in remote areas of
Scotland. However, where settlement patterns in a low-density area effectively place most of the
population on a linear corridor (for example, along a coast road, or a valley) this option might still beappropriate in some cases.

Volunteer-driven minibuses
As mentioned in the main text above, the legal position of such services was clarified under
sections 19 and 22 of the Transport Act 1985. The first such schemes were introduced in the early
1979s, in some cases with the assistance of existing regional bus company in the area who found it
impracticable to provide services for some settlements using conventional vehicles and paid drivers(For example, the Eastern Counties subsidiary of NBC in Norfolk). Typically, a mix of scheduled
public services, excursions and private hire activity might be undertaken, with different service
patterns according to the day of week.
A number of such schemes have been sustained in several areas, but they are not particularlycomprehensive in their coverage in rural areas as a whole. One constraining factor may be the need toensure that a sufficient ‘pool’ of volunteers can be recruited to cover the service requirements, and thatvolunteers can be replaced over time (for example, much volunteer work may be undertaken by ‘active
retired’ people in their 60s. As they age, they may no longer be able to meet the requirements
imposed, and fresh volunteers need to be recruited. This may also be affected by the shift to anincrease in retirement age from regular work). In some cases, cultural factors might be important;dependent on whether there is a tradition of public benefit volunteer work in the society as a whole(this affected, for example, scope for extending this concept to rural areas in Japan).

Enhancement of commercial ‘conventional’ bus services
In many countries, the bus operating industry has been relatively slow to adopt new concepts inmarketing and product development, and this may apply to rural services as well as those in urban
areas. In addition to examining scope for different types of service, it is also worth considering a morepositive approach to conventional bus provision.
Such scope does not necessarily enable very low density rural areas to be served, but may
strengthen the role of existing services, enabling a higher level of commercially viable service to beretained than would otherwise be the case (and/or services with a level of public support per trip
within an acceptable threshold).
Types of improvement may include:a) Higher specification vehicles. The cost of improved seating, lighting, interior finish etc., isvery small vis a vis the majority of costs, which are largely determined by driver wages, fuelconsumption, mechanical specification, etc. In some cases, it may be worthwhile reducing
seating density (given low average loads now found) to improve comfort – for example,
Arriva group has introduced its higher-specification ‘Sapphire’ services on some routes with 3seats across the width of a vehicle rather than the usual four. Wi-Fi facilities can also be added
at low cost. Overall, a modest rise in ridership (around 5-7%) may be sufficient to cover the
additional costs incurred.
b) Better marketing and information. Timetable publicity, provision of maps, etc. has often beenpoor. Improvements in information technology enable much more comprehensive information

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REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

to be provided at low cost, notably through messaging to mobile phones, etc. Use of social
media (such as Facebook or twitter) enable short-term changes (for example, due to weather
conditions) to be disseminated to users prior to travel.
c) Greater attention to service reliability (which may be particularly important for low-frequency
services), through realistic scheduling.
d) Where demand justifies it, offering regular-interval services (e.g. every hour), which are moreeasily memorised by users without the need to consult a timetable for each journey made.
These factors are not unique to rural operations, but may be particularly beneficial, in particularimproved in-vehicle comfort and passenger information. The main potential may be in enabling
improvements to interurban services, which attract usage from both town-to-town traffic and thatto/from intermediate villages. This can be seen in the Lincolnshire ’Interconnect’ network forexample, but also in other areas. One consequence is that some villages, which happen to lie oninterurban routes, now have very good levels of service (up to every half hour or even better), often
the best they have ever enjoyed. However, a much greater disparity of service frequency may now beseen between these villages and those in more isolated areas, where such scope for upgrading does notreadily exist.
A noteworthy example of upgrading a rural network in relatively low density is the ‘Norfolk
Green’ company (now a subsidiary of Stagecoach) serving the west of Norfolk, which has developed
improved frequencies and interurban links in a rural area characterised by a low density of populationand in some cases very poor services previously.

Government funding of service experimentation
In addition to initiatives which arise from commercial activity, voluntary groups, or local authority
actions, central government may initiate innovations through a centrally-funded programme. A
number of such initiatives have taken place in Britain since the late 1960s, the most substantial ofwhich were the ‘Rural Bus Challenge’ (RBC) and ‘Rural Bus Subsidy Grant’ (RBSG), introduced in1998 (both of which have now ceased). The former applied to new types of services, usually for athree-year period. For example, these have included many of the earlier demand-responsive services,and some interurban improvements (such as Lincoln - Skegness service within Lincolnshire). Bids
were invited by central government, which then made awards on merits of each case. The RBSG
(allocated on a per capita basis to local authorities with population densities below a specified
threshold) was generally used for more conventional types of service, enabling existing networks to beextended, and/or time periods in which services operated (for example, at evenings and weekends).
Considerable innovation was produced by these grants, some of which has been sustained.
However, it is important that outcomes of such innovations are carefully monitored if lessons are to belearned from their introduction. It is also desirable that it is possible for such services to be sustained
following the initial period of funding (subject to sufficient usage being generated to justify this). A
problem arising from some RBC services, for example, was that the level of support per trip was very
high, making it difficult for service support to be continued from local authority budgets following theinitial funding period.

Car sharing schemes
The high levels of car ownership in rural areas potentially enable the needs of those without cars to
be met by offering provision for specific journeys. This is not usually a simple matter of offering
empty seats already available (average car occupancy rates are such that total empty seats would
exceed the demands of those without car access), since the needs for those without cars would notPeter White — Discussion Paper 2015-07 — © OECD/ITF 201527

REPORT ON PUBLIC TRANSPORT PROVISION IN RURAL AND DEPOPULATED AREAS IN THE UNITED KINGDOM

necessarily match the times or locations when empty seats are available. It is therefore necessary to
make direct arrangements to match up the needs of those without access to other transport, andwillingness of car drivers to provide lifts. One should also distinguish between provision of car seatsto those without access to cars and ‘car sharing’ in the sense of encouraging more efficient travel by
those with cars to improve occupancy levels (for example, encouraging two people each travelling as
drivers as sole occupants to a place to work to share a car for this purpose).
Since the Transport Act of 1980, constraints on permitting coverage of costs incurred by those
providing the car service have been removed (provided that no profit is made). The contribution may
come either directly from the person being given the lift, and/or a public body (such as a local
authority) co-ordinating the provision of such a service.
In a number of low-density areas, car sharing schemes may provide a fairly comprehensive
service, for a wide range of trip purposes. In others, it may be focused more specifically on particularrequirements, such as access to health facilities. As in the case of volunteer minibus services, one issue
in the provision of such services may be the presence of a ’pool’ of volunteers, and the ability toreplenish these as existing volunteers are unable to continue may be an important factor in securingcontinuity of service.

Integration of public school and social services transport
The major statutory responsibility for provision of school transport held by local authorities createsa substantial level of resources which can also be used for other types of service provision. Likewise,
resources provided for social services transport, typically minibuses, in some cases with special
facilities (such as wheelchair access) creates a further set of resources. Considerable scope may exist
for integrating such services with the general public network, especially where the local authority is
involved in providing substantial financial support. In many cases, institutional barriers may exist, forexample the separate contracting of school and public services, even within the same authority, may
result in the full scope for such integration not being attained.
The integration may take the form of complementary service patterns at different times of day (forexample, resources required for the school peak may be used to provide shopping and other journey
purposes at other times of day). In other cases, more direct integration may be possible - for example
by placing school trips and other journey purposes on the same vehicle (e.g. a morning peak journey
into a market town).

7. Economic evaluation of rural transport options

In contrast to the assessment of transport infrastructure projects, and major urban transport
expenditure, there is relatively little systematic appraisal of rural transport options, much of it being
based on fairly arbitrary criteria. For example, in the British case, much of the expenditure in rural
areas is determined by statutory obligations, notably those with respect to free school travel andconcessionary fares. The majority of a local authority’s expenditure in this respect is typicallydetermined by free travel for older school pupils (those aged between 8 and 16, living above 3 miles
from their nearest appropriate school), and the obligation to provide free concessionary travel (apartfrom the Monday-Friday morning peak) to those who are disabled or above 60 (although the policy is

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a national one, compensation to operators is paid at the local level). This has resulted in thediscretionary element of spending being much reduced. In some areas, it has even been proposed toabolish the funding for tendered rural services altogether (for example, in Cumbria). One can also see
reductions being made in the discretionary element of education transport spending, for example tofund pupils above the statutory leaving age of 16 who are still in education, and/or services to religious
denomination schools.
It is noteworthy that many rural areas proposing to make radical cuts are incurring relatively low
cost per passenger trip on the services concerned (as an average) – for example £1.35 in North
Yorkshire21, and about £1.33 in Herefordshire22.
A fairly crude approach has thus come to be adopted toward evaluation of tendered rural bus
service support, typically using an average value for the net support per passenger trip (i.e. after taking
account of fares revenue). Guidelines used by local authorities are typically in the range of £2 to £6.
However, this does not take into account user benefits in any systematic form, except insofar as
different degrees of importance may be attached to different trip purposes – authorities may, forexample, give higher importance to journeys for work and medical purposes than leisure trips,
although this is not necessarily reflected in an explicit differentiation in the net support per trip
regarded as acceptable. An improvement has been made recently, following work by the Mott
Macdonald consultancy and the Institute of Transport Studies at the University of Leeds, which sought
to determine the economic benefits of retaining bus service provision, by identifying ‘social impact’
benefits per return trip for those bus journeys which would not otherwise be made. These were
estimated at 2010 values and prices as £3.84 for a concessionary pass holder and £8.17 for a nonholder23, values which are similar to some of the crude average thresholds used as cost-effectivenessmeasures by local authorities currently. This guidance has now been incorporated into ‘webtag’, theweb-based guidance on forecasting and evaluation methods provided by the Department forTransport24.
It should be noted that these values relate to trips that would not otherwise be made, and when arural bus service is withdrawn it does not necessarily follow that all trips on it would cease - somemight take place via alternative bus services, demand-responsive operations, etc. A default value of
21% is suggested in the guidance, although this appears to relate to evidence from additional trips
being generated (as distinct from diverted) to an improved bus service. In the case of cuts in a rural
service, with few alternatives available, it might be reasonable to assume more substantial effects
would arise from elimination of a service: for example, only half of the trips would still be made.
Taking the guidance figure of £8.17 for a return trip by a non-concessionary pass holder (above) then
one could assume that a value of £4.08 for a one-way trip would be applicable. If it is assumed that
half of the trips would no longer be made, then a value of £2.04 per one-way trip applied to all trips on
the current tendered service to be withdrawn could be inferred. By the same logic, a value for aconcessionary pass holder trip no longer made would be about 96p. Assuming a 50:50 split ofconcessionary/non-concessionary travellers, the overall average would be about £1.50 at 2010 prices.
Factoring up to 2014 prices using a webtag guidance25 GDP deflator of 8% between 2010 and 2014
would bring this value to about £1.62. It is too early to say whether this guidance is being applied in21.

Bus & Coach Professional 31 January 2014, p5

22.

Inferred from Herefordshire data quoted Coach & Bus Week 19 March 2014, p10.

23.

Monetising the social impact of bus travel. Mott MacDonald, March 201324.

Department for Transport. TAG unit A1.3 User and Provider Impacts, updated May 2014, available athttps://www.gov.uk/government/publications/webtag-tag-unit-a1.3-user-and-provider-impacts-may-2014

25

DfT ‘Webtag data book’ May 2014, ‘Annual Parameters’ table.

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any systematic form - for the moment short-term budget constraints are likely to be more critical - but
it could provide a more informed figure for a threshold net subsidy per trip.
The current financial pressures also raise the question of whether the free travel for older users isnecessarily sensible, since it could result in some rural dwellers having a free pass, but no services on
which to use it. Indeed, in some areas passholders have suggested that a reversion to a lower fare (e.g.
half price) rather than free travel would be a preferable alternative to no service at all, but the DfT has
been unwilling to permit any local flexibility. One must also question whether it is sensible to retain
the rail network at its present size, given the very high funding for some rural routes which, if
redeployed to bus services, could support an entire network in the area concerned.

30Peter White— Discussion Paper 2015-07 — © OECD/ITF 2015

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