finance

Bus companies to be promised coronavirus bailout this week


Jim Pickard, Chief Political Correspondent

Bus companies will this week be promised hundreds of millions of pounds to deal with plummeting passenger numbers in the latest bailout by the UK government since the start of the coronavirus pandemic.

Whitehall sources said Grant Shapps, the transport secretary, was waiting for the Treasury to sign off on approval for payments to bus operators to compensate for the steep fall in passenger numbers after the government ordered most people to stay at home for the duration of the crisis. Last week Mr Shapps announced a six-month rescue package for the rail industry and the bus compensation is expected to last for the same period of time.

The payments will come on top of measures that Mr Shapps has already privately set out to the industry to help cushion companies from the impact of the crisis.

At an online meeting of the House of Commons transport select committee last week Mr Shapps told MPs he was drawing up a “sector-specific deal” to help the bus companies which, he disclosed, had seen a 78 per cent fall in passenger numbers.

In a private letter sent to the industry on the same day he disclosed that the department would continue to make a payment called the bus services operators grant on the basis of estimated service levels from before the Covid-19 outbreak — even where companies are laying on fewer bus trips.

The grant is a government-funded support mechanism for bus services that pays about £251m a year to councils and operators to subsidise routes in less accessible areas.

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Mr Shapps also said he was writing to every English local transport authority outside London to urge them to continue payments for tendered bus services and concessionary fares reimbursement at pre-crisis levels.

Bus companies can also benefit from Treasury initiatives over the last fortnight to subsidise workers’ pay and allow VAT deferment.

But the bus operators are still pushing for further subsidies to support the industry through the crisis.

The Confederation of Passenger Transport, which represents the sector, earlier this month requested a £1bn bailout but did not say what criteria, such as the length of the crisis, this was based on. It said on Monday that funding for the wages of furloughed workers, the BSOG and concessionary fares would go some way towards covering costs, but much more was needed to “fill the gap” in funding needed to run an emergency bus network. 

“The initial lockdown was meant to be three weeks. If it’s going to be three months or even longer, there is no way the current offering is going to be enough,” said Lilian Greenwood, a Labour MP who sits on the transport select committee.

Mr Shapps has declined to give any details on further help for bus operators but told the Financial Times on Monday it was “vital that we protect the sector for years to come”.

“We will continue to work closely with our colleagues in the bus sector to help them remain resilient during this challenging time,” he said.

In an announcement later this week the train companies are set to be promised government compensation for lost revenue although not in its entirety, according to industry figures.

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The COPT has warned that a failure to back the industry would lead to the “decimation of the national bus network”. The group has predicted a fall in revenues outside London of £50m a week.

The Local Government Association wrote to the government on Monday warning that vital bus services will struggle to survive unless the government produces generous emergency rescue funding.

The LGA, which represents councils, said some companies could go out of business unless ministers stepped in immediately.

“We are urging the government to step in and provide emergency funding for bus services and council-run public transport, such as trams and light railway,” wrote David Renard, LGA transport spokesman.

“Without this, some companies and vital services will struggle to survive during the current crisis.”

Additional reporting by Bethan Staton

 



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