Competition brings chaos on the buses: The rail sell-off Bill is expected this week. Do past deregulations hold a lesson? Christian Wolmar reports

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SIX YEARS after deregulation, bus wars are still in full flow in Sheffield.

The 93 bus which I had been told to take to the headquarters of South Yorkshire Transport was waiting at the stop near the bus station. The blue double-decker was in the livery of Sheffield Omnibus. It was, however, in no hurry to move off until another 93, a single decker in the livery of SYT, the area's main operator, arrived to chase off its rival.

This 'wing mirror timetabling' is common in Sheffield with competitors trying to claim a dwindling number of passengers. In 1985, the last year of the cheap fares policy which kept tickets to an average 8p, there were 350 million passengers; that has fallen to under 200 million last year.

The average fare is now 48p but bus mileage has remained the same, which means there is terrific competition on the profitable routes and the city centre is jammed with competing buses.

SYT's managers pinpoint the loss of the cheap fares as the start of a decline. Brian Keith, its project manager, said: 'Because of the cheap fares policy we were bucking the national trend. Our passenger numbers were growing.

'And car ownership was the lowest in the country because we offered such a good alternative. Now it is rising much faster than the national average.'

Martin Mayer, secretary of the local bus workers' branch of the Transport and General Workers' Union, says there are wider lessons: 'People always say that public transport is a declining industry and nothing can be done about it. The cheap fares policy showed that it is not an inevitable decline.'

Deregulation of the bus industry, like rail privatisation, was intended to increase competition and stimulate new services. The industry, dominated by publicly- owned companies and hidebound by tight regulations, was an obvious target but both managers and unions say that the results have been damaging.

They point to the chaos on the streets, the confusion for the passenger and the lack of investment. Mr Mayer said: 'You used to be able to buy a timetable for 50p showing all routes and it would be valid for a year. Now services are changed every week.' When the new pounds 240m supertram is completed next year, SYT will not be allowed to co-ordinate its services with it because the Office of Fair Trading would argue that this is an anti-competitive activity.

The Government's argument against the cheap fares policy was that the ratepayers of the now defunct South Yorkshire county council were forced to subsidise the service. Indeed, they paid pounds 80m in 1985, equivalent to about pounds 110m at today's prices. The local passenger transport executive still provides pounds 40m to subsidise socially necessary routes.

However, Mike Smith, the PTE's press officer, points out that this is not a net benefit: 'You have to count this against the awful increase in congestion in the city as more people have taken to their cars and, of course, the extra they are paying in fares.'

Both management and unions agree deregulation swept away some restrictive practices. There is, however, a human cost. 'Many drivers are getting in money terms about the same as they did five years ago. And they have to drive for five-and-a-half hours without a break,' Martin Mayer said.

The extra efficiency means South Yorkshire now runs the same number of miles with 750 instead of 1,100 buses and breaks even rather than making a loss.

Management and unions suggest a similar ideal model. Mike Pestereff, SYT's finance director, said: 'I would like to see something similar to France where all the public transport in a town is integrated and then offered by tender to the private sector.'

Mr Mayer only differs in wanting to see the operation remain in the public sector. In fact the Government is moving in the opposite direction. SYT is still owned by the four local metropolitan councils - Sheffield, Rotherham,, Barnsley and Doncaster - and the Government has offered them the carrot of being allowed to reinvest the capital receipts they receive for any sales.

If the authorities resist they may be forced to break up their bus services into three competing groups.