Bus services are 'black hole' for £1.2bn public subsidies

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Stephen Byers was warned yesterday that Britain's bus network was a "financial black hole", gobbling up £1.2bn of public money every year with minimal accountability.

The Secretary of State for Transport, Local Government and the Regions was told by leaders of transport authorities that bus services, which account for nine out of 10 journeys on public transport, were often inadequate, unreliable and expensive, and the organisations handing out subsidies had little control over how it was spent.

The criticism came on the eve of a meeting today at which bus operators will tell the Transport minister, John Spellar, that regional passenger transport authorities (PTAs) and local councils are at fault for ignoring the Government's 10-year plan and failing to ease congestion, particularly by providing bus lanes.

By far the biggest slice of the £1.2bn handed over to bus companies, such as First Group, Stagecoach and Arriva, is used to provide services on a restricted number of "non-commercial" routes in rural areas and outlying estates, and to subsidise fares for children, pensioners and the disabled.

However, many PTAs, such as those covering Manchester, Birmingham, Newcastle and Strathclyde, argue that they have no means of knowing exactly how many passengers are using the services.

Chris Mulligan, of the Greater Manchester Transport Authority,said: "It's time we got to grips with these subsidies, which represents hundreds of millions of pounds of taxpayers' money. Until we know the value we are getting for this huge subvention ... we are simply pouring money into a financial black hole. If this was happening in the rail industry there would be a national uproar."

Mr Mulligan believes PTAs should decide the routes and the frequency of buses.