The original concept of Fuel Duty Rebate was simply that of giving back to the bus industry the money it paid to Government in fuel duty, and was a recognition of the part buses play in reducing congestion, contributing to social inclusion and the saving in pollutants from every car journey which was transferred to bus. These were all seen as benefits to society that the bus offered (and indeed continues to do so) and by handing back the fuel duties incurred in providing these societal benefits, the Government was clearly seen not to be benefiting fiscally in the provision of those benefits.

BUS USERS UK was concerned that turning FDR into a grant severed the link with fuel duty and that BSOG would be seen as a munificent and ultimately expendable form of extra ‘subsidy’ to the industry. This has ultimately proved to be the case; BSOG has not kept pace with fuel duty and figures are being quoted to suggest a very high level of ‘subsidy’ to the bus industry, which do not bear scrutiny. A headline figure of £2.185bn expenditure on the bus industry ignores the contribution now made by bus users through fuel duty, suggests that £725m paid to bus operators for carrying concessionary pass holders is also ‘subsidy’ when it is a payment for carrying a person from A to B in exactly the same way as a fare paid in a normal transaction, and that £650million required to pursue the Mayor of London’s transport policy, however laudable, is also a ‘subsidy’ paid to the bus industry at large.

All of these payments being seen erroneously as ‘subsidies’ are then open to public scrutiny and reduction during difficult spending rounds.

We believe it is inappropriate for bus companies to pay duty on fuel and that all fuel used on in-service mileage should be free of duty. Furthermore we are concerned that fares are having to be increased to make up for the difference between fuel duty rises and a fixed rate of BSOG. Indeed in the present climate of oil price rises every incentive should be given to bus operators to provide a viable and economic alternative to car use and encourage beneficial modal shift.

We believe that suggestions that bus operators are encouraged to burn unnecessary amounts of fuel to qualify for extra BSOG are fallacious. It is true that fuel consumption on modern vehicles is higher than that of older generations, though cleaner-burning engines have, until the latest round of Euro emissions levels, had a detrimental effect on fuel consumption, as have increased weight to take into account requirements for higher equipment levels and stronger construction both for safety requirements and to meet the structural challenges of making vehicles more accessible. Fuel costs are the penalty we all pay as users, and are a concern to operators. Operators are unlikely to squander fuel unnecessarily so that they get some of its cost back through BSOG.

That said BUS USERS UK welcomes the recent shift back to heavier-weight buses, which may have higher fuel demands but give much higher levels of comfort and ride quality than those vehicles which ensued from the drive over the last two decades to take out as much weight as possible from vehicles to reduce both first costs and fuel costs. After all, the negative effect of the extra fuel consumed is outweighed every time a car user finds the bus an attractive proposition, which he or she is more likely to do with a well-specified heavyweight bus than a cheap and nasty lightweight one.

The argument which favours linking BSOG to passenger loadings will serve simply to increase the current trend to maximise resources on the busiest routes at the expense of lightly-used ones, with a detrimental effect on services which are already marginal and an overall reduction in social inclusion.

We would certainly favour incentives to accelerate the application of real-time systems and smartcard applications. We would also favour carefully-targeted funding towards solutions which lower carbon and other emissions. However the greatest contribution bus services can make to air quality and congestion is by providing an attractive service and effecting modal shift rather than necessarily by buses ‘consuming their own smoke’.

The SAFED initiative is also to be welcomed, both for its potential cost reduction and for its potential to make the bus journey a more pleasurable experience. Perhaps the simplest way of promoting SAFED is to make it an integral part of the training requirement of the driver CPC, with a demonstrable benefit to the operator.

We would favour
1. a return to 100% fuel duty rebate, given as a rebate not a grant;
2. additional funding to encourage the rapid introduction of smartcard ticketing and real-time information;
3. grants to operators towards the cost of a range of carefully defined low-carbon vehicles, which might include:
• hybrid vehicles
• electric vehicles
• vehicles using gaseous fuels, including hydrogen, and other alterative fuels from renewable sources (such as bioethanol produced from food processing waste)
4. promotion of SAFED through the Driver CPC mechanism

We do not consider that any special arrangements need be put in place to channel BSOG though local authorities where Quality Contracts are invoked, or through TfL: a straightforward reimbursement of the duty paid on fuel used for scheduled services (and this should include express coach to bring that mode into line with intercity rail and short-haul air services) is simple to administer, will help allay additional fares increases and will give a strong message that the Government favours modal shift towards the bus.