Duty increase to hike up bus fares in Wales

Jan 30 2008 by Rhodri Clark, Western Mail

BUS passengers face service cuts and higher fares because the Welsh Assembly Government is adding 10% to fuel bills.

Two Pembrokeshire services have already been axed while fares in North-East Wales have twice increased by 8% in three months.

Managers said yesterday the WAG’s unprecedented decision on fuel duty would cost the Welsh bus industry millions of pounds.

But they warned the ultimate losers would be passengers, council taxpayers and the environment, because of higher fares and costlier bus contracts for councils.

Even the WAG will take a hit, paying more for pensioners’ free travel under a formula based on average bus fares.

Fuel duty is increasing by 4p per litre, spread over two stages – last October and in April this year.

English bus operators were compensated for the 2p rise last autumn, but the WAG decided to withhold the rebate in Wales.

A WAG spokesman said the fuel-duty rebate, Bus Service Operators’ Grant, was paid on the basis of miles travelled, and did not reward or penalise the performance of bus operators, nor did it encourage the use of greener fuels or technologies.

“Our consultation paper Putting Passengers First sets out our intention to review the arrangements for both BSOG and other bus subsidies in order to promote a more direct link between subsidy levels and our priorities for tackling congestion, poor performance and accessibility,” he said.

“We are preparing to review the subsidy arrangements as a result of the consultation findings.”

Stagecoach in South Wales, which operates across Gwent and the Valleys, said the first 2p rise would add £175,000 to its fuel bill over a year.

Swansea-based First Cymru said the rise would cost it more than £190,000, which would double with April’s rise.

“It will cost operators millions of pounds, if you add up across Wales,” said Justin Davies, First Cymru’s managing director.

His company would have to raise fares or withdraw services.

“At a time when we’re trying to promote public transport and I think the WAG is trying to produce a transport policy, it seems to be perverse to be tipping over in the opposite direction.”

The WAG’s fuel-price increase could hit rural areas especially. Richards Brothers, which operates 65 buses in Pembrokeshire and Ceredigion, has already withdrawn local services and will look for other potential savings.

“We’ve cut back two journeys in the evening in Fishguard, because of the rising costs,” said partner Malcolm Richards.

Lewis y Llan, which provides council-funded buses across rural Anglesey, could surrender contracts and cancel services.

Managing director Tony Lewis, whose fuel bill stands to rise by £7,000 a year, said, “We worked out a price and our profit margin for the contracts. We expected the fuel duty to be constant.”

Gareth Davies of Wrexham- based GHA Coaches said, “In the past the rebate has gone up automatically, and 2p on a litre makes a lot of difference.

“The only way to claw that back is to put the fares up, which is a last resort because it can scare passengers away. We’ve had to put them up twice in the last three months, by 8% each time, just for the diesel costs.

“The more the fares go up, the more the average fare goes up and the more the WAG have to pay out on the free passes.

“Passengers are the ones who will lose out. They will pay more and services could be cut.”

John Gould, managing director of Stagecoach in South Wales, said the situation was unprecedented. “This is why operators haven’t anticipated the extra cost. We may have to bring forward our September fares rise.”

Conservative AM Andrew Davies, Shadow Transport Minister, said the situation made a mockery of the Labour-Plaid Cymru coalition’s transport promises.

“It affects us all if bus fares go up or services are cut. It puts more traffic on the roads and it takes away the choice that people should have in a 21st-century country.”