The Bank of England laid bare the consequences of the Conservatives’ economic failure last week.
In a triple whammy of bad news, the Bank raised interest rates by the highest amount in a quarter of a century, they forecast that inflation will rise to 13.3% – the highest level for over forty years – and that Britain is going to fall into a recession lasting more than a year.
Despite such unprecedented bad news, the priorities of two Conservative leadership candidates display a complete failure to recognise this economic reality.
Meanwhile, the two people actually in charge of the economy at the moment – the Prime Minister and Chancellor of the Exchequer – are both sunning themselves on holiday. The Government is paralysed. No decisions are being made.
This paralysis is already having real world consequences as can be seen with the announcement that the last late night bus on a number of routes in Ipswich will no longer run.
To understand why this is happening it is important to recognise that all bus companies have to operate on a commercial basis. They can only either make a profit or break even. Although Ipswich Buses is one of the few council-owned bus companies left in the country, it is still required by law to be run commercially.
The one difference between Ipswich Buses and a commercial company like FirstBus is that the Council, as the sole shareholder, does not take money out of the company in the form of a dividend but requires it to reinvest all income back into services. This means that Ipswich Buses has historically been able to run many more routes without a subsidy – such as Sunday and evening services – than commercial operators elsewhere in the country.
However, the bus industry has been facing a lot of cost pressures, even before the recent loss of passengers from Covid and now the soaring cost of diesel. A large part of this was due to a reduction in funding towards free pensioner bus fares.
As a result, in 2018 Ipswich Buses registered their intention to stop Saturday evening, Sunday, bank holiday and last bus services that they could no longer run commercially on a swathe of routes across the town.
They applied for funding to keep these services going to Suffolk County Council who, as the transport authority, have the responsibility – and receive funding from the Government – for supporting buses. However, the County Council refused, citing lack of money.
If it had been left there, then those services – including the last buses of the day – would already have been cut four years ago.
However, at that point Ipswich Borough Council stepped in to support these routes at a cost of £138,000 per year. We do not have a formal responsibility to support bus services and receive no funding from the Government for it, but we believed it was socially, economically, and environmentally important to keep these services going.
The contract for these services runs until September this year so we have had to go out to tender again. Due to soaring costs in the bus industry the tenders have come back significantly higher. To continue to support all the existing services would now cost £196,000.
As a council we are already having to make £6m extra savings due to inflationary pressures. We simply can’t afford to fund this full increase. Suffolk County Council has again refused to provide any more support. We have been able to find an additional £30,000 but we can’t go any higher than this.
This £30,000 increase in cost will allow us to continue to support all but the last bus of the day on the 3E, 5E, 8, 9 and 13. The services to save were chosen by looking at current and historic passenger numbers.
The priority was given to the services which are used by the most people. On some days the last bus carries an average of fewer than two passengers. The last bus services were also the ones where the subsidy required has increased the most – in fact it has more than doubled.
However, we do recognise the importance of providing as comprehensive a bus network as possible and if we can identify additional external funding we will look to reinstate these services.
This cut in last bus services represents a triple failure on the part of the Government. They have failed to get inflation under control. They have failed to support bus companies – in Germany, their government paid for a €9 monthly public transport pass. And they have failed to support councils hit by soaring costs.
If they had fixed anyone one of these issues then these cuts to our bus services would not need to happen.
With neither Rishi Sunak nor Liz Truss proposing any solutions this is an early taste of what the future is going to hold under the Conservatives: pay more, get less.