The UK Bus Industry - Deregulation and Privatisation

Local bus operation in the UK was revolutionised by the 1985 Transport Act, which both deregulated and privatised Britain's buses. There is no general agreement on the benefits of deregulation - increased competition was at best a mixed blessing. There is no doubt though that this competition, together with privatisation, brought about significant efficiency gains - the average bus operating cost, per mile of operation, was reduced by 44% (in real terms) over the period 1986 to 1996. This is a brief summary of these changes - more data will be added to this site in due course.

The data relates to the whole of the UK bus industry - about 76,000 buses in all, spread across a few thousand companies - although many of these own only one bus. However, most of the following data relate to Local Bus Services; regular, scheduled, stopping bus services in cities, towns and the countryside. Express services are not included in this category, although similar cost savings have been made here. Local Bus Services make up about 65% of total bus operation in the UK (by vehicle-kms.) All comparisons are between 1985/86 (the last full year before deregulation) and 1995/96. Incidentally, significant savings had already been made in the UK bus industry prior to 1985, but it was only after that date that privatisation got into full swing.

The highlights of the data are;

Over the ten years, Local Bus Service vehicle-kms increased by 26% (although this has now levelled off), and vehicle-kms on other services increased by 19%.

At the same time, smaller buses were introduced, often at higher frequencies, so the number of Local Bus Service seat-kms increased by only 7%.

Total operating costs for Local Bus Services over the ten-year period fell by 29%; costs per vehicle-km fell by 44% and costs per seat-km by 34%

Much of these cost savings was achieved by reductions in staff costs, both in terms of reduced wages and reduced numbers. In relation to vehicle-kms:

• Driver numbers were reduced by 19%. Drivers wages (adjusted for inflation) were reduced by 10%, giving an overall reduction in drivers' costs of 27%
• Maintenance staff numbers were reduced by 52%. Figures for maintenance wages are not available; they probably fell slightly.
• Other staff numbers (mainly administration) fell by 54%; again, figures for wages are not available, but there was probably a fall in real terms.

In 1985/86, "Other" staff constituted 18% of the total; this had fallen to 12% by 1995/96.

The number of buses fell by 12% over the ten years; average annual kms per vehicle rose by 11%, to 54,200 kms per bus.

The bad news is that over the 10 years, passenger numbers fell by 22%, while fares rose by 23% (adjusted for inflation). However, this was basically a continuation of a trend that had been going on for many years, and there are signs that numbers have now stabilised.

External support by central and local government for Local Bus services fell by 49%, and now stands at 17% of turnover; this includes government rebate on road fuel duty. The remainder is tendered for competitively on a route-by-route basis.