Autumn Statement – BSOG retained

News that BSOG has been retained is the headline from the Autumn Statement outlining the Government’s spending plans over the course of the Parliament. BSOG is currently worth over £300m each year to bus services. Announced by Chancellor of the Exchequer, George Osborne, the Statement is actually two announcements combined, including not only a document charting the state of the UK economy, but also a mini-Budget in which changes to fiscal policy are signalled.

CPT has been lobbying the DfT to retain BSOG at current levels and for the Grant to be paid to operators. Whilst the Chancellor made no specific reference to BSOG in his Statement or in the supporting documents, the Confederation hopes to have further information shortly.

CPT Chief Executive, Simon Posner, said, ‘This is extremely good news for the bus industry. CPT has persistently lobbied DfT to retain BSOG at current levels and for the Grant to be paid direct to bus operators. As I told the Transport Minister, Andrew Jones MP, the industry is grateful to the Secretary of State and his team for their efforts in securing this deal in what will have been a very difficult Spending Review process. BSOG is a key element in assisting operators, enabling them to keep fares affordable and continue running services that might otherwise be unprofitable and therefore vulnerable to cancellation. So the overall winner will be passengers.’

Another group that lobbied for BSOG to remain was Bus Users UK. Chair of the passenger watchdog, the Rt Hon Norman Baker, said, ‘This is great news for bus services and for passengers. Cutting the BSOG would have led to fare increases and further cuts to services, causing particular hardship to vulnerable people and people on low incomes. This relatively small source of funding is a small price to pay for the massive contribution buses make to society.’

Greener Journeys Chief Executive, Claire Haigh, said, ‘The Chancellor is absolutely right to protect the Bus Service Operators Grant (BSOG) in his Spending Review. Greener Journeys has clearly demonstrated that the Grant delivers very high value for money, generating up to £3.50 in net economic benefit for every £1 spent, so of course it is a relief that such vital funding has been preserved. However, the deep and widespread cuts to local authority funding mean that bus services may still be under threat. Buses provide a crucial service in keeping people connected to their families, jobs, communities and training opportunities, so it is vital that wider bus funding is also protected over the course of the next Parliament.’

Wider transport implications

Other transport related announcements in the statement include the DfT’s day to day spending is to fall by 37%. DfT and a number of other Departments have already signed up to 30% of funding cuts. However, George Osborne said, ‘But transport capital spending will increase by 50% to a total of £61bn – the biggest increase in a generation. That funds the largest road investment programme since the 1970s. For we are the builders.’

There will be £250m made available to support motorways in Kent to relieve pressure caused by Operation Stack, as well as £13bn to be invested on transport in the north. This includes providing £150m to support the delivery of smart and integrated ticketing across local transport and rail services in the region. London will get an £11bn investment in its transport infrastructure.

In a move that should reduce insurance bills, the Government is to make it harder for people to claim compensation for exaggerated or fraudulent whiplash claims, ending the right to automatic compensation for minor injuries.
Consideration is to be given to transferring responsibility for funding TfL’s capital projects to local government. It will also be spending over £5bn on roads maintenance this Parliament, with a permanent pothole fund.

Commenting on the Spending Review, Stephen Joseph, Chief Executive, Campaign for Better Transport, said, ‘The Chancellor’s focus remains squarely on ever more infrastructure, often at the expense of vital everyday transport. While Mr Osborne dons his hi-vis jacket and hard hat at big construction projects, bus services continue to be lost and high impact investment in walking and cycling is scaled back. The Chancellor’s claim that “we are the builders” will be meaningless for people finding it harder to get to work, school and town centres because their cash-strapped local authority can’t support a bus service. It’s great that the Government has allocated funding to develop smart ticketing in the North of England, but this is needed all over the country. The lack of real roll out of flexible ticketing for part time workers nationwide is also a disappointment despite assurances that schemes will be included in future rail franchises.’

Chief Executive of Transport Focus, Anthony Smith, said, ‘Rail passengers will be relieved to hear that the big projects designed to relieve overcrowding and lead to more reliable journeys have been protected. Users of the strategic road network will be relieved to see that the five-year programme of investment will be maintained. But those who use the bus will be wondering how these changes will affect their local journey. We urge all transport decision makers to keep passengers at the heart of the decisions they make, providing plenty of timely information to help people work round changes to their transport options.’

Growth

Growth of 2.4% was forecast in the statement for 2015, a figure unchanged since June. Growth in subsequent years is forecast to be 2.4%, 2.5%, 2.4% and 2.3%. Since 2010, the UK has been the fastest growing economy, alongside the US. A budget surplus of £10.1bn is to be delivered on schedule by 2019-20. Borrowing is to total £73.5bn this year, falling to £49.9bn, £24.8bn and £4.6bn in subsequent years. Debt is expected to be lower in 2015-16 than 2014-15 and to fall every year after that. Total spending is planned to rise from £756bn this year to £821bn by 2019-20.

The business department’s funding is set to be cut by 17% and uniform business rates are to be abolished, with elected mayors allowed to raise rates under certain conditions. An Apprenticeship levy is to be set at 0.5% of an employer’s wage bill, with a £15,000 allowance for all firms taking part. The Government’s new apprenticeship levy is expected to deliver 3m apprenticeships, which it claims will ensure large businesses share the cost of training people, but no business with a pay bill below £3m will have to pay. It will also increase the funding for each apprenticeship to ensure they are high quality.

Industry staff development body, People 1st, says that while the apprenticeship levy may not be positively received, the bus and coach industry must now maximise investment and secure a central role in its management. Chief Executive of People 1st, Simon Tarr, said, ‘The levy is going to pose some real challenges and there is a risk that those businesses offering high quality training will have to divert this investment to apprenticeships even if this is not necessarily the right fit. However, for many businesses apprenticeships can provide real bottom line benefits. We have been working with over 200 visitor economy sector industry employers to create new apprenticeship standards, offering employers a system that has been designed by them and for them, and prepares apprentices for a career, not just a job. Launching in spring 2016 the new standards represent the biggest change to apprenticeships in recent times.’

‘For the sake of these new standards, we, as an industry, need to ensure the levy works for us; it’s going to be challenging for many businesses, but it’s not going to go away. We must now make our voices heard loud and clear to government on how it is managed. As a sector we will be making a significant financial contribution to the new apprenticeship levy.’
The State pension is to rise by £3.35 a week to £119.30 next year and savings credit is to be frozen at the current level. Every individual and small business is to have their own digital tax account by the end of the decade.

To read the statement in full, visit: www.gov.uk/government/speeches/chancellor-george-osbornes-spending-review-and-autumn-statement-2015-speech