How Britain's bus passengers are being taken for 'rip off' ride
Britain's five big bus companies have given their shareholders £181million a year in dividends while services have been slashed and fares doubled, the Mirror can reveal.
Research by campaign group We Own It has revealed the payouts by region with London and the South East seeing the most cash siphoned off to shareholders.
The big five bus companies: Arriva, Stagecoach, First, Go-Ahead, and National Express, average £1.81 billion over 10 years and researchers say the real figure could be even higher as it only includes the major bus operators, not the smaller operators.
The £181m figure is more than double the amount of money that has been cut from local authority supported bus funding since 2010.
Cuts, amounting to £74m a year have been blamed for 2,400 bus routes disappearing in England and Wales alone.
Bus companies are making huge dividends (Photo: age fotostock RM)
Meanwhile, bus fares have doubled in real terms since buses were deregulated and privatised in the 1980s.
The South East is the region that is ripped off the most, with at least £48.7m a year going as dividends.
London, often praised for its bus system that many people think is publicly run, leaks at least £40m a year to shareholders.
Other regional dividends include; North East (£30.7m), North West (£23m), Midlands (£16.5), South West (£3.8m), Wales (£2m) and East Anglia (£1.2m).
The research, using the firm’s own published accounts, also uncovered some areas where bus companies are making over 15% profit and sometimes profit rates were as high as 20%.
Busways, a subsidiary of Stagecoach which provides bus services in Tyne and Wear recorded profit rates of 20.29% in its most recent accounts.
The South East is the region that is ripped off the most, with at least £48.7m a year going as dividends
The research comes as the government plans to debate the Bus Services Bill, where it is expected that they will continue to attempt to force through a complete ban on councils setting up new public bus companies.
The Lords voted against the ban when the Bill came before the Lords last year, but it is expected that the government will attempt to reinsert the clause as it goes through the House of Commons.
Campaigners will hand in a petition signed by more than 20,000 people on Thursday (9th March) at Westminster, calling on the government not to ban new public bus companies.
There are 11 publicly owned bus companies in Britain and they often win awards. Nottingham City Transport was recently awarded Best UK Bus Operator for the fourth time.
These public bus companies often provide high levels of investment in services because they are publicly owned.
Reading Buses is able to invest an additional £3m a year in the bus network (around 12-15% of its annual turnover) because it doesn’t pay out dividends to private shareholders.
London Bendy Bus
If the ban on new public bus companies is forced through it could scupper the chances of places like Bristol, whose Mayor, Marvin Rees, is exploring setting up a city-wide bus company.
Cat Hobbs, Director at We Own It, said: “Our new research shows bus services in Britain are being run like a racket.
“We are told that privatisation brings competition, but just like we see on the railway, it’s often a virtual monopoly, with huge companies benefiting from government subsidies whilst also taking passengers for a ride.
“People are right to ask how good could our buses be, or would my route have been cut, if we weren’t lining the pockets of shareholders?”
“Buses are an essential public service that people need to visit their families and friends, or get to work. They should be run in the interests of passengers, not shareholders.
“Those places where buses are publicly-owned, like Reading and Nottingham, show it’s possible to stop dividends trickling away, so that profits are reinvested in the services people use.
“We are calling on the government to abandon its plans to force through this ridiculous ban on new public bus companies so that other councils can dream of copying the best bus operators in the UK.
A Stagecoach Group spokesman said: "Commercial bus routes run by operators outside London have remained relatively stable in the past decade despite a very challenging economy. In contrast, council-funded routes have been cut by 26% in metropolitan areas and by 40% in non-metropolitan areas.
"Dividends to shareholders provide a return on their investment in helping fund significant improvements for customers. Stagecoach has invested more than £1billion in around 6,500 more accessible buses and coaches for local communities in the last 10 years, as well as offering the lowest bus fares in Britain. Our transport services also support around 35,000 direct jobs in the UK and thousands more in the supply chain."
A spokesman for First Bus said: "We share the aim, alongside our local authority partners, to get more people out of their cars and using buses. The current industry model works as bus companies like us bear running costs, take revenue risk in operating services and can invest appropriately in our fleets, whereas alternatives would require substantially higher levels of public sector investment.
"First Bus has invested £455m in 2,500 new buses over the last six years as well as developing technology such as contactless and mobile ticketing and improving the punctuality of our buses. Additionally, industry-wide market conditions continue to be challenging with mixed high street trading and congestion facing bus operators today.”
A spokesperson for Arriva said “Arriva is a wholly owned subsidiary of Deutsche Bahn, and since being acquired in 2010 has not paid any dividends to our parent and has retained profits to fund investment back into the business. In fact since being acquired in 2010, Arriva has invested £585m into our UK bus and train businesses."
