Journeys on Britain’s public transport network are recovering after Covid-19 – but sustainable funding remains a challenge.
Public transport is a key enabler of economic, environmental and social prosperity.
But it’s still unclear how services should adapt to changing patterns of demand and become financially sustainable after the Covid-19 pandemic.
Two years ago, the ICE published a set of principles for what long-term public transport funding should be built on.
Last year, we hosted a debate to discuss putting those principles into practice.
That emphasised the need to move away from sticking plaster solutions and towards a sustainable funding model for public transport.
However, since then, high inflation, delays to capital investment and strikes have only added to the uncertainty about the future of public transport in the UK.
Use is recovering
Overall, journeys taken on public transport remain below pre-pandemic levels – in part because the shift to more home working has continued.
Around 4 in 10 adults in Britain now work from home at least some of the time, according to the latest Office of National Statistics data.
But public transport use has continued to trend upwards.
According to the Office of Rail and Road (ORR), 369 million rail passenger journeys were made in Great Britain between October to December 2022 – the last quarter with available statistics.
That’s 80% of the total for the same quarter three years ago.
However, multiple strikes impacted the rail network during those months.
And one week in November without strikes saw passenger use reach 99% of the equivalent level in 2019.
This rise has continued in 2023. Daily statistics from the Department for Transport (DfT) showed a record high post-Covid daily average on the rail network of 98.3% use in April.
On some days, use exceeded pre-Covid levels. And it stayed high across all days of the week and the weekends.
Reasons to be cautious
While the trend appears positive, the ORR has noted that the recovery may not be as high as it seems.
For example, it’s unclear how many journeys use split ticketing – which has become more prevalent.
And passenger revenue remains well down according to the latest available statistics.
Most significantly, fare income on the rail network was £2.1 billion in the last quarter of 2022 – a third below the £3.2 billion achieved three years ago, when adjusted for inflation.
High levels of government support will continue – for now
To meet the shortfall, government support for operators has remained high. It provided £13.3 billion in funding for the rail industry over 2021/2022.
This was almost a quarter lower than the year before – but still well above pre-pandemic levels.
Last year the government also reached a further settlement with Transport for London (TfL) to provide an additional £1.1 billion in funding up to March 2024.
TfL is highly reliant on fare income. The DfT figures suggest London Underground use is around 80% of pre-Covid levels on weekdays.
But the level of support that the government is prepared to continue providing the industry will decline.
TfL and other transport operators are being pressed to find efficiencies.
The risk is that cuts will make public transport less attractive just as passenger numbers appear close to recovering.
Bus fare cap success
On the bus network, journeys have recovered to 85 to 90% of pre-Covid levels, according to the DfT.
This is despite the continued decline in the number of bus services.
According to Campaign for Better Transport, more than a quarter of English services have been lost in the last decade. In the first year of the Covid-19 pandemic, 16% of services were cut.
Since January, bus fares in England have been capped at £2 by the government to help protect services, boost use and support people with the cost of living.
Research by Transport Focus suggested the cap has encouraged more people to use the bus – including to replace journeys they would’ve made by car.
The government has extended the cap until the end of October. It will rise in November to £2.50 for a further 12 months – providing additional certainty before prices are reviewed.
It said the strategy was ambitious, full of good ideas and supported by much-needed extra funding.
But delivering on its vision requires more focus and detailed plans from the government.
How other countries are responding
Protecting services and finding a sustainable funding model post Covid-19 isn’t just a UK challenge.
In Singapore, the government aims to provide a high quality, affordable and financially sustainable public transport system.
It uses a fare formula to calculate the cost to commuters of using public transport.
However, the cost drivers for public transport have risen significantly, primarily due to increased energy prices.
In 2022, the Public Transport Council (PTC) raised fares by 2.9% - much lower than inflation.
To meet the difference and keep fares affordable, the government will continue subsidising operating costs at approximately S$1 per journey, or over S$2 billion annually.
In Germany, the government launched a €9 monthly ticket to encourage people to use public transport.
There’s evidence suggesting some users did reduce their car use in favour of other modes.
The ticket has now been replaced by a €49 monthly ticket which covers all public transport journeys except for long-distance trains.
The ICE’s view
Well run public transport services support the achievement of wider national goals such as net zero, economic growth and better social outcomes.
This is why public transport has continued to be heavily subsidised and governments – in the UK and worldwide – are encouraging people to use it.
The challenge in the UK is that thinking around public transport hasn’t evolved a great deal in recent decades.
Too often, short-term solutions are provided. Meanwhile, systemic reforms – such as the creation of Great British Railways – become clouded by uncertainty.
The need for a fundamental rethink about public transport funding prompted the ICE to publish our discussion paper and principles in 2021.
And it’s why we will soon publish a policy paper on whether England needs a national transport strategy to help link transport outcomes with wider national objectives.
The signs of recovery in public transport use are positive.
But there’s no time to be complacent about the need to protect and enhance those services in the long run.