Bus operator’s plea to halt ‘damaging’ tax increase

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THE owner of an independent bus operator has urged the Chancellor to reverse a planned tax increase which he warns will lead to cuts in services and steep rises in fares.

Peter Shipp, chairman of Hull-based East Yorkshire Motor Services (EYMS) Group, said bus operators face a 58 per cent increase in fuel tax in April when the Government slashes a fifth from the bus service operator grant.

This comes on top of all-time highs in fuel prices and reduced payments from local authorities for operating concessionary travel schemes, which offer a lifeline for pensioners and disabled people.

EYMS Group had a turnover of £38m in 2010. It owns 400 buses and coaches and employs 950 staff.

Mr Shipp called on George Osborne to use some of the Government’s recent tax windfall to restore some or all of the planned grant cut.

He said the 20 per cent cut planned for April equates to 8.6p per litre extra on the price bus companies pay for diesel – a 58 per cent rise.

“If the 3p rise in fuel duty in August goes ahead, that increase will become an unprecedented 79 per cent,” added Mr Shipp.

“The grant is not a huge amount in the scheme of things, but is simple and cheap to administer and delivers huge value for money for the Government and for bus passengers, yet the Government still plans to cut it by about £90m a year.”

He said the net cost of fuel for his company has risen from £1.2m in 1999 to almost £5m this year.

Mr Shipp said: “This is grossly unfair on bus passengers who inevitably bear the full brunt of these cost increases.

“The Government keeps telling us that it wants to see more people on buses, that buses are vital for the economy, jobs, climate change and social inclusion, but these changes, together with the equally damaging financial effects of the concessionary travel scheme are having exactly the opposite result.”

The UK bus industry is dominated by big players like Stagecoach, Go Ahead and National Express. Independent operators provide around 25 per cent of the country’s bus routes.

Mr Shipp said independents lack the economies of scale and diverse range of commercial interests to support their businesses. He added: “We are using every means at our disposal to save fuel through driver training and telematics but the savings come nowhere near offsetting these huge increases.”

It is estimated that more than 1,100 bus routes have been lost in England.

The Treasury did not respond to calls for comment.