Local public transport in England has been in decline since the mid 1950s. In the 1970s it ran into steadily increasing deficit. It was a topic of dispute in parliament with the Transport Act 1980, which abolished the severe quantity-licensing restrictions on express (long-distance) coach services, and made it somewhat easier for new operators to obtain licences to compete with established operators on stage carriage (local) bus services. At about that time, some of the metropolitan counties and the Greater London Council (GLC) formulated explicit policies of increasing subsidies to their services. This precipitated a bitter and continuing dispute over the powers and responsibilities of local and central government, the criteria by which subsidy should be judged and the extent and method by which services should be given financial assistance.

This chapter presents estimates of the economic benefits, narrowly defined, of subsidy to public transport in the English metropolitan areas. The chapter shows how the estimates can be used to address the allocation of a total budget between different spending authorities. The full technical details are to be found in Department of Transport, 1982.

ECONOMIC PHENOMENA INVOLVED

If there are no resource costs involved in the greater use of a transport facility, then there will always be a net advantage in reducing the charges for its use. This must be so, since the traffic generated obtains the benefit of use and there are no extra resource costs by assumption.