HC Deb 05 August 1975 vol 897 cc119-21W
Mr. Horam

asked the Secretary of State for the Environment whether he will make a statement on the finances of the National Bus Company.

Dr. Gilbert

Yes. In October last year the Chairman of the National Bus Company reported to my predecessor on the financial difficulties facing the company. In the event the company's loss on revenue account for 1974 was £12.3 million.

On 17th March my right hon. Friend told the House, in answer to a Question from the hon. Member for Hertfordshire, South-West (Mr. Dodsworth) that the National Bus Company and my Department were reviewing the company's longer-term prospects.

I have now considered the results of this study. It predicts that there will be a further loss on revenue account in 1975. Since the NBC is required by statute to break even, taking one year with another, its options are to seek additional revenue through increases in fares; to obtain additional financial support from the county councils; to cut services; or to secure some combination of these.

The NBC told me that its subsidiary companies are already seeking from the traffic commissioners the highest fare increases they consider feasible. They expect local authorities' payments in 1975–76 to provide only a third of what is needed to maintain services at about their present level. The company has already decided, for reasons of normal management economy, on cuts of about 9 million miles over routes throughout the country. Without increased local authority grants, however, the NBC would need to make further service cuts totalling over 40 million miles, with some consequential redundancy.

Local authority grants to public transport within levels of expenditure accepted by the Government are eligible for Transport Supplementary Grant (TSG). Over 90 per cent. of such expenditure this year is in the major conurbations. Over the next three years the Government's policy is to see the overall total of such spending greatly reduce, but a larger share of it going to assist public transport outside the major urban areas. This policy will be reflected in the distribution of Transport Supplementary Grant for 1976–77.

Decisions on the allocation of TSG for 1975–76 were made last December and cannot now be altered. Pending decisions by local authorities about the services they wish to support next year, the Government have therefore agreed that the NBC may continue to draw on the National Loans Fund this year, as it did in the last financial year, in the expectation that the NBC will return to viability.

I hope that this, together with the local authority support already being negotiated for 1975–76, will enable the company to suspend action on major cuts on services while the counties review, in the light of this statement, the levels of support they have included in the transport policies and programmes submitted to me in July. If authorities wish to revise these levels, after any necessary discussions with the NBC subsidiaries, the Department and the Welsh Office will consider revisions to this element in the transport policies and programmes up to the end of September. Thereafter, if a county has decided not to support particular loss-making services, it must be assumed that these will be cut.

I shall be reviewing the position with the NBC Chairman later in the year.

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