Scrutiny over Plymouth City Council's £12.3m electric bus investment with Citybus

Plymouth Citybus buses in Royal Parade, Plymouth
-Credit: (Image: Reach Publishing Services Limited)


Questions have been raised about Plymouth City Council’s plans to bankroll Citybus’ £28.3m purchase of new electric buses. The Government’s Subsidy Advice Unit (SAU) said the authority has not fully explained why a proposed £12.3m subsidy towards the cost is the “minimum” amount needed and what effect it will have on other bus companies.

The council asked the SAU for advice about the proposed deal with Plymouth Citybus, part of the huge Go Ahead Group, which would see new zero emission buses (ZEBs) replacing 50 out-of-date double-deckers in Plymouth and the Rame Peninsula.

The SAU today published its non-binding advice to the council and although it doesn’t say whether the subsidy should be given, or complies with certain rules, it does say what the council has explained well and where there are “areas for improvement”.

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The council told the SAU its proposal to subsidise the cost of the new buses and charging infrastructure will reduce carbon emissions and improve air quality.

The new double-deckers are intended to replace 33 Euro IV diesel buses and 17 retrofitted Euro V buses, part of a Citybus fleet of more than 300 vehicles.

The subsidy would amount to 43% of the total cost of the buses, with the rest met by Citybus or its parent company. The subsidy will mostly come from Government cash: the Department for Transport’s Zero Emission Bus Regional Area (Zebra) 2 Fund will provide 84%, with the council stumping up 6% and Cornwall Council providing 10%. But if Citybus doesn’t get the subsidy the buses can’t be bought.

The 18-page SAU report said the council had addressed how subsidising the new buses would lead to lower emissions, better air quality and encouraging the use of public transport. And it said the council had assessed that the benefits outweigh any negative impacts.

But it said the council should provide better evidence as to why the size of the subsidy is the “minimum necessary”. And it said the authority should consider more deeply how it can give the subsidy but limit “potential negative effects” on competition and investment.

It said it should look at monitoring, ringfencing, and clawbacks “which are not currently addressed” for the finance. And it wondered why the council had not looked at other ways of paying for the buses, apart from using the Zebra 2 fund, such as taking out partial loans or using biomethane/biodiesel buses.

A Plymouth City Council spokesperson said: “We requested guidance from the Government’s Subsidy Advice Unit concerning our proposed subsidy to Plymouth Citybus Limited for the new zero-emission bus fleet. We have now received their report and are considering their advice ahead of making a final decision about the proposed subsidy.”

The SAU’s report showed that 88% of the Plymouth bus network is operated commercially, without any subsidy, with Citybus and Stagecoach South West, part of the Stagecoach Group, being the two main operators, together delivering more than 99% of all bus services within the city, both commercial and tendered.

The SAU said the council’s assessment was that the impact of the subsidy on current competition was likely to be limited and have no significant competitive impact outside Plymouth.

But the SAU said subsidising new buses could have the unintended consequence of raising barriers to entry and expansion, as new or existing operators seeking to directly compete would have to do so in competition with a fleet of new electric buses.

The report said: “Therefore, the assessment could consider the potential impact of the subsidy on the likelihood of new entry on these routes. This could, for example, involve some consideration of the local circumstances which may affect the potential for entry even without the subsidy and past experience of competitive entry in bus services in Plymouth.”

The subsidy is dependent on Go Ahead or Citybus allowing chargers to be used by community groups, and ensuring the new buses operate on agreed routes for at least five years.

Other bus operators in the Plymouth Enhanced Bus Partnership were offered the chance to join with the council and apply for the Zebra 2 funding, but only Citybus came forward. Other bus operators endorsed the application, however, because of its “wider value to the bus partnership”.

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