Labour needs to extend £2 cap on bus fares, says Stagecoach boss Claire Miles

Stagecoach is embarking on a journey that is about to come to an end. At the wheel of this new adventure is Claire Miles.

She took over as chief executive a year ago to lead a company with a turbulent past that is now a pure-play bus and coach operator focused exclusively on the UK.

Stagecoach was one of the biggest proponents – and beneficiaries – of the deregulation of the 1980s, when private companies competed with each other for profitable routes.

Under the leadership of controversial Scottish siblings Sir Brian Souter and Dame Ann Gloag, who set up the business in Perth, the company grew rapidly, acquiring rivals across the UK before expanding overseas and into trains and trams.

But all that has changed. Stagecoach, which employs 19,000 drivers, is under new ownership after the founders sold their last shares two years ago to DWS, the former Deutsche Bank infrastructure fund.

It is also under a new boss who is committed to passengers and the vital importance of buses to communities.

Miles joined after a career in customer-facing companies including Centrica, which owns British Gas. He arrived as passengers were returning to buses after Covid-19, but many were feeling the effects of rising food and fuel bills.

Stagecoach has benefited from a number of government-backed schemes to encourage public transport use following the pandemic.

These include a £2 cap on single fares, introduced in January 2023 to help tackle the cost of living crisis. The scheme will be extended until the end of this year.

Miles says: “We would like to see an extension. There is compelling evidence that it has helped increase bus use.”

But a return to what she calls “the norm” of fully commercial fares, where bus operators decide prices, seems unlikely.

She says: “If and when the £2 fare cap ends, we need to plan for it in a way that is affordable. We don’t yet know what the Government plans to do.”

One thing the new Labour government is clear about is giving local authorities more control over the bus networks in their area.

This “franchise” model means that local authorities not only set prices, but also routes and timetables. In return, bus companies provide local services for a fee.

The system has been in place for many years in London and is being rolled out in Greater Manchester.

Franchising is less lucrative for Stagecoach. Last year it lost money in London – which accounts for a quarter of its £1.6bn annual turnover – due to a shortage of drivers and a higher wage bill. It also set aside £21m to cover “onerous” contracts in the capital.

Overall, its profits grew by a third to £97.3m in the year to April 2024 as more people used buses.

Miles is optimistic about the prospect of more London-style franchises.

“Whatever model the local authority wants to adopt, we’re happy to work with them,” Miles insists, as they “make the transition” to a new way of managing buses.

While he expects that “over time more of our revenue will be converted to franchising,” that won’t happen overnight.

She says, “This will take years.”

In the meantime, Stagecoach will work with local councils to facilitate the transition from private to public ownership.

Miles cites the case of Greater Manchester, where Stagecoach has a long-standing presence and which, under Labour mayor Andy Burnham, is in the process of transitioning from a commercial enterprise to a franchise.

The trick, Miles says, is “not to try to change too many things at once” and to minimise disruption to passengers while still providing a reliable service.

This is a far cry from a few years ago, when Stagecoach took the council to court in an unsuccessful attempt to prevent bus services being brought back under public control.

“We don’t feel that way anymore,” Miles says cheerfully.

“We are prepared to offer bus services in any modality that exists. What matters is that the community and passengers receive excellent bus service.”

Buses are the most popular form of public transport in the UK, with an average of more than one bus journey per week per person.

The only thing Miles is seeking is “continuity” and “support” from Ministers for an “essential” service because “it is a good investment for them.”

Uncertainty arises as Stagecoach overhauls its buses to make them more environmentally friendly.

Of its fleet of 8,500 vehicles, only 55 are net-zero emissions, but the company is investing heavily and has just placed an order for more than 400 electric vehicles.

The scale of Stagecoach’s operations is huge. You can travel from Land’s End to John O’Groats on its buses, says Miles, adding: “You can travel on some buses for two and a half hours, which is very cost-effective considering the £2 fare limit.”

Loyalty to Stagecoach varies. Miles says: “The brand is important in Scotland because of our heritage.”

But in other parts of the country, where routes might be split between multiple operators, “it’s probably a lot less.”

What attracted you to the job, especially given your lack of prior transportation experience?

“What we do every day is really important. The commitment of everyone to get the job done, to get people from point A to point B, is really brilliant,” he says.

“That’s why I’m here.”