In the News Teaching Activity: Buses Get £150M Boost After HS2 Cancellation (Nov 2023)
The government has redirected some funds from the cancelled HS2 into support for bus services including an extension of the £2 cap on bus fares to 2023.
Have a go at this free teaching activity, which includes a downloadable worksheet and suggested answers.
The cancellation of the Birmingham to Manchester leg of HS2 allows funds to be redirected to smaller transport projects, providing a welcome £150 million boost to bus services in parts of England, according to Rishi Sunak.
This investment, part of the "Network North" plan, will support bus services in the Midlands and northern England. However, some critics argue that the funding falls short of addressing long-standing transportation issues, emphasising the need for public control of bus services. The boost for buses also means the £2 bus fare cap can remain in place until 2024.
According to the government, 34 million single bus tickets out of the 50 million sold in Jan and Feb 2023 were cheaper because of the £2 bus fare cap. The March Transport Focus survey reported an 11% increase in bus use because of lower bus fares.
Read the article and then answer the following questions.
- What is the opportunity cost of providing £150 million more for bus services?
- Calculate the price elasticity of demand for bus use in March 2023, if you assume the average bus ticket price was £2.50 for a single fare before the £2 price cap was introduced.
- Work out the effect the bus fare price cap is likely to have on the revenue of bus providers given your PED (Price Elasticity of Demand) value.