As fuel costs soar, people shift from cars to trains and buses

A decade after New Labour attempted to manoeuvre the term "modal shift" into the mainstream with the publication of a White Paper that foresaw (another) transport revolution, the phrase is now threatening to become the sort of buzzword your average bar-room economist will be comfortable flashing around.

Whether you are in a position, or even have the inclination, to go through a modal shift yourself, escaping the debate about the mass move from private to public transportation - getting out of your car and hopping on the bus or train - will become more difficult than evading the congestion charge.

But while everyone from Labour ministers to council planners, from the motor manufacturers to the environmental lobby, has been second-guessing how the future would look when people migrated from cars to buses and trains - and during which time pernicious road-pricing schemes and taxation levels were introduced - the first evidence of that change in transport mode is now happening.

Statistics from the Department for Transport indicate the rate of car usage has fallen every quarter in the last year from a high point of annualised growth of 4% seven years ago.

What has put this deceleration fully into reverse gear? Environmentalists will argue it is a case of the nation finally getting in touch with its green conscience. The public transport companies will argue it is a byproduct of the huge investment in new trains and buses that is making their modes of getting from A to B bearable.

Other theorists will tell you it is because of the change in urban population dynamics, the influx of migrants who economically or culturally use public transport as a matter of course.

There may be something in any or all of these but it is, in fact, more a result of a far more juddering seismic economic shift: the oil price. The price of a barrel of crude has been at all-time highs of more than $140 a barrel, sparking-40% increases in costs for the average motorist over the last year in which unleaded petrol is being sold at 120p a litre - while diesel has soared through 130p.

Searchers for evidence of the modal shift are directed to the recent trading statements of Britain's big five people-movers:

STAGECOACH

The company that runs South West Trains and co-owns Virgin Trains has seen its shares trade at long-time highs on the back of revenues up 17% and earnings ahead by nearly 75% - with dividend payments to investors, including its major shareholder and founder Brian Souter, going up by nearly a third. Its train passenger revenues have soared 13% and bus passenger numbers are up 3.6% which, with fare rises, equates to revenues up by 7.5%.

GO-AHEAD

Its London buses are showing revenue growth of nearly 12% as it buys more bus groups to take advantage of the usage boom. Revenues from its staples of the London commuter belt, Southeastern Trains and Southern, have been roaring ahead by 13%.

FIRSTGROUP

Another big operator of London buses, the company has profit margins ahead by 11%. Overall profit figures show the group has boomed to a new record high of £560 million, up 40%, as it also has jumped on the public transport boom in the US by buying companies there including the iconic Greyhound buses.

ARRIVA

It too is talking of "robust" growth on the London buses, but what has been most eye-catching for Arriva-watchers is the 10% surge in revenues at its intercity, long-haul train operation, Cross-Country, where it replaced the long-suffering Virgin last year.

NATIONAL EXPRESS

London's big train operator from the north and east says revenues are up 11% into King's Cross and 6% into Liverpool Street while its London buses are ahead by 9%. Its coach services, an alternative in many areas to the train, are running 5% ahead year on year.
The share prices of the public transport companies have not all run as hot as the revenue numbers because the City frets on the long-term hit to their energy costs, even though their fuel bill is for the most part taxexempt.

But a window on what the City really thinks of the future of the car is found in the share prices of the London stock market's main motor dealers. With car sales nationally grinding to a halt, Inchcape stock has fallen by a third in two months, Lookers' has halved since the turn of the year and Britain's biggest car salesman, the Pendragon group which trades as Stratstone and Evans Halshaw is holed up in the crash-repair centre, trading at just a tenth of where the shares were 18 months ago.

All the supporters of modal shift need to come up with now is a more userfriendly term.