THOUSANDS of daily bus services will be scrapped and fares will rise by 20 per cent during the next decade in a continuing exodus from public transport to the car, a report has found.

The Government is falling well short of its official target of increasing bus use in every region. Passenger numbers are declining in every large city apart from London, the only area where services remain under public control.

The report, commissioned by the Passenger Transport Executive Group (PTEG), which represents local authorities in Manchester, Leeds, Liverpool, Sheffield, Newcastle upon Tyne and Birmingham, found that bus companies were exploiting local monopolies to make excessive profits.

Fares have increased by 86 per cent above inflation since 1986 and passengers have fallen by half in those cities. By contrast, the cost of motoring has remained stable and the total distance travelled by car in Britain since 1986 has increased by 50 per cent.

John Prescott, the Deputy Prime Minister, said in 1997: “I will have failed if in five years’ time there are not many more people using public transport and far fewer journeys by car. It’s a tall order but I urge you to hold me to it.”

Rail travel has increased by a quarter since Mr Prescott made his pledge but the decline in bus services means the proportion of journeys made by bus, tram or train has fallen from 15 per cent to 12 per cent.

The Government’s official target is to increase bus and tram journeys by 12 per cent in England by 2012 and to deliver growth in each region. Last year bus and tram journeys rose by 1.9 per cent in London but fell by 1.2 per cent in the rest of England.

The report found that bus services had declined by 41 per cent in Tyne and Wear, 31 per cent in South Yorkshire and 20 per cent in the West Midlands since 1995. Services in Manchester, West Yorkshire and on Merseyside fell by 10 per cent to 12 per cent.

The report concludes: “Projecting these numbers forward gives an estimate that over the ten years from 2004-05 to 2014-15, bus patronage will fall by 20 per cent, fares will rise by about 20 per cent and service levels will fall by about 20 per cent.

“Bus services are not providing a high-quality alternative to the private car and so motorists do not have incentives to switch to the only public transport mode that may be available to them.”

In London, where the average fare is the same in real terms as a decade ago, bus passenger numbers have risen by 50 per cent since 2000. The services are controlled by Ken Livingstone, the mayor, who sets fare levels and determines the frequency and quality of the service under tightly drawn contracts with bus companies.

In the rest of England, private operators control all aspects of the service and can withdraw from routes with 56 days’ notice. PTEG wants its members to be given similar powers to the London mayor. It believes that this will allow cities to offer a better service by cross-subsidising lightly used routes with the profits made from the busiest ones.

It claims that private operators are contributing to decline by cherry-picking the most profitable routes, leaving others with an infrequent service that results in increasing numbers of people switching to cars.

The Government has begun a review of the way buses are regulated outside London and is drawing up proposals that would allow local authorities and bus companies to co-operate more closely on service levels. But ministers have balked at the idea of giving authorities the power to set fares, routes and frequencies.

The report found one company dominating bus services in each of the biggest six English regional cities. National Express runs 81 per cent of buses in Birmingham and makes an estimated 21 to 35 per cent return on investment. The other companies also make “excess profits” despite presiding over declining services, and often failing to fulfil commitments to invest in newer, more reliable vehicles.