Bus reform – the road ahead

It’s a busy time for local transport professionals as we see the emergence of another transport bill devoted to buses and a flurry of preparations to implement bus franchising in many regions outside of London following the successful Greater Manchester franchising scheme.

Local bus services are described by politicians as a broken part of our transport network, evidenced by loss of patronage and bus routes across the country - there can be little doubt that communities urban and rural want to see better. In common with many other parts of public services that the labour government has committed to fixing, this is a massive task with numerous challenges to be overcome.

Here are the most important of these:                                

• Congestion
• Complex fare structures
• Authority/operator partnerships not delivering to their true potential
• Fragmented and non-existent services in rural areas
• Transition to franchising takes time
• Essential investment in new and retro-fitted zero emission vehicles is costly and takes time to achieve

In the Government’s move to dramatically improve bus services, two key tools have been made available to authorities with local transport responsibilities - bus franchising and enhanced partnership schemes. 

Bus franchising

Franchising is an established model for providing bus services adopted in London and across many parts of the world. In a franchising scheme, local authorities will determine the details of the services to be provided – where they run, when they run, what fares are charged and the standards of the services.

Enhanced partnership schemes

Enhanced partnership schemes form a more straightforward basis upon which improvements in bus services can be realised. All authorities that have adopted an enhanced partnership plan (as a requisite for being entitled to secure government grant funding) must have at least one enhanced partnership scheme in place.

The scheme will incorporate a range of improvements to services that passengers will benefit from. A scheme may require the authority to commit to improve the quality of bus stations, stops and shelters, deliver better promotion of bus services through marketing activities and implement plans for bus priority measures in urban areas. In return, operators can be required to make a series of commitments to improve services – such as through improved training of drivers, agreeing to invest in new vehicles with reduced or zero emissions and work with the authority and other operators in initiatives, such as multi-operator ticketing and contactless and capped ticket fare structures. 

Although these two options have been made available, authorities must give some consideration to further development of its enhanced partnership before taking the franchise route. Under revised government guidance due to be published shortly, authorities should avoid pre-determination that franchising is the best solution and should first work with operators over (it is expected) a three month period to explore enhancements that can be made to the existing partnership that could deliver a model for bus service provision that would persuade the authority not to proceed with franchising.

The Bus Services (No 2) Bill

Where partnership working continues, the Bus Services (No 2) Bill currently passing through Parliament includes measures associated with enhanced partnerships. Notable is an attempt to address the issue of reductions in the availability of bus services - operators have discretion as to what services to operate and, provided that the required notice is given to the relevant transport authority and the traffic commissioner, may vary and even end particular services that are not financially viable. Authorities are then placed in the invidious position of determining whether to step in and provide funding, from very limited budgets to maintain services that would otherwise be lost. 

Now, its proposed that an additional obligation be placed upon authorities that have enhanced partnerships. Provisions within the Bill require all affected authorities to, within one year of the commencement of the relevant provision, establish and incorporate into their enhanced partnership plans a statement of those services operating within their area that are to be regarded as socially necessary services.

As published the bill sets out a definition of social necessary services being services that 

“enables passengers to access:

1. 1. essential goods and services,

   2. economic opportunities (including employment), or

   3. social activities, and

if cancelled, is likely to have a material adverse effect on the ability of passengers to access those goods, services, opportunities or activities.”.

Any route that is so designated will become a quasi-protected route in that, should an operator propose to cancel or materially vary an existing route registration, the authority should actively take steps to mitigate the effect of the operator’s decision. It will be interesting to see what DfT guidance follows as to how this new duty should be observed. Through this new duty there will also, surely, be risk of judicial review actions where communities and other interested parties feel that the authority has fallen short in meeting its duty.

For authorities who have come to the decision that franchising is the best option, the process involved to implement a franchising model will be sped up through a particularly smart move – taking advantage of transport specific procurement regulations that provides for direct awards of public transport contracts. Currently available for the purpose of direct awards to rail operators and for individual awards of local bus service contracts, this will be a major change in how the regulations can be used. 

The government propose that authorities that have made a franchise scheme may implement that scheme immediately through direct awards of local service contracts to existing operators. The contracts must last for no more than five years. This provides breathing space for the authority to prepare a longer-term strategy covering what services are to be provided, what bus depots are required and who should own them and also during this period, conduct a well organised procurement process. 

There are other improvements to be found in the Bill – some fixing problems that existed with the initial bus franchising legislation which was rather light touch in terms of providing for the process of transitioning from a deregulated private sector controlled public service to the bus franchising model.

The area in which contention could still arise is the issue of depot ownership. To get to a point of competing packages of services under a franchise arrangement, ownership of the depot closest to the routes concerned confers an advantage on that operator. Other operators would need to price their bids taking account of “dead operating mileage” and applying drivers’ rosters less efficiently given the limits on drivers’ hours.

Authorities will typically aim to agree a commercial sale to the authority of larger depots but are openly also indicating a willingness to exercise a Transport Act 1968 power to acquire land by compulsory purchase. Indeed, Liverpool City Region Combined Authority has commenced a process that could lead to compulsory acquisition. If an attempt to exercise that long standing but little exercised power arises and is challenged as an unlawful use of the power (franchising legislation could after all have provided for a more specific power to have been set out) the outcome will be interesting to say the least.