Stephanie Elsy, a Business Consultant specialising in public sector marketplaces and contracting, gave a presentation in relation to the Bus Services Act 2017 including the new models of bus provision, opportunities and challenges that it could provide. For the last three years, Stephanie had been an adviser to the Tower Transit Group, a bus operator in London, Cambridge, Australia and Singapore.
Tower Transit was a relatively new Transport for London-contracted bus operator in the UK and had Australian owners. In order to enter the bus marketplace in the UK, Tower Transit had purchased several routes from an existing London operator, First Group. Tower Transit had also purchased a business in Cambridge and had recently introduced bus franchising in Singapore. Tower Transit had operated within the franchising market in Australia for many years and were also currently bidding for contracts in Chile and Brazil.
Stephanie also worked with the Urban Transport Group which brought together all the large Combined Authorities as members and more recently, the Tees Valley Combined Authority had become an Associate Member. Stephanies clients supported the Bus Services Act 2017 since it was conceived and actively worked with the Government, opposition parties and transport authorities to ensure that it became legislation. There were two main reasons why the Act was supported.
Firstly, it was believed that franchising was the best model for bus services, passengers and transport authorities and was increasingly recognised as such by transport authorities around the world. Secondly, the only way new operators could compete with existing operators was by buying their way in. Since de-regulation in the 1980s the whole market had been consolidated. De-regulation was intended to improve competition and bus services but in fact for example in London, there were now around five companies operating 80% to 90% of all bus routes and they were the routes that were profitable. This consolidated market made it difficult for new operators to come in from another part of the country or overseas.
The way to remedy this consolidated market was to have a franchising system where the transport authorities had control of the market and worked in the best interests of the passengers. The Bus Services Act 2017 was introduced as part of the Governments Devolution Programme and was supported by a number of Combined Authorities. Dr Jon Lamonte, Chief Executive of Transport for Greater Manchester (TfGM), was quoted from a speech to the Transport Committee last year, in which he stated that since de-regulation in 1986, the number of bus journeys had fallen from 353 million to 210 million and this was a national decline. The de-regulation of bus services had not worked for passengers and bus services were largely provided by multi-national transport companies who rarely competed with each other. There was a vast array of fares and ticket types, which could not be used with other operators. It was difficult for passengers to know which fares were best value and whether to use buses at all. The current system prioritised the commercial interests of the operators above passengers and the public transport market.
Some years ago, Nexus, a Tyne and Wear based company, Nexus, sought to introduce a Quality Partnership Scheme to improve services. This was vigorously opposed by existing operators since they risked losing market share. As a result of the opposition, the Scheme was ultimately rejected by an Independent Panel set up to regulate the quality contract process. A great deal of time, effort and money was spent developing the scheme which was thwarted by the bus operators.
Under the Bus Services Act 2017 the decision whether or not to introduce contracts was a political one made by the Directly Elected Mayor. The Act provided transport authorities with an excellent opportunity to get a better transport system for local populations. Naturally, the large transport operators had lobbied against the legislation and as a concession, part of the Act provided two new partnerships with extra powers. They were: Advanced Quality Partnership Schemes and Enhanced Partnership Schemes. Operators preferred a partnership model to be adopted since it negated the threat of franchising and they might therefore offer transport authorities incentives to agree a partnership. However, it was believed that partnerships would not have a long term impact on the current issues and would only consolidate the existing position where it was very difficult for new companies to enter the market.
Franchising could give authorities such as the Tees Valley Combined Authority (TVCA) the power to manage the marketplace and use competition to reduce costs, make better use of government subsidies and direct them where they were most needed. Items that were needed to improve services, such as more environmentally friendly buses or ones with wi-fi, could be included in the contracts.
Some examples were provided of different models of contracting including in Jersey, where franchising was introduced in 2011, service quality had improved and costs had been reduced. In Singapore, all brand new buses and depots had been purchased by the Government and the operators competed to run the services. A Panel Member gave an account of her experience of the bus services in New Zealand, which were extremely efficient and excellent value for money.
It was highlighted by a Panel Member that a key issue for Middlesbrough would be reducing car usage and encouraging people to use buses instead. The introduction of the congestion charge in London had deterred many people from using their cars and encouraged them to opt for a bus journey instead. Another issue was the cost, especially since taxi fares were relatively cheap throughout the Tees Valley area. It was suggested that it passengers knew the buses were reliable, fast, not too expensive and journeys were a pleasant experience they would use them more. People were often forced into using their cars because there was no suitable bus service available.
One quite controversial scheme introduced in Nottingham to deter car usage was a work place parking levy. This also generated an income stream that the transport authority used to invest in infrastructure. Not everybody liked it but it worked really well. It was acknowledged however, that in Middlesbrough, efforts had been made to encourage more footfall in the town by reducing car parking fees and this had also been successful. The policy was intended to stop the flow of shoppers who travelled by car to out of town retail parks rather than coming into the town centre.
Introducing bus franchising would take at least three to four years and under the Bus Services Act 2017, transport authorities could now request information from operators regarding usage, routes and fares. The Transport Authority could decide whether to own its own depots and buses and being a public sector authority could access cheaper loans to provide investment in infrastructure.
Another issue raised was the environmental impact of buses. In fact, even if the buses were diesel rather than electric, it was still a more environmentally efficient method of transport to have more people travelling by bus than using cars. In addition, the contracting system could be used to demand more environmentally sustainable buses. Transport for London (TfL) had very ambitious targets for carbon neutral buses and were using systems in buses that churned out cleaner air than that which was going into them. Hydrogen buses had been very successful and ran on a cheap source of fuel which was environmentally carbon neutral.
A point was also raised regarding the population of the Tees Valley at around 700,000 and whether this would attract interest from other operators outside of the area. It was explained that most area contracts were not for massive populations. Even in London, there were lots of contracts and each one was a comfortable size. A company outside the Tees Valley would make a judgement on the contracts available and could bid on one contract in order to grow their own business. Companies would bid for new business if they were able to compete. Under the present system, there was no new business available and Middlesbroughs bus service, for example, was shared out between two companies.
The TVCAs Transport Strategy needed to ensure everything worked together because at the moment there were lots of different operators doing their own thing in isolation. Having a Bus Strategy was a critical part of the economic strategy for the whole region. Cycling, walking, buses, trains, and air travel all needed to be integrated so that it worked seamlessly for passengers. As the Transport Authority, the TVCA could ensure that bus and rail timetables were co-ordinated. The Tees Valley area was spread across five different boroughs which were geographically quite different. Transport Planners would need to consider carefully the design of the market possibly based on the natural flows of people, ie where passengers travelled to and from, rather than historical or geographical areas.
The Chair thanked Stephanie Elsy for attending the meeting and providing an insight into the Bus Services Act 2017 and the opportunities and challenges for the Tees Valley Combined Authority (TVCA) in developing its Bus Strategy.
The following draft Terms of Reference for the Review were presented to the Panel for consideration:
a) To examine the Tees Valley Combined Authoritys (TVCA) proposals and timescale for implementation of the Connecting the Tees Valley Strategic Plan and in particular the Bus Strategy.
b) In light of the Bus Services Act 2017, to consider the options available to the Tees Valley Combined Authority and Middlesbrough Council in relation to bus franchising and/or enhanced partnership schemes by investigating examples of similar schemes already in use in England.
c) To examine Middlesbroughs Local Implementation Plan (LIP) prior to submission to the TVCA.
d) To investigate how Middlesbrough Council can work with the TVCA and local bus operators to support the local economy through improved bus service provision and community involvement including environmental implications and with specific reference to other best practice models.
The Panel approved the draft Terms of Reference.
The Chair informed Panel Members that Matt Goggins, Head of Bus Services, would be attending the next meeting to provide information in relation to the Partnership arrangement operated by Merseytravel.
1. the information provided was received and noted.
2. the Terms of Reference for the review of the Tees Valley Strategic Transport Plan including Bus Franchising, as presented at the meeting, were approved.