Economic Development, Environment and Infrastructure Scrutiny Panel Minutes

Economic Development, Environment and Infrastructure Scrutiny Panel Minutes

Wednesday 11 October 2017
10:30 a.m.
Spencer Room, Town Hall, Middlesbrough

Attendance Details

Storey, (Chair), Arundale, Branson, Higgins, Lewis, McGloin, Saunders, Walters
S Lightwing, N Peacock, S Thomas
Apologies for absence:
were submitted on behalf of Councillor Hussain
Declarations of interest:

There were no Declarations of Interest at this point in the meeting.

Item Number Item/Resolution

The minutes of the meeting of the Economic Development and Infrastructure Scrutiny Panel held on 13 September 2017 were taken as read and approved.


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. Stephanie’s 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 Government’s 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 Middlesbrough’s bus service, for example, was shared out between two companies.


The TVCA’s 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 Authority’s (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 Middlesbrough’s 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.


AGREED that:

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.


The Director of Economic Development and Infrastructure and the Project Co-ordinator were in attendance to provide an update on the Orange Pip Market. Members viewed a short video clip showing the Orange Pip Market taking place.


Middlesbrough’s inaugural Orange Pip Market was held in May 2016 in Baker Street. There were fifteen stalls and 3,000 visitors. The Market was very successful and by August 2017 had grown to 44 stalls, moved onto Bedford Street and Albert Road as well as Baker Street, and had over 10,000 visitors. More than 400 traders and 100 artists had now taken part in the Orange Pip Market. By December 2017 it was estimated by STEAM (Scarborough Tourism Economic Activity Model - 2011 prices) that over £3 million would have been spent in the local economy related to the Market.


Press coverage of the Orange Pip Market had been very positive and there was a huge social media following on Facebook, Instagram and Twitter.


Following the success of the first three Markets in 2016, concerns were raised regarding over-crowding, access and safety. In view of these issues, the decision was taken to move the August 2016 Market to Centre Square. The decision provoked an unprecedented response from loyal followers with over 40,000 Facebook engagements within 24 hours of the announcement. In general, however, people did agree that overcrowding and queuing at previous events were issues that needed to be addressed.


Holding the Orange Pip Market in Centre Square provided the opportunity to put on a slightly different programme as there was more space available and some carnival games were introduced. It also enabled the Council to put arrangements in place to take the Market back to Baker and Bedford Streets and include Albert Road as part of the venue, having organised road closures for the event.


The success of the Orange Pip Market was due to several factors which were detailed by the Director. A professional Curator, rather than an operational market manager, had been appointed, initially part time but who was now full time. The Market remained loyal to its original ambitions of quality, culture and uniqueness and the Curator maintained a strict qualification criteria for traders and artists. The Curator explained that she had taken inspiration from other similar markets in London and New York that she had visited. The entertainment was provided free of charge and many of the traders provided free samples.


Middlesbrough Council had provided a budget of 113K per annum and there was approximately £20,000 per year income from pitch fees. Pitch fees had started at £30 and increased to £50 and the charges would be reviewed for next season. A 10% profit share scheme with a licensed bar provider had netted £450 at the Market held in Centre Square Now that Orange Pip was an established and successful brand, the intention was to seek sponsorship as well as external funding.


A Christmas Eve Special Market was currently being planned and promoted with the aim of raising the Market’s national profile and making it an annual event with regional significance. Other ideas for the future included an Orange Pip Flea Market and Orange Pip Pop Up events.


The Chair thanked the Director and Co-ordinator for their presentation and commented that it had been uplifting to hear about the phenomenal success of the Orange Pip Market and on behalf of the Panel, congratulated all involved.


AGREED that the information provided was received and noted.


Following a presentation at the previous scrutiny panel meeting, a Panel Member had raised some further queries relating to the LED Lighting Scheme in Middlesbrough.  A  written response had been provided to the additional queries, however, there were some issues still outstanding.  A copy of the written response was tabled for Members' information.


AGREED that the Infrastructure Programme Manager would be invited to attend the next meeting of the Economic Development and Infrastructure Scrutiny Panel on 8 November 2017 to clarify the outstanding issues.


The Chair gave a verbal update on the items considered at the Overview and Scrutiny Board meeting held on 10 October 2017.




Tuxedo Royale


In response to a query, it was confirmed that arrangements were in place for the Tuxedo Royale boat currently moored in Middlehaven to be broken up and removed as part of the project for the installation of the new Dock Bridge.



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