Economic Development, Environment and Infrastructure Scrutiny Panel Minutes

Economic Development, Environment and Infrastructure Scrutiny Panel Minutes

Wednesday 8 November 2017
10:30 a.m.
Spencer Room, Town Hall, Middlesbrough

Attendance Details

Storey, (Chair), Branson, Higgins, Lewis, McGloin, Saunders, Walters
D Carter and S Lightwing
Apologies for absence:
were submitted on behalf of Councillors Arundale and 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 11 October 2017 were taken as read and approved.


Matt Goggins, Merseytravel and Ian Taylor, Transport for Quality of Life, were in attendance to provide the Panel with information relevant to the current scrutiny review.


The Liverpool City Region (LCR) had a population of 1.5 million and an economic population of almost 3 million. The LCR included six Local Authority districts which covered parts of Greater Manchester, North Wales and Lancashire. The Combined Authority for the LCR was established in 2014 with four key areas of responsibility which were: transport, economic development, skills and planning and housing. The Combined Authority comprised the leaders of the six local authorities, the Mayor of Liverpool, the Chair of the Local Enterprise Partnership (LEP) and representatives from various other delivery bodies. In May 2017, a Mayor was elected for the Liverpool City Region, and was given new powers over buses.


Merseytravel was the strategic transport arm of the Combined Authority as well as the LCR’s transport delivery body. Merseytravel built and maintained transport infrastructure, managed the Merseyrail concession, operated Mersey Ferries and Mersey Tunnels and administered travel tickets and concessionary travel. Merseytravel also funded non-commercial bus services and was part of the LCR Bus Alliance and was leading on the development of a Buses Business Case for the Combined Authority.


Within the LCR there were 137 million bus passenger journeys per year and 80% of public transport journeys were taken by bus, despite a thriving rail network. Locally, buses were critical to economic growth, social capacity and access to education. In common with most areas of the UK, there had been a long term decline in bus patronage over decades and it was crucial for the region that this was reversed.


The Bus Alliance had taken the approach of emphasising the importance for the economy and education of buses. Four times as many people in the LCR region commuted by bus than the UK average. Buses took 100,000 people to work every day in LCR and 60,000 to their place of education. The bus industry was one of the biggest providers of employment in the LCR and provided approximately thirty apprenticeships. Bus users were responsible for 30% of city centre expenditure and buses helped people access LCR’s major events, such as the Grand National and the Open Golf, playing a key role in crowd management and dispersal. Buses also played a huge part in tackling congestion through efficient use of road space, keeping the LCR moving. Access to the bus network also reduced employment deprivation as well as income deprivation.


In terms of society, buses provided access to opportunity for people and a way out of social isolation. The most vulnerable people in the LCR relied the most on bus services. Research showed that a 10% improvement in bus services reduced social deprivation by 3.6% and there were some real areas of deprivation in the LCR. The local bus network also enabled travel and social interaction for the elderly and also disabled people.


Merseytravel had researched the importance of buses and particularly considered concessionary journeys and how this could reduce social deprivation. Approximately two years ago, in conjunction with the Bus Alliance, a new Bus Strategy was developed with the aim of highlighting the importance of bus to the LCR, the challenges around declining bus patronage and the opportunities for services in the future. The new Bus Strategy was adopted by the LCR Combined Authority in 2016 and was part of an over-arching transport plan for Bus, Rail, Ferry and Tunnel.


This was the starting point for the LCR’s ambition for bus services and included aspects such as sustainable transport, punctual and reliable services, and simple information for bus users, straight forward tickets and value for money for the taxpayer. This set the scene for the development of the partnership approach between the LCR Combined Authority and the bus operators. The partnership was developed over a twelve month period with Merseytravel, Arriva and Stagecoach, in line with the aims of the Bus Strategy. The Voluntary Partnership Agreement was signed in September 2016 and would remain in place until 2021. Whilst the two main operators had been targeted initially, the aim was for other operators to join the partnership and talks with them were currently underway.


The stated aims and objectives of the Bus Alliance were for Merseytravel, bus operators and the City Region to align behind common goals and work together to drive social and economic growth for the LCR. The two main aims were to grow fare paying patronage and to quickly and significantly improve the experience for bus customers. It was noted that in common with many other areas, the amount of subsidy from the public purse was declining. In order to bridge the gap, bus operators would increase fares or cut services. The alternative was to increase revenue and thus reduce subsidy and concessionary travel fares over time. The Bus Alliance had set an outcome target of 10% fare paying passenger growth along with improved customer satisfaction levels, and a reduction in reliance on, and the cost of, the public sector providing bus services.


A programme of joint work had been agreed which was monitored by an Alliance Board, which was over-arching and a Programme Board, where things were managed in more detail. A Stakeholder Board provided input and challenge to the Alliance. There were six work streams focusing on key work areas which mapped across to the Bus Strategy: Network Design, Growth, Customer Experience Off-Bus, Customer Experience On-Bus, Punctuality and Reliability and Smarter Ticketing. The business planning process ensured continuous improvement and ongoing investment and rather than a three to five year plan there was annual cycle which made it more reactive. There had been a mixture of public and private sector investment of £52 million during the first two years. The Bus Alliance had set a number of targets including customer satisfaction on value for money, punctuality and journey time, average fleet age, and investment.


One of the Bus Alliance’s successes to date was the development of a multi-operator ticket for young people. The ticket, which was a simple any bus all day ticket costing £2 was launched in 2014. The Bus Alliance had extended the ticket across the region rather than just being a Merseyside ticket and it was now valid for young people until their 19th birthday. One of the bus operators, Stagecoach, had adopted the scheme elsewhere in the UK.


Other initiatives included:


  • 24 hour bus routes.
  • Free Wi-Fi and USB charging points on all buses as standards.
  • A new bus station at Kirby.
  • A re-launched bus service to Liverpool Airport with reduced fares and increased frequency.
  • Network reviews working with operators and success commercialising routes that were previously supported.
  • Delivering savings.
  • 'Better by Bus’ marketing and promotion campaign.
  • A new cleaning regime, with buses cleaned more than once a day.
  • A concessionary system for ticketing with a single smartcard for the region.
  • Investment in new vehicles including 12 new electric buses, 15 hybrid and 15 bio-methane.

There were nine bus stations in total including two in the centre of Liverpool, which were the largest, and the others were located in key district centres. The city centre Queens Square Station was the busiest bus station in Europe with over a million buses passing through it each year. Liverpool One Station was quieter and the Alliance was working on how this could be balanced out.


With regard to the 24/7 buses there were currently three routes including one to the airport and another across the river. The cross river element was important because the ferries and trains did not operate at night, so the only way across the river at night on public transport was by bus. This had previously been a supported service but was now a commercial investment.


Whilst there was a flat fare system operating in Liverpool, the cost varied amongst different operators. Arriva charged £2.30 for single ticket and Stagecoach charged £2.10.  Travelling a longer distance was better value for money than a short journey. One of the products of a deregulated bus market was that different operators had their own approach to fares. By law, operators could not corroborate and go to one price as this would be price fixing, which was illegal. The idea of de-regulation was to bring competition into the market and that would bring prices down.


For multi operator or multi modal tickets, the Transport Committee decided what type of tickets were available and at what price, in consultation with the operators. However, this could not be applied to single operator prices. The aim was to move to an account based ticketing system so that passengers could purchase a ticket for any mode of transport and for example, one day use it on Arriva, then on the train and then on Stagecoach.


Both the Alliance’s initial targets had been met, with 16% growth in fare paying patronage and 142% increase in young people travelling by bus in LCR. There had been a slight decline in adult patronage but this was accounted for by the increase in young persons’ age limit to under-19.

Customer satisfaction had improved overall and 90% of bus passengers were satisfied or very satisfied. Value for money had increased by 10% since 2013.


With regard to the Buses Services Act 2017, the LCR Mayor had access to all the new powers, although some of the guidance and regulations were still awaited. At the outset it was made clear to the bus operators that the Alliance would look at all the options available. The bus operators indicated that they wanted to continue developing the partnership. Work had commenced on a Business Case looking at all the options the Act provided. There was no outcome in mind other than the best model and the best bus offer for the region to enable market growth. It was anticipated that the process would take a minimum of two years.


It was highlighted that an Enhanced Partnership under the Bus Services Act 2017 was different to the current arrangement as all operators in the LCR would need to agree for it to be implemented. At the present time there were only two operators on board.  An Enhanced Partnership also provided protection from competition legislation, allowing more collaboration to take place.


With regard to franchising it was clear from the work on the business case to date, that there were significant benefits including the opportunities for multi travel, cross ticketing and efficient networks. At the present time, good bus networks were heavily centred on areas where operators received the best returns. Franchising would allow a lot more integration across different transport modes and was effectively what had been so successful in London over the last twenty years, where patronage had doubled.


It was emphasised that one of the most important issues was building up trust with the operators. Whilst there would always be some disagreements it was important to have a good relationship with the operators in order to develop any kind of partnership or franchising arrangement.


At Merseytravel about 70% of the budget was spent on buses, made up from supported services, running bus stations and reimbursement for concessionary travel. The supported bus network cost in the region of £15 million net, although this was reducing over time and would be around £12.5 million next year. There were some small operators whose total income was from contracts or concessionary payments. This figure was less for the larger operators because they had a commercial network. However they still received a significant amount in concessionary payments.


A copy of Dr Ian Taylor’s summary report  - Building a world-class bus system for Britain -  had been circulated to the Panel members prior to the meeting for information. The report was based on work undertaken prior to the enactment of the Bus Service Act 2017. The 1985 Buses White Paper had promised that deregulation would bring better services, reduced fares, more people would travel by bus and the operators would still be in profit. However, the reality of de-regulation was that fewer people travelled by bus, services worsened and fares had increased.


Public funding made up 42% of the money going into the bus network (£2350 million). This funding was divided into: concessionary fare reimbursement 18%, bus services operators grant 6% and supported services 18%. Most public funding allowed operators outside of London to use it to run whatever services they believed to be most profitable. There was no effective public accountability for this expenditure and bus services termed 'commercial' were supported by this public money. The subsidy for supported services was therefore not spent strategically.


Statistical information presented in relation to the financial year 2013/2014 evidenced that:


  • The efficiency of public money spent on buses in London per journey was almost half that in all other areas in England.
  • The operating profit in London was 3.8%, in metropolitan areas 8.4% and in all other areas 6.3%.

It was calculated that if franchising was introduced in the Tees Valley area, and Cleveland Transit’s annual profits of £3.9 million were reduced to the London average of 3.8%, there would be £2.4 million additional funding to spend on bus services per annum.


The essential attributes of a world-class bus system were stated as providing a world class passenger experience, cost-effective use of public money and buses being part of a city’s or region’s strategic vision. Bus services needed to be efficient, affordable, good quality,  and co-ordinated. Profits should not be excessive and free bus travel should be provided for the young and elderly without undue expense. All road passenger transport should be funded and governed together. Bus networks needed to be purposely designed for maximum public benefit and policies to grow bus use should be backed by policies to reduce car use. Cities should be planned so that development of land use planning was undertaken in conjunction with public transport enhancement.


The Panel were shown a chart detailing a comparison of how well the Bus Services Act enabled the essential attributes of a world-class bus system to be achieved by: total De-Regulation, Enhanced Partnership, Bus Franchising and Municipal Operation.


De-Regulation made it impossible to achieve many of the essential attributes of a good bus network and came at a heavy financial cost. Franchising enabled a local bus network to be purposefully designed with the best possible service levels and maximum economic/social value. Franchising also removed the potential for excessive profit to be extracted.


The Enhanced Partnership route would allow some of the attributes however, as noted previously, this had to be agreed by all the operators, so the network had to be designed with them in mind. In addition, with an Enhanced Partnership, whilst the price of a multi-operator ticket could be set, bus operators could still sell their own tickets which could undercut the multi-operator ticket price.

Municipalisation of buses achieved everything that franchising could do, with the added benefit of capturing all profit for reinvestment in the bus network.  There were currently eleven municipal bus companies in the UK including Blackpool, Nottingham and Reading which had survived de-regulation. The Bus Services Act 2017 had banned the establishment of new municipal companies. However, existing municipal operators could be invited to provide services in other areas.


Some examples were given of services in Europe, where municipal bus operations were the norm. Municipal companies were the dominant public transport providers in most German and Austrian cities. In Germany, 88% of local public transport trips (bus, tram, local train), were on services provided by publicly-owned operators. In Vienna, municipal operation delivered high service quality, high cost-efficiency, and a strong basis for network operation. Most services were operated by Weiner Linien, a subsidiary of Wiener Stadtwerke, which was wholly owned by the City of Vienna. Some suburban bus services were contracted to private operators and there had been substantial expansion and improvement since the 1990s including new vehicles and longer hours of operation.


In France there was a move away from franchising towards municipal bus operation. Most bus services were 'whole-area’ franchises. Transdev and Keolis operated two-thirds of all urban bus networks outside Paris. Since 2003, twenty five cities had switched to direct management of their buses, or set publicly owned companies to operate their buses. The main reason was to cut costs while maintaining services. Early evidence suggested that expected cost savings had been realised.


It was highlighted that the Tees Valley Combined Authority comprised five unitary authorities which were quite different in geography and infrastructure. Ian Taylor stated that he was confident franchising could work for the Tees Valley area also that it would allow local or small operators to get in on the market as well as the large operators.


It was also noted that the Tees Valley Mayor had recently launched the South Tees Development Corporation which was a huge project in terms of economic development for the Tees Valley and in particular focussed on the development of the former SSI steelworks site. Ian Taylor commented that there was a disconnection in the UK between land use planning and transport planning and that when developing a site, transport should be considered at the start.


The Chair thanked Matt Goggins and Ian Taylor for attending the Panel meeting and for their informative presentations.


AGREED that the information provided was received and noted.


The Chair gave a verbal update on the items considered at the Overview and Scrutiny Board meeting held on 7 November 2017.




The Chair advised that the next meeting of the Economic Development and Infrastructure Panel was scheduled to take place on 13 December 2017.  It was anticipated that the Panel would receive further information in relation to the current reviews into the LED Lighting Replacement Scheme and also the Tees Valley Strategic Transport Plan Including Bus Franchising. 



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