The Chair of the Economic Development and Infrastructure Scrutiny (EDIS) Panel outlined the Panel's main findings, conclusions and recommendations following a Scrutiny investigation of the Tees Valley Strategic Transport Plan including bus franchising.
The Economic Development and Infrastructure Scrutiny (EDIS) Panel recommended to the Executive:
a) That in order to achieve the TVCAs transport vision for the Tees Valley and provide commuters, residents, and visitors with a world class public transport system, specifically with regard to the Bus Strategy and the powers provided by the Bus Services Act 2017, the TVCA should implement a franchised bus network.
b) That the TVCA should ensure that the franchised Tees Valley bus network is efficient, affordable, reliable and safe for all users and there are opportunities for both small and larger operators to tender for services or routes.
c) That the profit achieved by implementing bus franchising is re-invested directly into the network for initiatives including ticketing schemes with concessions for the young, elderly and unemployed; a single smartcard for the Tees Valley region; 24 hour bus routes, investment in new vehicles, free Wi-Fi and USB charging points on all buses.
d) That any investment in new vehicles for the network, whether by operators or the Transport Authority, should have regard to environmental implications and options such as electric, hybrid or bio-methane buses selected.
e) That Middlesbroughs Local Implementation Plan (LIP) aligns with the priorities in the TVCAs Strategic Transport Plan.
The Chair described that one of the panels intentions was to look at what the Tees Valley Combined Authoritys (TVCA) plans were in relation to the Bus Service Act, passed by Government in an attempt to address various issues with transport. It was noted the TVCA looked at transport strategy covering all areas of the Tees Valley and all elements of transport infrastructure ranging from pedestrians to airports. The panel, however, examined Bus Services and the Bus Services Act to understand what provisions could be made with individual Councils and TVCA for Bus Services in the Tess Valley.
The panel received evidence from various sources, including private bus companies such as Tower Transit and MerseyTravel, experts such as Dr. Ian Taylor from Transport Quality of Life as well as Council officers.
The Bus Services Act provided for two options available for the TVCA; one being a formal arrangement between TVCA and Bus companies called an Enhanced Partnership. This option entailed bus companies and the TVCA working to provide a network of services for the good of the area. However it was noted that there was an element of good-will on behalf of the bus companies. The second option was Franchising whereby the TVCA would set routes and fares with all profits from fares being returned to the TVCA and distributed as it saw fit. Under franchising all routes would be tendered, meaning bus companies would bid to operate on them with resulting contracts containing a range of requirements as determined by the TVCA. Requirements could include environmentally friendly buses, for example.
The Chair of EDIS noted the Bus Services Act was intended to resolve issues surrounding bus services after de-regulation in the 1980s, after which an increase in fares and fewer services had been experienced.
The panel found that of the two options available, franchising was the best option for the TVCA. This would allow for cross-subsidising, meaning unprofitable services would be underwritten by profitable services instead of being withdrawn resulting in community centric services being maintained. Currently, 53% of profit made by bus companies was made through fares with 18% of that profit being apportioned to shareholders as dividends. With franchising all income would be received by the TVCA which would then be able to re-invest in the system. It was noted the remainder of the income for bus companies was received from central government through such things as concessionary fares which, again, would be received entirely by the TVCA.
A Member queried if bus operators had been approached as part of the investigation as it was not apparent from the report. It was clarified the panel heard evidence from Tower Transit, who operated buses in the UK and internationally. Tower Transit were in favour of franchising because, as a small company, they would be able to compete in the market against larger companies. The Member commented the Leven Valley bus service, which no longer operated, had not been sustainable and was unlikely to have been forced out of business by larger companies, such as Stagecoach and Arriva. It was also commented the final report appeared not to be advocating franchising, citing Tower Transit finding it difficult to get into Transport for London. Other examples of the report advocating enhanced partnerships included increased customer satisfaction and numbers of young people using buses.
The Chair of EDIS responded that the paragraphs cited did speak favourably of enhanced partnerships, and the panel recognised its benefits. It was also clarified the panel had heard evidence from MerseyTravel who, while in favour of enhanced partnerships, also stated it is reliant on good-faith by bus companies as there is no statutory obligation on them to maintain such things as concessionary fares. The Chair acknowledged that while the evidence in favour of enhanced partnerships was positive, franchising was the preferred option as the TVCA would have a greater input to operations and pointed to Leven Valley and noted that under franchising that service could have been subsidised and kept running.
The Member commented that Stagecoach engaged with him as part of a public consultation and undertook changes to their services based on that consultation. It was also suggested that enhanced partnership should be the preferred option with franchising used as a potential punitive measure in the event bus companies act inappropriately. It was noted that, in the Panels view, franchising offered more control over the bus system, meaning they would be more accountable to representative authorities whereas enhanced partnership did not allow this.
A Member emphasised there was an element of good-will on behalf of the Bus companies to act in the interests of communities by citing discussions she had with Stagecoach and how services had been altered that were not to the benefit of all residents within her ward.
The Chair of the Children and Learning Scrutiny Panel queried if there would be any set-up costs associated with the implementation of franchising. The Chair of EDIS clarified there would be some costs involved, however this would depend on how the system was implemented. The intention of the panel was not to examine the detail of implementation but rather to look at the issue on a broader scale. It was also commented that Middlesbrough had very good links running North/ South but not East/ West and that Middlesbrough only had two bus companies operating in it with franchising potentially resolving this.
With regards to the reports Terms of Reference C: to examine Middlesbroughs Local Implementation Plan (LIP) prior to submission to the TVCA it was noted the panel did not examine this due to time constraints.
The Chair of Corporate Affairs Committee queried if this issue would be considered by the panel in the future. The Chair of EDIS confirmed that Middlesbroughs LIP refers to all facets of transport within the town and the panel focussed on bus provision only. It was also commented that the panel would seek feedback from officers on how the LIP developed and how it was being implemented more generally.
A Member commented that transport in the Tees Valley needed to be organised so residents had access to a reliable system and franchising seemed to be the most suitable way of doing this. The Chair of EDIS made reference to the South Tees Development Corporation and its work on the former SSI steel manufacturing site. It was commented that that effective transport links, including bus services, could assist Teesside residents in accessing multi-billion pound regeneration and investment projects. It was also commented that Stagecoach on Teesside generated approximately 13% profit, which was double the profit it generated in other areas. It was noted if Stagecoach generated the London average profit (3.8%), under a franchised scheme, this would generate £2.4m per year for TVCA to spend on buses, resulting in more money for the bus system.
The Chair of OSB suggested the report should reflect that the Executive work with the Mayor to influence the TVCA.
ORDERED: The recommendations should reflect that the Executive works with the Mayor to advise the TVCA to adopt franchising before the findings and recommendations of the Economic Development and Infrastructure Scrutiny Panel be endorsed and referred to the Executive.