BUS DEBATE: FRANCHISING OR PARTNERSHIP?
23 April 2015 | Author: David Fowler, Editor, Transport Times

Continuing the report from last month’s Great Transport Debate, hosted by Transport Times in association with KPMG, this week we focus on the bus debate which pitted two David Browns against each other: one the group chief executive of Go-Ahead, the other the chief executive and director general of Merseytravel, to make the case for and against extending the bus franchising model, as used in London, to other UK cities.

Go-Ahead’s Brown said that there were many good things about the London bus market. “But my starting point is that you shouldn’t impose someone else’s system on the market,” he said. “Every market it is different. There has to be clarity over what you’re trying to solve.”

The London model works in London. But the capital has a population of 8.6 million, a growing economy and also a 24-hour economy where most of the growth in bus patronage is outside peak hours. Congestion exists on a scale unimaginable anywhere else; there are red routes, camera-enforced bus lanes, declining car ownership and traffic lights under TfL control. The gap between revenue and what the network costs to run is £600m annually. Fares are higher in London because costs are higher.

London also has the mayor whose main area of responsibility is transport, and who has taken “brave” decisions to invest in congestion charging and the bus network. And franchising was not a guarantee of good service. In the 1990s it had not provided a particularly good service and investment had been low.

Outside London “we are not starting with a clean sheet”, he said. Operators had bought bus companies on the basis that they would continue in the private sector. “People have already invested in buses, people and so on over time.” Proponents of franchising “are effectively saying we’re going to take that away without compensation.”

“One of the key ingredients of a good bus service is partnership,” the Go-Ahead boss added. He cited Brighton, where Go-Ahead is the leading operator, as an example. Brighton & Hove Buses had invested in buses and the council had invested in providing bus lanes and other infrastructure.

“This is not a broken bus model,” he insisted. ”The bus market does not need fixing. Local authorities need to be clear about what they’re trying to solve because I’m positive that by working together it will be solvable.”

Merseytravel’s David Brown responded: “For the cities in the North, the whole conversation has been transformed.” The focus in the cities was on devolution and economic growth, informed by research by PTEG, individual cities and bodies such as Greener Journeys into the economic importance of the bus.

“There is a growth agenda in cities outside London. Making sure we have a well-organised, simple to understand bus network is essential to support the growth we expect,” he said.

“In the Liverpool city-region there is huge growth potential there for the taking, but it depends on a good, simple affordable transport system.” The city would need a wider catchment area to find the necessary skills.

Investment in bus services provides excellent value for money in generating economic benefits for urban areas, he went on. In PTE areas buses generate an estimated £2.5bn in economic benefits against public funding of £0.5bn.

Merseytravel’s chief continued: “We accept London is bigger, but it’s a city, like Liverpool and Leeds.

They’re not completely different animals. We oft en talk as if the London model cannot apply to other cities because they’re not London.”

He added that “we need to work on getting other government departments to recognise the social and environmental benefits of the bus”; meanwhile, “Many people find the level of fares on buses unaffordable, especially people trying to get back into work – many can’t afford to take jobs.”

In answer to the question of what problem franchising was trying to solve, he said that in Manchester, city leaders had persuaded the chancellor that a bus network run on a more organised basis was necessary for growth. “We generally need more organised, integrated and affordable networks. An essential ingredient for growing businesses is a stable, structured, reliable network.”

Partnership had worked in some markets, such as South Yorkshire or Oxford. But if Newcastle, to take a different example, had decided franchising was what it wanted, why not?

“The simplicity, affordability, quality of service in London – why can’t that be put in place in Liverpool? Why can’t the same customer proposition apply to Liverpool as to London?”

In the following discussion, Go- Ahead’s Brown responded that the bus operators’ key aim was also growth. “There’s no question but that we want to be part of the solution,” he said.

Merseytravel’s Brown said a better economic model was a system in which it was up to the city to decide what transport it wanted to buy. “London knows what it wants and buys it through a franchising system. If now we [Merseytravel] put £1m into the bus market in Liverpool we can’t guarantee we will get £1m of value. With franchising we could.”

Go-Ahead’s Brown said “I think the regions can achieve their aims without the operators losing control of services.”

Speaking from the floor, former TfGM information systems director David Hytch pointed out the difficulty of reaching partnership agreements in Manchester, where there were 48 operators. “Some organisations’ ambitions seemed to be only to slow things down rather than make them happen.”

Merseytravel’s Brown spoke of the need to respond quickly in the cities to seize opportunities for growth. Go-Ahead’s Brown said the Newcastle franchising (quality contract) proposal was on its fourth iteration. It had required the bus companies to employ lawyers to examine and respond to the proposals, draining resources. “You could have had a partnership working two years ago,” he said.

Next week's blog will focus on the aviation debate, to receive notifications of new blog posts sign up in the box to the right of the page.

Reference: Transport Times, April 2015 Issue

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