CITIES SHOULD BE WARY OF TAKING ON FRANCHISING
9 December 2014 | Author: David Begg
It would be sensible to pass the revenue risk to the operators – but this will come at a cost
The move by chancellor George Osborne to devolve significant powers to Greater Manchester was bold and audacious, and is a welcome step in giving cities outside London more control over their own destiny.
We have consistently argued in TT that devolution is good for transport. However, the implicit assumption made by many is that all you have to do is give cities London-type bus franchising and they will replicate London's success. If only it were that simple.
Why does no one refer to Belfast-style bus franchising? The public sector owns and runs the bus services in Northern Ireland's capital. Translink – which operates the services –would be the first to concede that it has been haemorrhaging passengers for decades, and the key ingredients for growing bus patronage are non-existent in Belfast compared with London. The worry for many cities in the UK is that they are nearer to Belfast than they are to London when assessing the factors which are key in determining bus patronage: car restraint, car ownership, urban density and bus priority.
Franchising does makes it easier to provide an integrated public transport offering with a simple flat fare ticketing system and a multi-modal smartcard. However, if it's relatively cheap and easy to park a car, and car ownership is rising, bus franchising is no panacea.
London has significantly increased the amount of money spent on buses since TfL was formed. This led to a big expansion in the size of the network and a period of low fares (until more recently). London's transport commissioner, Peter Hendy, has always been nervous about cities being given franchising powers without the resources to deliver.
Local politicians will want lower fares, a more comprehensive bus network and better services in the evening. However, this takes money and it's difficult to see where it is coming from given the cuts that local authorities have made in the past few years to bus funding. There is a simplistic and wrong assumption that the profits made by bus companies in the current deregulated framework can be used to provide a better network in a regulated set-up. The company with the highest profit margins – Stagecoach – also has the lowest fares.
There will be a tendency in a franchised network to reduce the frequencies on busy corridors and spread vehicles across less populated corridors and during evenings and weekends. This will reduce patronage: frequency levels are are crucial to passenger volumes.
The cites in the north of England were right to be wary about taking responsibility for the Northern Rail franchise without the resources to make a difference. They should be just as cautious on bus franchising. When bus franchising is introduced in Greater Manchester don't expect it to adopt the London model, whereby TfL takes the revenue risk and the operators are paid to run the mileage. The bus market in Greater Manchester does not have the ingredients for success that London has, which means it would be sensible to pass the revenue risk to the operators. This will come at a cost as the operators will demand higher margins to compensate for this risk.
Bus franchising can work if it is adequately resourced and there is a focus on the other ingredients essential for a thriving bus market. If not then it has all the makings of a bad pass.
Reference: Transport Times, November Issue 2014
Franchising will be discussed at the 2015 UK Bus Summit being held on 12th February in London