The ‘big mo’ is now with devolution and bus regulation

Close-up of a bus

An unstoppable momentum appears to be building around devolution and bus regulation.

What a difference a week makes. It’s not clear yet whether this is quite a Berlin Wall moment on buses and devolution – but at the very least it’s the equivalent of mass demonstrations in Leipzig. And we all know where that led to. This is how it happens – the pressure builds and builds and then with dizzying speed ‘all that is solid melts into the air’ and a new paradigm forms itself.  They don’t happen often but I’ve been through these moments before.  Most notably when the roads programme suddenly collapsed (after years of political, community and intellectual pressure) in the nineties, and transport policy shifted towards seeing public transport as a solution rather than a problem. A shift in thinking that has not been reversed. With big developments almost by the day there’s a risk that this column will be out of date before it’s published, but here goes… Continue reading

Status quo is risky, not bus franchising

Bus livery designs

A simple and consistent livery for Tyne and Wear buses, forming part of Nexus’s proposal for a Quality Contract Scheme.

Plans to introduce a Quality Contract Scheme in Tyne & Wear should excite anyone who wants to see better public transport.

Not surprisingly those who are making monopoly profits from bus deregulation are currently active (directly and via proxies) in denigrating both the motives and the competence of Nexus in triggering the formal process for a Quality Contract Scheme (QCS). Before dealing with some of these arguments in detail let’s step back and look at the big picture.

For the first time outside London we are looking at a proposition that will bring integrated public transport – with simple smart ticketing – to a major urban area. This is the basic formula that has been key to London’s success and that is common (for good reason) to major urban areas around the world. This is huge. I would have thought that people who profess to be pro-public transport would have welcomed this – be excited by it. Or at the very least would like to see if it worked or not. In fact, out in the real world people and passengers are positive about it. They just aren’t the same group of people who write for the trade press.

Person touching-in with an Oyster card

A QCS can give passengers the integrated, Oyster-style ticketing they want. (Picture: TfL).

Now there are those that believe that Oyster-style simple unified ticketing is not the right way forward for large urban areas. Instead bus operators should be free to “set their fares on each route for that which the market can stand” as Marc Morgan-Huws argued in Passenger Transport (PT064). In some ways this exposes the crux of the argument. This might make sense for an individual operator but it flies in the face of what makes sense for an urban public transport network as a whole or what passengers want. Passengers want something that looks and feels like Oyster. The USP of a Quality Contract is that it can give it to them. And evidence from around the world shows that where cities move to a simpler, integrated fares system passengers respond positively.

But to get back to the narrative of choice of the opponents. Not surprisingly this sidesteps the big picture altogether and instead is all about casting aspersions on motivation and competence. On motivation the argument is that the QCS is about a lust for power and/or to divert funding out of the bus sector and into Nexus’ wider budget.

The ‘lust for power’ assertion doesn’t stand up given that local government has had QCS powers for years and not used them. In general all the evidence shows that local government is cautious about taking on extra responsibilities which is why Nexus have done such a thorough job on the QCS business case and is not over-promising on outcomes.

Stacks of coins

The business case for the QCS is based on making much better use of public sector bus funding alongside fares income.

Critics argue that this is also all about filling a black hole in the accounts. Well in some ways they are right. The pressure is on available public sector funding for buses (40% of operator income in Tyne & Wear) and in this environment indulging 20 per cent profit margins is not justifiable. Where the critics are wrong is that this is a sinister plot to divert funding to Tyne & Wear Metro or other unspecified purpose. It’s not. Metro funding comes from a combination of fares income and specific direct grant from central government for Metro. The business case for the QCS is based on making much better use of the specific public sector funding available for buses alongside fares income. Funding for bus is specific to bus and the QCS is necessarily based on that.

The next strand of the argument is that taking on responsibility for the bus network is hugely risky and that Nexus doesn’t have the competence to take on these risks. Disaster beckons and it’s Tyne & Wear taxpayers that will end up picking up the bill. There’s some mystification going on here behind the scare tactics.

Franchising is clearly not such a terrible risky thing as otherwise companies like Stagecoach wouldn’t be part of the franchising system for bus services in London or national rail. Franchising is the norm for the provision of public transport in Great Britain as it is increasingly the norm right round the world. Indeed it’s a system that Stagecoach’s most recent financial statement said drives down costs and encourages competition in London.

Passengers paying a bus fare

81% of adult passengers would see fares stay the same or fall under the QCS.

In fact, it’s bus deregulation that is the anomaly. The system that nobody copies. Is there something inherently risky about buses outside London that make it so unstable and risky that franchising won’t work? No. The factors that could change demand are well known and the business case factors them in and sets aside a contingency for worst case scenarios. But there is no reason to believe that a QCS will trigger the collapse in bus use that the scare stories about local taxpayer risk are predicated on. Why would it when services will be maintained and 81% of adult passengers will see fares stay the same or fall and when everyone will benefit from a promise to limit future average fares rises to RPI? When those aged 16-18 would benefit from a much cheaper £7.50 a week ticket for all services and there would be better value for students and a new offer for older and disabled passengers as well. When instead of the constant chopping and changing of deregulation there will be simple integrated fares and an Oyster-style offer. Looks like a recipe for growth to me. Certainly not the collapse of demand for bus travel that justifies the scary bedtime stories the operators et al are seeking to frighten the good people of Tyne & Wear with.

So the QCS provides a superior proposition to the status quo and will be delivered in exactly the same way as most of the rest of Britain’s public transport. But Marc Morgan-Huws argues that bids to provide it won’t be competitive. No reason why that should be true. Everyone knows that there are plenty of companies who don’t want to slog it out on the streets through bus wars who currently largely locked out of the UK market by incumbents. There would be plenty of companies wanting to win these contracts.

Tyne and Wear Metro

Nexus already delivers the franchise for the Tyne and Wear Metro, currently benefiting from a £385m investment programme.

But is Nexus competent to deliver a franchise efficiently and effectively? Well it already has. Its called the Tyne & Wear Metro (now being successfully upgraded by Nexus as well).

And finally there’s the argument that greater public sector involvement will inevitably stifle innovation. I would argue it’s the public sector at least as much as the private sector, and arguably more, that has driven innovation in public transport in general and bus services in particular. From Oyster to low floor buses, from ultra low emission vehicles and guided busways – it’s the public sector that restlessly forces the pace and seeks to move the product to the next level. Why? Because they know that gimmicks and playing catch up with the 21st century isn’t enough when quality public transport is so central to achieving wider environmental, economic and social ambitions for cities.

So the risk is not the QCS – a clearly superior fares offer achieved by better utilisation of available finance for bus services in Tyne & Wear, and delivered through a proven format in which Nexus has demonstrable competence. The risk is to carry on with a status quo based on falling funding for buses subsidising rates of return which are not justified and which gives passengers the disintegrated fares structure that they don’t want. This is potentially the biggest thing to happen on bus services in 25 years outside London. It offers the opportunity to break down the Berlin Wall of transport policy between London and the rest of the country which means only the capital is allowed to benefit from planned and integrated public transport. It also offers the chance to see if “charging what the market can bear” at operators’ discretion is better than a simpler, cheaper, oyster-style fares offer. I think I know what current and potential bus users would prefer.

Jonathan Bray

This article was originally published in Passenger Transport magazine.


Ten years of the pteg Support Unit: Part two

In the second of a series of three blog posts, pteg Support Unit Director Jonathan Bray continues his look back over ten years of the pteg Support Unit.

Ten years of the pteg Support Unit: The unstoppable force of devolution

Merseyrail train at station

Devolution has seen Merseyrail Electrics transform into one of the best performing rail networks in the country

Some of the votes on devolution to Wales, Scotland and London were tight. They wouldn’t be if they were re-run now. And devolution has been good for transport. London is the most striking example with just about every aspect of transport in the capital either transformed for the better, or in the process of being transformed. Rail investment has also rocketed in Scotland. Some of the best performing rail routes are also those that have been devolved – London Overground and Merseyrail Electrics in particular.

The trouble is that for England outside London what tier of governance you devolve to is less clear cut. Regions, city regions, Counties, Districts – what you do for one area has implications for others. This, coupled with the Metropolitan policy elite’s disdain for inquiring too deeply (see Part one) has led to both this and the previous government layering on various initiatives which don’t always relate to each other and lack sufficient decisiveness. Whitehall too is reluctant to fully let go – because now that Scotland, Wales and London are gone – there’s only the rest of England left to play with. So progress is slow, messy and fitful but it’s happening – and it is a one way process. Ultimately though, the logic of having local public transport services controlled locally will prevail and our major cities will have transport systems and planning arrangements that will look and feel more like those in London and in cities across Europe. We will get there in the end.

The rise and rise of rail

Design for a high speed train by Priestmangoode

Rail is now seen as a symbol of the future – rather than of the past (Picture: Priestmangoode)

Fifty years ago Beeching slashed and burned as much of the rail network as he could get away with. And in the decades that followed the rail network was constantly having to fend off a Whitehall establishment that saw rail as a costly problem bequeathed to them by an earlier era that sooner or later they would deal with decisively and terminally. But in the last ten years or so there’s been an extraordinary turn around. Not least because there’s been a boom in rail traffic. Particularly on our city region networks – where growth has outstripped that of London and the South East as people commute further and in greater numbers to access the jobs and opportunities in revitalised core city centres. Rail now looks more like the future and less like the past. HS2 symbolises all of that. After decades as being seen as a costly problem to be managed down to size, rail is seen as part of the solution not the problem. Rail is something that politicians of all kinds want to be associated with. There’s also a sense recently that some of rail’s stardust has settled on the other modes. The recently flurry of investment and expansion of tram schemes – with, most notably, Manchester Metrolink becoming a full on network. And even the bus has lost some of its ‘loser cruiser’ stigma with the Metropolitan policy elite in the last year or so. The bus is now seen as a respectable policy option – if not yet a cool one! The protection of BSOG in the Spending Review being one sign of that.

The battle for the bus

The bus is local public transport for most people outside London. Yet because buses in London are sorted and the bus lacks social cache, bus services outside London had largely been left to decline. Part of a gentlemen’s agreement between Whitehall and the large operators that the bus operators would pretend to compete with each other while Whitehall would pretend to care about falling patronage and rising fares. And whilst the media was hypnotised by every twist and turn of the politics and profits of rail privatisation they let the massive profits being generated off the back of the poorest people in Britain by deregulated bus services outside London go unreported and unexplored. Even though it’s been these profits that have actually been fuelling the wider global ambitions of the big groups. Meanwhile local government in general had slipped into cosy ‘decline management ‘mode on bus. How sloppy were things before we got stuck in? Not long before we started the DfT seconded a senior official to work for CPT on policy, media and public affairs (a fairly easy job lobbying yourself!); maintenance standards were so shoddy wheels were coming off First Group buses in service; and the Traffic Commissioners were regularly dealing with truly appalling early, late and non-running – because even the largest operators knew they could get away with it.

Speakers from the pteg Urban Bus event

New alliances are being forged in support of bus, as our recent ‘Case for the Urban Bus’ event showed. (L-R): Konstanze Scharring, Director of Policy, SMMT; Stephen Joseph, Chief Executive, Campaign for Better Transport; David Brown, Chair, pteg; Pedro Abrantes, Economist, pteg; Claire Haigh, Chief Executive, Greener Journeys; Dr Janet Atherton, President, Association of Directors of Public Health; and Tony Travers, Director, LSE. Picture by Andrew Wiard

We changed all that. We put some sharp dividing lines into the bus debate. We dragged bus policy out of the shadows and into the public arena. We had to fight unbelievably hard against Ministers who too often sided with their hostile officials to get some workable legislation for local transport authorities to improve bus services and we worked together as a network to put that legislation into practice.

We were vilified  for doing this not only by the operators (fair enough) but also by their legions of spear carriers – including the world’s most craven trade press and the extensive selection of organisations and individuals who in one way or another are on the bus companies payroll and whose main job it is to enforce a ‘partnership’ (deregulation) consensus at all costs.

We kept going regardless and by doing so the bus is in a far better place than it was ten years ago. At the very least the bus operators know that they have to be seen to push to the very limits what can be achieved in a deregulated environment – which is increasingly guided by legal agreements which came out of the 2008 Local Transport Act. Meanwhile our tenth anniversary saw the first move by a Local Transport Authority (Nexus) to trigger the statutory process for the franchising of bus services (a ‘Quality Contract’) which if it goes ahead will allow bus services to be properly planned and managed and make Tyne and Wear the first conurbation outside London to enjoy the benefits of simple, smart and integrated zonal ticketing across the modes.

Jonathan Bray

Read Part three in the series ‘Ten years of the pteg Support Unit’ which looks at the way we work and the way cities will work in the future. >

< Read Part one in the series ‘Ten years of the pteg Support Unit’ featuring top ten highlights of the last ten years plus the influence of London.