With a decision on the sale of Plymouth Citybus expected today and a government seeking to reduce debt by realising £16bil in asset sales, what future is there for the remaining municipal arm-length companies?
Local government owns about two-thirds of this £16bil-worth of assets. The suggestion seems to be that councils consider what they can release. Councils will obviously be expected to realise the maximum value from the assets they hold.
If you exclude Plymouth Citybus (still in municipal hands, today at any rate) and Islwyn Borough Transport (in the throws of transfer to Stagecoach), there are now just 11 munies left. Here’s the Omnibuses Blog synopsis on them all, in just 10 words each, with operations ranked in order of size, largest first:
- Lothian Buses—award-winning star performer suffers from recession and tram works
- Nottingham City Transport—already benefits from public-private investment & strong council support
- Cardiff Bus—rocked by competition concerns. Indications of possible sale somewhat unsettling
- Reading Buses—slipping high performer battling against recessionary downturn and PR debacle
- Blackpool Transport—cuts force award winning well-known director off the scene
- Warrington Borough Transport—strong and consistent performer seemingly bucking usual depressing industry trends
- Thamesdown Transport—expanding housing & economy can’t disguise some unpalatable network thinning
- Rossendale Transport—questionable performance from operator surviving sell off debate, for now
- Ipswich Buses—previously immune, Ipswich follows First in recession led route axing
- Newport Bus—new management tries patching staffing ills, as X30 gamble wins
- Halton Transport—investment certainly but very lacklustre performance takes the shine off
And, if you can predict the future from recent history, at deregulation in 1986 there were 45 municipally owned arms-length operators plus seven publicly-owned PTEs. Four have gone in the last five years, alone.
5 comments:
What is a municipal operator? That particular grey line seems to be blurring all the time. Yes, you list the remaining traditional state-owned operators, but we shouldn't forget the new raft coming along and picking up tenders and in some cases, commercial work. Do they count? Thinking of those in Kent, Dorset, Torbay, Norfolk etc. Others operate sizeable fleets of school buses, others still own buses which are run on tenders by 'normal' operators. All are potentially saleable assets.....
A few weeks ago one of your posts highlighted the concentration of the bus operating industry into a small number of very large businesses, and a large number of very small businesses. I seem to recall this was derived from an OFT consultation, but the search facility does not seem to find the correct link.
This finding confirms my view, that there are economies of scale for the largest operators, but also diseconomies of scale for a small operator expanding. Put simply, the medium sized operators cannot achieve the economies of large groups through, for example, bulk purchase of vehcles or centralised IT systems, but their overheads may well be higher than for the very smallest operators.
Given that most of the 'municipals' are small or medium sized, I think it is inevitable that, on cost effectiveness grounds, they will all ultimately come under pressure to be taken over by the larger groups.
As I understand it, the "municipals" are the old companies, i.e, the ones that have survived in council ownership throughout deregulation, as opposed to the ones recently set up by councils.
I'd be interested to know how many "new" council owned bus companies there are.
You mentioned Kent (Kent Tops Travel). Two more I can think of are the one in Peterborough and Wightbus on the Isle of Wight.
As for sale vale, not sure these have too much. Wightbus for instance only has to run the stuff SV doesn't want anyway!
Is anyone willing to write a short post on the *new* publicly owned “municipals”? There are operators who run schools only (e.g. Dorset), those concentrating on contracts (e.g. Park & Ride in Worcester), and those operating more traditional bus services, usually subsidised (e.g. Kent). Their value is probably more in keeping the market place active or offering value rather than as an asset for sale. After all, they are somewhat different to the “traditional”, longer standing ones, the new segment having been formed for specific purposes.
RC169 has it right (or at least colours in part of the picture) when he compares the overheads of medium sized companies with both small operators and large groups. There are exceptions, of course, such as small Islwyn Borough Transport that seem caught between being a medium sized fleet in terms of legacy yet cannot easily assume the benefits of being a smaller operator. Often, terms & conditions of middle-ground arms-length operators are most favourable and often there’s also a pensions deficit.
I would write a post about the "new municipals", except I don't know much about them!
I will have to wait for a post to educate me on them!!
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