We are concerned that Quality Contracts “would need considerable additional funding for contracting which is unlikely to be available in the near future. We consider the approach by Metro in gaining funding from the existing profits of the bus operators would threaten the re-investment in the industry locally. We fear more cheap and nasty operators would be contracted to keep costs down”This quote is from the Campaign for Better Transport’s West Yorkshire group, whose view, unlike the West Yorkshire ITA, comes out in favour of partnerships, not contracts. The quote nevertheless struck me as interesting.
1. Franchises
What they are saying is that franchising would effectively cost more. They may be right. I don’t know West Yorkshire well enough to comment. But, playing devil’s advocate for a minute, should QCs actually cost more?
We know they’re costly in London. This is as much to do with recent capital investment in new buses and an insistence on high frequencies, even in parts of London that are out of centre.
Might it be different elsewhere? By
- Illuminating costly and wasteful competition
- Ensuring frequencies are adequate and not excessive and
- Passing the scheduling expertise from operator (where it wouldn’t be needed) to authority (where it would)...
2. Cheap & Nasty Operators
There’s been much Omnibuses debate about whether Trent Barton, often aligned with quality, need worry about lower cost competition. But, don’t lower cost operations give people choice and reduce fares? In a competitive situation, it may not always last but it does have a role, especially where fares are perceived as high. Might it also have a more long-term role in a QC?
31 comments:
Franchising could actually raise funds for the Local Authority.
'Selling' a local lucrative area to one operator, with controlled service levels and fares levels, is an option that Local Authorities may not have yet investigated.
Profit levels in London are way below those in the regions. Thus, unless the franchising costs eat up this extra (I doubt it would take all of it), franchising needn't be more expensive.
As for "cheap and nasty" operators, there are two points here. One is that there needs to be auditing and enforcement against operators big and small - perhaps with franchising this role would pass to the franchising authority from the Traffic Commissioners?
Another is that such operators can be encouraged to play a different game. In the Milton Keynes area, they have improved in quality (vehicles, drivers etc) as the standards required in contracts have also improved.
So if you just contract "a bus service from X to Y", you'll get rubbish. Be more specific, and you'll get what you ask for, subject to decent enforcement (yes, including the last bus).
When running an Open Top bus on the Isle of Wight, I was once invited to be a franchisee for a local village route which was "not performing up to expectations" for Southern Vectis.
What would have been the advantage for me, the operator? I would have been paying SV for the privilege of making less profit or even a loss.
Franchising only makes sense (e.g. Costa Coffee etc) where there is significant brand promotion by the franchisor. At least the operator gets something for his money! But brand is irrelvant for most bus routes as there can be no alternative because of dimnutive and diminishing market size.
Quality Contracts don't need to cost more if you are not going to make any changes then it shouldn't cost more (though public sector proflicacy is a risk), but the question is if you aren't going to change/improve anything, what is the point of introducing them? Why go to the upheaval and risk if nothing is going to change and can anyone believe that politicians pushing this through are then going to say "nothing needs to change" after they have been saying for years how bad commercial operators have been doing, it would make them appears as if they did just want control and not for any solid reason.
How many staff (and what types) would transfer would depend on whether their employers would offer them opportunities elsewhere and if they wanted to work for Metro, the authorities don't currently have the staff to manage this and they would be difficult to recruit - London never lost them as they never sold the routes so the core nucleus of service planning remained at LT/TfL. The sort of staff who are involved in network planning are the senior managers who would transfer elsewhere or would be involved in the bidding process from the operators side so wouldn't be available before start-up to make these decisions in any case (as would the more junior schedulers and the like). Also London operators still have schedulers etc as they have to do the crew and vehicle scheduling after they win the contracts, the tendering authority can't schedule the staff as they are not their employees and wouldn't be negotiating with them. It is also complicated by the fact that the 3rd & 4th largest operators in West Yorkshire have their head office function outside the county covering operations and depots elsewhere so are unlikely to transfer staff like this.
West Yorkshire also doesn't have a lot of 'wasteful' head to head competition, a bit in the Wakefield/Pontefract area & a bit in the Huddersfield area but in most of the areas whilst there are multiple operators (and competition for tendered services) there is little excessive head to head competition. Plus the idea that introducing franchising will end up providing a worse service by reducing service levels on the core (currently commercial) network because inexperienced outsiders think there are too many buses seems ridiculous, commercial operators aren't likely to over-provide on commercial services with no competition existing so service levels are likely to be what is commercial.
Passing control to the public sector renders the whole operation subject to the vagary of politicians. Set up criteria for subsidy and service levels, and there will always be someone pleading for an exception and hoping to win votes.
Yes, some will be justified, but in other cases, the chattering classes who know how to make themselves heard will gain precious resources that cause cutbacks elsewhere.
Expect a rash of poorly-patronised services to clinics, health centres and the like.
(For a real life example of such complaining, the campaign by a handful of people in the small Kent village of Sevenoaks Weald diverted both management attention and public funds from the job of carrying large numbers of people).
And when the money runs out? Easy -blame central government.
"Plus the idea that introducing franchising will end up providing a worse service by reducing service levels on the core (currently commercial) network because inexperienced outsiders think there are too many buses seems ridiculous"
"commercial operators aren't likely to over-provide on commercial services with no competition existing so service levels are likely to be what is commercial."
No... but an operator providing the right level of service doesn't mean that outsiders don't think there are too many buses.
"No... but an operator providing the right level of service doesn't mean that outsiders don't think there are too many buses."
Sometimes there are too many buses. The wasteful tit-for-tat on Manchester's Oxford Road is a disgrace in just about every way.
A single-operator, 100% off-bus-ticketed, 5 minute frequency service using 3-doored bendy buses is what is required. Not a filthy old decker with 10 people on board every 30 seconds (sometimes) but often with longer gaps and bunching.
Franchising outside of London will never work unless you throw London-style money at it - just ask Peter Hendy!
We've read on this blog before about the battle against QCs going on in Tyne and Wear. The North East Bus Operators' Association produced this briefing note for councillors to draw attention to just how much a QC might cost. Voluntary Partnership Agreements (VPAs) can produce all the benefits without transferring the financial risk to the public sector (which would be an 'unintended consequence' of a QC). But until this industry starts shouting from the rooftops about just how good we are at moving people efficiently at reasonable fares, our voice will never be heard.
It would be interesting to learn how much the various ITAs are spending on consultancy fees to add weight to their biased argument. Never mind, at least it gives the typical vastly over staffed PTE something to do.
Franchising should lead to improved services and reduced costs
Like it has on the railways ?
DS, 10 May, 2012 08:00 said...
"Franchising could actually raise funds for the Local Authority.
'Selling' a local lucrative area to one operator, with controlled service levels and fares levels, is an option that Local Authorities may not have yet investigated."
So the bus service provides income to the local authority to spend on its pet projects? Can't see this helping to increase bus patronage.
"So the bus service provides income to the local authority to spend on its pet projects? Can't see this helping to increase bus patronage."
This is one of many dangers, many LAs do not see buses as important, but would use them to raise funds if possible. But the biggest danger of politicval control is that of not facing up to fares increases and servcie cuts when times are tough. them makimg panic cuts when the bills came in.
Going back to cheap and nasty operators, yes they fill in the gaps left by good operators, but only as transport of last resort. No scope for growing bus use.
In W & N Yorks, decent buses are often specified and applied, but, to 'get value for money' drivers are on lower wages, schedules are tight and there are not enough spare vehicles. This does not grow the market either.
@ Anonymous 0955 - I've read the document produced by the North East bus operators and I don't see their proposition as being very positive. They criticise the ITA for making comparisons with London and they proceed to make endless comparisons with London themselves. I also strongly dislike the repeated veiled threat of legal action to secure "compensation". This, along with the "we shut down all our operations" threat, is clearly the nuclear option the bus operators consider they have in their pockets to make QCs go away.
There are repeated criticisms about the ITA not revealing the future network or fares and yet the operators make no commitments whatsoever about retention of routes, frequencies or future fare increases. There is no mention of the repeated changes, reductions in services and resultant uncertainty and instability for people dependent on bus services. They talk about investement in vehicles but little investment in anything else (unless supported by government eg smartcards) or the vast amounts of profit taken out of these operations. The counterbalance of London's "inflexible" network is that people can rely on it.
I also dislike the somewhat sneering suggestion in the original article that somehow outer areas of London should not have or cannot justify frequent services and that somehow the suburbs are "over provided" for. There are still huge flows in the suburbs covering all those boring places like health centres, stations, hospitals, shops and educational facilities that somehow are deemed secondary by another respondent to this article. London has a spread of services and service levels which align to the demands of passenegers.
I am lucky enough to benefit from London's inflexible and expensive network whose concept is seemingly not justified anywhere else. Can the supporters of deregulation explain why decent subsidised bus services are "not allowed" elsewhere in the UK which seems to be the gist of their opposition to Quality Contracts? I'm also slightly baffled by the repeated whinge about councillors "interferring" in bus services. Surely private operators, as responsible businesses, wish to engage with and listen to key local stakeholders? Or do they really just want to pay "lip service" to this and retain the right to do what they want to anyway? It often feels like "business independence", up to and including the "shut up shop" option, is all the companies are really interested in. Everything else can go hang. I look forward to hearing why I am deluded to believe in a more regulated bus network!!
"Can the supporters of deregulation explain why decent subsidised bus services are "not allowed" elsewhere in the UK which seems to be the gist of their opposition to Quality Contracts?"
Simply because most London politicians can see that London could not function efficiently without buses, red routes and congestion charging.
Even though this is also true about most other conurbations, most local politicians do noy see it, and will not support buses, red routes and congestion charging.
They see buses as unimportant, and even if they publicly say they are important they will not support them. Wesy Yorks Metro says buses are important, and that Metro supports buses, but where is the
congestion charging and where are the red routes?
Metro support each rail treip by about £2 but they are not going to do this for bus trips, indeed one of their reasons for QCs is so they can spend even less on buses!
Politians in charge of buses? look at what they are in charge of now and what a mess they make!
@plcd1
Yep, you're the lucky one. Taxes raised throughout the UK help to pay for the very large subsidy received by the London bus network.
2289m journeys, revenue of £1289m, costs of £1848m (all figures from the TfL annual report). Subsidy therefore of £559m, or somewhere in excess of £70 per head of London population. Other urban areas scrape in at no higher than £50, and shire counties are often sub-£20.
And by the way, the mode share for bus in outer London is 14.1% - a figure which also includes trams.
(Source: TfL Travel in London report). That's not especially impressive, and certainly observation suggests that many journeys are lightly-loaded in the evenings, as are early mornings at the weekend.
A few economies in London could pay for a lot more elsewhere....
@ Capitalist - interesting how your subsidy number is rather at odds with what the North East bus operators quote. They cite a number of over £700m subsidy - I wonder where that comes from? The plan for London is to get subsidy down quite a long way through lower contract prices and above inflation fare rises. The Mayor has guaranteed the network is not cut back in his winning manifesto so that's an interesting contrast to previous plans which saw a planned reduction in total kilometrage. I think the subsidy target is close to £400m pa.
Philosophically it does boil down to what you want public transport to do. Is it to provide mobility to a population of a town or city plus cater for visitors and workers or is it simply an excuse to provide what is profitable plus a minimalist top up for socially necessary services. I'm firmly in the "mobility" school of thought.
@plcd1
"Can the supporters of deregulation explain why decent subsidised bus services are "not allowed" elsewhere in the UK which seems to be the gist of their opposition to Quality Contracts?"
Public transport subsidy per capita is vastly higher in London than elsewhere, even than in most rural counties, which is where you traditionally think of buses as needing subsidy. Even if you take into account the higher proportion on non-Londoners using London transport than is usually the case in other parts of the country, London still gets massively more subsidy than elsewhere.
Why can't this be replicated across the country? Money, pure and simple. Councils up and down the land are cutting this, axing that, slimming down the other. They simply don't have the money to invest in heavily subsidised bus networks when there are commercial services already provided, and it would (justifiably!) be seen as a gross misuse of public money to subsidise commercially viable operations.
I don't know to what extent London deserves to be different. I don't know whether the very high frequencies, particularly late evenings and Sundays, are justified. I do know that the simple fare structure and use of Oyster is a worthwhile investment. On the other hand I don't see why the vehicle requirements are so strict and why buses have to be pensioned off so early.
Well said! I couldn't agree with you more.
plcd1 - I applaud your honesty and unashamed enthusiasm for franchising, ITAs and the like. However, I have some serious misgivings
Your quote "@ Capitalist - interesting how your subsidy number is rather at odds with what the North East bus operators quote. They cite a number of over £700m subsidy".
Whether it is £700m, or the figure that Capitalist took from tFL's own figures of £559m, is an irrelevance. The lower figure still represents a massive amount. Furthermore, the figure is to be reduced to £400m by
a) Better contractual agreements - why are they better at procurement already, one may ask?
b) Increasing fares above inflation?
There are several areas that concern me about the outline proposals, and much lies in the detail. Yes, a nirvana of stable, high quality bus services, removal of "wasteful competition" and extension of multi-operator ticketing sounds great.
However, here's the rub, and a few examples of what could happen.
As noted on an earlier blog, we have the issue of cross border services, and Bristol/South Glos was specifically mentioned.
So Bristol CC set up a ITA/franchise system? First Bristol then decide to truncate their routes so the 43 Centre-Kingswood-Oldland gets split in half? That way, they retain the latter half irrespective of franchising results (as it's in South Gloucestershire) and the fairly local substantial traffic that it has. However, this means that areas such as Warmley, Oldland and large areas in east Kingswood lose their direct link with the City Centre?
Another issue is the knock on effect of franchising. Such an area is Tyne and Wear. Let's suppose that the services from Derwentside (Consett and Stanley) to Newcastle form part of an ITA franchise and that these are won not by GNE, but by Arriva??
The loss of those routes would probably see the demise of Stanley depot and Consett outbase, and the loss of other marginal local routes that were worthwhile. Would that then lead to DCC having to let contracts for replacements. So Tyne and Wear wins, at Durham's expense?
cont'd
Then we have the political aspect. We've already had reference to the grandstanding of a Bristol councillor berating First for not running some services on a bank holiday as they weren't included within a tender spec. What else might happen?
We also have the removal of three door bendi buses (wasn't that supposed to be a solution) on what seemed to be nothing more than populist electioneering by Boris. Then NBfL comes along as another political ploy.
Then we get "we know best" syndrome. Tyne and Wear was a prime example, whereby the early 80's saw direct services from areas of Gateshead truncated at Gateshead or Heworth. Why? To force people to change onto the Metro. Was this giving people what they wanted?
Lastly, the question of hypothecation (?) or ringfencing of revenue/profit. Is that guaranteed that money from bus service profits is then ploughed back into bus services? We could see it diverted to fund other transport, such as trams, trains, metros, etc. That's the best.... at worst, it could merely be used as a cash cow to fund other services in other areas such as social services or education.
I'd prefer to see more incentives for operators to innovate and collaborate rather than these proposals. At the moment, Nexus particularly have been very vague about they will work.
It also pre-supposes that operators are generally rubbish and need bringing to heel. Taken to the enth degree, you could see something like GMPTE taking the X43 under a franchise agreement. Imagine if it was then won by First Manchester.....??
Also, the "threat of compensation" has been wielded. Would you? If the council wanted to bulldoze your house for a new road, surely you'd expect to be recompensed for it? Or are you arguing for some banana republic style nationalisation where a company's assets are just seized?
For me, there's too many unknowns and rather than pass legislation, perhaps more carrot, less stick would be better.
@ Anonymous 2237 - what I believe in is a public transport system that works, is comprehensive, is affordable and offers genuine mobility. I am originally from Tyne and Wear and am initimately familiar with how the integrated network developed. I wrote consultation responses on each phase of the changes. The PTE even called my bluff and had me work on bus service development so I know a little bit about how it worked back then despite being young.
Everyone cites Gateshead Metro as a failing of the integrated network but it was extremely well used with fully loaded double decks on high frequency services. Today you have less frequent single decks and Go Ahead feel qualified to call that an unparalleled success. The issue of cross boundary services survived the introduction of the integrated network in Tyne and Wear and today you have fewer such services because there is less demand for those routes despite the efforts of Go Ahead and Arriva to try to keep them going. Inevitably the economic decline in Northumberland and Durham and swingeing cuts to bus funding don't help.
I am sure that if TWITA carry on with their plans then they will be forced to deal with the cross boundary issue as a result of political and public pressure. If services were proposed for large cuts then the plans would founder. Clearly the bus operators are already trying to stir up such sentiment by creating scare stories. No one actually knows how cross boundary routes in Tyne and Wear would work.
I do not doubt for a second that there are good services provided by commercial operators. However the question remains as to whether they are good enough to allow people to make a lifestyle decision to rely on public transport and dump the car. I could not live in a place where there were no evening or Sunday bus services to allow me to get about. Unfortunately far too many people in the country are deprived of such services.
I do not claim to have a magic answer to squaring the commercial vs public service view of bus servives. I would dearly like to see better bus services across the country and I think more dedicated public funding should be made available to bolster bus networks to protect what we have left and put back what has been lost over the decades. I would also like to see some genuine engagement from the bus industry as to how they can bring their skills into play to make that work. All parties in the bus industry have valid concerns about each others behaviours and it would be nice to see all of them step away from the extremes and get talking and then doing for the common good.
@plcd1 said...
As far as your last paragraph goes, the Association of Bus Operators in West Yorkshire
http://www.abowy.co.uk/ is offering a partnership which would negotiate with all stakeholders, and using productivity gains from better bus priority and revenue from patronage growth would seek to provide what bus users need and want. This is what CBT West Yorks gp, of which I am a member, is supporting.
"Metro says buses are important, and that Metro supports buses, but where is the
congestion charging and where are the red routes?"
AIUI there is no scope for Red Routes outside London, they are a peculiarly Greater London byelaw of some sort. However there *are* urban clearways (no parking, no loading) which are essentially the same thing but with double yellow lines and no-loading kerb stripes instead. The last one of those I noticed was the Luton-Dunstable road, but there are lots of them.
Congestion charging (the stick) is to me a tax, and nothing more than it. Driving in London is rubbish. It's stressful, it's slow and parking costs a fortune. That being the case, if I really *had* to drive to London a tenner a day wouldn't affect my choice. So I do not support it. I rather support bus priority measures - sensible ones, designed by the European model - and a sensible, co-ordinated public transport network including all modes, through ticketing and co-ordinated planning.
Neil
Or, if we can't have Councils or PTEs doing that, let's make exceptions to the laws about cartels etc and let the bus operators form them?
On-road competition for local bus does not work, except in very limited circumstances. Even without regulation, it'd be vastly better to let the bus companies get on with competing with the car together, no?
Neil
plcd1 - that was one of my points...no-one knows how cross border routes will be tackled. Nexus have stressed the positives (quality, multi-operator ticketing) but the vagueness extends to all these questions.
I know that arguing against such things is like arguing against Mom and Apple Pie, and I'm not doing that. However, it is one of a number of questions that are not being answered.
You made the point about United and Northern's services surviving in pre de-reg days. Indeed, but many things have changed. Not least, we're talking now about a regulated environment (T&W) next to a deregulated (Co Durham).
The decline of passenger figures within Tyne and Wear is not just confined to GNE or buses in general. The Metro ridership decreased by 25% between 1991 and 2001.
This indicates that there are wider social changes that have affected bus ridership in that area. We know what they are:
Out of town developments that actively promote car usage
Increased prosperity and motoring costs falling in real terms
Changes from major employers on single sites to a more fragmented employer profile
In principle, I'm with you that I want to see funding and commitment that enables bus networks to grow. Some bus operators (and we know who they are) need to raise their game. However, can bus services be all things to all people? No. Can politicians be trusted to run services for the good of users and not for populism and vote grabbing. I worry!
"Can politicians be trusted to run services for the good of users and not for populism and vote grabbing. I worry!"
You could just as easily say:-
"Can bus operators be trusted to run services for the good of users and not to maximise profit at the expense of perfectly viable but lower-margin routes?"
Or worse, in some cases it seems that this question is more apt:-
"Can bus operators be trusted not to sneak subsidy from Councils by cutting journeys as unviable that aren't themselves viable as a self-contained tendered service, to ensure they are the only ones who can get the tender"?
It goes both ways.
Neil
"Can bus operators be trusted to run services for the good of users and not to maximise profit at the expense of perfectly viable but lower-margin routes?"
This is a myth. They will run as many routes as the income as the turnover supports including marginal loss makers. They want to maximise the value of season tickets, so the bigger the network the better. Also they do not want other operators to take on marginal routes as it might later threaten core routes.
But they will not and can not allow the whole network to go into loss, so if fuel or wages rise or if traffic slows buses so extra buses are needed on core routes then marginal rotas will be ased .
There is a lot a pro bus local auhtority can do to help keep margianl routes, paradoxically, bus lanes on core routes helps marginal routes. Pro bus comments from an LA cost nothing and help, but contant criticism as in W Yorks cuts patroange and therefore cuts services
"This is a myth. They will run as many routes as the income as the turnover supports including marginal loss makers."
But if taking a bus off a marginal route and putting it on a highly profitable one is financially expedient, e.g. to run 5 minutes in front of a competitor, they'll do that.
Neil
There's plenty more examples of companies retaining marginal routes as
a) retain market share, limited opportunities for competitors
b) spread fixed cost over a wider base
There are, of course, examples of firms deregistering work that comes back to haunt them (e.g. First in Barnstaple) so the idea of that businesses do this on a widespread basis is wide of the mark.
When you say the word 'Franchise', most people immediately think of business-based franchises like those that are top listed in popular business magazines every year. But, it is important to remember that there are hundreds and thousands of franchises out there, some that are spectacularly successful, others that are total failures. Obviously, you want to avoid the latter.
franchise opportunities in utah
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