Why franchise? The key issues....

Why should local transport authorities consider franchising when considering how they deliver bus services, and what pitfalls should they avoid? Matt Gamble, an associate director at AtkinsRéalis, outlines some of the key considerations..

My colleague Dave Pearson considered variations in the performance of Enhanced Partnerships (EPs) in our previous article, as well as how local transport authorities (LTAs) and bus operators might consider aspects of focus and governance in these EPs.

In this article, I outline some questions that LTAs should consider before progressing with the other key option for delivering bus services – franchising.

We look forward to discussing these questions and other challenges and opportunities at the forthcoming Quality Bus Conference, 23-24 September. Register now

There is a legitimate argument regarding control of a public service. LTAs will be acutely aware that, if they take control, then accountability follows. It could be argued that Section 63 of the Transport Act 1985 gives local transport authorities ultimate accountability for bus service delivery.

However, in practice, the fact that different elements of the bus product are controlled by different actors means accountability is split, with the result that it is too easy for one side or the other to deny accountability. Was the bus late because of traffic? Or did the operator’s arcane ticketing system mean it took an age to board an influx of passengers? Or was the bus late leaving the depot? Or was a bus stop obstructed or poorly designed in the first place? Or was it all four?

Therefore, focussing accountability for every aspect of the bus product onto a single controlling body should be central to any proposal for franchising. After all, Transport for Greater Manchester reports that it has made the buses run significantly more to time through franchising. This leads to two observations:

• Many LTAs take a light touch concerning performance management on existing tendered services. To yield the benefit of control, they will have to invest in process and much, much more officer time in performance management;

• LTAs’ wider policies and actions will impact on the quality and / or cost of the bus service proposition – as they do now, of course. But, with franchising, the impacts of these policies and actions will impact on the LTA’s reputation, or income, or operating cost, or all three. Of course, this might be good for the bus. The LTA will now directly face the financial consequences of excluding buses from a town centre or removing bus priority in favour of other modes. It will now face the harsh reality that an action that reduces one of the two sources of income, passenger revenue, increases the call on the other source of income, subsidy.

Authorities should carefully consider perceptions and expectations. When professionals and many politicians talk of a ‘London-style’ bus system, they think of control and accountability. When lay people and many other politicians talk of a ‘London-style’ bus system, they have a mental image of frequent buses, Oyster cards, and low fares – all facilitated by a carefully maintained brand presence and consistent standards of infrastructure maintenance and information provision.

When I was assisting a local authority just outside London some years ago, I once had to respond to someone who had moved out of the capital to an affluent area with high car ownership and mainly local authority-tendered bus services, while retaining her job in central London.

The gap between her expectations and the bus service delivered to her was profound, and without a massive injection of funds, it would be unlikely to have changed very much with franchising. So, LTAs should be careful in planning and articulating what franchising will and will not deliver.

Let us consider how TfL, the longest-established franchising authority in the UK, has juggled its sources of funds and the scale of the network. Following years of growth, patronage decreased by 26% between 2013/14 and 2022/23. Scheduled mileage over the same period fell by only 6%; fleet from its highest point (2016/17) by approximately 9%. Subsidy (including BSOG) increased by 8%, and the subsidy per passenger journey by 45%.

The Pandemic clearly threw patronage off course, but what’s noticeable is that, along with the general picture outside London, demand has pretty well resumed its pre-Covid trend.

So TfL needs to respond, and on the one hand, it is doing so with its action plan for buses, having delivered several improvements that will deliver patronage growth, such as 24-hour bus lanes and the Superloop. On the other hand, it delivered only part of the surgery it identified in central London.

Therefore, LTAs need to carefully consider their reasons for wanting to pursue franchising. Can they afford it? Can they take on the financial risk? What outcomes can franchising be expected to deliver – economic growth, improved equity in access to services, fewer missed hospital appointments? Would a more intense focus on service development and delivery through a robust Enhanced Partnership help deliver these instead?

And do they need to carefully consider how to balance the competing demands for roadspace to ensure that they don’t risk the bus proposition becoming unaffordable through their own policies? One reason behind the fall in patronage and increase in subsidy in London must have been the decline in average bus speed – 6% across the network over the last 10 years. 

Finally, LTAs must consider the governance arrangements. It’s easy to say that the dial can be turned up or down in response to changes in demand or funds available. However, delivering this effectively will require more focus on business planning and stronger governance arrangements than most LTAs have had to bring to bus services until now. 

AtkinsRealis