The Bus Services Act in England has passed and will be fully enacted over a period of time, and most local authorities (bizarrely, other than Metropolitan Districts) will have the legal ability to set up their own bus operation.
This follows 2019 Scottish legislation – the difference being that in Scotland, such things can be run directly in-house, while in England, they must be established as an arm’s length company.
The ‘new’ entitlement will be of scant use to the myriad local authorities that already have in-house operations running under existing legislation! One way many of them run bus services now is by using Section 22 ‘community bus’ permits.
This gives me a degree of personal unease. It is fine for some marginal operations, but for what I would term a ‘proper’ bus service, it implies that local authorities can run them under less stringent conditions than the commercial market. And that cannot be right.
Fundamentally, I must ask why a local authority would wish to set up its own operation. There might be very valid reasons: lack of bidders for contracts, a single bidder with an effective monopoly, and so on.
In such cases, the knowledge that the authority might run things itself can act as a brake on overpricing, so the idea has its uses. But ‘because we fancy doing it’ is hardly a valid reason.
Cost is a key issue. Many people assume that an in-house operation is bound to do it cheaper, but is that really true?
There are immutable costs in running a bus service. Drivers must be paid the going rate or they will not work for you. A bus (and its maintenance) costs what it does regardless of ownership. Fuel costs the same, and you have to replace the fleet at some point, so depreciation does not shift. That is a big ‘fixed’ element of outgoings.
And never pretend that local authorities do not carry overhead costs, because they most certainly do! We have worked with many authorities with in-house operations, and their knowledge of associated costs has varied from clueless to knowing the last penny.
Most current in-house operations are based on home-to-school contracts, sometimes with off-peak inserts. Dead simple; no antisocial hours, and one driver, one bus, five days a week. But a ‘proper’ 0500-0000hrs, seven-day service is a completely different kettle of fish, which raises all sort of issues.
My advice to local authorities expanding into bus operation? Beware of what you are taking on!
