Some Welsh SME operators ‘concerned’ about bus franchising

Welsh bus franchising plans are causing SMEs concern, Senedd committee told

Plans to roll out franchising across the Welsh bus network have left many small- and medium-sized operators in the country “very concerned,” the Senedd Climate Change, Environment and Infrastructure Committee heard on 26 May.

That was the verdict of Director of both South Wales Transport and the Coach and Bus Association Cymru (CaBAC) Bev Fowles. He told the Committee that CaBAC members are worried that moves to reregulate buses will leave them struggling to compete with larger businesses to secure franchising contracts.

Mr Fowles adds that previous experience in the regulated London environment gave him an insight into the cost of preparing a large tender, which he believes in Wales could be “up to £250,000” against no guarantee of success. Such expense is prohibitive for SMEs and would lead to some such businesses ceasing to run buses, Mr Fowles continues.

Confederation of Passenger Transport Cymru Director Josh Miles, speaking at the same hearing, underlined Mr Fowles’ concerns about the impact of franchising on smaller operators, which account for a higher percentage of the overall bus network in Wales than in England or Scotland.

“We have got a lot of rural areas with a lot of family-owned firms. I think they will typically struggle to compete in a franchise environment,” says Mr Miles. Both men also pointed to New Zealand as an example of what could happen. There, when buses were reregulated, “quite a lot of contraction in the SME sector” followed, Mr Miles adds.

Mr Fowles adds that if franchising of the Welsh bus network led to the exit of some SME operators from the marketplace, there is a danger of a lot of much good practice displayed by those businesses being lost.

“That has to be avoided at all costs, because Wales is such a diverse country… with diverse needs, and they all have to be met. I think franchising may well not achieve that.” He adds that those individuals within the public sector in Wales that will undertake the franchise procurement process “hold the key” in ensuring that SMEs have a fair chance of involvement.

Mr Miles adds that such an outcome would be the “holy grail,” but he adds that considerable work is required to achieve it. He notes that during his time with the Federation of Small Businesses before joining CPT, he spent a lot of time talking about such procurement, “but not much time seeing it happen.”

When it published its white paper on bus reregulation, the Welsh Government acknowledged that the mechanism poses a “risk” to SME operators. It is thus working with those businesses and Transport for Wales to mitigate such worries and to reduce the barrier to entry to a franchised network for them.