Moves to introduce bus franchising in Wales will cause major uncertainty for the industry if the Welsh Government does not step in quickly to provide clarity on how investments made in the meantime will be protected, the Confederation of Passenger Transport (CPT) has said.
Worries over what happens between now and the start of franchising are the biggest source of concern for bus operators in Wales, adds CPT Cymru Director Josh Miles.
A white paper published on 31 March made clear that public control of bus services is the only way forward. The necessary legislation may not be laid until 2024 in a worst-case scenario, says Mr Miles, although 2023 is thought to be more likely. Introduction of the first franchised networks is expected during the 2025/26 financial year.
“Passenger numbers in Wales remain well down on pre-COVID-19 levels and the sector must now look towards franchising,” he adds. “Operators will ask: ‘Why invest?’” However, on a more positive note he says that the Welsh Government recognises the issue “and is looking to address it.”
Further worry has been caused by a lack of clarity on the amount of funding needed to introduce bus re-regulation. “That is not conducive to confidence,” adds Mr Miles. He notes that the franchising model adopted it likely to be Wales-specific and thus subject to a bespoke cost regime.
Where the necessary money will come from is also unclear. A suspension of roadbuilding in Wales may release funds, although ongoing revenue support once franchising is introduced will be required.
More detail on the fiscal aspects of re-regulation will follow with the draft legislation.
Despite these concerns, Mr Miles credits the Welsh Government with having already listened to the bus industry’s views around funding. Efforts to protect operators’ investments will be imperative if progress towards zero-emission bus fleets in Wales is to continue during the transitionary period, he continues.
Although the earlier Welsh Government aim for all buses in the country to be zero-emission by 2028 has been relaxed to 2035, it is understood that the revised approach includes a target of 50% having transitioned from diesel by 2028.
Mr Miles suggests that the Welsh Government’s desire to see SMEs figure prominently in the franchised regime could necessitate a leasing mechanism to assist with the shift to zero-emission, although options for direct grants or as a condition of tendering may also be part of that change.
“Small- and medium-sized operators form a big part of the Welsh bus market, representing a larger percentage than in England or Scotland,” he continues. “A grant model is better for larger businesses, but even a leasing model will potentially be challenging for some SMEs.”
On operators’ response to the white paper, Mr Miles says there has been “a mix” of views. In contrast to work around re-regulation of buses in Manchester, where two operators pursued Judicial Review of the process, he adds that there is a general acceptance of the move towards franchising and “a willingness” to make it work.
“Some SMEs see it as a big opportunity, but others see it as a risk that will invoke costs through the tendering process. For those, that could outweigh the benefit of being involved.”
Read the Welsh Government’s white paper here.
