Stagecoach East MD Andy Campbell explains franchising’s pitfalls and the cheaper, quicker alternatives
I can understand why some people find the idea of franchising bus services attractive.
What’s not to like about the concept of providing community bus services where and when people need them, including a comprehensive service for rural areas, and all at a price that’s affordable for everybody – without any need to factor in profit?
Keeping the wheels turning
Unfortunately, the issue is not that simple. Whether you opt for a commercial operation or a council-controlled franchise, the wheels only turn if there is enough money to put fuel in the tank.
The North East Combined Authority (CA) spent two years investigating the business case for franchising, only to reject it as an option once it worked out that the entire operation would run out of money by year three.
Manchester is spending £11.5m on a feasibility study to explore franchising across the metropolitan area. That’s £11.5m of public money being spent on a possibility that may be discarded with zero return for local bus users. When many public services are already at breaking point, isn’t there a better way to invest this money?
And if the feasibility study comes back with a thumbs-up to franchising in Manchester, the CA will then have to find millions more to recruit a sufficiently experienced team and fund the behind-the-scenes infrastructure to support the operation – all before bus users experience any change to their service, whether good or bad.
Any government funding that’s made available for public transport should be spent on improvements that will directly benefit customers – not wasted on buildings or consultations that may or may not make a difference at some point in the future.
Community bus services
We receive regular complaints from the public who feel frustrated when their local service has to operate on a reduced timetable or is cut altogether. This is happening more frequently than it used to, and it frustrates us too.
We want to provide an excellent community service but, as a commercial operation, we simply can’t fund unprofitable routes over the long term. Doing this would put any business at risk. It would jeopardise the salaries that our drivers, mechanics and office staff, and their families, rely on.
For many years, councils across the country quietly stepped in to subsidise rural and other less popular routes. This has been done as a valuable community service, without fanfare. Visually, you can’t see a difference between a subsidised and a profit-making bus service – the buses all look the same and the subsidy isn’t flagged up in red letters along the side. The only clue, possibly, is in the number of passengers on board.
However, government cuts over past years are now biting hard and councils are struggling to balance their budgets without impacting frontline services. Local authority (LA) bus budgets have fallen by one third across the UK. With less government money available to subsidise community bus services, operators across the country are forced to offer fewer routes or significantly reduced timetables.
Would franchising solve this? It hasn’t done so in London, where the franchising model has to be subsidised by the taxpayer to the tune of £600m-£700m every year. I’d suggest sums like Manchester’s £11.5m could go a long way towards supporting the bus services that already exist for the community, without any need to reinvent the wheel.
In addition, councils already have the means to stipulate routes, frequencies and fare structures as part of a ‘quality partnerships’ approach. Franchising doesn’t offer anything new here.
Profit and passengers
Profit is necessary, because a bus company in profit has the means to re-invest in vehicles and technology that make a journey comfortable for passengers. From leather seats to mobile charging points, free wi-fi, and the recent introduction of contactless payment technology, it’s profit that enables us to upgrade our buses every year and it’s our passengers who benefit.
We are also intentional about trying to future-proof our services, with sustainability in mind. For example, our latest Park & Ride fleet is fitted with engine stop-start. We are also in discussions about the potential for electric buses for Cambridge. In these ways, we contribute to the city’s ‘clean air’ agenda – but our ability to innovate is dependent on having profit to re-invest.
Although they wouldn’t coin the term ‘profit’, a well-run franchising operation would still need to factor in a surplus in order to facilitate these sorts of improvements by operators. A franchising operation that’s run on a shoestring would quickly degenerate into a quality of service that few passengers would want to use.
Furthermore, franchising transfers the financial risk from the operator to the public purse. The LA would enter into a contract requiring bus operators to deliver specified routes on their behalf. The council would pay bus operators, whether or not those services were attracting enough passengers to cover the cost of maintaining the route. Any losses would become the council’s – and therefore the taxpayers’ – responsibility.
Congestion’s distortion
As an organisation staffed by fallible human beings, we’re not perfect. We know that, and our goal is always to deliver the best service that we can. However, issues beyond our control, such as unpredictable congestion, make our job extremely difficult.
It’s easy to make a sweeping statement to say that bus franchising is the answer to everything, when in reality there are plenty of smaller, practical details that would make a huge difference to the reliability of bus services in and around Cambridge – and at minimal cost.
Smart traffic lights that respond to traffic flow; bus stops that aren’t positioned to cause traffic tailbacks; sensible bus lane planning that keeps buses moving from the outskirts of the city right into the centre.
No one seems to want to talk about these practical issues though. Perhaps they don’t grab enough headlines.
