Memorandum by Northamptonshire County
Council (Bus 39)
THE BUS INDUSTRY
1.1 Northamptonshire County Council takes
pleasure in making this submission to the Transport Sub-Committee
inquiry on the bus industry. The first part of the submission
highlights the current problems experienced by the County Council;
the second part addresses specifically the five issues the Committee
wishes to consider.
2. CURRENT PROBLEMS
2.1 The County Council has a policy of seeking
improvements in the quality of public transport as a means of
reducing social exclusion and encouraging a shift from car to
more sustainable forms of transport. This is a major challenge
as public satisfaction with the quality of bus services and information
is relatively low compared with other services for which the County
Council has a responsibility. The County Council has, however,
encountered a number of problems in implementing this policy.
These can be summarised as follows:
withdrawals of commercial bus services
at short notice
substantial increases in tender prices
for both home to school and public bus services
lack of competition for tenders
lack of a national policy and strategy
for bus services in medium sized towns
no co-ordination between services
where there are two dominant operators
increasing emphasis on challenge
funding and the resources this requires in terms of bidding.
Withdrawals of Commercial Bus Services
2.2 The last two years have witnessed a
change in strategy by the major bus groups in terms of the services
they seek to provide. They have placed a much greater emphasis
on concentrating resources on what they consider to be their core
markets at the expense of other routes and services. In Northamptonshire,
the major operator is progressively withdrawing services from
many parts of towns leaving just a core network of inter-urban
routes and maybe one or two routes in the medium sized towns.
In Northampton, the major operator is also concentrating resources
on nine key routes and withdrawing totally from what it considers
to be less profitable areas of town and times of day.
2.3 Two recent examples of this have also
occurred in the towns of Corby and Wellingborough. In Corby, the
major operator announced in July 2000 that it was withdrawing
five out of the seven commercial routes in the town from October
2000. Two of these routes consist of vital links between housing
areas and the industrial estates operating at peak times only.
The County Council considered it was necessary to replace most
of the services proposed for withdrawal but in doing so had to
provide £175,000 per year in emergency funding that had not
been previously budgeted for.
2.4 A similar situation has now emerged
in Wellingborough and the neighbouring small town of Higham Ferrers
where the same operator is proposing to withdraw all but one town
service. The withdrawals consist of two commercial services in
Higham Ferrers and two in Wellingborough. Again the announcement
was made after the budget for 2002-03 had been set. It is not
clear yet what additional funding will be necessary to maintain
essential services in these areas.
2.5 In total, just under 1,000 commercial
journeys per week were withdrawn by operators in Northamptonshire
during the year October 2000 to September 2001. This is set to
be exceeded this year as a result of the proposals recently announced
for the Wellingborough area and also the withdrawal and curtailment
of two services in Northampton from April 2002.
Increases in Tender Prices
2.6 In common with many other authorities,
Northamptonshire has experienced increases in tender prices way
beyond the present level of inflation. In the year October 2000
to September 2001, prices for retendered home to school transport
contracts increased by 24 per cent compared with the prices immediately
prior to retendering and 33 per cent for public bus services.
The effect of this on home to school transport has led the County
Council to reconsider its policy of providing free home to school
transport for children living below the statutory distances for
which free transport is compulsory. As far as public bus services
are concerned, this has led to some marginal services being withdrawn.
Lack of Competition for Tenders
2.7 In Northamptonshire, the provision of
bus services is concentrated in the hands of two major operators
who, between them run about 95 per cent of all bus mileage in
the County. Outside Northampton, one operator provides more than
90 per cent of all bus mileage. This monopoly of provision is
reflected in the low number of tenders received for local bus
servicesthree for non-rural bus grant contracts and four
for rural bus grant contracts. This is despite the fact that there
are over 40 operators on the tender list. One of the reasons often
cited by smaller operators for not tendering is the difficulty
they have in breaking into a market dominated by one or two major
operators. Until recently, the major operators have always operated
some journeys commercially on routes that have otherwise been
contracted making the tenders that the County Council has been
able to offer unattractive to a new operator. Even with a change
in strategy which has led to whole services being withdrawn, the
continuing presence of the major operator on the remaining core
routes in Corby, for example, is expected to deter new entrants
from coming into the town. In this situation a quality contract
approach could well offer benefits (see para 3.9).
Lack of a National Policy and Strategy for Medium
2.8 Most of the problems experienced in
recent years have centred on services in the County's medium sized
towns (population 25,000-100,000). The appropriate response to
this in terms of the level of service has been made more difficult
by a lack of clarity in the policies and strategies that need
to be employed in such areas which are defined neither as urban
2.9 The strategy for rural areas, focused
almost entirely on relieving social exclusion by reducing isolation,
has been backed by considerable amounts of new funding through
rural bus grant, rural bus challenge and rural transport partnerships.
In urban areas, operators are still able to provide many services
commercially at frequencies high enough to make the bus an attractive
alternative to the private car. Here the strategy has been one
of providing capital funding through the LTP process for bus priority
schemes, light rail and other initiatives designed to encourage
2.10 In the medium sized towns, there is
as yet no clear objective for public transport and consequently,
apart from the urban bus challenge initiative, no new sources
of funding to address the needs of these areas. Unless there is
a major initiative in these towns, bus services within them could
well face the same problems as those experienced in rural areas
some 30 years ago.
No Co-ordination Between Services in Towns where
there is more than one Operator
2.11 In Northampton, town services are operated
by two large companies. Although this does provide some competition
for tenders, a major drawback is the lack of co-ordination between
the services provided. Since the Competition Act 1998 came into
force and the Office of Fair Trading has focused its attention
on the bus industry, the two operators have been less willing
to engage in dialogue regarding the future development of services
in the town. At one level, this has made it difficult to introduce
quality bus partnerships as operators will not commit themselves
to future levels of service along given corridors or the provision
of low floor buses. At another level, service changes are no longer
co-ordinated, with the result that one part of town now has 15
buses per hour and another has had its service withdrawn completely.
Changes to fares are also no longer co-ordinated with the effect
of fares on one operator's services being different from those
of another for the same journey. The two operators do not pursue
these practices willingly but do so only to ensure that they do
not come under the spotlight of the OFT. The outcome though, is
lower customer satisfaction as bus users cannot understand why
these practices exist and why the network cannot be better co-ordinated
for the benefit of users.
Increasing Emphasis on Challenge Funding
2.12 Although additional funding for public
transport through the various challenge funding processes has
been welcomed and Northamptonshire has done well from the rural
bus challenge fund, the amount of time spent on making the bids
is significant. Staff resources are scarce and there is concern
about the amount of time being spent on abortive bids. Given that
only one fifth of the bids for urban bus challenge funding were
successful, questions should be asked as to whether this type
of competition provides an effective use of resources. A more
effective means of allocating funds would be through the Local
Transport Plan process suitably updated to take account of rapidly
3. SPECIFIC ISSUES
Subsidies in the United Kingdom Bus Industry
3.1 Work being carried out nationally has
confirmed that it is appropriate for subsidies to be provided
to the bus industry to assist with meeting the twin objectives
of reducing social exclusion and encouraging modal shift away
from the private car towards public transport.
3.2 Subsidies to the bus industry are provided
in the following ways:
fuel duty rebate based on mileage
local authority subsidy paid to operators
as a result of a contract being awarded;
subsidy channelled through local
authorities from rural bus grant, rural bus challenge and rural
transport partnership initiatives; and
payments made to operators (by district
councils) as a result of accepting concessionary fare passes for
pensioners and disabled people.
3.3 In addition operators receive indirect
benefits from capital expenditure on highway related schemes including
bus priorities and receive substantial funding as a result of
contracts or the purchase of season tickets for scholars entitled
to free home to school transport.
3.4 Although operators receive substantial
amounts of funding through the public purse, the outcome of this
funding remains one of low customer satisfaction and an environment
where services change at short notice and often require urgent
injections of additional local authority funding that has not
been planned or budgeted for.
3.5 The most pressing problem for local
authorities at the present time is revenue funding to maintain
services proposed for withdrawal by operators yet there is no
direct government help being given to local authorities in recognition
of this problem. If the local transport plan is to be effective
as the tool for delivering the Government's strategic transport
objectives, it must be accompanied by an integrated funding strategy
that recognises the volatility of the industry and the increasing
cost of providing the level and quality of service that the public
The Relative Merits of Bus Quality Partnership
and Bus Quality Contracts
3.6 It must be recognised that these two
concepts are means to an achieving objectives rather than objectives
in themselves and hence should be seen as just two of the many
complimentary procurement strategies that a local authority might
employ to achieve a modal shift or a social exclusion objective.
3.7 For any partnership to be successful,
the partners must share at least one common objective. A common
objective is to increase the number of people travelling by bus.
This is good for operators as it should increase their income
and good for local authorities as it might lead to a reduction
in congestion and in certain cases can reduce social exclusion.
Where the bus network for a particular area (not just one route)
is strong commercially, operators will seek to strengthen the
network further by increasing frequencies to a level necessary
to achieve modal shift and make that network a priority for the
provision of new low floor buses. Where this happens, local authorities
may be willing to re-allocate scarce road space in favour of the
bus and impose potentially unpopular traffic restraint measures
to further encourage modal shift and a growth in bus use. This
creates a fertile ground for a quality partnership.
3.8 On the other hand, the conditions for
engaging a local authority are unlikely to be present where the
network is not strong commercially or where the operator withdraws
services from other parts of town to concentrate on one or two
core routes. The local authority will find it more difficult to
justify the provision of bus priorities in such circumstances
and also be less able to introduce traffic restraint measures.
Moreover, if the local authority has to find additional revenue
funding to maintain services on non-core routes, the climate of
co-operation is unlikely to be such to encourage further investment
to be made in bus enhancement measures.
3.9 Experience in Northamptonshire suggests
that where the local authority has a clear strategy for the development
and improvement of its bus network, but this cannot be achieved
commercially by an operator, then the quality contract might well
be the appropriate tool for ensuring the delivery of a total network.
3.10 A quality contract in this context
would be a contract for the provision for the whole network of
internal passenger transport services within a defined area excluding
commercial inter-urban routes but possibly including some non-commercial
rural services into the town. It would be specified to a minimum
standard with the operator/partner being given every encouragement
to beat the standard to increase service usage. In Northamptonshire
the operator would take the revenue risk, apart from new services
to areas of new development, and therefore, have the incentive
to grow the market by increasing ridership.
3.11 It has not been possible to introduce
a quality contract voluntarily in Northamptonshire due to the
fact that the incumbent operator wishes to continue the best services
commercially. It is inevitable that this will reduce the number
of operators interested in running the remaining services in a
town as the continued existence of a major operator will act as
a deterrent to new operators.
3.12 Under the present legislation, it is
unlikely that any quality contracts will be introduced either
in Northamptonshire or elsewhere because of the minimum two-year
lead-time before one can be set up and the potential for network
instability during this period.
3.13 In conclusion, a quality partnership
will work where operators can deliver most of the network commercially
in the area in question. On the other hand, a quality contract,
as described above, might be a better alternative where the network
cannot be delivered as a whole commercially.
The Importance of Bus Priority Measures and Their
3.14 Where the objective of a transport
network in an area is to achieve modal shift, it is likely that
this objective has arisen because of existing or future congestion.
Consequently, it is most likely that bus priority measures will
be necessary as part of an overall strategy to deliver a high
quality alternative to the private car. Bus priority measures
can take many formsbus lanes, bus only streets or turns,
selective vehicle detection at traffic signals, for example. The
most appropriate form of bus priority will depend on local circumstances.
Their primary objective is to improve the reliability and regularity
of bus services so that people can rely on them when choosing
to use buses rather than cars. A secondary objective may be to
reduce journey times. Whatever the objective, an appropriate bus
priority scheme can help achieve these objectives along with other
measures to reduce boarding times, for example.
3.15 To be effective, the bus priority schemes
need to be enforced. That applies equally to other traffic management
measures to ensure effective use of road space, including the
monitoring of on-street car parking. Evidence in Northampton suggests
that this can be better achieved where the local authority has
taken on board powers to decriminalise parking through setting
up a special parking area. The income from this can be used to
fund enforcement and also other transport improvements. It would
be logical for local authorities to extend these powers to include
the enforcement of parking in bus lanes but a change in legislation
would be required to enable wardens to enforce moving traffic
offences in bus lanes.
Regulation of the Bus Industry
3.16 The provision of bus services is still
considered as an essential public service by users and non-users
alike. Since 1986, governments have taken the view that this can
best be achieved by companies approaching the task from a commercial
perspective. Regulations relating to the extent of the provision
of services and fares were swept away and replaced by "safety
net" regulations relating to notice given on how and when
services could be changed. Local authorities were given powers
to fill gaps in service by seeking tenders for those considered
as socially necessary. Regulations relating to safety (quality
licensing) were largely unchanged and have proved less controversial.
3.17 It is still difficult for many people
to accept that bus companies do not have an obligation to provide
a full range of services in an area and have the freedom to "cherry
pick" good routes and times of day rather than have to provide
a comprehensive service. This is compounded by the fact that in
most areas there exists a monopoly operator and no competition.
Unlike many other service industries, customers often do not have
the choice as to the company that can best meet their needs. Barriers
to entry into a new area are high as the incumbent operator is
able to adapt its services quickly and easily to see off a potential
competitor. This state of affairs can be very frustrating for
a local authority as it is often unable to respond effectively
to the legitimate concerns of its citizens about the quality of
what they perceive to be a public service.
3.18 Where this is of concern to the local
authority and there is a belief that the existing mix of commercial
and contracted services do not meet the needs of an area, the
local authority should have greater ability to secure a quality
contract for that area. Paragraphs 3.8 to 3.10 outline how this
might be achieved.
3.19 In rural areas and in some housing
areas in urban areas, the potential of taxis and hire cars in
providing bus services is often perceived to have been neglected.
This has been largely due to the fact that most taxi operators
tend to be based in towns and confine themselves to the work which
rewards them bestplying for hire at ranks and on the street.
Private hire car operators, on the other hand, find it easier
to obtain a private hire car licence and are often more willing
to provide services in rural areas, albeit only as shared hire
cars. Under the Transport Act 1985, only taxi operators can apply
for a special restricted PSV operators' licence which enable them
to become taxi buses. Private hire cars can only do this by obtaining
a restricted PSV operators' licence. Neither of these mechanisms
has appeared attractive to operators, hence a review of the regulations
governing private hire car operations might be worthwhile to enable
new operators with vehicles with less than nine passenger seats
to enter the market and provide taxi bus type services.
The Contribution of Bus Services to Social Exclusion
3.20 Bus services are a means to an end.
They are a means of enabling people to gain access to work, shops,
education establishments, leisure facilities, medical facilities
and friends. In fact for many people they are essential for maintaining
a fulfilling life. The number of people dependent upon bus services
has declined as car ownership has increased but they have often
become more difficult to serve as the facilities people need to
reach have centralised and often moved to locations easily accessible
by car but remote from traditional bus routes.
3.21 Social exclusion has often been seen
as a rural problem. But it is now becoming increasingly a medium
sized town problem as towns of 25,000-50,000 have often lost facilities
eg hospitals, or their traditional town centres have suffered
decline as retail, leisure and office facilities have sought to
relocate on edge of town sites.
3.22 Quantifying the link between transport
and social exclusion is difficult as is the distinction between
social exclusion and quality of life. In 1986 the County Council
took the decision to give low priority the provision of evening
and Sunday services, given that most of these services were used
for leisure and social purposes. Yet 15 years later the lack of
evening and Sunday services still gives rise to some of the highest
levels of dissatisfaction with bus services, although changing
work, shopping and leisure patterns during this period has contributed
to this view.
3.23 The role of the bus in providing a
link can be made in other ways- by other types of transport service,
by bringing the service to the person eg home deliveries or electronically.
But discussions with groups of people in villages highlight the
importance to their quality of life in having the ability to leave
their village or home environment from time to time and to travel
elsewhere. It is very difficult to place a value on this quality
of life issue.
4.1 The Government in its 10-Year Plan for
transport has set a target for a 10 per cent increase in the number
of people travelling by bus. Although this should not be an onerous
target for the bus industry outside London, the indications from
the last two years point to a further decline in the level of
service in many areas of the country. This includes medium sized
towns in Northamptonshire. This trend will lead to a reduction
in the number of people travelling by bus in those areas unless
the local authority intervenes to maintain services. For local
authorities, the cost of intervention is high, particularly when
set against the background of rising tender prices both for public
bus and home to school transport services.
4.2 Neither the current regulatory nor financial
framework is appropriate for the successful delivery of the 10-Year
Plan objectives. The former needs to give greater powers for local
authorities to enter into quality contracts where the commercial
network has clearly failed to deliver the service necessary to
achieve higher levels of usage and customer satisfaction. The
financial framework needs simplification with the local transport
plan, suitably updated, being the prime mechanism for securing
both capital and revenue funds to assist in the delivery of services.
Consequently there should be less reliance on challenge type funding
which is expensive in terms of bidding resources.
4.3 These changes combined also with greater
freedoms for local authorities to enter into contractual arrangements
appropriate to their areas could encourage greater entry into
the market for small operators currently deterred by the presence
of a larger operator and the complexity of the regulatory and