Deregulation and ownership of buses

[greenline712]

mods note - split from this thread

The deregulation of bus services (Transport Act 1985) was predicated on bus companies determining what routes / journeys were commercially viable, and operating same without subsidy.
In many cases, companies would often pick up journeys at the margins (a 1900 trip on an otherwise commercial service, for example, where a "network benefit" was perceived).

Other journeys / routes that were deemed socially necessary (but not commercially viable) would be supported financially by the relevent Local Transport Authority (usually the County Council).

This actually worked very well in very many cases until the financial strictures of the 2010s, when LTAs found they were unable to finance what they wished to support. It should be noted that some bus companies tried to pick up these lost routes / journeys, but eventually found that there was insufficient passengers travelling, and they were withdrawn.

Simply blaming "deregulation" and "profit-scamming" bus companies does the industry no favours .... for around 25 years the structure actually worked very well. If the changes to the funding of ENCTS passes and reductions in central Government funding of local councils hadn't happened, then the status quo might well have continued.

 

[aron2smith]

The deregulation of bus services (Transport Act 1985) was predicated on bus companies determining what routes / journeys were commercially viable, and operating same without subsidy.
In many cases, companies would often pick up journeys at the margins (a 1900 trip on an otherwise commercial service, for example, where a "network benefit" was perceived).

Other journeys / routes that were deemed socially necessary (but not commercially viable) would be supported financially by the relevent Local Transport Authority (usually the County Council).

This actually worked very well in very many cases until the financial strictures of the 2010s, when LTAs found they were unable to finance what they wished to support. It should be noted that some bus companies tried to pick up these lost routes / journeys, but eventually found that there was insufficient passengers travelling, and they were withdrawn.

Simply blaming "deregulation" and "profit-scamming" bus companies does the industry no favours .... for around 25 years the structure actually worked very well. If the changes to the funding of ENCTS passes and reductions in central Government funding of local councils hadn't happened, then the status quo might well have continued.

Doesn't matter if it worked well for a while, both deregulation and austerity were really disruptive to many areas that got no say on it whatsoever. The cuts in my area were severe, they removed the only direct route to the main rail station and decimated the evening and weekend services which severely limits so many aspects of life. Buses may look quiet but if only one bus fail to show now which seems like all the time with the 251 tbh, the next one is full and standing, especially but not just in rush hour! That is not a way to run the service, especially if we want passenger numbers and modal share to increase. Before my time, but I envy the London Transport and London Country routes that once existed!

Public transport is simply too important to leave to the market and the 1986 to 2016 status quo may have worked but it was never going to last forever and really made no sense that councils had to pay private companies to run buses at quieter times when the lot used to be run together as one system, one network by the council/ transport authority. The places that either franchised or were lucky enough to keep municipal ownership came out of the 2010s stronger than everyone else.

The fact that Central Connect was willing to run only 6 journeys on Saturdays and nothing on Sundays, but with Stansted's funding it can now run the current full timetable of 17 journeys/ day, says it all really. Even if it only carries small numbers, every journey matters. Growing up in London and now living just outside, the contrast couldn't be more stark and frankly we deserve much better as passengers! I don't actually care who runs my bus but I want it to be reliable and run at any time of day that lets me fully participate with activities in my local area and region, the current services don't let me do it and that's to the detriment of my social life, the bus company and the local economy.

 

[Robertj21a]

Doesn't matter if it worked well for a while, both deregulation and austerity were really disruptive to many areas that got no say on it whatsoever. The cuts in my area were severe, they removed the only direct route to the main rail station and decimated the evening and weekend services which severely limits so many aspects of life. Buses may look quiet but if only one bus fail to show now which seems like all the time with the 251 tbh, the next one is full and standing, especially but not just in rush hour! That is not a way to run the service, especially if we want passenger numbers and modal share to increase. Before my time, but I envy the London Transport and London Country routes that once existed!

Public transport is simply too important to leave to the market and the 1986 to 2016 status quo may have worked but it was never going to last forever and really made no sense that councils had to pay private companies to run buses at quieter times when the lot used to be run together as one system, one network by the council/ transport authority. The places that either franchised or were lucky enough to keep municipal ownership came out of the 2010s stronger than everyone else.

The fact that Central Connect was willing to run only 6 journeys on Saturdays and nothing on Sundays, but with Stansted's funding it can now run the current full timetable of 17 journeys/ day, says it all really. Even if it only carries small numbers, every journey matters. Growing up in London and now living just outside, the contrast couldn't be more stark and frankly we deserve much better as passengers! I don't actually care who runs my bus but I want it to be reliable and run at any time of day that lets me fully participate with activities in my local area and region, the current services don't let me do it and that's to the detriment of my social life, the bus company and the local economy.

Are you saying that you are also prepared to pay good prices for this better service?
If you've spent a lot of time using the pretty cheap TfL buses you may well have a rather skewed view on bus fares.

 

[TUC]

In Teesside deregulation led to a 60% reduction in subsidy costs, for a similar sized network. Every part of the country now adopting different models costs more. Why should we want such a poor use of money?

 

[Dwarfer1979]

Buses have to be funded someway, the issue is that the UK has long decided that it doesn't value its bus service to properly fund it through taxes (at least outside London). If you don't have solid and long term funding then private businesses will be better able to run more efficiently and so keep more running for the same amount of limited government funding. Private operators are normally, I suspect we can all think of at least 1 big group who fail here, better at remaining fleet of foot to react to changing circumstances, finding efficient ways of covering work and of marketing what they have got in an attractive way - particularly if you have a good mix of large, medium and small operators in an area.

As others have said, the issue we have run into is that government funding has become even more tight which has coincided with government placing more restrictions and costs on operators (whether you think they are a good thing or not, emission requirements & disability access regs make buses more expensive to buy and run, Open Data & on-board announcements make it more difficult & expensive to run a bus service etc) whilst cutting or controlling income to operators (reducing the fuel duty rebate & concessionary fares where operators now have limited control over how much income they get from a major passenger group) make it harder for operators to provide a comprehensive network. This has particularly undermined the operator mix, it is harder and more expensive to start a new operator than it has ever been (acceptable buses cost more and with concessionary fares you need to be able to operate with little income for up to 6 months before payments kick in) and the pressures on smaller operators is pushing many out. This unfortunately has left us a little too reliant on a single big operator in too many areas and whilst they may be able to deliver the high volume core network they have always been poorly positioned to be the best caretakers for marginal & secondary routes where smaller operators often provided better solutions but there are just fewer of them than there used to be so combined with councils reducing what they can/will fund many of these services have faded away or been reduced to the minimum service level for those with no choice but not a level that will attract discretionary customers.

Until government at any level indicates they are able & willing to put significant funding into bus services it is probably better if they limit their involvement as in my experience councils/government are not good at making decisions like this quickly and there are more worthy destinations for that money (social care) which mean that buses will always be left fighting for scraps just with more scraps taken up with inefficiencies of extra layers of management between councils & operators to manage contracts etc. Without some government funding somewhere in the cycle you will never get a good comprehensive network and at the moment there doesn't appear to be a major party in the UK to commit to even enough to fund a commercial system properly let alone a more comprehensive heavily subsidised system across the country.

 

[mattb7tl]

In Teesside deregulation led to a 60% reduction in subsidy costs, for a similar sized network. Every part of the country now adopting different models costs more. Why should we want such a poor use of money?

Except it doesn't cost more.
If you're refering to the bee network it is a 1/3rd cheaper to operate per KM... The 200 million figure is also the same figure it cost to run the private network when inflation adjusted and assuming you have no added costs since the pandemic, it also includes the maintenance of the metrolink, fare reimbursements, bus stops, bus stations (new high quality one recently opened so that's an extra cost) If you put the cost of that over all the profits of all the private bus companies in the deregulated era it would also be unprofitable. The only thing that has changed financially is that the majority of cost, cash flow, and income are all in one singular place. It was always unprofitable just split apart and there is no significant increase in costs.
A lot of the smear articles on the network are made by management from McGills, the same company which exploits the taxpayer by having singles more expensive than day tickets as the NEC scheme is based on a % of a single manipulating the concessionary fare reimbursement scheme which is taxpayer money.
Franchising is an expensive transition but not an expensive on going cost which is most important.

 

[TUC]

Except it doesn't cost more.
If you're refering to the bee network it is a 1/3rd cheaper to operate per KM... The 200 million figure is also the same figure it cost to run the private network when inflation adjusted and assuming you have no added costs since the pandemic, it also includes the maintenance of the metrolink, fare reimbursements, bus stops, bus stations (new high quality one recently opened so that's an extra cost) If you put the cost of that over all the profits of all the private bus companies in the deregulated era it would also be unprofitable. The only thing that has changed financially is that the majority of cost, cash flow, and income are all in one singular place. It was always unprofitable just split apart and there is no significant increase in costs.
A lot of the smear articles on the network are made by management from McGills, the same company which exploits the taxpayer by having singles more expensive than day tickets as the NEC scheme is based on a % of a single manipulating the concessionary fare reimbursement scheme which is taxpayer money.
Franchising is an expensive transition but not an expensive on going cost which is most important.

I'm referring to West Yorkshire where, if I remember correctly, the Combined Authority's own figures showed that the new system would cost over £11m more than existing arrangements.

 

[mattb7tl]

I'm referring to West Yorkshire where, if I remember correctly, the Combined Authority's own figures showed that the new system would cost over £11m more than existing arrangements.

Also true
WYCA has one of the most ambitious plans to improve buses out of all the major regions within the UK. The cost for WYCA is going to increase substantially no matter the system because of the ambitions. They simply want to spend more on their buses. TfGM was far less ambitious and had more of a focus on integrating their many different forms of transport, filling gaps, and extending hours of operation. This is overall cheaper and will not add much of a cost to the previous existing network which makes it a good comparison.
The same document you reference from WYCA shows that an EP+ would be more expensive long term and provide less economic benefits but has a bonus of being quicker and cheaper short term while franchising is the opposite. One system represents privatisation, one represents public control. If they are going to spend more the people who are more educated than any of us (also third party) say they are better off facing the large transition costs and going for franchising to get the most value and lower on going costs in the future.

 

[Man of Kent]

Except it doesn't cost more.
If you're refering to the bee network it is a 1/3rd cheaper to operate per KM... The 200 million figure is also the same figure it cost to run the private network when inflation adjusted and assuming you have no added costs since the pandemic, it also includes the maintenance of the metrolink, fare reimbursements, bus stops, bus stations (new high quality one recently opened so that's an extra cost)

TfGM's own figures show it costs a lot more than the previous arrangements. The net cost of providing the bus network is now £226m. Previously tendered services and concessionary fare reimbursement came to around £100m. And the figure for all the items you have listed above is budgeted at £344m for 2025-26.

I am told that the "1/3rd cheaper per km" figure comes from comparing the price of a tendered service with that for a busy commercial operation.

 

[Stan Drews]

TfGM's own figures show it costs a lot more than the previous arrangements. The net cost of providing the bus network is now £226m. Previously tendered services and concessionary fare reimbursement came to around £100m. And the figure for all the items you have listed above is budgeted at £344m for 2025-26.

I am told that the "1/3rd cheaper per km" figure comes from comparing the price of a tendered service with that for a busy commercial operation.

Indeed. Not a chance that buses are costing 1/3 less to run under TfGM than they were before. I think that is just a classic ‘smoke and mirrors’ play with statistics that can be made to support just about any agenda, if you try hard enough.

 

[TheGrandWazoo]

Indeed. Not a chance that buses are costing 1/3 less to run under TfGM than they were before. I think that is just a classic ‘smoke and mirrors’ play with statistics that can be made to support just about any agenda, if you try hard enough.

It doesn't take much to highlight that the 1/3 figure is clearly misleading.

The fuel costs the same, the driver costs the same, the maintenance the same... aside from some back office (?), the actual running costs are the same. The operators before weren't making 33% profit before and, whisper it, they are still making a profit now. Except Metroline probably!

 

[Cesarcollie]

Except it doesn't cost more.
If you're refering to the bee network it is a 1/3rd cheaper to operate per KM... The 200 million figure is also the same figure it cost to run the private network when inflation adjusted and assuming you have no added costs since the pandemic, it also includes the maintenance of the metrolink, fare reimbursements, bus stops, bus stations (new high quality one recently opened so that's an extra cost) If you put the cost of that over all the profits of all the private bus companies in the deregulated era it would also be unprofitable. The only thing that has changed financially is that the majority of cost, cash flow, and income are all in one singular place. It was always unprofitable just split apart and there is no significant increase in costs.
A lot of the smear articles on the network are made by management from McGills, the same company which exploits the taxpayer by having singles more expensive than day tickets as the NEC scheme is based on a % of a single manipulating the concessionary fare reimbursement scheme which is taxpayer money.
Franchising is an expensive transition but not an expensive on going cost which is most important.

1/3 per km cheaper to operate…..than what?

 

[mattb7tl]

TfGM's own figures show it costs a lot more than the previous arrangements. The net cost of providing the bus network is now £226m. Previously tendered services and concessionary fare reimbursement came to around £100m. And the figure for all the items you have listed above is budgeted at £344m for 2025-26.

I am told that the "1/3rd cheaper per km" figure comes from comparing the price of a tendered service with that for a busy commercial operation.

In 2022/23, before franchising related costs were included, TfGM’s accounts show overall expenditure at £184 million. Adjusted for inflation, that becomes approximately £205 million. However, that assumes an unrealistic scenario: that under continued deregulation, operators would have required no additional financial support and that infrastructure, staffing, and tram-related costs would remain static despite all evidence to the contrary.

Additionally, there's now a £6 million rise in bus station costs, pushing the adjusted total to around £211 million. This is a conservative baseline, and even modest increases in support for struggling services, or service improvements would close much of the gap between this and the £226 million cost of franchising. It’s also important to note that under franchising, funding is now centralised. TfGM directly receives grant funding that would previously have gone to operators (also millions) so the £226 million isn't an apples to apples increase, but a reflection of having all the costs and funding in one place rather than scattered across public and private sources.

 

[Man of Kent]

TfGM directly receives grant funding that would previously have gone to operators (also millions).

If that is a reference to Bus Service Operators Grant, that was devolved to TfGM in 2017. If it isn't, what grant funding is it?

 

[Numpt33]

The only thing that has changed financially is that the majority of cost, cash flow, and income are all in one singular place. It was always unprofitable just split apart and there is no significant increase in costs.

I am no fan of McGill's however, pretty much every operator HAS to do this - and should do this. The government demanding to paying half the single fare is indefensible, given that drivers and mechanics don't accept a 50% pay reduction for the warm fuzzy feeling of providing a public service. It's an abuse of monopsony power.

If an operator doesn't overcharge singles, they have to cross subsidise this deficit from full fare adults. Which is actually much worse - youre robbing poor people (generalisation, but on the whole, bus users are poorer than average) to pay old people's fares (not means tested) for them. It is an iron law that operators pay suppliers and staff - or it's bankrupt. This rule also applies to Councils, but nobody cares because "profit = murder" or whatever.

Except it doesn't cost more.
If you're refering to the bee network it is a 1/3rd cheaper to operate per KM... The 200 million figure is also the same figure it cost to run the private network when inflation adjusted and assuming you have no added costs since the pandemic, it also includes the maintenance of the metrolink, fare reimbursements, bus stops, bus stations (new high quality one recently opened so that's an extra cost) If you put the cost of that over all the profits of all the private bus companies in the deregulated era it would also be unprofitable.

In the rotten old days the bulk of deadweight costs were routes which the TC/Council wouldn't subsidise, weren't used but were "super important" because it existed in 1929. There were also lots of restrictive practises such as demarcation disputes, services abruptly stopping at administrative boundaries when the demand to keep running further was there (lost revenue), but the biggest cost by far were the totally unsustainable ponzi schemes defined-benefit public sector pensions also went with deregulation and privatisation. These types of pension schemes killed a lot of industry across the western world in the 1970s.

The Metrolink is a deadweight cost - I.e. it doesn't matter how well used it is, fares are set too low for it ever to cover its true cost of operation even if it was always 100% full. Will bus' surpluses be used to fund the Metrolink?

Buses can and do cover their costs from the hard work of earning passengers, and their routes are determined by passengers, not political shenanigans (run it there because us councillors own land near there so we can cash in on some delicious property value uplift). Buses can experiment, take risks, and adapt networks - the public sector can't and won't.

There is a massive contract compliance gravy train cost burden, to ensure that companies actually delivered the contract before releasing funds. This involves very expensive lawyers on both sides which doesn't exist in a deregulate system. Ultimately the idea that public control is better is where I take issue - nobody really thinks Council services are actually well run services. Glasgow Corporation wasted time and energy on whether Orange or Green should be on top - this sort of stupidity isnt something which should eat up the time and energy of a bus operator.

The "lower fares" promise is kind of a mirage, as the money has to come from somewhere, and that is your pocket either as a customer, or as a taxpayer. Council tax is horrendously regressive, but you can vote with your feet if a service is crap. If buses aren't valued now, they will matter even less in the battle between schools, the NHS, Roads, etc. Buses are just too far down the pecking order. Giving mayor's buses as a toy to play with and abuse is not the way to improve bus patronage; Just sell off the car parking spaces to build flats on them and charge for city centre street parking.

 

[Leedsbusman]

It doesn't take much to highlight that the 1/3 figure is clearly misleading.

The fuel costs the same, the driver costs the same, the maintenance the same... aside from some back office (?), the actual running costs are the same. The operators before weren't making 33% profit before and, whisper it, they are still making a profit now. Except Metroline probably!

Also TFGM own the depot and are buying vehicles so taking the capital hit to reduce the revenue budget as they don’t have to pay the operator for depreciation on these assets.

 

[mattb7tl]

I don't particularly care about the cost of maintaining the trams or any other infrastructure costs. I'm stressing the point that the annual cost of running that transport network is roughly where it would have been under privatisation after adjusting for inflation, service & infrastructure improvements and the general industry trajectory of rising costs. The anti-franchising articles are using this as a 'gotcha' but there is no substantial difference in the cost of running the network.

Buses can and do cover their costs from the hard work of earning passengers, and their routes are determined by passengers, not political shenanigans (run it there because us councillors own land near there so we can cash in on some delicious property value uplift). Buses can experiment, take risks, and adapt networks - the public sector can't and won't.

Imagine a convenience store where the taxpayer buys, maintains, and renews your shelving, tills and even the shopfront (that's bus stops, shelters, stations, and now buses..!) then covers a chunk of your utility bills (fuel subsidies, BSOG, & BSOG+) If, after all that, you report a profit on companies house, is that really profit or just a publicly funded illusion of commercial success, that's the reality of the private bus system. The so called risk taking is often from market pressure while any actual risks like serving low income areas or somewhere that isn't an urban corridor is mopped up by the taxpayer.

And as for the claim that the public sector isn’t experimental and adaptable? Honestly, that’s laughable. Some of the UK’s most creative, customer focused, and adaptive bus operators are publicly owned or controlled. Just look at Reading Buses, Nottingham City Transport, Blackpool Transport, and Lothian Buses all award-winning, all delivering high-quality, forward-thinking networks with strong ridership. If innovation were truly the private sector’s strength, you’d expect to see standout examples across the country especially after decades of private dominance instead a whole 70% of passengers in the country are carried by the top five bus companies, and they simply do not hold a candle to those examples and are flat out uninspiring...

There is a massive contract compliance gravy train cost burden, to ensure that companies actually delivered the contract before releasing funds. This involves very expensive lawyers on both sides which doesn't exist in a deregulate system. Ultimately the idea that public control is better is where I take issue - nobody really thinks Council services are actually well run services. Glasgow Corporation wasted time and energy on whether Orange or Green should be on top - this sort of stupidity isnt something which should eat up the time and energy of a bus operator.

It’s true that any form of public service contracting requires oversight but from my view robust accountability isn’t a cost it is a safeguard. Ensuring public money is well spent should never be dismissed as a “gravy train.” If anything deregulation has removed that layer of accountability.

 

[Man of Kent]

I don't particularly care about the cost of maintaining the trams or any other infrastructure costs. I'm stressing the point that the annual cost of running that transport network is roughly where it would have been under privatisation after adjusting for inflation, service & infrastructure improvements and the general industry trajectory of rising costs. The anti-franchising articles are using this as a 'gotcha' but there is no substantial difference in the cost of running the network.

Except that the only example we have so far, Greater Manchester, has seen a massive increase in public sector costs. Capital grants to buy depots and vehicles, which as some operators have pointed out, could have been used for bus priority. Internal staff costs up. And as I have already pointed out, the basic running costs of the network i.e. route subsidies and ENCTS payments, have broadly doubled.

And looking further down the line, will grants be available when the vehicles need replacing? Or, as West Midlands seem to be proposing, can every extra cost be repaid out of the farebox? Like a lot of observers, I shall be very surprised if every authority promoting franchising gets as generous settlements from central government as Greater Manchester has.

Incidentally, Blackpool Council is propping up Blackpool Transport with a massive loan. The company has generally lost money since 2016, although the operation of trams as well as buses makes direct comparisons with other municipal operators difficult. But full marks for presumably using local funds, rather than expecting money to be handed to them on a plate.

 

[Numpt33]

The so called risk taking is often from market pressure while any actual risks like serving low income areas or somewhere that isn't an urban corridor is mopped up by the taxpayer.

Actually poorer areas are usually better served as poor people actually take buses more than the wealthy. Rural areas and wealthy areas are actually bigger commercial risks and less well-served. Complaints about lack of services is due to poorer people's employment being at weird hours, workplaces pushed to peripheral industrial(costs) or inaccessible housing estates (oh look theres the Council's influence again), or the 90 minute Jobcentre commute threshold.

Imagine a convenience store where the taxpayer buys, maintains, and renews your shelving, tills and even the shopfront (that's bus stops, shelters, stations, and now buses..!) then covers a chunk of your utility bills (fuel subsidies, BSOG, & BSOG+) If, after all that, you report a profit on companies house, is that really profit or just a publicly funded illusion of commercial success, that's the reality of the private bus system.

The original plan was for bus companies to be completely responsible for bus stops and timetables. The predicted/desired/intended explosion in the number of operators in 1986 meant this couldnt/shouldn't have been done then. If operators were fully responsible for the location and condition it would mean that if a stop didn't have a legible timetable, the operator could replace/fix things. Bus stops would be appropriately spaced and located according to what works for a good network, not according to those who shout loudest. In general, PTA areas have bus stops appropriately spaced but most shire and borough councils won't take out bus stops which are too close together because of a handful of very loud complainers, which means everyone's bus service is significantly slower.

BSOG was a soft bailout of the nationalised industry which survived as it wasn't viewed as distortionary, it slightly lowers the net cost of operating a service and it is quite simple/cheap to administer. It covers about 5% of the fare, and it's worth £50/year to a taxpayer, or 13p a day - just under 7p a single journey.

Many bus stations were privatised with the operator, so it's a mixed bag, but all bus stations charge operators to use the station on a non discriminatory basis, and I'm quite sure they are financially self-supporting in most cases. Those which aren't often get sold and redeveloped. So it isn't like the bus industry couldn't absorb the withdrawal of BSOG (or it's successors). Roger French's horror file attests to how diligent Councils are with the infrastructure.

And as for the claim that the public sector isn’t experimental and adaptable? Honestly, that’s laughable. Some of the UK’s most creative, customer focused, and adaptive bus operators are publicly owned or controlled. Just look at Reading Buses, Nottingham City Transport, Blackpool Transport, and Lothian Buses all award-winning, all delivering high-quality, forward-thinking networks with strong ridership. If innovation were truly the private sector’s strength, you’d expect to see standout examples across the country especially after decades of private dominance instead a whole 70% of passengers in the country are carried by the top five bus companies, and they simply do not hold a candle to those examples and are flat out uninspiring...

All of those municipal companies which succeed do so because their Councils are very hands-off when it comes to services. The failing municipals; Newport City Transport, and Cardiff Bus (don't know about Warrington's Own) have much more political involvement and this is what is toxic. I believe Cardiff Bus has always had councillors on their board and when they veto fare rises, and get involved in pay/pension disputes, or network decisions they always intervene against change and rob Cardiff Bus of money to invest money in improvements.

Last I looked (a few years ago) CB was losing money. The fact the big 5 exist is to do with consolidation of the industry in the 1990s, which then drives standardisation which was driven by the finance industry.

It's the "Regulation" part which I take issue with, not ownership. The SME or non-FTSE bus companies are often leagues better, albeit there's much more variety due to greater numbers.

It’s true that any form of public service contracting requires oversight but from my view robust accountability isn’t a cost it is a safeguard. Ensuring public money is well spent should never be dismissed as a “gravy train.” If anything deregulation has removed that layer of accountability.

The purest form of accountability is paying passengers using services. Contract delivery is usually about complying with the letter of the contract at minimal cost. If it is in the contract, it'll cost ya. If it's not, it won't get done. The grottiest buses I ever saw in my life were in London, and that will be due to internal cleaning of buses not being easy to audit readily. TfL depend on passengers reporting grotbuses to TfL to prove non-compliance. The operator isn't penalised reputationally for a grotty bus, as it isn't their image being tarnished.

 

[mattb7tl]

Except that the only example we have so far, Greater Manchester, has seen a massive increase in public sector costs. Capital grants to buy depots and vehicles, which as some operators have pointed out, could have been used for bus priority. Internal staff costs up. And as I have already pointed out, the basic running costs of the network i.e. route subsidies and ENCTS payments, have broadly doubled.

I’m not sure where your figures are coming from, but they don’t reflect the actual data in the most recent TfGM accounts for 2023/24. Based on the published Statement of Accounts, there is no evidence of a “massive increase” in the core operating costs of the network due to franchising. To take your specific examples, the cost of supported bus services rose from £37.18 million in 2022/23 to £42.24 million in 2023/24. That is an increase, but it is neither exceptional nor indicative of franchising inefficiency it’s consistent with what we would expect in a commercialised network subject to rising inflation. It certainly isn’t a doubling of cost.

Concessionary travel costs, meanwhile, have actually decreased. In 2022/23, the cost was £61.30 million. In 2023/24, that fell to £54.45 million. This reduction is largely due to the introduction of franchising in parts of the network, where farebox revenue from concessionary passengers is now counted as “revenue foregone” within TfGM's own operations, rather than being reimbursed to external operators, and will be measured differently. If you are referring to the line item “Bus Franchising” in the 2023/24 accounts, the figure of £29.82 million represents more than just operational costs. It includes not only the running costs of franchised services but also mobilisation and implementation costs (expected to drop to £24.5 million) including ones where they haven't even started (or only partly with T2) to collect the farebox revenue at the time of the accounts.

The overall cost of the network is around the ball park of where it would have been in the private network. My very conservative calculation at £211 million (inflation adjusted + bus station infrastructure, both would have occurred under the private system, and not really subjective) I will stress again that figure assumes that the network would be the exact same in 2023, with no extra support for journeys or services, and no service improvements.

 

[edwin_m]

The big potential prize from franchising is an increase in ridership coming from a more integrated and understandable network. If it's working that could generate extra revenue to outweigh any extra cost, and would certainly contribute to wider local objectives relating to accessibility, health and reducing congestion.

Do we have any figures yet to show how that might be going?

 

[mattb7tl]

The big potential prize from franchising is an increase in ridership coming from a more integrated and understandable network. If it's working that could generate extra revenue to outweigh any extra cost, and would certainly contribute to wider local objectives relating to accessibility, health and reducing congestion.

Do we have any figures yet to show how that might be going?

Network patronage has increased by 5%, roughly 7 million extra journeys. A lot of targets they have are above forecast like revenue and tap and go usage. Very positive early indicators and tons of infrastructure planned in the future.

 

[slowroad]

Network patronage has increased by 5%, roughly 7 million extra journeys. A lot of targets they have are above forecast like revenue and tap and go usage. Very positive early indicators and tons of infrastructure planned in the future.

Do we know what the 5% is compared to, and whether any of it is due to lower fares, or other factors not necessarily related to franchising?

 

[edwin_m]

Do we know what the 5% is compared to, and whether any of it is due to lower fares, or other factors not necessarily related to franchising?

Lower fares are related to franchising, because without franchising most routes have to be commercial and will charge the fare they need to be profitable (and in some cases whatever fare they think they can get away with). Public subsidy to reduce fares could be a perfectly valid objective to deliver social benefits, but is virtually impossible in a deregulated environment.

 

[slowroad]

Lower fares are related to franchising, because without franchising most routes have to be commercial and will charge the fare they need to be profitable (and in some cases whatever fare they think they can get away with). Public subsidy to reduce fares could be a perfectly valid objective to deliver social benefits, but is virtually impossible in a deregulated environment.

Maybe, but would still be worth knowing what is doing the “driving”!

I’m not sure where your figures are coming from, but they don’t reflect the actual data in the most recent TfGM accounts for 2023/24. Based on the published Statement of Accounts, there is no evidence of a “massive increase” in the core operating costs of the network due to franchising. To take your specific examples, the cost of supported bus services rose from £37.18 million in 2022/23 to £42.24 million in 2023/24. That is an increase, but it is neither exceptional nor indicative of franchising inefficiency it’s consistent with what we would expect in a commercialised network subject to rising inflation. It certainly isn’t a doubling of cost.

Concessionary travel costs, meanwhile, have actually decreased. In 2022/23, the cost was £61.30 million. In 2023/24, that fell to £54.45 million. This reduction is largely due to the introduction of franchising in parts of the network, where farebox revenue from concessionary passengers is now counted as “revenue foregone” within TfGM's own operations, rather than being reimbursed to external operators, and will be measured differently. If you are referring to the line item “Bus Franchising” in the 2023/24 accounts, the figure of £29.82 million represents more than just operational costs. It includes not only the running costs of franchised services but also mobilisation and implementation costs (expected to drop to £24.5 million) including ones where they haven't even started (or only partly with T2) to collect the farebox revenue at the time of the accounts.

The overall cost of the network is around the ball park of where it would have been in the private network. My very conservative calculation at £211 million (inflation adjusted + bus station infrastructure, both would have occurred under the private system, and not really subjective) I will stress again that figure assumes that the network would be the exact same in 2023, with no extra support for journeys or services, and no service improvements.

Interesting- I saw another calculation which reckoned costs of around £100m a year. Not saying it’s right but it looked pretty convincing.

https://www.freewheeling.info/blog/how-much-does-franchsing-cost#:~:text=In%202021%2F22%20TfGM%20spent,That's%20not%20far%20off.

 

[Dwarfer1979]

Network patronage has increased by 5%, roughly 7 million extra journeys. A lot of targets they have are above forecast like revenue and tap and go usage. Very positive early indicators and tons of infrastructure planned in the future.

This may change if they can keep up the growth in future years now they are in full control but the first quoted passenger growth announced by TfGM was very similar to the growth that my MD was quoting at around the same time for my employers medium sized business in the deregulated provinces. In other words it was no different, and possibly slightly behind the best at this, to the growth rates being experienced by all operators at the end of the recovery from COVID & driver shortages that

And as for the claim that the public sector isn’t experimental and adaptable? Honestly, that’s laughable. Some of the UK’s most creative, customer focused, and adaptive bus operators are publicly owned or controlled. Just look at Reading Buses, Nottingham City Transport, Blackpool Transport, and Lothian Buses all award-winning, all delivering high-quality, forward-thinking networks with strong ridership. If innovation were truly the private sector’s strength, you’d expect to see standout examples across the country especially after decades of private dominance instead a whole 70% of passengers in the country are carried by the top five bus companies, and they simply do not hold a candle to those examples and are flat out uninspiring...

All of the successful municipals run as commercial operators, often with successful ex-big group managers, and there is very little in their networks that would look different to how the big groups run (except possibly slightly better evening services than a big group might have got to). All of the companies you mentioned have actually done the commercial operator practice of simplifying and focussing on the core commercial network at the same time and in a similar way to the big groups, Lothians is the least obvious but the nature & history of the city means it could be done differently in a city like Edinburgh than Reading or Nottingham due to size & density. None of them do much, or any, normal tendered services either commercially or as tenders (in Nottingham those sort of routes are done by independents like CT4N whilst Reading Council have never really seemed to bother with such even where there are gaps). They can invest a little more thanks to not needing to make the same return to owners but they basically work in the same way and I don't think the part of the legislation that made municipals easier to set up was that controversial, there is a case for them if you do them right and they are working in the same market under the same rules on a level playing field.

Interestingly the biggest opponents of franchising at the moment are the municipals as they have the same issues around being able to win franchises as any medium sized operators, they don't have the financial or management depth to be able to compete on such work. There is a big concern in Wales that TfW pushing for franchising could actually finish off the two Welsh municipals as they are suddenly open to international group competition in a market they are ill suited for rather than being in a competitive advantage where their status actually gives them an advantage over incomers.

The one interesting thing that comes out of franchising is that the Combined Authorities very quickly change their views about managing service changes. For years we have been told that operators could make changes too often with not enough notice and that they wanted to limit change dates and increase notice periods. Now TfGM are in charge they appear to be working on 4 weeks notice (when before franchising they were pushing for about 15 weeks notice) and appear to have one change date a month, once they have to deal with the real world very quickly they see that the operators weren't being unreasonable and were just doing their best to manage what the vagaries of real life as best they could.

 

[Tetchytyke]

Interesting- I saw another calculation which reckoned costs of around £100m a year. Not saying it’s right but it looked pretty convincing.

What is particularly interesting in that article makes this point:

However, the model only allowed regulation, not nationalisation. Cities like Greater Manchester, confronted with five bus operators of which four lost money, could probably have simply bought the operators for less than a quarter of the cost of regulation. Assuming that Stagecoach was the only business still making realistic profits, GMCA could probably have bought the lot for about £60m - a lot less than franchising was going to cost. But that option was not open to them. I mentioned earlier that of the big two, only Stagecoach was making serious money. Diamond and Go-Ahead were, respectively, earning profits of £0.9m and £0.4m on turnover of around £30m.

That aligns with my general view that franchising can be, in many cases, the worst of all worlds. You still have huge sums of money leaving the industry into the back pockets of shareholders but you don’t get any of the benefits of private sector innovation (such as it is). You really are buying a dog then barking yourself.

Of course this is all by design. There’s a reason why the Conservatives, and the current Diet Tory Labour Party, won’t let local authorities truly take back control.

All of the successful municipals run as commercial operators, often with successful ex-big group managers, and there is very little in their networks that would look different to how the big groups run (except possibly slightly better evening services than a big group might have got to).

The likes of Lothian prove that the model of ownership doesn’t change much to the end user. Public sector businesses are not intrinsically inefficient any more than private sector businesses are intrinsically efficient.

The advantage to public ownership comes behind the scenes: any profit from the commercial network flows back to the public sector and can be reinvested in other public services. In the private sector those profits flow out of the system into the pockets of offshore hedge funds.

 

[joieman]

Interestingly the biggest opponents of franchising at the moment are the municipals as they have the same issues around being able to win franchises as any medium sized operators, they don't have the financial or management depth to be able to compete on such work. There is a big concern in Wales that TfW pushing for franchising could actually finish off the two Welsh municipals as they are suddenly open to international group competition in a market they are ill suited for rather than being in a competitive advantage where their status actually gives them an advantage over incomers.

The conflict of interest between franchising and municipal operators is a rather peculiar situation. In such circumstances, switching from a municipal model to a franchised model could even be seen as regressive.

 

[mangad]

It's the "Regulation" part which I take issue with, not ownership. The SME or non-FTSE bus companies are often leagues better, albeit there's much more variety due to greater numbers.

I think "often" is the key word here. Not always, not never, but often.

Here's the thing. You can have bad operators, you can have middling operators and you can have good operators. You can have FTSE owned companies, large private operators, small independent operators, publicly owned operators. And you can have any combination of the former with the latter.

Likewise de-regulation was never a panacea for perfect services. You can have good deregulated services, middling ones, poor ones. Same for regulation.
There is no perfect system.

What should be pretty obvious is that the deregulation of 2025 is very different to the deregulation of 1986 in terms of operators, quality and services. I was thinking about this with the launch of the Bee Network. Prior to deregulation my parents house (where I grew up) was served by one bus route run by GM Transport (let us call it route A) that ran every 15 minutes in peak, 20 minutes off-peak. Within a few years of deregulation, there were three routes (A, joined by B and C.) In one direction, eight buses an hour ran. In the other, ten. Three companies running down the same bit of road.

Skip forward a few decades, and only the original route (A) remains. Prior to franchising it had (as it still does) four buses an hour peak, three buses an hour off-peak, served by one operator, Stagecoach. One of the new operators lost its licence to operate due to safety concerns, the other got swallowed up by First who then retreated from the area.

That was the reality of bus de-regulation near my parents. A flurry of activity, new routes, all manner of stuff. And all that remains is the original bus service, running in a very similar way to what happened if deregulation had never happened in the first place. I wonder how often that pattern has been repeated across the country.

(Whilst I haven't named the route for personal privacy reasons, I checked the timetables using the Railmedia Timetable Archive)

 

[Man of Kent]

I’m not sure where your figures are coming from, but they don’t reflect the actual data in the most recent TfGM accounts for 2023/24. Based on the published Statement of Accounts, there is no evidence of a “massive increase” in the core operating costs of the network due to franchising. To take your specific examples, the cost of supported bus services rose from £37.18 million in 2022/23 to £42.24 million in 2023/24. That is an increase, but it is neither exceptional nor indicative of franchising inefficiency it’s consistent with what we would expect in a commercialised network subject to rising inflation. It certainly isn’t a doubling of cost.

Concessionary travel costs, meanwhile, have actually decreased. In 2022/23, the cost was £61.30 million. In 2023/24, that fell to £54.45 million. This reduction is largely due to the introduction of franchising in parts of the network, where farebox revenue from concessionary passengers is now counted as “revenue foregone” within TfGM's own operations, rather than being reimbursed to external operators, and will be measured differently. If you are referring to the line item “Bus Franchising” in the 2023/24 accounts, the figure of £29.82 million represents more than just operational costs. It includes not only the running costs of franchised services but also mobilisation and implementation costs (expected to drop to £24.5 million) including ones where they haven't even started (or only partly with T2) to collect the farebox revenue at the time of the accounts.

The overall cost of the network is around the ball park of where it would have been in the private network. My very conservative calculation at £211 million (inflation adjusted + bus station infrastructure, both would have occurred under the private system, and not really subjective) I will stress again that figure assumes that the network would be the exact same in 2023, with no extra support for journeys or services, and no service improvements.

The budget for 2025/26 presented to the Greater Manchester Combined Authority on 7 February this year. Reprdocued below: all figures in £000s.

Note that operational costs, which presumably cover running the bus stations and so on, are listed separately to the net cost of providing the Bee Network. (And assuming TfGM charged bus station departure fees, they will have lost a chunk of income on that score too). Also, while ENCTS income is still received from the constituent councils, it is no longer spent on the basis of where the passenger travels, but disappears into the Bee Network overall. Hence why I say that the fair comparison is the old tendered services cost plus ENCTS, which hovered around the £100m mark.

Resources​	​
Funding from GMCA​	-322464​
Bus and Metrolink funded financing costs​	-21500​
​	-343964​
Net expenditure​	​
Concessionary Support non-Franchised Services​	3321​
Capped Fares Scheme non-Franchised Services​	1389​
Non-Franchised Tendered Services​	2078​
Bus Franchising net cost​	226304​
Metrolink net cost​	39000​
Operational Costs​	39875​
Accessible Transport​	3700​
Traffic signals costs​	3822​
Scheme Pipeline development Costs​	18165​
Financing​	6310​
Total Expenditure​	343964​
Surplus/(Deficit)​	-​