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The Labour Government's Buses Bill, franchising, quality contracts/partnerships, deregulation.....

geoffk

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I can't find a thread discussing the new government's approach to buses, other than one specially on TfGM franchising.

My view is that franchising is not likely to extend much beyond the metropolitan areas. This is partly because of the likely cost involved but also because smaller local authorities no longer have the expertise in-house as many have reduced their staff levels to cope with statutory transport duties (home to school and special needs transport). We are likely to end up with a mixture of franchising, quality contracts, quality partnerships and plain old deregulation in those areas where local authorities have shown little interest in buses (not naming any names). Then there is the question of competition. Since deregulation, the competition authorities have sought to enforce competition law and prevent collaboration/collusion between operators. If integration is now to take priority, there will need to be a new role for the current body, the Competition and Markets Authority.

Would anyone hazard a guess what the bus scene will look like in, say, 10 years time?
 
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greenline712

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Far too many imponderables to even contemplate an answer. Frankly, I'd struggle to predict quite what the bus industry will look like in 2026 !!!
I would say that you've summed up the situation very well ... if I was to highlight any one aspect, then it would be repealing all aspects of the current competition legislation. That would be a start ....
 

MotCO

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One aspect of the proposed bill is for local authorities to be able to run their own buses. Whilst I take the point that @geoffk made about lack of local authority staff, it does allow local authorities to take over failing bus companies especially where no other operator wanted to take over the routes as happened once in west Wales.



Also, what is going to happen to the £2 fare? I think it would be acceptable to increase it to £2.50 say, but to abolish it would cause dificulty with some bus companies and be an own goal comparable to the Winter Fuel Allowance abolition.

My view is that franchising is not likely to extend much beyond the metropolitan areas.
One of the disappointments with the Manchester franchising operation is that the SME operators lost out, which is really bad news. Small local operators are often more fleet of foot, know the locality well, and can operate with lower expenses (no contribution to corporate overheads for example).
 

ChrisC

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One aspect of the proposed bill is for local authorities to be able to run their own buses. Whilst I take the point that @geoffk made about lack of local authority staff, it does allow local authorities to take over failing bus companies especially where no other operator wanted to take over the routes as happened once in west Wales.
I’m not sure if this would really work on any large scale outside of large cities. For example, Derbyshire Community Transport, which operate a number of bus services around towns and rural areas has recently failed. The County Council have been negotiating with Stagecoach to take over the running of these subsidised routes.
 

Mwanesh

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I can't find a thread discussing the new government's approach to buses, other than one specially on TfGM franchising.

My view is that franchising is not likely to extend much beyond the metropolitan areas. This is partly because of the likely cost involved but also because smaller local authorities no longer have the expertise in-house as many have reduced their staff levels to cope with statutory transport duties (home to school and special needs transport). We are likely to end up with a mixture of franchising, quality contracts, quality partnerships and plain old deregulation in those areas where local authorities have shown little interest in buses (not naming any names). Then there is the question of competition. Since deregulation, the competition authorities have sought to enforce competition law and prevent collaboration/collusion between operators. If integration is now to take priority, there will need to be a new role for the current body, the Competition and Markets Authority.

Would anyone hazard a guess what the bus scene will look like in, say, 10 years time?
You have summed it up nicely.Marginal areas will loose out.I will give an example in Birmingham on the X51 Cannock route.The Nbus ticket was valid on the whole route.Now its only as far as Bloxwich due to Cannock being outside the West Midlands Combined area
 

Magdalia

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My view is that franchising is not likely to extend much beyond the metropolitan areas.
Thanks for starting this discussion.

The Cambridge and Peterborough Combined Authority are doing a consultation on franchising see here:


Welcome to The CPCA bus franchising consultation​

The Cambridgeshire and Peterborough Combined Authority (CPCA) is on a journey to improve bus services for everyone in Cambridgeshire and Peterborough.
To take part in the bus franchising survey, click on Have Your Say.

This is partly because of the likely cost involved but also because smaller local authorities no longer have the expertise in-house
Given their track record I don't have much confidence in the Cambridge and Peterborough Combined Authority taking on the financial risks of franchising.

I have had a look at the consultation report, which did not inspire much confidence either.

I'd be interested in the views of some bus industry experts.
 

Roger1973

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I'm not an 'expert' but...

Some commentators will approach this from the political angle either that franchising is good or franchising is bad. Trying to be practical, and while recognising that a lot of the detail isn't out there yet, but -

As said in the opening post, many local transport authorities reduced their public transport staff in the post-2010 era, and the skills of implementing new things are often no longer there. The skills over the last decade or so have been more in making cuts, spreading what budget is left ever more thinly, and telling people why things can't be done. (I don't mean this as a criticism of the individuals still there - I have been a local authority public transport officer.) If network planning, marketing and information provision moves from bus companies to franchising authorities, there may be some transfer of people from bus operators to local authorities, though.

A lot of the people who left local authorities post 2010 have either entered retirement, possibly earlier than they had intended, or gone in to something else. Some local authorities that have tried to hire additional people in the last few years to implement Bus Service Improvement Plan (BSIP) measures have advertised a few times and not been able to get anyone. However attractive a role, not many people will consider giving up their current permanent job for a short term contract. The 'Bus Centre of Excellence' is supposed to try and make up some of this ground, but may be too little too late in the BSIP process at least.

There is a lot of uncertainty over what happens next - in terms of the £ 2 fare (initially a short term thing post covid, but kicked down the line several times), and ongoing service support via the 'revenue' stream of BSIP / BSIP+ which runs out at the end of March. And a lot of councils are already in or heading for major financial trouble, so any non-statutory spending (which at the moment includes public transport) seems likely to be under pressure for some years to come.

While recognising that the deregulated market is not perfect, and is variable across the country, I get the feeling that a lot of the thinking behind franchising is trying to solve the problems of maybe 30 years ago. There aren't many areas or corridors where there are excess profits being made by monopoly operators, or where resources are being put in to 'wasteful competition' that could provide cross-subsidised resources for additional services elsewhere.

The attitude towards small / medium enterprise operators also seems stuck in the 1990s, in that they seem to be seen as a nuisance running low quality buses and should be eliminated. Many small operators have kept routes going - and in some cases built them up again - after major operators pulled out. It seems morally wrong that small operators are going get put out of business because they don't have the centralised bidding teams that the big groups will have to prepare bids for big franchises, or the resources to expand to run big franchises.

Local authorities' areas do not match natural bus networks (with the possible exception of the Isle of Wight) and in areas where county councils have been abolished and unitary authorities were set up, the local authority areas often don't match urban areas. The Reading urban area, for example, includes suburbs in the east and south that are in Wokingham borough, and western suburbs that are in West Berkshire. How would any of those three authorities do a franchise? Would neighbouring authorities that might be of different political colour and different financial circumstances be able to agree on a joint franchise?

And where's the money to do it all going to come from? Franchising on its own won't instantly produce London levels of services and fares, however much the politicans point to London. Franchising potentially generates more levels of admin than the current system does, and presumably will pass revenue risk to the franchising authority. The London bus network takes a lot of revenue subsidy.

There is a valid political argument about the extent to which bus services should be run as a commercial business funded by passengers or as a worthwhile public service funded to some extent by local or national taxation, but that doesn't seem to have come up yet. And with the current government talking about black holes and spending cuts, I'm not entirely optimistic about it all.
 

gc4946

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I think the main way for local authorities to gain control of local buses would be via one of the privatised operators selling its depots or as a last resort measure. There's the Public Works Loan Board (now the UK Debt Management Office - Wikipedia) that could advance finance to pay for the acquisition. However the management capacity of local authorities regarding public transport has sharply reduced following years of austerity and loss of key expertise ... remember before 1986 deregulation quite a lot of councils had their own passenger municipal departments that had to become arms length operations, this capacity will need to be built up again. Franchising will work in metropolitan areas with greater revenue raising opportunities but in many shire areas partnerships may be a better option.
 

Meerkat

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I think the main way for local authorities to gain control of local buses would be via one of the privatised operators selling its depots or as a last resort measure. There's the Public Works Loan Board (now the UK Debt Management Office - Wikipedia) that could advance finance to pay for the acquisition. However the management capacity of local authorities regarding public transport has sharply reduced following years of austerity and loss of key expertise ... remember before 1986 deregulation quite a lot of councils had their own passenger municipal departments that had to become arms length operations, this capacity will need to be built up again. Franchising will work in metropolitan areas with greater revenue raising opportunities but in many shire areas partnerships may be a better option.
The local authority owning the local depot would make franchising easier, but how does TUPE work for buses? If a new company takes over routes, but from a different depot does that mean they can avoid having to TUPE over the previous franchisee’s staff?
 

Roger1973

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The local authority owning the local depot would make franchising easier, but how does TUPE work for buses? If a new company takes over routes, but from a different depot does that mean they can avoid having to TUPE over the previous franchisee’s staff?

Subject to the disclaimer that I'm not a lawyer or HR person or active trade union rep...

TUPE is a bit fuzzy round the edges, and quite a lot of what is now accepted is based on precedent / case law (tribunal decisions) rather than what was written in to the law in the first place. Some things come down whether the specific circumstances are considered 'reasonable' in law.

TUPE for bus drivers probably happens more often in London than elsewhere, as it's common (although not universal) for drivers to work on a rota where they exclusively or mainly do one particular route. Where routes in London are re-tendered and pass to another operator, drivers who currently work that route are usually eligible for TUPE transfer to new operator, although in practice, old operator will often have vacancies and will offer drivers the option of transferring to another rota (sometimes to another garage) rather than transfer with their existing route to new operator. (my understanding is this has to be an offer open to all drivers affected, rather than picking who to keep) - although those drivers have the legal right to transfer to new operator if they want.

Where drivers are on a rota that involves multiple routes, it can be more complicated, and TUPE may not apply if a driver does not spend a clear majority of their time working on the route that is changing hands. (I don't think there is a percentage of time set in law, but a few Sunday route Y duties on the route X rota, or occasional rest day work on route Z won't make a difference though.)

Many driver contracts in London have a clause that drivers can be re-located (possibly with some financial compensation) to another garage, so what's in drivers' existing contracts may also play a part.

I understand (but don't know the detail) that there was one tribunal case in London where a TUPE transfer was considered 'unreasonable' after a route moved garages from one side of London to the other following re-tender, and the drivers were entitled to redundancy pay rather than compulsory TUPE transfer.

I'm not sure what happens where a route network changes. For example some of the recent changes in London have involved route A being withdrawn, and routes B and C extended to cover parts of it, which may have reduced work at one operator and increased it at others. I've not been involved in London for a few years now and don't remember anything like that.

What is happening / has happened in the Greater Manchester patch may be more relevant to some of this - I've no knowledge of, or involvement in that.
 

TheGrandWazoo

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The local authority owning the local depot would make franchising easier, but how does TUPE work for buses? If a new company takes over routes, but from a different depot does that mean they can avoid having to TUPE over the previous franchisee’s staff?
I am not a lawyer or HR expert, but TUPE relates to the work that is being undertaken. Therefore, if you have staff predominantly dedicated to an operation (i.e. they spend most of their time on that work), then they have the right to be transferred and their terms and conditions of employment being protected.

The reality in many bus operations outside London is that most staff are not dedicated to a particular route so if you lose a tendered service, it is fair to argue that staff aren't dedicated. Also, most firms are so desperate to keep staff for existing work that they try to retain them as best they can. So even in London, if Arriva loses a route to Go Ahead (for example) and the drivers are dedicated to it, they may have the right to transfer but Arriva may well try to retain them. That may appeal to the staff - don't have to move, existing depot closer to home (walk? cycle?). Also, depending on their pension scheme (which isn't covered in TUPE), that may well be a reason to stay.

EDIT: I was typing as @Roger1973 was and he raises the issue of reasonableness to transfer. Whilst not set in stone, it is usually accorded that if the new place of employment is >10 miles away, it is unreasonable to expect people to transfer and a redundancy situation occurs.
 

Meerkat

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Thanks for the above. I guess that means if a local authority tenders a biggish franchise (ie all one town’s routes) it’s likely that all the staff TUPE.
This is where I struggle to see how the new bidders can be cheaper than the incumbent, make a profit, and cover their bid and set up costs (unless the incumbent has really let things slide).
 

317 forever

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I think that operators see even greater uncertainty than we do, what with the £2 fare, franchising, the potential for new municipal operators etc.

So, although a few coach operators are changing hands - taken over by Go-Ahead for example - there are noticeably few bus operations being bought or sold.

There are still changes, a notable case in point being Arriva pulling out of Aylesbury & High Wycombe, but this was decided before the General Election yet alone more detail emerging about Labour aspirations and plans.
 

Roger1973

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Thanks for the above. I guess that means if a local authority tenders a biggish franchise (ie all one town’s routes) it’s likely that all the staff TUPE.
This is where I struggle to see how the new bidders can be cheaper than the incumbent, make a profit, and cover their bid and set up costs (unless the incumbent has really let things slide).

The financial aspect is one other thing where I'm unconvinced about big franchises.

While I'm not going to claim that the London system is perfect, each route (generally) a separate franchise, and there are multiple operators in London (albeit less than there were at one time) - there are few bits of London where one has a complete monopoly, and even where they do, if a few routes in one area come up to tender together, it can be worth another operator considering opening a new site outside their existing patch.

To some extent at least, this means that operators can't extort unreasonably high prices out of TFL, or impose unreasonably bad wages / conditions on drivers, as there are going to be other operators not that far away.

Where new monopolies are created, I'm not so sure it will be good for workers, and any new franchise contract is going to have to have a rational way of dealing with changes to the network over the life of the franchise without the operator being able to charge what they like for anything that wasn't in the original contract (which is how many outsourcing contracts that offer a headline initial 'saving' make money...)

EDIT: I was typing as @Roger1973 was and he raises the issue of reasonableness to transfer. Whilst not set in stone, it is usually accorded that if the new place of employment is >10 miles away, it is unreasonable to expect people to transfer and a redundancy situation occurs.

Yes, although I think there has been case law / tribunal decisions that the higher up you are, the more reasonable it is to move locations. Expecting (for example) a part time cleaner who lives round the corner from their workplace to travel 10 miles each way might be less reasonable than a higher paid full time worker. I don't know if travel time / cost would be a factor in a tribunal decision as well as just distance.

Another strand to TUPE is it is harder to apply to support / management staff. If the loss of route/s at re-tender means that a depot now needs fewer engineers / supervisors / controllers, it's usually not possible to identify that any of them are associated with a particular route / contract.

If an entire depot operation changes hands (in the way that a few London garages have been sold as a 'going concern') then I would have thought that the controllers / engineers etc based there would TUPE to the new owner as well.

But head office / regional office level people probably wouldn't.
 
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geoffk

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On the road competition seems to have mostly died a death and, if integration is to be part of the Government's agenda, why not apply the "not primarily abstractive" test to new bus routes in areas without franchising or quality contracts, as happens now with proposals by open-access train operators The ORR does this and could do the same for buses, after all it is the Office of ROAD and Rail. In that case, the CMA would cease to have a role except perhaps in takeovers.

At the recent TravelWatch SouthWest conference, Giles Fearnley, former MD of First Bus, felt the Jersey or Guernsey models could be a way forward, suggesting that operators there have more commercial incentive than in the London or Manchester model and share some of the risk, but I don't know any of the detail and have never been to the Channel Islands. Stagecoach SW is taking over operations in Guernsey next year.
 

Bletchleyite

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At the recent TravelWatch SouthWest conference, Giles Fearnley, former MD of First Bus, felt the Jersey or Guernsey models could be a way forward, suggesting that operators there have more commercial incentive than in the London or Manchester model and share some of the risk, but I don't know any of the detail and have never been to the Channel Islands. Stagecoach SW is taking over operations in Guernsey next year.

I would agree that the Jersey/Guernsey model of a franchise type contract covering an area with the subsidy defined in advance (if any) and the minimum service provision part of that, but with the bus operator largely able to get on with it, is going to be the best model for small to medium towns/cities where the Council isn't going to have the skills to plan and operate effectively and with adequate quality, and where rail has little or no input into local transport needs. I think that model would work very well in, for example, Milton Keynes, or a group of towns centred on Aylesbury/High Wycombe.

I don't think it would work well for large cities like Manchester or London, where having a public body coordinating all public transport (i.e. a classic PTE reinvented) is in my view the best likely approach.
 

Ghostbus

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Nothing much is going to change in the lifetime of this parliament. Too many delays.

In ten years time it's still going to be a patchwork, a postcode lottery, where nothing can or will be done unless the DfT thinks it's a good idea.

Some will benefit, with a clear bias to urban areas and the extremely socialist concept of having an "authority" to manage an "area" that is so large individual citizens and even whole towns don't really matter, and wasting millions on follies is simply the routine cost of government. Most of us will be left behind.

The dream (nightmare?) of council owned and managed bus fleets for all, will be as fanciful then as it was in 1990.

Depressing, isn't it?
 

johncrossley

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The financial aspect is one other thing where I'm unconvinced about big franchises.

While I'm not going to claim that the London system is perfect, each route (generally) a separate franchise, and there are multiple operators in London (albeit less than there were at one time) - there are few bits of London where one has a complete monopoly, and even where they do, if a few routes in one area come up to tender together, it can be worth another operator considering opening a new site outside their existing patch.

To some extent at least, this means that operators can't extort unreasonably high prices out of TFL, or impose unreasonably bad wages / conditions on drivers, as there are going to be other operators not that far away.

I was a bit sceptical about full depot tendering but it seems there were many competing bids for the Greater Manchester franchises, including firms totally new to the region, such as Metroline, the big winner in Tranche 3. By contrast, competition in the route by route system in London is much less. Depot wide bus tendering is common abroad and is of course widely used for tram and rail concessions.
 

Meerkat

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I was a bit sceptical about full depot tendering but it seems there were many competing bids for the Greater Manchester franchises, including firms totally new to the region, such as Metroline, the big winner in Tranche 3. By contrast, competition in the route by route system in London is much less. Depot wide bus tendering is common abroad and is of course widely used for tram and rail concessions.
Abroad they don’t have TUPE, which protects workers but restricts options for change by a new operator.
 

Meerkat

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They do have TUPE in the EU. However, whilst the general approach is similar, the application varies in different countries.
Sure I read that in Germany new train franchises have to recruit all their staff - they don’t automatically transfer from the old provider, and might not transfer at all (particularly if DB is sabotaging private operators again…..)
 

Roger1973

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I was a bit sceptical about full depot tendering but it seems there were many competing bids for the Greater Manchester franchises, including firms totally new to the region, such as Metroline, the big winner in Tranche 3. By contrast, competition in the route by route system in London is much less. Depot wide bus tendering is common abroad and is of course widely used for tram and rail concessions.

Yes - my concern was more for what happens once the franchise is awarded if the franchising authority wants changes, or if the franchise operator finds it has done its sums wrong (or circumstances change in some way) and they want out.

Another strand to it all is the cost of putting all these bids together - passengers somewhere on each group's network are going to have to pay for the cost of preparing both successful and unsuccessful bids.
 

greenline712

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One of the reasons that London tenders (in the main) single route contracts is to allow SME operators to bid ... it opens out the market more widely. In the past, this did work, although more recently other barriers have kept the SME operators out.

I'd say there was more competition possible in London !! It is also possible for operators to group route bids at the bidding stage .... "give us routes 223, 232, 244, and we'll discount the total price by 5%".

In Manchester, we have seen operators with a good operational record fall out of the big tranche bidding, simply because the big boys have the size to bid big. There is a value in involving SME operators .... if nothing else it gives new entrants to the market some opportunities.
I believe that Manchester will come to regret the big tranches, especially at contract renewal time ..... no competition!!!
 

johncrossley

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I'd rather play it safe with big companies than risk smaller firms. The experience in London with the smaller operators has been mixed.

I believe that Manchester will come to regret the big tranches, especially at contract renewal time ..... no competition!!!

Given there was a lot of competition this time around, why do you think that will be any different in the future?
 

greenline712

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I'd rather play it safe with big companies than risk smaller firms. The experience in London with the smaller operators has been mixed.



Given there was a lot of competition this time around, why do you think that will be any different in the future?
Because, effectively, the only operators big enough to compete now are Stagecoach; GoAhead .... and that's about it! Arriva might pull themselves together, First have basically quit the city; NatEx seem not to want to move outside their heartland (apart from Dundee, which was a purchase, not tendering).
The SME operators will have had their fingers burnt .... Metroline was a bid from the left-field!!

I'm not convinced that franchising per se will improve buses in Manchester .... on-time performance seems to be stagnating at around 75%, so it may end up being an expensive exercise for not much improvement. Still, it's with us now .... we'll see in five years time if the experiment will have worked.
 

johncrossley

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Because, effectively, the only operators big enough to compete now are Stagecoach; GoAhead .... and that's about it! Arriva might pull themselves together, First have basically quit the city; NatEx seem not to want to move outside their heartland (apart from Dundee, which was a purchase, not tendering).
The SME operators will have had their fingers burnt .... Metroline was a bid from the left-field!!

First still operate one of the small Bee Network franchises.

There were something like 8 bids for Tranche 1, so some of the bidders didn't have a major presence in the area. One of the main reasons for whole depot franchising is to open up the competition to companies outside the region. So the Metroline bid wasn't *left field", it was by design.
 

TheGrandWazoo

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First still operate one of the small Bee Network franchises.

There were something like 8 bids for Tranche 1, so some of the bidders didn't have a major presence in the area. One of the main reasons for whole depot franchising is to open up the competition to companies outside the region. So the Metroline bid wasn't *left field", it was by design.
First has a very small operation.

If the idea was to open up competition to companies outside the region... well, it only partially succeeded with one party being successful out of three tranches.

Perhaps even more pertinently, there has been a reduction in the parties involved so no SMEs, and with Arriva and Transdev now being ousted.

I'm not convinced that franchising per se will improve buses in Manchester .... on-time performance seems to be stagnating at around 75%, so it may end up being an expensive exercise for not much improvement. Still, it's with us now .... we'll see in five years time if the experiment will have worked.
Indeed, and I have posed the question before @greenline712. Merely painting buses yellow, or having a ticket inter-availability isn't going to achieve any meaningful change in patronage. It's about getting buses to move quicker across the region and being more reliable.

We're seeing over the last 10 years in London that bus patronage has been falling and that's against a background of population growth. Slow down buses, and incentivise operators to pad out timetables because of onerous penalties, is not going to make people give up their car for even the most straightforward journeys.
 

MotCO

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We're seeing over the last 10 years in London that bus patronage has been falling and that's against a background of population growth. Slow down buses, and incentivise operators to pad out timetables because of onerous penalties, is not going to make people give up their car for even the most straightforward journeys.
Agree, particularly if you're slowing down traffic with 20 mph zones, LTNs (the scheme in Streatham had to be reversed after horrendous traffic jams), and reducing two lanes to one to create cycle lanes which adds to traffic congestion.
 

johncrossley

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Agree, particularly if you're slowing down traffic with 20 mph zones, LTNs (the scheme in Streatham had to be reversed after horrendous traffic jams), and reducing two lanes to one to create cycle lanes which adds to traffic congestion.

These things have nothing to do with franchising and can be with or without franchising.
 

markymark2000

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One of the reasons that London tenders (in the main) single route contracts is to allow SME operators to bid ... it opens out the market more widely. In the past, this did work, although more recently other barriers have kept the SME operators out.

I'd say there was more competition possible in London !! It is also possible for operators to group route bids at the bidding stage .... "give us routes 223, 232, 244, and we'll discount the total price by 5%".

In Manchester, we have seen operators with a good operational record fall out of the big tranche bidding, simply because the big boys have the size to bid big. There is a value in involving SME operators .... if nothing else it gives new entrants to the market some opportunities.
I believe that Manchester will come to regret the big tranches, especially at contract renewal time ..... no competition!!!
London's model encourages existing operators to bid reasonably as they will want to keep their depot costs covered. In Manchester there is no need for existing firms to bid cheap to keep their business going. No loss if they don't win. As they won't have any shut down costs or ongoing costs.

In London operators keep the depot. Much better than Manchester where every time the depots transfer operators, they will have to be redecorated with the new operators logos and stuff. New operators policies in place etc.

In London drivers can keep with the operators they like. In Manchester as we have seen, significant numbers of staff have transferred depots just to stay with the operator of their choice. Drivers will have to keep transferring operators as/when contracts change. That is no good for drivers morale.

Manchesters model is worse for drivers, worse for operators and worse for the contract bids.



I think if Manchester insists on having some bigger group lot bids, routes which could be operated by one or multiple depots should be tendered separately. Route X50 for example could be Diamond Eccles, Metroline Hyde Road or Stagecoach Queens Road. Due to TFGMs stupid franchising contacts, the X50 is going to be ran by Wythenshawe! Despite 3 depots being better for it. 17/18 too from Oldham, nowhere near the routes. A colossal mess all because of the poor contract system.
 

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