But ownership doesn't change under Franchising. The entire burden of everything falls on the taxpayer and the operator is guaranteed a profit win, lose or draw. We've heard that the Manchester rounds have had significant underbidding by operators, although whether that's to get a foot in the door or test the market or reflective of lower costs it's too early to say.The ownership model is the problem, though.
We see it time and time again in the bus industry that the private operators will take the money from the core daytime service on a route then dump the ‘marginal’ early/late/Sunday service on a route on the taxpayer. Look in Bradford, First have pretty much packed up and gone home by 9pm, the only later buses you’ll see now are on WYPTE tenders, or Transdev Keighley.
Of course there isn't just one model of Franchising, but we all know that the TfGM model is the one that is going to be adopted by all Labour authorities (i.e. all of them), which involves the taxpayer both specifying and picking up the revenue risk. If it were me, I'd do franchising more like on the railways in OPRAF days, i.e. say "our core budget is £x, we may also be able to get extra funding of £y - tell us what you can guarantee for that price, what you think you'll also be able to achieve in an ideal world, and what enhancements the extra funding might bring and the operator whose core service provides the best coverage to the most people wins"