Franchise the buses? You need money in the tank

There are issues surrounding calls for the franchising of local bus services says Stagecoach East managing director.

I can understand why some people find the idea of franchising our bus services an attractive one.

What’s not to like about the concept of providing community bus services where and when people need them, including a comprehensive service for rural areas, and all at a price that’s affordable for everybody – without any need to factor in profit?

Keeping the wheels turning

Unfortunately though, the issue is not that simple. Whether you opt for a commercial operation or a council-controlled franchise, the wheels only turn if there is enough money to put fuel in the tank.

The North-East spent two years investigating the business case for franchising, only to reject it as an option once they worked out that the entire operation would run out of money by year three.

Manchester is currently spending £11.5m on a feasibility study to explore franchising across the metropolitan area. That’s £11.5m of public money being spent on a possibility that may be discarded with zero return for local bus users. When many public services are already at breaking point, isn’t there a better way to invest this money?

And if the feasibility study comes back with a thumbs-up to franchising in Manchester, the Combined Authority will then have to find millions more to recruit a sufficiently experienced team and fund the behind-the-scenes infrastructure to support the operation – all before bus users experience any change to their service, whether good or bad.

Franchising was approved in London. How much do you think the Transport for London office building, pictured below, cost taxpayers?

In my opinion, any government funding that’s made available for public transport should be spent on improvements that will directly benefit customers – not wasted on buildings or consultations that may or may not make a difference at some point in the future.

Community bus services

We receive regular complaints from members of the public who feel frustrated when their local service has to operate on a reduced timetable or is cut altogether. This is happening more frequently than it used to, and it frustrates us too.

We want to provide an excellent community service but, as a commercial operation, we simply can’t fund unprofitable routes over the longer term. Doing this would put any business at risk. It would jeopardise the salaries that our drivers, mechanics and office staff, and their families, rely on.

For many years, councils across the country have quietly stepped in to subsidise rural and other less popular routes. This has been done as a valuable community service, without fanfare. Visually, you can’t see a difference between a subsidised and a profit-making bus service – the buses all look the same and the subsidy isn’t flagged up in red letters along the side. The only clue, possibly, is in the number of passengers on board.

However, government cuts over past years are now biting hard and councils are struggling to balance their budgets without impacting frontline services. Local authority bus budgets have fallen by one-third across the UK. With less government money available to subside community bus services, bus companies across the country are forced to offer fewer routes or significantly reduced timetables.

Would franchising solve this? It hasn’t done so in London, where the franchising model has to be subsidised by the taxpayer to the tune of £600-700m every year. I’d suggest sums like Manchester’s £11.5m could go a long way towards supporting the bus services that already exist for the community, without any need to reinvent the wheel. In addition, councils already have the means to stipulate routes, frequencies and fare structures as part of a ‘quality partnerships’ approach. Franchising doesn’t offer anything new here.

Profit and passengers

Profit is necessary, because a bus company in profit has the means to reinvest in vehicles and technology that make a journey comfortable for passengers. From leather seats to mobile charging points, free wifi, and the recent introduction of contactless payment technology, it’s profit that enables us to upgrade our buses every year and it’s our passengers who benefit.

As a company we are also intentional about trying to future-proof our services, with sustainability in mind. For example, our latest fleet of Park & Ride buses is fitted with stop-start technology so that the engines cut out automatically when a bus is caught in traffic. We are also in discussions about the potential for electric buses for the city. In these ways, we contribute to the ‘clean air’ agenda in Cambridge – but our ability to innovate is dependent on having profit to reinvest.

Although they wouldn’t coin the term ‘profit’, a well-run franchising operation would still need to factor in a surplus in order to facilitate these sorts of improvements by bus operators. A franchising operation that’s run on a shoestring would quickly degenerate into a quality of service that few passengers would want to use.

Furthermore, a franchising model would transfer the financial risk from the bus operator to the public purse. The local authority would enter into a contract requiring bus operators to deliver specified routes on their behalf. Bus operators would get paid, by the council, whether or not those services were attracting enough passengers to cover the cost of maintaining the route. Any losses would become the council’s – and therefore the taxpayers’ –responsibility.

Congestion distorts the picture

As an organisation staffed by fallible human beings, we’re not perfect. We know that, and our goal is always to deliver the best service that we can. However, issues beyond our control, such as unpredictable congestion, make our job extremely difficult.

It’s easy to make a sweeping statement to say that bus franchising is the answer to everything, when in reality there are plenty of smaller, practical details that would make a huge difference to the reliability of bus services in and around Cambridge – and at minimal cost. Smart traffic lights that respond to traffic flow. Bus stops that aren’t positioned to cause traffic tailbacks. Sensible bus lane planning, that keeps buses moving from the outskirts of the city right into the centre.

No one seems to want to talk about these practical issues though. Perhaps they don’t grab enough headlines.