Background

The Bus Services Bill was introduced into Parliament last month.  Despite generating considerably more public transport journeys than any other mode, governments rarely pay too much attention to buses.  This is the first significant piece of new legislation on buses since John Prescott’s Transport Act sixteen years ago and is thus deserving of our attention.

With the exception of a handful of remaining municipal companies, for example in Nottingham and Reading, bus services in Great Britain are operated by private companies:  the ‘big five’ are Stagecoach, First, Arriva, Go Ahead and National Express.  In London, bus services are run under contract to Transport for London.  Elsewhere, following deregulation introduced by Margaret Thatcher in 1986, private companies are generally entitled to run any services they like so long as their drivers are appropriately qualified, their vehicles safe and their routes and timetables are registered with the Traffic Commissioner in their area.  Local authorities have a duty to assess the needs of their residents and the power to commission bus companies to top-up those services which cannot be run at a profit.

The Competition and Markets Authority (previously the Competition Commission) seeks to ensure that there is fair competition between private companies in the bus market.  Whilst open competition can benefit passengers it can also work against their interests if too rigidly enforced.

The Transport Act 2000 sought to address the shortcomings of the market by introducing statutory quality partnerships and quality contracts schemes.

Quality partnerships encouraged cooperation between the local authorities, who are responsible for the infrastructure (such as stops and shelters, and bus lanes) and operators, who are responsible for running the services.  Local authorities would invest in enhancements to the infrastructure and operators would in turn introduce improvements to their services (operators who did not do so would not be allowed to use the enhanced infrastructure).

Quality contracts schemes (QCS) effectively reversed deregulation, enabling local authorities to specify routes, timetables and fares and put all services in their area out to tender, keeping the revenue and reinvesting it in services.

Local authorities were under a duty to consult before proceeding with either quality partnerships or quality contracts schemes.  Quality partnerships have proved relatively popular.  However, despite further refinements in the Transport Act 2008 designed to make it easier to in introduce quality contracts schemes, not a single one has ever been agreed.

The difficulties of introducing a quality contracts scheme were brought to a head in the North East last year when a proposed scheme, long in the planning, on which there had been substantial consultation, fell foul of the Opinion of the QCS Board, who deemed it to have failed three of the public interest tests set in the legislation and also to have breached their statutory consultation duty by failing to re-consult to correct erroneous statements.  Although not a legally-binding judgement, it did reinforce the challenge of overcoming the legal barriers to re-regulating set out in the legislation, compounded by the entrenched opposition of the major bus operators who risked losing profitable businesses they had developed over a long period of time.

Meanwhile, the number of people using buses continues to fall, while fares (except for older and disabled people who qualify for free bus journeys in England, Wales and Scotland) continue to rise.  Year-on-year reductions in government funding for local authorities have resulted in significant cuts to socially-necessary bus services.

Bus Services Bill 2016

The It is against this background that the Government has introduced its Bus Services Bill, which is currently going through the House of Lords prior to its introduction into the House of Commons.

The Bill, which applies only to England, introduces stronger partnership arrangements.  The current ‘Quality Partnership’ scheme now becomes ‘Advanced Quality Partnerships’. The big change is that the authority no longer has to commit to infrastructure improvements (e.g. bus lanes) as its part of the deal.  Its contribution can now be on things like parking or traffic management policies instead, and on marketing.

There is a new tier of partnership called ‘Enhanced Partnerships’ (EP). These are designed to apply to a wider geographical area and can set more criteria than can an Advanced Partnership.  An EP can include things like frequency, timetables, vehicle specifications, payment methods, ticketing structure.  But EPs cannot dictate the price of the bus operator’s own tickets or compel them to run services they do not wish to operate

New franchising powers giving full control to authorities replace the current Quality Contract Scheme legislation.  New powers to franchise services would be made available to combined authorities with directly elected Mayors to allow them to take control of their services as Transport for London does in London.  Applications from other local authorities will be considered by the Secretary of State on a case by case basis.

Partnerships (both forms) and franchises allow the authority to specify multi-operator tickets and to market and promote these. EPs and franchises allow them to go further – e.g. setting the price of the multi-operator ticket.

The Bill also includes powers, through secondary legislation, to release open data on routes, timetables, punctuality and fares. Through open data, it is intended that app makers will be able to develop products that passengers can use to plan their journeys.

The Bill is intended to dovetail with the recently passed Cities and Local Government Devolution Act 2016 which provides for directly-elected mayors to combined local authorities in England and Wales and to devolve housing, transport, planning and policing powers to them.

Consultation provisions

There are four provisions in the Bill which require consultation:

• Advanced quality partnership schemes (s.1 which amends s.113 of the Transport Act 2000): s113G sets out the notice and consultation requirements, including a list of stakeholders who must be consulted (including organisations representing users of local services and ‘such other persons as the authority or authorities think fit)

• Franchising schemes (s.4 which amends s.123 of the Transport Act 2000): notice requirements are set out in s.123C and consultation requirements in s.123E, consultation document requirements in s.123F and response to consultation requirements in s.123G.

• Advanced ticketing schemes (s.7 which amends s.134 of the Transport Act 2000): s.134D sets out notice and consultation requirements.

• Enhanced partnerships plans and schemes (s.9 which amends s.138 of the Transport Act 2000): notice and consultation requirements are included in s.138F.

Secondary legislation, still to be published, should shed further light on exactly what will be required.

The Institute View

The Bill introduces several new statutory provisions to consult.

References in the Transport Act 2000 are less than completely clear about whether the general public must be consulted, although the Institute believes that requirements to give notice in local newspapers indicates that Parliament intended that they should be.  The notice requirements in the current Bill provide more flexibility to local authorities and while they list stakeholder groups who must be consulted, the list does not specify members of the public.  That is not to say that authorities will not seek wider public support for their preferred approach, particularly where they envisage strong opposition from bus operators, as is likely to be the case with franchising.

Conversations with civil servants briefing those drafting the legislation indicate that they see consultation as a spectrum: consultations with key stakeholders are likely to suffice for the simpler agreements; local authorities and bus companies should not seek to proceed with franchising or more ambitious enhanced partnerships without consulting the public.  This seems sensible.

A number of authorities can be expected to be attracted by the opportunity to take back control of their own bus services.  Any proposal to go down the franchising route must be accompanied by an assessment which compares this approach with alternatives and considers the performance of the proposal in relation to affordability, value for money, practicability and consistency with existing policies (s.123B).  This assessment is subject to an auditor’s report (s.123D), both of which must be published (s.123E).  It remains to be seen whether these requirements will prove easier to satisfy than those which related to quality contracts schemes.  Some authorities may conclude that they can achieve all or most of their key objectives by opting for enhanced partnerships which impose less-demanding requirements.

The requirement to consult “such organisations appearing to the authority or authorities to be representative of users of local services as they think fit” may be expected to stimulate the growth and development of such groups as well as questions about their representativeness.  User groups believe they should have a say in the monitoring of the effectiveness of any new arrangements.

In the short term, the new arrangements are unlikely to completely stem the flow of cuts to bus services resulting from reductions in funding.  Public consultation will continue to be required.

Local authorities are likely to be judged on how they adhere to the spirit of their various new obligations and deliver best practice consultations to stakeholders and the public, and not just the letter of the law.

Relevance

This briefing is of particular relevance for Councillors and Council officers, LEPs, bus operators, and consultation and public engagement lead officers.

Further insights

Notes are published by the Institute in good faith as a member benefit, but the information provided cannot be relied upon as constituting advice giving rise to any legal or other liability whether express or implied.

This is the 16^th Briefing Note; a full list of subjects covered is available for Institute members and is a valuable resource covering so many aspects of consultation and engagement