REVEALED: The economic dangers of the National Bus Strategy

As Parliament comes back into session, there is an urgent need to raise the alarm on the National Bus Strategy. As further detail has emerged this summer, it is clear that the Strategy is in fact an accelerated program of ‘Enhanced Partnerships’ – the purpose of which is to revive the failed policy of bus deregulation. Nearly every local authority in England has now been coerced into starting this path, by the threat of losing access to all future bus funding.

In July, the National Bus Strategy became a source of international controversy when the former UN Rapporteur for Poverty, Philip Alston, accused the UK government of ‘doubling down’ on its ‘extreme form of bus privatisation’, despite already being in breach of multiple human rights obligations. He also raised serious doubts whether the Strategy has any cost-benefit analysis or evidence-based policy behind it. Our investigation now confirms his suspicions that the government has no economic case to offer.

No economic case for the National Bus Strategy

In a recent FOI response, the Department for Transport confirmed to us that they have not conducted any cost-benefit analyses or demand forecasts comparing deregulation with Enhanced Partnerships, franchising and municipal ownership; except for an extremely limited and outdated 2017 study. This is further confirmed by the Department for Transport’s new ‘areas of research’ corporate report, which includes at least a dozen questions relating to unresolved issues in the National Bus Strategy; strongly emphasising the need for economic research, as well as private vs. public operation and the barriers for devolved transport policy. Indeed, the National Bus Strategy itself points out multiple areas requiring further policy work, including the ban on municipal ownership, which it says is ‘ripe for review.’

The truth is that the public control of buses was never intended to be a realistic option for local authorities. Despite promising to update ‘incompatible’ 2017 guidance on Enhanced Partnerships and franchising in Spring, the government failed to meet this commitment in time for the initial deadline of June 30th. This means that nearly every local authority has now been coerced into making a statutory declaration towards an Enhanced Partnership (EP), without the facts in front of them. To add insult to injury, the EP guidance was updated just one day after the deadline, and the guidance for franchising remains to be updated.

‘Bus Service Improvement Plans’ are a public investment giveaway to bus companies

The second stage of the Strategy is now underway and local authorities must complete a ‘Bus Service Improvement Plan’ (BSIP) by October 31st to remain eligible for funding. BSIPs are ‘joint funding proposals’ between councils and bus operators, due to be judged by criteria that revolves almost entirely around short-term measures. As this is an extra, non-statutory stage to the Enhanced Partnership, public consultation is strongly discouraged, despite the fact that BSIP content is expected to be almost fully replicated in the form of an ‘EP Plan’.

The primary condition of BSIP funding is for councils to commit to ambitious public investments – especially an increase in bus priority – while bus companies are encouraged to form a ‘collective joint position’ and a ‘shopping list’ of demands from the earliest possible stage. Invitations for ‘reciprocal investment’ are to be ‘heavily weighted’ towards what local authorities can provide, to allow for the commercial uncertainty felt by bus operators as they emerge from the pandemic. Only minor improvements are expected from bus operators in return, as competition law prevents councils from imposing anything but ‘indispensable’ restrictions on the deregulated market. The ability for councils to cross-subsidise services, set prices or generally lower fares will also be banned by law.

Under these circumstances, the level of profit leakage from public investments has now reached a greater level than ever before. For example, Greater Manchester’s 2019 case for franchising found that it offered almost three times the economic value of the bus companies’ partnership proposal. Under the funding conditions and strict deadlines imposed by the National Bus Strategy, we can expect the disparity to be even greater.  In addition to the £3 billion pledged for bus services, this will have a knock on effect on all public transport, cycling, and walking schemes – preventing the ability to make an integrated plan, or optimise the value of investments.

Urgent action required within the next two months

Having failed to offer any economic case for Enhanced Partnerships, the government’s only justification is that the process is quicker than public control (franchising). However, it is their own legislation that makes the franchising process so difficult, and there is now a near-unanimous consensus that the Bus Services Act (2017) is inadequate to the task. This includes a wide range of respected organisations, including NYU Law School, Centre for Cities, the CPRE, the Transport Select Committee, and even the National Audit Office.

The ultimate solution is for the government to pause the National Bus Strategy and urgently review the legislation behind it, including the ban on municipal ownership. The economic dangers of continuing with bus deregulation are in no doubt, and there is an urgent need for Parliamentary intervention before the BSIP deadline of October 31st. If the Enhanced Partnership program goes forward next April, councils will be locked into bus deregulation for the long-term.

However, this should not let councils off the hook. There are just two months left to complete the BSIP process and it is absolutely vital that they resist pressure from bus companies and create ambitions that can be shown to bring long-term economic value to their communities. Due to the ban on cross-subsidy under deregulation, this will only be possible under public control or ownership (estimated to bring back £340 million or £503 million per year to the British taxpayer, respectively.)

In turn, the government must come through on its promises to update and strengthen the franchising process. Currently, only mayoral combined authorities even have access to the powers to franchise their buses. However, the government has committed to supporting access to these powers ‘for local authorities with the capacity and intention to use them’ and it’s now a priority to call them in on that promise.

In both the BSIP and EP guidance, the government has advised councils to limit the length and scope of public consultation as much as possible. Since the next two months will be crucial to negotiations, local campaigners should do all they can to raise fundamental issues and long-term objectives in relation to bus services. This means putting long-term social, economic and climate justice at the top of the agenda, and demanding that councils incorporate these goals.

References:

-NYU School of Law (2021) Public Transport, Private Profit

-Centre for Cities (2021) Get on board: bus franchising

-CPRE, the countryside charity (2021) Every village, every hour

-Transport Select Committee (2019) Bus services in England

-National Audit Office (2020) Improving local bus services in England

-Transport for Quality of Life (2015) Building a World Class Bus System

This article was edited on 09/09/2021 to include a link to the Bus Services Bill: Impact Assessments (2017). This is the only cost-benefit analysis conducted by the Department for Transport, comparing franchising and enhanced partnerships.