The decision by the North East Combined Authority to pursue quality contracts for bus services in Tyne and Wear clearly demonstrates the feelings of many in north-east England towards deregulation: it isn't working for them. With other local authorities, including Greater Manchester, West Yorkshire, South Yorkshire and Merseyside all considering some form of franchising model too, one might conclude that deregulation has failed.
However, there are some deregulation success stories around the UK which show there can be significant benefits, particularly if all the parties involved work together. What the case of Tyne and Wear demonstrates is that there is dissatisfaction among local politicians, lobby groups and passengers with the way some bus companies are providing services – or, at least, a perception that it could be done better.
One of the benefits that deregulation has brought, almost universally, is cost control; operators have a commercial motivation to keep costs as low as possible. Looking overseas to Ireland, both north and south of the border, and to France, where services are regulated, the cost of providing bus transport is much higher.
Deregulation gives bus companies a direct relationship with passengers. Though pro-regulation organisations often cite better local accountability as a benefit, regulation runs the risk of distancing the service provider from the service user: local politicians and lobby groups, rather than passengers, dictate the agenda.
Having said that, the relationship between bus company and passenger could be stronger in many cases. When deregulation was planned, the vision was of many competing companies, each striving to please the end user with the best value and service. This hasn’t turned out to be the case, with the big five operators – Arriva, FirstGroup, Go-Ahead, National Express and Stagecoach – dominating the market, with very little competition on most routes.
The result is that some companies have not focused on passenger needs, leading to dissatisfaction with the services they provide. In areas such as around Cambridge and in north-east Scotland, service providers did listen to their customers and chose to take a longer-term view to reaping the returns on its investments.
Bus companies must be prepared to work in partnership with local authorities, and local authorities must be prepared to come to the table with an open mind. Each side must recognise the common ground and the differences. The public sector has to learn that profit is not a dirty word; the private sector has to be prepared to invest without immediate paybacks.
One recent example of where the public and private sector came together is the Luton-Dunstable Busway, which opened in September 2013. The central element of a project designed to reduce congestion and improve journey times between the towns of Houghton Regis, Dunstable and Luton, an eight-mile route is exclusively reserved for bus use.
Luton Borough Council, which provided the busway infrastructure with funding from the DfT, had to work with three local bus companies in order to make the investment a success. The operators committed themselves to investments, such as improved buses and a multi-operator ticket system, understanding that passenger numbers would rise gradually once the busway opened.
The benefits of both regulated and deregulated bus services are being recognised in emerging markets. Countries such as Abu Dhabi, India and Kazakhstan are seeking to combine the efficiency that market competition can bring with an integrated transport system – a “semi-regulated” model.
Clearly there is a huge difference for a country starting with a blank sheet compared with one with a deregulated system already in place. However, Systra’s work on feasibility studies and transport planning for these markets begins with the same overriding goal as those in developed markets: maximising the use of public transport, which requires making it as straightforward as possible to use.
Bus companies here have started to get that message. The announcement in November by the big five in which they promised to launch multi-operator smart ticketing in city regions during 2015 is welcome, although the operators could have responded more quickly to the calls to exploit this technology.
Unlike the water or power sectors, which have powerful regulators watching over a small number of major providers, the bus sector is lightly regulated. This means that where operators and councils are unable to identify common ground, the only recourse authorities have is to move to the quality contract model.
Bus companies in other regions must listen to passengers – and their representatives – if they don’t want to see the same thing happening.
Neill is based in SYSTRA’s Glasgow office and can be contacted at email@example.com.
Reference: Transport Times, January 2015 Issue
Deregulation of the bus industry will be discussed at the 2015 UK Bus Summit being held on 12th February in London - See more at: