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| Plans for public control of buses suffer setback | |
| (about 3 hours later) | |
| Plans to bring local buses back under public control have been dealt a blow by a ruling over Tyne and Wear’s pioneering attempt to regulate its services. | Plans to bring local buses back under public control have been dealt a blow by a ruling over Tyne and Wear’s pioneering attempt to regulate its services. |
| In the culmination of a bitter, drawn-out battle between the regional authority in Newcastle upon Tyne and private bus firms, an independent board has dismissed a scheme to re-regulate buses, judging it does not provide value for money and would have a disproportionate impact on bus operators. It warned that going ahead could potentially leave the council liable for hundreds of millions of pounds in compensation for firms such as Stagecoach. | In the culmination of a bitter, drawn-out battle between the regional authority in Newcastle upon Tyne and private bus firms, an independent board has dismissed a scheme to re-regulate buses, judging it does not provide value for money and would have a disproportionate impact on bus operators. It warned that going ahead could potentially leave the council liable for hundreds of millions of pounds in compensation for firms such as Stagecoach. |
| After hearings this year, the Quality Contract Scheme board chaired by the traffic commissioner for the north-east said Tyne and Wear’s proposals to control bus routes, timetables and fares would improve services, but would not provide value for money. | After hearings this year, the Quality Contract Scheme board chaired by the traffic commissioner for the north-east said Tyne and Wear’s proposals to control bus routes, timetables and fares would improve services, but would not provide value for money. |
| The operators had argued that attempts to take control of routes would be in breach of their economic rights. The panel ruled that Nexus, the region’s transport executive, could face liabilities of up to £226m to compensate Stagecoach, Go-Ahead and Arriva for loss of business if the scheme went ahead. | The operators had argued that attempts to take control of routes would be in breach of their economic rights. The panel ruled that Nexus, the region’s transport executive, could face liabilities of up to £226m to compensate Stagecoach, Go-Ahead and Arriva for loss of business if the scheme went ahead. |
| Related: We're ignoring the crisis of our most democratic public transport: buses | Related: We're ignoring the crisis of our most democratic public transport: buses |
| The decision could have huge implications for city devolution plans at the heart of the chancellor’s vision of a “northern powerhouse”. Manchester and other cities have agreed to changes including elected mayors in return for control over local financing and transport, with buses a key issue. | The decision could have huge implications for city devolution plans at the heart of the chancellor’s vision of a “northern powerhouse”. Manchester and other cities have agreed to changes including elected mayors in return for control over local financing and transport, with buses a key issue. |
| Deregulation of bus services outside London was brought in by the Thatcher government in the 1980s. Stagecoach and other transport firms have made the bulk of their UK profits from such bus services rather than the trains or regulated buses they also operate. | Deregulation of bus services outside London was brought in by the Thatcher government in the 1980s. Stagecoach and other transport firms have made the bulk of their UK profits from such bus services rather than the trains or regulated buses they also operate. |
| Nexus argued it was paying large subsidies to fund unprofitable routes for community benefit, while not being allowed to run public services on profitable routes under the legislation. Local authorities are also forced by law to provide concessionary bus travel for pensioners. | Nexus argued it was paying large subsidies to fund unprofitable routes for community benefit, while not being allowed to run public services on profitable routes under the legislation. Local authorities are also forced by law to provide concessionary bus travel for pensioners. |
| The transport executive claimed re-regulation would save money and lead to better services. But operators led by Stagecoach, which runs about 40% of bus services in Tyne and Wear, claimed the move would mean higher fares, worse services and higher taxes. | The transport executive claimed re-regulation would save money and lead to better services. But operators led by Stagecoach, which runs about 40% of bus services in Tyne and Wear, claimed the move would mean higher fares, worse services and higher taxes. |
| Stagecoach said the decision had clear implications for the government’s plans to devolve control of buses to local authorities in the north, warning that the forthcoming buses bill must ensure any proposals to franchise bus networks were subject to proper safeguards and a transparent public interest test. | Stagecoach said the decision had clear implications for the government’s plans to devolve control of buses to local authorities in the north, warning that the forthcoming buses bill must ensure any proposals to franchise bus networks were subject to proper safeguards and a transparent public interest test. |
| Stagecoach’s chief executive, Martin Griffiths, said: “We welcome the review board’s confirmation that the core franchising proposal was unaffordable, inflexible, high risk and not in the public interest. Tyne and Wear already has 90% bus customer satisfaction, amongst the highest levels of bus use in the country, and smart ticketing is being introduced across the region. Franchising does nothing to build on that successful, high-quality network.” | |
| He urged the regional authority to abandon its franchising plans and work in partnership with bus operators. | He urged the regional authority to abandon its franchising plans and work in partnership with bus operators. |
| But Labour said the decision was disappointing. The shadow transport secretary, Lilian Greenwood, said: “It puts the needs of shareholders ahead of passengers and critically undermines one of George Osborne’s key northern powerhouse commitments. We must reverse the decline in bus services outside London and it’s clear that the deregulated model has failed. Labour’s councillors in the north-east were absolutely right to push for reform in the face of appalling abuse and they continue to have our full support. | |
| “Today’s announcement proves once and for all that the current law is not fit for purpose and the onus is now on the government to bring forward new legislation. It’s now vital that the government does not cave in to pressure and duck the need to include radical measures in its forthcoming buses bill.” | “Today’s announcement proves once and for all that the current law is not fit for purpose and the onus is now on the government to bring forward new legislation. It’s now vital that the government does not cave in to pressure and duck the need to include radical measures in its forthcoming buses bill.” |
| Richard Collins, a transport specialist at the law firm Bond Dickinson, said the drawn-out battle between the bus operators and the regional authority showed up problems with the current regulatory structure. He said: “There is more regulation coming down the pipeline, the buses bill, due next year. It may be that, whatever the outcome of this process, new forms of partnership between operators and local authorities are likely. | Richard Collins, a transport specialist at the law firm Bond Dickinson, said the drawn-out battle between the bus operators and the regional authority showed up problems with the current regulatory structure. He said: “There is more regulation coming down the pipeline, the buses bill, due next year. It may be that, whatever the outcome of this process, new forms of partnership between operators and local authorities are likely. |
| “It’s going to create an interesting dynamic: part of the northern powerhouse is about devolving decision making to local authorities and it throws up challenges for bus operators.” | “It’s going to create an interesting dynamic: part of the northern powerhouse is about devolving decision making to local authorities and it throws up challenges for bus operators.” |