Franchising bus services could cost you an extra £68 per year - even if you don't use them, report shows

Date published: 08 September 2019

A new report has revealed the potential cost implications of operating bus services under a franchise system in Greater Manchester, which could cost every household in Greater Manchester up to £68.10 extra each year, whether or not they use the buses.

The report follows the Mayor’s decision to pursue a franchise system, which would see the public become responsible for the full cost of the bus network, instead of the current system where a majority of costs are covered by bus operators.

Produced by passenger transport specialist TAS and commissioned by OneBus, the report estimates that the costs of operating bus services will increase dramatically in the first year of franchising and by up to 73% over the first seven years – the likely length of the contracts that operators will work under.

The report says that under franchising, there would be a probable need for more bus drivers and an increase in dead mileage due to ‘away-from-home’ contracts – where buses travel extra distances from their depot – pushing up operational costs.

It also says that in addition to the £20m that local authorities have already spent on consultants, the move would also require additional spending on setting up a contracting system, employing more people to monitor the system, and ongoing public investment in new buses. Typically, each new double-decker bus costs £250,000 with the latest low-emission buses costing significantly more.

The report states that if the regional authority wants to implement more routes, or to subsidise lower fares, as Transport for London does in the capital, then the cost to the public purse will be higher still.

Gary Nolan, chief executive of OneBus, which represents the majority of bus operators in Greater Manchester, asked TAS to look into the costs of moving to a franchising model.

He explained: “Franchising is being presented as a guaranteed route to better buses services, but there are potential costs that threaten to increase the financial burden on the public, whether or not they use the bus.

“This report sends a clear message to TfGM that the costs of operating the bus network are far greater than they imagine. Under a new partnership approach, operators would invest profit into improvements; under franchising, this investment would need to come from taxes. The only alternative to tax rises will either be higher fares or routes being cut.

“Immediate action from the local authority would be far better focused on congestion, which pushes up fares, harms air quality, increases journey times and damages the reliability of the bus network. Without urgent action from TfGM to tackle the growing number of cars on our roads, improvements will grind to a standstill, regardless of whether buses operate in a franchise or partnership.”

The findings of the TAS report follow the biggest independent study of bus passengers in our region, conducted by YouGov in March 2019, which revealed an overwhelming majority of Greater Manchester residents (76%) are not willing to accept further increases to council taxes to fund public transport.

The only place in the UK where a franchising system operates is in London, where bus use has fallen 6% in the past three years. Transport for London is facing a £700m deficit and many bus services are having to be cut.

In Greater Manchester, the last time bus services were operated by local transport authorities, between the mid-1970s and mid-1980s, bus numbers were slashed by more than 20%, with 650 buses cut from the network. Passenger numbers plummeted by 35%, and between 1975 and 1980 alone, the cost of bus fares increased by 379%.

Nolan concluded: “Our vision is a system fit for the future and that delivers regular improvements for the travelling public and boosts the economy of our region. We have already pioneered free Wi-Fi for passengers, integrated ticketing, have committed to 450 low-emission buses in the next three years, and introduced contactless payments years in advance of the tram system.

“We have much to be proud of in Manchester and should not be aiming to be a ‘second London’ with our transport network. We’d much rather be the ‘first’ Manchester and we expect the alternatives to be fully considered to avoid increasing the cost for taxpayers.”

In response, Councillor Aldred, Chair of GM Transport Committee said: “Unsurprisingly, a report commissioned by bus companies has come up with results that support their argument that nothing needs to change in Greater Manchester’s bus market. We simply do not recognise the figures in this report. It is clear to us that these companies’ first priority is protecting their profits, not delivering a first-class service for their passengers.

"The simple fact is Greater Manchester’s bus market is broken. Routes and timetables are designed because they can deliver a profit, not because they provide a valuable service. I hear so many complaints from passengers that our bus network is confusing, disjointed and expensive. The only way we are going to encourage people out of their cars is by offering an integrated, simple to use and value for money public transport network – and buses have to be central to this.

“Counter to the bus companies’ argument, there are only two ways the bus market is funded: the tickets passengers buy and public money. This includes £27m paid to subsidise services on routes the bus companies don’t want to run; £46m for concessionary fares and £14.4m in refunded fuel duty. Over the past 20 years, Greater Manchester has also spent over £230 million on bus priority measures and £170 million on bus stations, interchanges and bus stop upgrades.

“Despite this significant public subsidy for buses, the status quo clearly isn’t working as the number of people using buses continues to fall year on year.

“For the past two years TfGM have been preparing an in-depth assessment of the proposed franchising scheme, which includes consideration of whether the scheme and other options would be affordable and represent value for money for Greater Manchester.

"An independent audit of this assessment is currently underway and full details of the costs and financial issues would be published shortly after the audit has completed and should the GMCA decide to continue with the proposed franchising scheme by undertaking a consultation.”

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