Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Memorandum by Dr Roger Sexton (Bus 25)



  Coming from a family of busmen, I have had throughout my life a very keen interest in the bus industry.

  I have been a law teacher for over 30 years, and for the last 16 years I have watched (aghast) at the legal chaos which "governs" the British bus industry outside London. I am a frequent visitor to Switzerland, Germany and Sweden, and I find a very strong contrast between (non-London) British bus services and bus services in these three countries.

  I am a (non-operating) member of the Confederation of Passenger Transport, even though (as may already be apparent) I strongly disagree with that organisation's views on Bus Regulation. I frequently express my views in letters published in the specialist Transport press, and on three occasions "The Times" has published letters from me on the subject of transport regulation.


  I will largely concentrate on the fourth point on which you have asked for views. It seems to me that the other four issues are (while not unimportant) subordinate to this central question of regulation.


  I would extend the system of franchising used for London bus routes to the rest of Britain. The franchising would be administered by a network of regional PTEs. Eg there would be an East Midlands PTE covering (approximately) Nottinghamshire, Derbyshire, Leicestershire and Lincolnshire.


  Outside of London, the bus industry has, for over 15 years, had a large degree of freedom from legal controls. The result of this freedom has been a 30 per cent drop in passengers. Yet in regulated London, passenger numbers continue to increase. In my view, the case for stricter controls on the bus industry, preferably through quality contracts (=franchises) is unanswerable.

  5.  The obvious, simplest, and best solution is to extend the London franchising system to the rest of the country. The regional PTEs would become the franchising authorities.

  6.  If the bus industry is so hostile to franchising, why then is it that

    (1)  four of the five biggest bus groups are strongly represented within London;

    (2)  all five of the biggest bus groups are involved in the franchised rail passenger market;

    (3)  at least four of the five biggest groups have bus interests in foreign countries where services are franchised out?

  7.  I would further add

    (a)  that it is very strange to talk of "integrated transport" where one half of public transport (railways) is subject to one (very strict) type of legal regime, while the other half (buses) is subject to a very different (very lax) legal regime.

    (b)  The British system of deregulation is way out of line with the rest of our EU partners, and with almost all comparable countries outside the EU. (Note especially the USA and Switzerland)

    (c)  The British system of "deregulation" has the necessary concomitant that the Bus Industry has become subject to the full rigours of Competition law. Competition law discourages, sometimes even penalises, co-operation between operators. The recent Arriva/First case in Leeds highlights this. Yet to my mind, the words "integration" and "co-operation" are almost synonymous.


  Firstly, the local authority cannot use a quality partnership to control either fares or (it seems) detailed timetables.

  Secondly, while a local authority can create excellent facilities for company X who promises (say) to run low-floor buses not more than three years old, company X is still open to competition from company Y which runs poorly maintained low-quality vehicles.

  Thirdly, there is also the fundamental question, what legal sanctions does the local authority have if a bus company fails to operate the high quality buses it promised? A "quality partnership", assuming it is a legally binding contract, is not the kind of contract which a court could, by a decree of specific performance, order to be carried out. (See Co-operative Insurance v Argyll [1997] 3 All ER 297, where the House of Lords refused specific performance of a tenant's covenant to keep its shop open during normal trading hours) The only other possible sanction is monetary compensation, ie damages. But what loss does a local authority suffer if the promised buses do not run? Probably very little. It is the general public who suffer.


  My home county of Nottinghamshire has been a major centre of these so-called "partnerships". My pragmatic observations suggest the following problems:

    (a)  There is an initial upsurge in passengers (usually around 10 per cent) on the "quality" routes, but this dissipates because people are driven back to their cars by

      (i)  a fare increase (often unannounced);

      (ii)  the frequent appearance of old (non low-floor) buses on the route;

      (iii)  poor (or non-existent) evening services, so that the bus is no use when working late.

    (b)  Operators put all their efforts into the quality routes, and the other services are neglected.


  35 per cent of all bus journeys within Britain are within Greater London—even though London accounts for barely one-seventh of the population. How come?

  Supporters of provincial bus deregulation produce lame excuses for the London bus boom, such as "Hideous traffic congestion in Central London"; "No sane person would drive into London"; "There is no choice in London except to use the bus". These supporters of provincial deregulation, who still (it seems) dictate government thinking, ignore two further crucial facts about London.

  Firstly, buses are booming not just in central London but also in the London suburbs. Suburban centres such as Croydon, Harrow and Enfield are similar in size, economy and congestion problems to provincial cities such as Nottingham, Leicester or Derby.

  Secondly, London has an extensive rail system (both surface and tube). The London public transport user often does have a choice between bus and train. Not so his provincial counterpart. With the sole possible exception of Glasgow, no British provincial city has a comprehensive rail network serving all the suburbs. Here in Nottingham, only about two per cent of public transport journeys into the city are by rail.

  For the vast majority of provincial passengers, public transport and buses are synonymous. Yet our free-market orientated bus companies have (with isolated exceptions) failed to stem the decline in bus patronage. Outside London, the general public sees buses as old, inconvenient, unsafe and contributing to (not curing) environmental damage. From time-to-time most provincial cities see the outbreak of "bus wars" between rival operators, with major streets congested with too many buses chasing too few passengers. Edinburgh has just been suffering from such a war. When a bus war broke out in historic Oxford, a Times Editorial described the situation as "Mayhem". When we had a bus war in Nottingham, correspondents to our local paper described it as "an environmental disaster".


  As the Leeds Firstbus/Arriva cases shows, provincial operators are now working in a legal minefield which discourages all co-operation (ie integration) between operators. However, the current deregulation gives to bus operators the freedom to start up, vary or cancel services more-or-less at will. The quid-pro-quo for this freedom is regulation by the OFT. Freedom to establish and remove services and OFT intervention are opposite sides of the same coin.


  While the franchised bus industry should generally be exempt from Competition law, I would propose one major exception to this exemption.

  For franchising or tendering to work, there must be plenty of bidders competing for each contract. Mergers of potential bidders (and cartels) must therefore be carefully policed by the Competition Law Authorities.

  We should, as a matter of urgency, seek advice from the Swedish Competition authority "Konkurrensverket". This body has experience policing that countries bus (and train) franchising system. One interesting feature of the Swedish system is that small operators are allowed to form a consortium to bid for contracts in competition with the three big groups operating in Sweden. Some of these small operator consortia have been very successful. "Buss I Vast" operating in the Gothenburg region built up to about 625 vehicles in a space of five years!


  There is very limited integrated ticketing outside London. Franchising of bus services would allow the following:

    (a)  A system of all-operator area travel cards which extends to the whole country.

    (b)  A national system of through bus-rail tickets modelled on the Swedish Tågplus system.

    (c)  A national system under which a person buying a day return train (or coach) ticket to a particular town can, for a small supplement (say £2 for a town like Nottingham) buy a "day anywhere" ticket on the destination town's transport system.

    (d)  A system under which all University towns would be required to introduce "Semester Tickets". This is a German idea; all students have to buy an all-route travel card. But the "Semester Ticket" (The English word is used) is valid for 6 months and is very cheap. (Currently the price is usually less than 50 Euros)

    (e)  (Another German idea using English words.) Employers would be able to buy "Job Tickets"—ie All operator travel cards sold in bulk at a discount price. If the employer chooses to give the Job Ticket to an employee, that ticket would be tax-free. (Car parking spaces are currently tax free!)


  There are rural areas where the presence of isolated commercial registrations hampers the planning of co-ordinated inter-connecting services. This is particularly true of parts of Nottinghamshire. I will give just one example. NCC has tried hard to improve services to a group of villages north-east of Nottingham—Oxton, Epperstone, Lambley and Woodborough. The latter two villages are served by a commercial registration running Nottingham to Woodborough every ninety minutes. I am sure a much better "value for money" group of routes (probably running hourly) could be planned if the commercial registration were withdrawn.


  Switzerland is the most free-market orientated nation in Europe. Its public transport (including buses) is the envy of the rest of the world. But that public transport is not the product of the free market. Rather it is a system planned by National, Cantonal and local governments.

  Planned Swiss public transport works effectively. The British free market in bus services does not work, and should be consigned to the rubbish bin of history.

Roger Sexton

28 March 2002

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