2 Strengthening the delivery chain
outside London
6. In London, Transport for London has responsibility
for the bus network and contracts with operators to provide the
services required. Authorities outside London, however, have no
direct powers over the 80% of services provided commercially.
For these services operators determine routes, timetables and
fares in competition with other operators. Local authorities provide
financial support for the remaining 20% of services to complement
commercial services or to meet a specific local community transport
need, and for these services they have direct control over routes,
fares and timetables.[7]
In relation to commercial services, local authorities' role relates
to their use of infrastructure, an exceptional example of which
is the Humber Bridge Board, which had been able to set tolls for
public services vehicles at much higher rates than for cars, with
the result the bus operator had ceased to provide a service across
the bridge.[8]
7. There were dominant operators in some areas around
the country, but the Department considered the market to be competitive.
Bus usage had grown in places where the local authority had worked
with one of the big bus operators, such as in York, and there
was competition for non-commercial services, with three bids obtained
for each tender.[9]
8. The Department believed operators would act rationally
to maximise profits and hence would not seek to drive passengers
off their buses. Fares had, however, risen by substantially more
outside London than they had in London (Figure 3). Buses
were on average 8.3 years old outside London, whereas in London
they were renewed on a five yearly cycle. The Department did not
consider age would necessarily affect reliability. It had calculated
that, through the provision of some 38,000 new buses, operators
had invested some £2 to £4 billion against the anticipated
level of private investment of £5 billion set out in the
10 Year Plan for Transport. The Department acknowledged
that in a number of localities one or more of the big five bus
operators dominated the market and there was a risk of quasi monopolistic
operations. In the Department's view, it was for the Office of
Fair Trading, as the competition authority, to address whether
operators were abusing a dominant position. Other market forces
could impact on the likelihood of achieving increased bus usage.
Figure 3: Bus fares over the period 1994-95 to 2004-05
Source: Transport Statistics of Great Britain
9. The Department considered that if a bus operator
were earning exceptional profits, new operators would enter the
market, increasing competition. The Department, industry and local
authorities were building a model of the bus market to better
understand the relationship between costs, fares and passenger
demand. The Department was not aware of data which suggested that
the five major transport operators earned 25% of turnover but
30% of profits from bus operations. If bus operators were driving
up bus fares to increase profits it was likely to lead to reductions
in passenger numbers.[10]
10. Without direct levers for influencing commercial
operators, voluntary codes of practice had been drawn up, but
ultimately it was for local authorities and bus operators to decide
whether they applied the recommended best practice. The Bus Partnership
Forum voluntary code of practice on service stability was intended
to discourage the changing of bus timetables at any time throughout
the year. The Department was ahead of its target to have half
of all buses with low-floors by 2010. Investment in new buses
had increased the number which were "low-floor" (and
hence accessible to people in wheelchairs or the elderly) to 44%
of the fleet, improving the accessibility of buses. But it was
unclear how widespread these improvements were across the country.[11]
11. Commercial operators' accountability to their
local communities for services provided could be improved. The
independent statutory Traffic Commissioners were responsible for
investigating serious failures by operators to deliver against
their registered timetables or to comply with the terms of their
operator's licence. The Commissioners were, however, reliant on
complaints from the public or local authorities to alert them
to possible breaches of operators' licences. They did not receive
information on performance routinely from operators. Awareness
amongst bus users of the role and powers of the Traffic Commissioners
to investigate complaints was likely to be low and the Department
was unaware of the extent to which the Traffic Commissioners had
acted upon local authorities' concerns about poor service. Unlike
for franchised rail services, there was no requirement for bus
operators to provide information on bus service performance to
the public.[12]
12. To date, no local authority had sought approval
from the Secretary of State to remove the right of commercial
operators to register and run local services and to deliver its
local bus strategy using Quality Contracts.[13]
The Department had sought to lower the potential barriers to the
introduction of Quality Contracts, by reducing the qualifying
period between setting the Contract arrangements and introducing
them from 21 months to 6 months. The hurdle had to be high as
only a strong public interest reason could be used to remove operators'
rights to the quiet enjoyment of their property, which the Department
considered was protected under the Human Rights Act 1998. An Authority
seeking to introduce a Quality Contract might face court action
by the existing commercial operator. Quality Contracts could,
however, be appropriate where a local authority wanted to introduce
road pricing, and needed the flexibility to control bus fares
and bus frequencies as well.[14]
7 C&AG's Report, 2.3-2.5, 3.2-3.7, 6; Q 153 Back
8
Qq 27-29, 35, 42-43, 78-80, 104 Back
9
Q 6 Back
10
Qq 25-26, 47-50 Back
11
Qq 7, 98 Back
12
Qq 8, 96, 132-149 Back
13
Under Quality Contracts, operators' rights to register and operate
services can be removed where this was the only practicable way
to deliver to local transport plan. Back
14
Qq 57-61 Back
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