Memorandum submitted by Greater Manchester
Passenger Transport Authority
1. Greater Manchester Passenger Transport
Authority (GMPTA) is the body established to assess the public
transport needs of the Greater Manchester City Region and make
policy decisions about public transport provision. We are pleased
that the House of Commons Transport Select Committee has decided
to hold an inquiry into "Bus Services Across the UK"
and welcome the opportunity to submit written evidence. We would
be happy to elaborate on the points raised orally, at any future
date.
2. This evidence details our views on current
bus provision in Greater Manchester. We have chosen to look at
the broad themes raised by the inquiry, and present a view on
the future policy levers required to meet both our local regeneration
objectives and deliver significantly improved patronage growth.
3. GMPTA is firmly of the view on a cross
party basis that the current regulatory framework for bus service
provision has failed to deliver an efficient, effective, and socially
inclusive bus network. The Authority is committed to the principle
of local transport authorities being given greater control over
the bus network within their area and has held this view for some
time. The Department for Transport (DfT) has indicated that a
new approach (in the form of "a Third way" or Enhanced
Quality Partnerships) could deliver improvements in the operation
of the bus network, although so far no proposals have been published.
In the absence of measures to streamline the process of introducing
Quality Contracts, we believe that Enhanced Quality Partnerships
(EQPs) could well be the mechanism to deliver the required improvements
for the benefit of the travelling public in conurbations outside
London.
4. This evidence describes the wider context
in which bus services operate within Greater Manchester and summarises
the Authority's view on the key characteristics of an EQP. We
conclude by offering a revised policy framework in which such
an approach may be delivered.
THE GREATER
MANCHESTER CITY
REGION
5. With a population of three million, the
Greater Manchester City Region has a critical mass of economic
activity, infrastructure and physical assets unrivalled in the
UK outside London. It is the key economic driver for the region
as a whole, accounting for 48% of the Gross Value Added (GVA)
output for the North West. The accelerated growth scenario based
on the City Region Development Programme (CRDP) actions assumes
average growth of 2.9% per annum between 2002 and 2015, against
a UK average of 2.5%.[6]
This is a central objective of our approach to meeting national
PSA 2, to reduce regional disparity.
6. The regional centre currently has a working
population of 136,000, with an additional 60,000 students, plus
day-time shoppers and night-time leisure users. In the last three
years alone the regional centre has secured around £1.5 billion
of private investment and generated around 25,000 new jobs. Manchester
now has one of the largest concentrations of higher education
investment activity in Europe. An efficient public transport network
is fundamental to achieving current and projected CRDP growth
targets in Greater Manchester. In the medium term, the Greater
Manchester Integrated Transport Strategy sets out how we will
underpin the growth agenda with investment in our heavy and light
rail networks. In the short term, the bus network provides the
only option for increasing public transport capacity to enable
sustainable economic growth to take place.
7. The 10 local highway authorities, GMPTE/A
and the bus operators all have important roles to play in the
delivery of effective bus services. This means a complex myriad
of relationships have developed between the public and private
sector. In some areas of the UK where bus use is increasing there
is one monopolistic bus operator in partnership with a single
unitary authority. In contrast, Greater Manchester is a complex
polycentric city region where the successful management of stable
bus services requires a more complex set of relationships to work
effectively.
8. Buses in Greater Manchester account for
86% of all public transport journeys. It is fundamentally important
for the future success of the City Region that the local bus network
responds to the economic ambition of authorities in Greater Manchester.
Inevitably, measures to boost economic growth and encourage social
inclusion will increase the total number of trips many of which
will be to and from the regional centre. This will require a significantly,
improved level of infrastructure that will in turn attract new
investors and residents into the area. Using controlled competition,
an EQP will be an important tool top help us to develop a series
of Corridor Partnerships with adopted outcome based targets designed
to support forecast growth within each corridor in an economically
and environmentally sustainable way. It is fundamental to the
economic viability of our area that the industry rises to this
challenge.
BUSES SINCE
DEREGULATION
9. In 1986 bus passenger trips in Greater
Manchester stood at 355 million annually. Despite a period of
stability at around 250 million in the mid 1990s, this figure
had fallen to 218 million by 2005, prior to the introduction of
free travel for the elderly and disabled in April 2006. This is
a worrying trend, both for the environment, the economy and the
bus industry alike.
10. Deregulation was designed to cut costs
to both the industry and public purse, promote innovation, secure
lower fares and offer passengers more choice. These national public
policy goals were partly achieved in the early years of deregulation,
through greater competition on routes, and reduced public sector
subsidy. This position was sustained through to the early 1990s.
However, from this time, the bus market in Greater Manchester
effectively lost its competitiveness with the larger operators
becoming market dominant, in neighbouring areas and on neighbouring
routes with major competition coming from the car or other public
transport alternatives. Today, now that the emphasis has changed
and Greater Manchester authorities are committed to delivering
a competitive city region where worklessness is reduced and people
can access pubic services easily in their area, a new policy framework
is required.
11. Passengers in Greater Manchester have
witnessed above inflation fares increases in the period after
the mid 1990s. Table two demonstrates that whereas fare levels
in real terms have remained unchanged in London, those in the
"deregulated" shire, unitary and metropolitan areas
of England have risen by 25% over the past 10 years.
BUS SERVICE FARES IN ENGLAND AND RETAIL PRICE
INDEX[7]
12. In addition to substantially increasing
fares, operators in Greater Manchester have streamlined services
so that low profit and non-commercial routes are withdrawn and
passed to the public sector to fund. This shift demonstrates how
the current regime has allowed the industry to gradually move
risk from the private to the public sector. Throughout the lifecycle
of the deregulated market, the public sector has had to meet growing
demand on the subsidised budget. The table below demonstrates
how the average cost for service subsidy has dramatically increased
in the last five years.
AVERAGE COSTS FOR SERVICE SUBSIDY IN GREATER
MANCHESTER[8]
| Year | 2001
| 2002 | 2003 |
2004 | 2005 | Change
|
| Pence per mile | 70.54 | 86.99
| 94.88 | 102.03 | 112.61
| 42.07p |
| % increase in Cost Per Mile |
| 23.1% | 9.1% | 7.5%
| 10.4% | 59.6% |
| Percentage increase in RPI |
| 1.3% | 3.1% | 2.6%
| 3.2% | 10.6% |
| | |
| | | |
13. Service withdrawals and rising subsidy costs mean
that today, some local communities are now threatened with the
complete withdrawal of their bus service. Between January 2003
and January 2006 alone, of 208 commercial withdrawals only 91
could be afforded to be replaced in whole or part by GMPTA. This
reduces the coverage of the current network, as GMPTA cannot continue
to meet the ever-increasing bus subsidy demands.
14. Greater Manchester is therefore faced with a market
failing to meet the needs of the Greater Manchester City Region,
with the threat of further decline. GMPTA is keen to facilitate
a market conducive to growth, where buses are reliable, frequent,
affordable, clean and safe. At present this is not the case as
the industry response when the product continues to fail is to
put up fares.
COMPETITION
15. Competition between bus operators only exists on
three out of 15 major corridors in Greater Manchester. [9]Consequently,
there is very little passenger choice. Although there are over
40 bus companies in Greater Manchester, the three major operators
(First, Stagecoach and Arriva) in terms of turnover now enjoy
96% market share in Greater Manchester. [10]The
big three have increased their hold largely through acquisitions
rather than through efforts to innovate or grow the existing market.
This position will not change in the foreseeable future. Unlike
the communications industry (privatised around the same time),
customers cannot react to poor service by changing suppliers,
as alternative providers do not exist. Therefore, we need to develop
an alternative delivery mechanism which will meet our objectives.
16. In Greater Manchester limited competition exists
only on major arterial roads where services are profitable and
can be operated at low risk. In these instances big operators
often compete with small local bus companies in markets that can
be aggressive and dangerous. A particularly relevant example of
this in Greater Manchester relates to the A6, 192 route where
some months ago UK North entered into competition with Stagecoach
resulting in an increased number of low quality buses serving
the route. Although this led to a more frequent service with lower
fares (Stagecoach has reduced fare levels to match those of UK
North) it has led to acute problems of traffic congestion at Piccadilly,
and consequent safety concerns for the travelling public. Despite
the recent introduction of a voluntary code of conduct called
CityPLAN, (a city centre code of conduct for bus operators which
contains appropriate maximum capacities on bus stands in the heart
of the regional centre to avoid unnecessary congestion), public
authorities were forced to increase the level of supervision in
the area with additional parking attendants and other officers
so as to prevent a serious accident on the route. It remains to
be seen whether both operators will remain in the market and whether
therefore the frequency and fare levels can be sustained in the
longer term.
PUBLIC SECTOR
OBJECTIVES
17. High frequency radial services can deliver benefits,
particularly in terms of improving access to town centres and
supporting modal shift. However, the competition (and consequent
bus on bus congestion) along routes (such as the 192) can devalue
investment and make supply provided in this manner "lumpy".
This does not provide good coverage across the network as a whole.
We require a properly integrated public transport system, which
can utilise the profits from these routes to provide other services
across the whole network. A wider network is essential in supporting
social inclusion, access to employment, education and other facilities,
but some essential services are always likely to be marginal and
thus, cannot be provided on a commercial basis. However in other
cases new commercial routes can be developed if operators are
prepared to engage in risk to capture new markets caused by demographic
change. Our attempts to encourage operators to invest in such
routes have largely failed and this is a growing trend. For example,
GMPTA would like to commit resources to areas where bus services
are poor, but where significant public money is soon to be spent,
such as in areas earmarked for Housing Market Renewal, areas where
Urban Regeneration Companies have been established by central
Government to drive regeneration, and in areas where we are creating
new jobs. In contrast, Metrolink routing is in the hands of the
public sector. This enables us to focus transport access at sites
where other money is being spent, in effect pump priming further
private sector investment.
18. At present, innovation relies on mechanisms such
as Kickstart funding which transfers risk to the public purse.
The most innovative bus schemes to have been introduced in recent
years, such as the first low floor buses, Manchester City Centre
Metroshuttle service, the Nightbus network and Yellow School buses
have all been public sector led. In future, we would like to see
a regime in which the risk on these schemes is not borne purely
by the public sector. Opportunities to grow the market, such as
in regeneration areas, should be subject to a new arrangement
where both parties share the risk and motivation to deliver on
any targets set.
PRIORITY AND
PARTNERSHIP
19. The Greater Manchester, Quality Bus Corridor (QBC)
network demonstrates how we are willing to furnish new routes
with bus priority to ensure success. Bus companies cite congestion
as a major cause of unreliability and point to priority measures
to reduce delays. To date, Greater Manchester has spent £60
million delivering 31km of bus lanes and over 1,500 bus stop upgrades
(new flags, raised kerbs, improved information). Over 300 traffic
signal improvements, and in the order of 200 traffic management
schemes to improve general traffic flow have been successfully
delivered along with over 500 pedestrian improvements. Manchester
is also taking forward bus lane enforcement to further improve
the operating conditions for buses. Despite this significant investment
by the Districts and the PTE/A, operators have been slow in bringing
to the table new initiatives such as simplified ticketing, marketing
and branding of the QBCs, improved standards relating to vehicle
quality and cleanliness and customer focused driver training.
20. Greater Manchester's QBCs generally have higher frequencies
and more direct services than other bus routes and where reasonably
priced weekly tickets are available, regular passengers have a
satisfactory level of service. We understand that reliability
is improving and patronage is up on the routes examined to date
(subject to data from operators). This is an achievement for the
Districts and PTE/A. However, we are lacking any of the wider
benefits because of the lack of action by the operators to complement
the work on the QBCs. In sum, partnership working on QBCs in Greater
Manchester has not delivered new vehicles unreliability is still
an issue and problems of service failure and driver recruitment
are common. QBCs have not promoted better integration or delivered
an affordable flat rate adult fare. To make progress on these
issues, particularly patronage growth, the public sector should
have the tools to incentivise good practice and equally, sanction
bus companies for operational failure. We want operators to match
priority commitments with investment in fleet and personnel, as
both of these important issues contribute significantly to better
services for passengers.
LEGISLATION
21. Competition legislation is unnecessarily prohibitive.
Regulation enforced by the Office for the Fair Trading (OFT) means
that, unlike in London, passengers do not benefit from integrated
timetables, tickets and services. Government has recognised that
a problem exists and we welcome proposed moves to ease the current
difficulties in this area. Clearly, some level of statutory exemption
from these conditions would go some way to providing higher quality
bus services in Greater Manchester.
22. Quality Contracts guidance represents a missed opportunity
for Government to secure best value in the procurement of bus
services outside London. This is a major concern. It is essential
that we understand whether public subsidy spend is delivering
best value for passengers in Greater Manchester. We would welcome
the introduction of a tool to measure value for money on bus subsidy
spend per mile because at present this does not exist.
23. Government should not be surprised that thus far,
no transport authority has been able to introduce a Quality Contract
for bus services. The condition attached to a Quality Contract,
requiring local transport authorities to prove they are the "only
practicable way" is nearly impossible to satisfy. Recent
guidance has sought to soften this, but even with the recent time
reduction, a Quality Contract would be likely to culminate in
a protracted legal battle that would only work to distract from
securing real improvements for bus passengers. The "only
practicable way" definition allows the bus industry to continually
delay the introduction of quality contracts by proposing new alternative
forms of partnership which then fail. In our view, the removal
of the "only practicable way" test would free up local
transport authorities to introduce quality contracts as a "fall
back" if EQPs (see below) do not meet public sector objectives.
AN ENHANCED
QUALITY PARTNERSHIP
FOR GREATER
MANCHESTER
24. Greater Manchester Authorities have published a target
of 4.5% patronage growth over the period 2006-11. In considering
options to deliver on this target in the future, we believe that
a greater level of public intervention in the current bus market
outside London is required. This may vary across different areas;
however, we believe that in Greater Manchester's case, a form
of controlled competition, underpinned by appropriate levels of
regulation would be the means of delivering a significantly more
effective and efficient bus network. Hence we propose an Enhanced
Quality Partnership (EQP) model, based around the central objective
of providing us with flexibility and ability to specify co-ordinate
and deliver local bus services.
25. Local transport authorities need to be able, in consultation
with local stakeholders, to specify a series of conurbation-wide,
needs-based, local bus networks designed to achieve our outcome
targets and to set down the service standards to be delivered.
The mechanism for delivering these local bus networks would be
through an EQP with exclusivity and a provision to allow a degree
of sub contracting for smaller operators.
26. The Government has yet to announce its EQP proposals
but our view is that operators should be required to deliver a
Binding Partnership Agreement including:
— a core network of routes on a local area basis;
— specified levels of frequency;
— punctuality and reliability standards;
— service quality issues such as vehicle quality,
driver standards accessibility and cleanliness standards; and
— integration (with other modes and ticketing systems).
27. The conditions of the EQP would be such to incentivise
operators to provide major targeted service improvements. These
improvements would relate to patronage growth, the delivery of
socially inclusive network coverage and commitments on affordable
fares with all mode tickets. Within the EQP, we will invite operators
to propose a level of service equal to that contained in a Quality
Contract, or at least that which provides the same public benefits.
In return, we will offer exclusivity. These benefits would be
secured via the various incentives attached to the delivery of
our specified outcomes across the network.
28. The Commission for Integrated Transport (CIT) has
identified how, at present, Bus Service Operators Grant (BSOG)
is granted to operators regardless of performance. We would like
to be able to use this crucial policy lever to tie BSOG (worth
£359 million in England in 2004-05[11])
to operator performance or to limit provision (of the rebate)
only to the bus company, which via the EQP, is committed to delivering
on the targets written into the agreement. This would incentivise
the operator, within the EQP, to be proactive against public sector
objectives, something we have difficulty encouraging them to do
at present. Growth targets would be set and catered for within
the network so that the operator that signs up to the partnership
can develop the market within the agreed timeframe of the agreement.
It is proposed that agreements should be active for a period of
five to seven years. Local transport authorities would be required
to deliver an agreed quality of infrastructure including waiting
facilities, with operators and local transport authorities jointly
providing information provision. Importantly, this would provide
a stable environment where limited changes to the network (if
any) should be subject to local consultation.
29. An EQP would facilitate cross subsidy, by enabling
routes yielding high profits to subsidise less profitable services.
It is possible such a mechanism could deliver far greater value
for money as supporting funds would be in place across the network
rather than the current system of subsidy for individual routes,
which has been previously identified as inefficient by the National
Audit Office.
30. This framework would be designed to encourage private
sector investment and innovation. We recognise the importance
of transport operators having the ability to manage their businesses
in a way that promotes patronage growth and delivers benefits
for the passenger. This would be written into the EQP and incentivised
accordingly. Any commitment on fares would need to include, a
simplified fares structure with provisions to provide an affordable
transfer ticket (across all operators and all modes) alongside
a mechanism to ensure bus travel is affordable.
31. A greater degree of local authority co-ordination
and leadership should not be seen as a threat to innovation and
efficiency but rather should enable the bus network to grow in
strength and effectiveness to deliver both public and private
sector objectives. We would hope to commit operators to delivering
an improved level of service, which does not exist currently.
The EQP requires an environment where accountability is clear.
Unlike in Greater Manchester, Transport for London has the powers
necessary, to hold operators to account. The public sector has
similar powers on the rail network, but at present these accountability
frameworks do not exist for bus services outside London as recognised
in the recent Delivery Chain Analysis undertaken by the National
Audit Office. This transparency, incentivised through Bus Service
Operators Grant, is at the centre of successful partnership working
and must feature prominently in any redesigned framework going
forward.
THE ROLE
OF THE
TRAFFIC COMMISSIONER
IN AN
EQP
32. The powers of the Traffic Commissioner should be
significantly enhanced to facilitate the new EQP arrangement.
In particular, the Commissioner would be required to enforce the
market restriction policies suggested above. At present, any operator
is free to run services on any route as long as they register
services with the Commissioner six weeks in advance of operation.
The exclusivity within the proposed EQP would mean that operators
would be unable to run services in this way. Indeed, the road
space would be reserved only for the operator within the partnership
(committed to delivering the service standards) and other operators
would be prevented from running services within the area of the
EQP. On parts of the network not subject to an EQP, the six-week
notice registration condition would remain. Our proposition would
be that before a local authority introduces an EQP, legislation
would be introduced to ensure that operators outside of the EQP
could not register services with the Traffic Commissioner on the
local network.
33. The Traffic Commissioner is severely under resourced.
The Traffic Commissioners' Annual Report 2004-05 states that reliability
monitoring in Greater Manchester "would not have been possible"
without the assistance of the PTE. [12]Even
if the current regime were to remain, one Commissioner with three
monitoring officers per region is clearly not sufficient. As a
minimum, commissioners require a greater officer resource to enable
them to effectively discharge their duties.
34. In order to make the market more transparent to local
communities and to successfully monitor the success of the EQP,
the Traffic Commissioner should receive and make publicly available
operator performance data, that would be used to support work
planning and monitoring operators' performance against the targets
set out in the partnership. Having publicly available data, as
recommended by both the National Audit Office and the recent Committee
of Public Accounts Report on the Delivery Chain Analysis for Bus
Services in England, would so some way to making operators more
accountable to the passenger.
CONCLUSION
35. This evidence has provided a snapshot of the current
environment for bus operation in Greater Manchester and we believe
that it demonstrates that the current system has increasingly
failed the travelling public. Significant restructuring is required,
in the form of controlled competition through an Enhanced Quality
Partnership Agreement, if we are to deliver for bus passengers
and in turn support the Government's objective of bus patronage
growth in every region and a wider urban renaissance.
36. Bus passengers tell us that reliability; service
stability and affordable fares are vital elements of a successful
bus service. We believe these elements are best specified by local
transport authorities: hence our proposal for an EQP in Greater
Manchester. This model may not be appropriate for bus provision
elsewhere. Indeed, flexibility across EQP approaches in different
areas may be a useful feature for the Government to consider in
developing its "Third Way" proposals for bus service
delivery. Our proposal is in its infancy. We recognise that it
would require significant legislative and regulatory reform. Hence
we submit it as a stimulus for debate only at this stage. We would
welcome the opportunity to explore the issues raised in greater
detail with the Select Committee.
24 May 2006
6
City Region Development Programme. Back
7
Transport Statistics for Great Britain DfT October 2005. Back
8
Average costs for service subsidy in Greater Manchester (GMPTE). Back
9
http://www.gmpte.com/content.cfm?subcategory_id=104202 (GMPTE
Bus Timetable Leaflet Library. The three routes are the A6, Oxford
Road and Chester Road.) Back
10
http://www.pteg.net/ Operator Financial Performance 2005. Back
11
Committee of Public Accounts Report on the Delivery Chain Analysis
for Bus Services in England-Forty-third report of Session 2005-06. Back
12
The Traffic Commissioners' Annual Report 2004-05. Back
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