BUS-TED

Introduction
The recent introduction of The Bus Services Act 2017 has opened the door for Mayoral Combined Authorities outside of London to begin implementing bus franchising operations in their area. The legislation also provides a procedure for Non-Combined Mayoral Authorities to implement franchised bus services, however this process is more onerous and requires the completion of more steps.

These procedures are introduced by amending The Transport Act 2000.

Changes such as these come off the back of the perceived success of an historically well-funded franchising framework in London.

What is a Franchised Bus Service?
Where there is a franchising scheme in place, the recognised franchising authority, the local government transport authority, will determine the details of all the services to be provided, and control when and where those services run. Effectively the scheme creates a monopoly on the local bus network and gives that monopoly to the local transport authority who become known as the franchising authority.  The franchising authority will then arrange a competitive tendering process to select which operators actually operate the particular services for a defined time period, no one else is permitted to operate in competition with the franchisee.

The authority also has responsibility for ensuring and maintaining the standard of the services being provided.

There are a number of potential models, but, for example, the operator may receive the remuneration from the transport authority agreed in the tender for providing the services and all the ticket revenue is retained by the franchising authority.  This would often include a cashless ticket payment system as well, oyster and contactless payment in London for example.

According to Section 123A(4) of The Transport Act 2000, a ‘franchising authority’ can be any of the following entities or organisations:

• A mayoral combined authority
• A county council in England for an area for which there are district councils
• A county council in England for an area for which there is no district council
• A non-metropolitan district council for an area for which there is no county council
• An Integrated Transport Authority for an integrated transport area in England
• A combined authority which is not a mayoral combined authority

That being said, where any authority, other than a mayoral combined authority, seeks to become a franchising authority; they may only do so if the Secretary of State permits it.

As set out above, where a franchised bus scheme has been approved and implemented, no other services can operate in the franchised area without the prior agreement of the franchising authority.
This creates significant ‘buyer’ control in the franchising authority, but with it comes significant financial risk.

It can also be difficult, once franchising is implemented, to return to a de-regulated model. Such concerns are one of the reasons that only mayoral combined authorities have automatic access to such schemes, and why other entities must adhere to a longer process.

Mayoral Combined Authorities – How to Set Up a Franchising Scheme
One needs to look no further than The Transport Act 2000, in order to find the procedure that must be followed in order to implement a franchised bus services scheme into a local area.

This, of course, only applying to Mayoral Combined Authorities (MCA). Any alternative entity will have to follow the longer process outlined later.

The five key stages of establishing a franchised bus scheme, if you are a MCA, as outlined by The Transport Act 2000, is as follows:

1. Prepare an Assessment of the Proposed Scheme

The requirement to put together such an assessment lies in the provision contained in section 123B of the 2000 Act. According to subsection (2) of that provision, the assessment must predict the effects of the proposed scheme and the impact it will have on the local area, and; compare that proposed scheme with one or more alternative course of action.

The purpose of such a requirement is to ensure that the users of the services see the benefit of the alternative bus operation frameworks for their locality.

There are, naturally, a number of other things that the assessment must display before the Government will be comfortable permitting them to establish a franchising scheme. The proposed franchising authority must outline how they would operate the scheme and how they would fund and budget and the infrastructure.

In putting together this report, the franchising authority may request information from incumbent or existing operators that they consider may further the analysis. Following this, they must also commission an auditor to review the final assessment, pursuant to section 123D of the 2000 Act.

The review by the auditor must state whether, in their opinion, the information relied upon in composing the assessment was of sufficient quality, the analysis of the information is of a sufficient quality and that the authority had due regard to any guidance issued.

2. Consultation and Engagement

Following the first step, the proposed franchising authority must publish a consultation document relating to the proposed franchising scheme. In accordance with section 123F of the 2000 Act, this consultation document must contain the following:

• A description of the area in which the proposed scheme relates
• A description of any areas that lie within the initially identified area
• A description of the local services to be provided
• The date on which the scheme is proposed to be made
• The date(s) on which the franchising authority intends to enter into local service contracts
• The period or periods it is proposed will expire between the making of local service contracts and the provision of local services under those contracts
• A description of the proposed scheme
• A statement explaining how the authorities will incorporate small-medium sized operators into the provision of local services.
• The date by which the response to the consultation must be received.

As part of the consultation, the proposed authorities must consult all persons operating local services in the relevant area, as well as all other persons holding a PSV operator’s licence or a community bus permit.

3. Response to the Consultation

Once the above-mentioned consultation has been published, the proposed franchising authority must publish a report explaining the authority’s (authorities’) response to the consultation, and their decision on whether to proceed with the franchising agreement.

As per subsection (2) of that same legislation, notice of the response to the consultation must be given to the Traffic Commissioner.

Again, the authority or authorities must show consideration as to how small-medium sized providers of local services will be incorporated into the franchising scheme.

Also included in this step is the actual making and publication of the franchising scheme, as required by section 123H of the 2000 Act. The idea here is to ensure that there is actually a scheme at the ready to be implemented that demonstrably betters the local services and its users from the alternative de-regulated schemes. Clearly, this analysis can be contentious.

4. Transition

Where the authority decides to proceed with the franchising agreement, the market will have to transition into this more regulated framework. In order to do so there are a number of measures outlined in the 2000 Act that will facilitate this.

Under section 123I of that legislation, incumbent local services may be postponed until full implementation can occur. However, before making such a decision they must consult persons operating local services who would be affected by the decision, as well as other persons who it would be appropriate to consult. There is also the concept of registered local service requirements enabling franchising authorities to record and keep track of who falls into the relevant area.

5. Implementation

Having implemented the franchising scheme, the relevant locality could see a number of potential benefits. These include integrated multi-modal ticketing under one brand and one simple oyster-style ticketing system. There is also likely to be the ability to cap and regulate fares, to ensure that commuters and users are encouraged to use the bus service. Obviously, these capped fares have to work economically, and this will be a challenge.

Environmental policy can be furthered given that the franchising authority will be able to impose standards and regulations regarding the emissions of vehicles, with the intention of improving local air quality.

These controls however obviously have to be paid for and the scheme has to provide affordable transport.