Tees Valley sets out road to bus franchising

Tees Valley Mayor, Ben Houchen, has today committed to a “thorough investigation” into whether “London-style” franchising is the best option for Tees Valley’s bus network.

Following a positive response to proposals from the Tees Valley Combined Authority Transport Committee today (26 June), Mayor Houchen will now instruct officials at the authority to prepare an assessment of a proposed franchising scheme for the whole of Tees Valley. The Committee recommended that £150,000 should be allocated to carry out an initial feasibility study.

Under bus franchising, the deregulated bus market is suspended and bus operators are only able to provide services under contract to the area’s local transport authority. This approach is used extensively across Europe, in London and elsewhere as it offers a range of significant advantages that are impossible under partnership – such as integrated ticketing, route planning, cross subsidy across bus services and consistent branding and accountability.

Under the bus franchising system in London, Transport for London - accountable to the Mayor - specifies what bus services are to be provided. TfL then decides the routes, timetables and fares. The services themselves are operated under contract by private companies through a competitive tendering process.

Mayor Houchen is keen to understand whether a similar system could be established in the Tees Valley, and if the costs and risks associated with franchising to potentially offer a better way of delivering a better bus network than is currently provided under the deregulated system.

Tees Valley Mayor Ben Houchen said, “People rightly demand that our bus network should be modern, accessible, affordable, and everyone should be able to use it. That’s why we need to look at all options on the table – including bus franchising. 

“Not everyone uses a car, so it is vital that our buses play a fuller role in connecting people with jobs, housing, education, healthcare, shops, family and friends. 

“Our bus companies are doing the best they can in the face of subsidy cuts by local councils, but it would be wrong of us not to look at whether there are other models that would work too. 

In April 2017 the Bus Services Act became law, giving Mayoral authorities like Tees Valley powers to improve bus services by reforming the current bus market. The options available include franchising – the system used in other cities globally – and ‘enhanced partnerships’. 

As part of this initial assessment, the Combined Authority will engage with bus operators to build a true picture of the operating costs and revenues of the Tees Valley bus network. This study will also focus on looking in detail at the top line financials of the current bus network in order to establish the level of profit generated by the Tees Valley bus network each year; and if there is a significant surplus, whether this reflects a fair return on investment for local people.

Mayor Houchen added, “This isn’t about putting the buses in public hands, but looking at whether a regulated system like London would work for us too.

“I’m clear that the Tees Valley needs a joined-up transport network, with simple fares and ticketing, that puts the passenger first and guarantees the best value ticket for their journey. 

“With this this initial assessment, we will be moving ahead with the powers we have to look at re-regulating the buses so they work for the people.”

 

Undertaking the above study will require the Mayor to invoke his powers under the Bus Services Act in respect of franchising, and request financial data from local bus operators. To date, only Greater Manchester has used these new powers.