The Head of Transport from the Tees Valley Combined Authority (TVCA) will provide an update on Bus Services.
RECOMMENDATION: that the Panel determines whether further information is required.
The Head of Transport from the Tees Valley Combined Authority (TVCA) provided an update on Bus Services. The TVCA, along with the five Tees Valley Councils, had a long history of working in partnership with bus operators. In 2021, the Government published a new National Bus Strategy, which included requirements to build on existing partnership working.
One of those requirements was for the local authorities to develop a Bus Service Improvement Plan (BSIP). The BSIP included a five point action plan setting out how bus services in the Tees Valley would be improved. The action plan was structured around:
The BSIP was submitted to Government in October 2021 and published on the TVCA’s website. The funding allocation to deliver the BSIP was expected to be awarded by the end of February 2022. The next step would be to decide how the funding would be allocated across the five priority areas and a detailed business case would be produced.
The other main requirement of the National Bus Strategy was that highway authorities had to develop either an Enhanced Partnership or a Franchise system. The Tees Valley Authorities were in the process of developing an Enhanced Partnership, which was in effect a statutory agreement between the bus operators and the authorities, setting out how the actions in the BSIP would be delivered. A shell agreement that formed the basis of the plan had been developed in advance of the funding allocation.
Throughout the Covid-19 pandemic, the Government had been providing recovery funding to the bus services and this was due to run out at the end of this financial year. Bus operators had experienced a huge reduction in terms of their fare income and there was currently a lot of uncertainty around the financial sustainability of the bus industry. The longer term impacts of the pandemic in terms of passenger numbers was, as yet, unclear. These issues had to be worked through at the same time as trying to deliver improvements and ensure that there was a sustainable bus network across the Tees Valley.
A Panel Member expressed concerns in relation to the enhanced partnership system as to whether it would actually obligate the bus operators to provide the services the local authorities requested, whereas a franchising system would ensure they would have to operate the services required. It was explained that no other local authorities outside of London had implemented a franchising scheme to date, although Manchester and Liverpool had started the process. Introducing franchising was complicated and involved multiple stages of legal process. Before franchising could be introduced, there was a legal test to be satisfied to demonstrate that the partnership approach had not worked. Whilst franchising would give local authorities control, it did not necessarily mean that bus service enhancements could be delivered, as bus companies still needed to make a profit. If services were not profitable, subsidies from public funding would be required. Even with franchising, the core problem remained that if a service was not commercially profitable it would require subsidy. It was also noted that in the Tees Valley there were two dominant operators, and it would be very difficult for a new provider to come in, given the infrastructure costs of setting up a new operation in the Tees Valley, and there would be a very limited market for franchising.
It was highlighted that several European countries invested in the UK’s bus companies in order to get a return to subsidise their own public transport services. Whilst it was acknowledged that bus companies existed to make a profit, it was suggested they could make a smaller profit.
With an enhanced partnership, the local authorities could use any public funding available to kick-start new services that had a chance of becoming commercially viable. There was also the potential to capture developer contributions on new housing sites to contribute to new services initially. The more evidence that was available about potential demand, the stronger the position was in terms of having discussions with the bus operators and persuading them to take a bit of a commercial risk in the early days, with the potential for a service to be profitable in the longer term.
One of the aims of the BSIP was to get more people using buses because it would provide the operators with more opportunity to take some commercial risks. Younger people were less inclined to own a car and more inclined to use buses and other modes of transport and this was seen as a growth market to focus on. If more people used buses on some of the busier routes, that would potentially create opportunities, as bus operators would have increased revenue to look at some of the more peripheral services where there was less demand.
There was also a programme of capital investment to prioritise buses on some of the core corridors, for example, Linthorpe Road. The challenge was limited road space, and it was difficult to allocate road space to buses or active travel. Whilst it was not straightforward, there was a commitment to make bus priority improvements.
The TVCA’s Tees Flex Service was a three-year pilot scheme which would continue until February 2023. The service was brought in to cover areas of the Tees Valley that did not have any bus services and currently carried about 1500 passengers a week. In spite of the Covid-19 pandemic, the service had experienced strong passenger growth and was still attracting new passengers. There was a much higher proportion of younger people and working-age people using Tees Flex, as opposed to commercially run services, which were generally dominated by concessionary pass holders. One of the main challenges was trying to aggregate trips with the on-demand service and balancing that with trying to encourage as many people onto buses as possible, to reduce the level of subsidy required. The reality was that running public transport in areas with low population densities or low demand, would always require subsidy. Customer satisfaction with the service was high and people could book their journey via an App or by phone.
The Chair thanked the Officer for attending the meeting.
AGREED as follows that:
1. the information provided was received and noted.
2. the Panel would revisit this topic in future.