That’s the way we successfully manage Metro now and we think buses should be provided the same way. We believe this will provide public transport that is simple, transparent and better value for money for passengers and the taxpayer.
Nexus, on behalf of the Tyne and Wear Integrated Transport Authority and the area’s five local councils, is exploring the respective benefits of a new Voluntary Partnership Agreement with bus companies, and a Quality Contracts Scheme, in which all services would be offered under franchise by a single public body.
We’ve been discussing these ideas with community and business leaders, and will make recommendations to the ITA later this year, followed by full local consultation. On these pages you can find out more about this important project.
Good quality bus services are essential to the economic and social life of Tyne and Wear and the region. They matter whether you are a bus user or not because buses get people to work and education easily. They get people to shops and nights out, and for some they are the only way to get around.
People in Tyne and Wear make 141 million bus journeys a year on 339 different bus routes – we take the most number of bus trips per head of population in the UK outside London. But there are dozens of different brands or operator identities and more than 100 different choices of ticket – a baffling mix for the customer to get to grips with.
Commercial bus companies in Tyne and Wear, mainly Stagecoach, Go North East and Arriva, get almost half their income – around £62m a year – from the taxpayer in the form of compensation for concessionary fares, Government grants and contract payments.
Despite this it is the bus companies alone who now decide where and when 90% of services go and what fares they charge. Profits are generally not used to support the remaining routes which, while more lightly used, nevertheless provide part of a network of essential local services. Nexus is left to plug the gaps on a piecemeal basis using funds from local taxpayers, costing around £9.5m this year alone.
The current model is confusing for the passenger, represents bad value for the taxpayer and is ultimately unsustainable as public spending will be reduced in the next few years. Bus services should be planned and provided with the public interest put first. We need to find new delivery models for this vital public service if we are to avoid cuts to services and rising fares.
The Tyne and Wear Integrated Transport Authority, with the support of the five councils in Tyne and Wear (Gateshead Council, Newcastle City Council, North Tyneside Council, South Tyneside Council and Sunderland City Council) is asking local people and local businesses for their views on plans for major changes to the way local bus services are provided and paid for.
We think these changes will give passengers a better and simpler service, the taxpayer greater value for money, and young people cheaper fares. We also believe it is the only way to avoid a decline in local bus services as costs rise and public spending is reduced. To achieve this we want to explore in parallel the ideas of introducing either a Quality Contract Scheme or Voluntary Partnership Agreement to cover the Tyne and Wear area, replacing what exists at present.
A Quality Contracts Scheme allows a local authority (in this case the ITA working through Nexus) to introduce concessions for buses – like the system already in place for London – with private companies bidding to provide services under a contract that specifies routes, frequency, fares and vehicle and quality standards. It would be similar to how Nexus successfully runs Metro now.
We believe the 14 key benefits of a Quality Contracts Scheme would be:
Transparency
- One single accountable and approachable entity responsible for all aspects of bus services.
- Ticket prices agreed in a democratic way by councillors on the Integrated Transport Authority.
- Clear and measurable targets for the performance of bus services, measuring reliability, punctuality, cleanliness, security and driving standards.
- Open consultation processes where routes and services are to be changed, with a clear process allowing local people to have their say.
- A single universal route for customers to comment and complain.
Simplicity
- A simple, universal fare structure covering all buses and Metro services, anywhere in Tyne and Wear.
- A single source for all travel information and ticket sales.
- Clear branding for bus services tying the network together and engendering greater passenger confidence.
- A core network of high quality, high frequency buses running every 10 minutes daytime and evening, with routes continuing late into the night and on Sundays, and backed up by local services.
Value for money
- Any public money paid to operators the result of competitive tender or market testing.
- All routes sharing a common fare structure, with surplus from heavily-used journeys supporting less-busy, but equally essential services, as the backbone to a more stable and affordable network.
- A better deal on fares for young people up to the age of 21 and full-time students.
- Opening the Tyne and Wear bus market to new competition to get the best contract price for every service.
- Commercial companies providing the best standards of customer service and vehicle quality, with incentives to beat performance targets.
To introduce a Quality Contracts Scheme we would need to invoke legal powers to introduce a franchising system in place of the existing ‘deregulated’ market. It would take up to three years to introduce this, following formal consultation on a detailed scheme proposal, approval by a Government-appointed Board and procurement of franchised services.
An alternative to this is a Voluntary Partnership Agreement, in which we would agree with current bus companies in Tyne and Wear key commitments on where and how frequently they operate routes, the range within which fares can change and the stability of the current network of bus services in the years ahead. It is possible this might be quicker to agree on, but we would want to see firm commitments from bus companies in line with what we think can be achieved through a Quality Contracts Scheme.
A strong desire for change
Engagement with business and community leaders has shown strong support for change and improvement to bus services – and recognition of the importance of buses to local people and the economy.
The number of people using bus services in Tyne and Wear has fallen steadily over the last decade, with two million fewer journeys in the last year alone.
The Tyne and Wear Integrated Transport Authority fears that this will lead to services being cut and people being left more and more isolated in future if action is not taken to change the way local bus services are delivered.
Nexus carried out informal consultation with more than 234 business and community leaders and groups which took place in early 2012 (see document below). The feedback shows strong support for the aims of the Bus Strategy delivery project. The main areas of concern were:
- the need for more integrated public transport with consistent standards;
- better solutions for fully-integrated ticketing;
- the need to reduce service changes and cuts;
- the implications of any changes on buses routes in and out of Tyne and Wear
- the need for consultation on any proposed changes
- the challenges involved in introducing a Quality Contracts Scheme.
The Bus Strategy Delivery project is being led by the ITA with the support of the five local authorities in Tyne and Wear; Gateshead Council, Newcastle City Council, Sunderland City Council, North Tyneside Council and South Tyneside Council.
View the Informal Stakeholder Engagement Results here.
What if we carry on the way we are?[+]
There is a real danger that bus routes will be cut back and the quality of service falls if we carry on as we are now. The Government is cutting the amount it pays in Bus Service Operator Grants by 20% in 2012, and local authorities are having to find savings across all their services, including the money they can afford to pass to Nexus to provide local transport for them. We need to make sure the business model for our local bus services are as efficient as possible and give the best possible value for money if we are to maintain services at their current level, and provide a better deal for younger passengers.
How are these different from the way the bus network runs now?[+]
At the moment no-one plans the whole public transport network to make sure it meets Tyne and Wear’s social and economic needs. Private operators provide 90% of bus routes in Tyne and Wear and make their own decisions on where and when these run and how much they cost. Nexus, using funds from local councils, fills the gaps by buying in ‘secured’ (social need) services where communities would otherwise have no public transport, or where buses don’t run at evenings and weekends.
Will local people have a bigger say in where and when buses run?[+]
Yes. In a Quality Contracts Scheme we would build in an annual consultation process so local people were fully involved in any plans to change services. As fares, frequencies and routes were ultimately set out by the ITA on behalf of local councils it and Nexus could be held much more accountable for how it performed. In a Voluntary Partnership there would not be the same degree of direct accountability, but we would agree with bus operators the best possible consultation on any changes they proposed as part of the partnership deal.
What is this engagement session all about?[+]
The Integrated Transport Authority, with the support of your local councils and Nexus, is proposing a major change to the way local bus services are planned, provided and paid for. We think these changes will give passengers a better service, the taxpayer greater value for money, and young people cheaper fares. We also believe it is the only way to avoid a decline in local bus services as costs rise and public spending is reduced.
To achieve this we want to explore in parallel the ideas of introducing either a Quality Contracts Scheme or Voluntary Partnership Agreement to cover the Tyne and Wear area, replacing what exists at present.
We want to hear your views on this outline proposal, before we develop our plans further.
What needs to happen for there to be a change?[+]
A Voluntary Partnership is a written agreement between Nexus, local authorities and bus operators. To enter into this agreement we would want to be sure that local people will be getting the best deal possible from its local bus service going forwards, and we would ask the current operators to provide assurances on maintaining existing routes, future fare levels and vehicle and customer service quality.
A Quality Contracts Scheme can only be imposed following extensive widespread consultation and needs to show how it will provide a better bus service than would otherwise exist in order to be approved by a Government-appointed board and then introduced, as the franchise system and bar on competition sweeps away normal rules on freedom to trade. This process, and the procurement of service providers, will take up to three years to complete.
What is a Voluntary Partnership Agreement?[+]
A Voluntary Partnership Agreement (VPA) is a written agreement that would be entered into between Nexus, local authorities and bus operators. In a VPA Nexus and local authorities would commit to providing infrastructure like priority lanes, stops and interchanges and negotiate arrangements for use of that infrastructure. Bus operators would meet this with commitments on vehicle standards, maximum fares, frequencies and timings.
What is wrong with the way things are now?[+]
The current public transport network is complicated to understand with dozens of operator and route brands, different information sources and more than 100 different ticket types. Market research shows people want travel and tickets to be simple – particularly when changing between buses or between bus and Metro – but this is the opposite of what they face now. Bus routes which make a profit do not help fund those which are provided to meet a social need – for example at nights and weekends or in areas of lower demand – which is why these have to be paid for separately by Nexus using funds from local councils.
We believe the taxpayer should have greater control of this vital public service for the money it provides. We believe passengers will get a better travel experience and be more likely to use buses if there are stable bus routes with simple messages on frequency, simple fares and designed into a whole integrated network, including Metro and the Shields Ferry. By making public transport better and more popular we can help address climate change, reduce congestion and support economic growth.
What benefits do you see for passengers?[+]
Under both models passengers would get a high quality, stable network of bus routes, and local people would get greater influence over where buses run, and greater value for the money they pay for public transport, whether through fares or taxes.
A Quality Contracts Scheme would allow us to go further and provide a simple universal fare structure integrated with Metro, and one body to go to if passengers had any problems. We also believe we would be able to provide much cheaper fares for students up to the age of 21, while maintaining a network of routes at the current level.
Who pays for bus services now?[+]
The taxpayer already meets almost half the cost of bus services in Tyne and Wear, even before anyone buys a ticket. Bus operators get paid around £62m each year through payments covering compensation for ‘free’ concessionary travel for older and disabled passengers, a Bus Service Operator Grant from Government and contracts for additional ‘secured’ services, alone worth £9.5m a year. We would provide a Quality Contracts Scheme in line with this existing public funding and the fares passengers pay.
Who will set fares and what will happen to any profits?[+]
In a QCS fares would be set by the Tyne and Wear Integrated Transport Authority, which already does this for Metro and the Shields Ferry, so a simple fare structure covering all local transport could be brought in. Nexus will manage the whole scheme and collect the fares. A big advantage of this is that it will allow greater cross-subsidy than exists now, with the most popular routes helping pay for those which fill important social needs, but which are not profitable – and which Nexus has to buy in separately using public funds. Any surplus would be put back into bus services, to keep fares down or to introduce new routes. The companies that won concessions in a QCS would be paid an agreed fee, and would seek to make a reasonable profit in return for investment in new vehicles and quality standards.
In a Voluntary Partnership bus operators would continue to set and collect their own fares, within limits set out in the partnership agreement. They would retain any profit after investing in new vehicles and quality standards, and could invest this in routes if they chose to.
Are bus companies failing to deliver a reasonable service?[+]
Our local bus operators have done a good job investing in modern vehicles, providing frequent services on the main routes into town and city centres, and providing customer service and ticket innovation. But we believe the customer will get a better service and the taxpayer will get better value for money if public transport is designed as a whole integrated network that is simple to understand and use, planned transparently and with profit-making routes helping maintain overall levels of service. We recognise the good things which bus operators do in providing individual routes, which is why we want to work closely with them in building a network either through partnership or contract.
What effect would these changes have on competition in the local bus market?[+]
We believe a QCS would increase competition for the provision of bus services in Tyne and Wear. Currently all but a tiny minority of bus services are in the hands of three operators, all of whom operate within clearly defined ‘territories’ where on-street competition is rare on all but a handful of routes. This has been confirmed by a recent report from the Competition Commission which describes how two local bus companies have taken steps to protect their own ‘territories’ and reduce competition between them. A QCS would open the market to new competition because it would guarantee income to companies who bid for contracts let by Nexus, as opposed to the current system where market entry is highly risky.
Discussions with the bus market have shown that many companies, both in the UK and further afield, would be eager to bid to win this business on a competitive basis – keeping contract prices low and improving value to the taxpayer. We would intend to let contracts in ‘bundles’ so that although a number of different bus companies will be under contract to provide services in Tyne and Wear at the same time, bus customers will benefit from the simplicity offered by a single, united bus network. In a Voluntary Partnership we would work with existing operators but this does not prevent new companies from entering the market on the same terms.
What is a Quality Contracts Scheme?[+]
A Quality Contracts Scheme provides a legal method to create a simple, transparent public service with greater value for money for the customer and taxpayer. It allows a local authority (in this case the ITA through Nexus) to introduce concessions for bus services in an area, with private operators bidding to provide groups of services in contracts covering all routes, frequency, fares and vehicle and customer service standards. It would be very similar to how Nexus successfully runs Metro now - setting fares, frequencies and quality standards itself, but with a private company
operating trains within the ‘Metro’ brand.