Reports:

Study of European best practice in the delivery of integrated transport: report on stage 3 - transferability

Public Transport in the UK

Local Bus Services Outside London

The operation of local bus services is determined by the provisions of the 1985 Transport Act. Operators are free to provide whatever services they feel necessary on a commercial basis, and there are provisions for subsidising non-commercial services. Local authorities are left to determine what transport need is not being met by the commercial service provision and, then, to seek bus services to meet these needs through competitive tendering.

Operators must hold an Operators Licence and registering the particulars of the service with the relevant area Traffic Commissioner at least 42 days prior to its introduction. Service changes also need to be registered at least 42 days prior to their introduction and in both cases, application can be made at less than 42 days notice if supported by the local authority.

The only circumstance where an operator might not be able to provide a service is where the Traffic Commissioner has determined Traffic Regulation Conditions, usually at the request of a Local Authority. Such conditions are usually to prevent dangerous traffic conditions or reduce severe traffic congestion. In the few cases where conditions exist they normally regulate the amount of time at which buses can wait at designated bus stops in order to avoid congestion and are, generally, in areas where there is substantial competition between operators.

Bus Industry Structure

The 1985 Transport Act also fundamentally altered the structure of the bus industry with the privatisation of both the National Bus Company (NBC) and Scottish Bus Group (SBG). It also saw municipal and PTE operators being put at arms length from the local authority.

Following a number of years of rapid and ongoing change, the industry has tended to consolidate into a number of major groups. Relatively unchanged, however, is the very large number of much smaller operators who continue to provide school buses, many rural services and, in some cases, urban services. In Great Britain, 68 per cent of PSV operators are small fleet operators with five or fewer vehicles.

The Competitive Framework

The 1998 Competition Act has a particular bearing on the bus industry. The Act specifically prohibits:

• agreements between undertakings, decisions by associations of undertakings or concerted practices which have the object or effect of preventing, restricting or distorting competition in the United Kingdom; and
• conduct by one or more undertakings which amounts to the abuse of a dominant position in a market in the United Kingdom.

The Act provides a non-exhaustive list of agreements and conduct to which the prohibitions apply and includes:

• directly or indirectly fixing purchase or selling prices or any other trading conditions; and
• sharing markets or sources of supply.

There is a block exemption for multi-operator tickets, although operators seeking specific rulings on individual schemes face an administration fee of £13,000.

The complexity of the situation can lead to operators being unwilling to consider such ticketing schemes, although provisions in the Transport Act 2000 allow for local authorities to set up such ticketing schemes whereby operators of local bus services are required to make and implement the necessary arrangements.

Local Authority Duties and Responsibilities

Local authorities are responsible for providing school transport under the 1944 Education Act, to 'co-ordinate' the provision of public passenger transport under the Local Government Act of 1972 (PTEs are covered by the 1968 Transport Act), and secure the provision of appropriate public passenger transport services to meet public transport requirements where those services would not otherwise be available under the 1985 Transport Act.

The Act also obliged local authorities who wish to subsidise local bus services to go to open competitive tender and to determine which tender to accept solely by reference to what, in their view, is the most cost effective and economic application of the funds available for such subsidies. There was also a duty not to inhibit competition between operators as a result of providing service subsidies.

The competitive tendering regime for non-commercial services remains unchanged, although the scope of tendering has increased with the provision of specific subsidies such as Rural Bus Grant.

Concessionary fares, typically for the elderly and disabled, have been provided by local authorities for many years, with a rapid expansion of schemes in the early 1970s. The Transport Act 1985 introduced a more consistent approach to operator compensation for participating in schemes, on the basis of revenue foregone, however the powers remained discretionary and, therefore, wide variations existed and district authorities were not obliged to offer concessions. The Transport Act 2000 has, however, introduced minimum standards for concessionary fares schemes. In England this comprises a 50% reduction on full standard adult fares for pensioners and the disabled (excluding weekday morning peak periods) whilst in Scotland and Wales rather more generous approaches have been adopted.

The Transport Act 2000 also requires local transport authorities to prepare and publish a Local Transport Plan setting out their policies for the promotion of safe, integrated, efficient and economic transport facilities in their area, and to develop a bus strategy for carrying out their bus functions. The Local Transport Plan replaces the Transport Policies and Programmes brought in under the 1972 Local Government Act. A similar regime also exists in Scotland.

An important change brought about by the Transport Act 2000 is the revocation of the requirement for local authorities to behave "so as not to inhibit competition" when tendering for non-commercial services. This is replaced by a duty to have regard to the interests of the public and of operators when making and varying Quality Partnership schemes, ticketing schemes and when inviting and accepting tenders for subsidised services. This should make it easier to augment existing commercial services at higher frequencies through tendered provision.

Quality Bus Partnerships, Quality Contracts and Ticketing Schemes

The concept of Quality Bus Partnerships (QBPs) has been in existence from the mid 1990s and, generally, involves one or more bus operators and one or more local authorities (district, county, unitary, principal councils or PTAs) agreeing a partnership. The operator(s) agree to provide a certain standard of service, usually through the introduction of low-floor buses, whilst the authority agrees to provide some infrastructure improvement, such as bus priority or improved shelters/waiting arrangements, to assist the operation. Such schemes have been non-statutory.

The Transport Act 2000 allows for statutory schemes, the principal difference being that they would be enforceable at law. Standards may then be imposed upon operators, but these specifically must not include service frequencies or timings.

A statutory scheme requires formal consultation with operators and interested parties and once in operation must remain so for at least five years.

Quality Contracts differ from Quality Partnerships in quite fundamental ways. Sections 124 to 134 of the Transport Act 2000 enable local authorities, either alone or jointly, to make a Quality Contract (QC) scheme provided that they are satisfied that it is the only practicable way to implement their bus strategy or strategies.

Under a QC scheme, the authority will determine what local services should be provided in the area concerned and to what standard. Contracts would then be let with bus operators, granting them exclusive rights to provide services to the authority's specification. The contracts may last for no more than 5 years.

If a QC scheme is implemented, the standard provisions of the 1985 Transport Act would no longer apply. Operators would not be able to register any service wholly within the QC area for commercial operation. For that reason, full consultation is required and a scheme could not come into operation for at least 21 months after it is made.

Sections 135 to 138 of the Transport Act 2000 empower local transport authorities, alone or jointly, to set up ticketing schemes, whereby operators of local bus services are required to make and implement arrangements to accept each other's tickets or provide integrated ticketing in ways specified in the scheme.

In making a scheme, the local transport authority must be satisfied that it is in the public interest and helps to implement the bus strategy.

Some operators are already involved in area-wide ticketing, although as already noted the provisions of the Competition Act have stifled developments, but they cannot be compelled to do so. If a scheme is made, operators will be compelled to participate if they wish to provide local bus services in the area.

Local Bus Services Inside London

Unlike the rest of the UK, the provision of bus services in London was not deregulated under the 1985 Transport Act. Bus operators are not, therefore, able to determine and register their own commercial network of services wholly within the Greater London area. Special arrangements exist for cross-boundary services.

The entire network of local buses is determined by Transport for London (TfL) and then routes or groups of routes are put out to competitive tender. Whilst operators are consulted, decisions on route planning, the route network and timetables are all made by TfL. Fares are set by TfL and marketing is also undertaken by TfL, although some operators do provide back-up materials of their own.

In contrast to a number of local authorities outside of London, the contract specifications are quite rigorous in terms of quality and other standards. This has led to a large number of new buses coming into the capital, often at the expense of the major groups' provincial operations.

Figure A.1 - Bus Kilometres and Patronage in London

Source: DTLR, A Bulletin of Public Transport Statistics, 2000.

Figure A.1 shows the changes in local bus patronage and kilometres operated since 1990. In contrast to the rest of the UK, patronage has seen a fairly consistent increase year on year such that passenger numbers are now higher than at any time since the mid-1970s. Kilometres operated have seen a general increase, despite some reductions in the early 1990s, and this increase is of a higher magnitude than elsewhere in the UK.

Industry Structure

In common with the rest of the UK, London bus companies were privatised, this taking place during the early 1990s. There are no arms-length municipals although TfL does have its own arms-length operator, this having come into being following the failure of an independent operator in the east of the Capital and now retained to provide competition to the other companies who are, mainly, part of the major groups.

Competitive Framework

Unlike the rest of the UK there are no particular concerns with respect to the 1998 Competition Act. Competition in the Capital is restricted to tender bids, on the basis of cost and quality.

Quality Initiatives

The concepts of Quality Bus Partnerships and Quality Contracts do not have the relevance in London that they have elsewhere in the UK. There are, however, a wide range of quality initiatives underway, including the London Bus Priority Network and London Bus Initiative.

As already noted, there are quite stringent quality conditions connected to the individual service specifications and contracts.

Rail Services

The Regulation of Railway Services

The Railways Act 1993 laid the foundations for the rail industry as it currently exists within the UK. This broke up the former British Railways into a number of separate entities as follows:

• Train Operating Companies (TOCs);
• Rolling Stock Companies (ROSCOs);
• rail freight operators (e.g. EWS);
• a railway infrastructure company - Railtrack; and
• rail maintenance businesses.

Franchises specify basic service and quality requirements; bidders specify either a subsidy requirement or what they are prepared to pay for the franchise concession. The basic service requirements are specific in terms of the minimum timetable to be operated and in terms of quality, reliability and such things as PIXC (passengers in excess of capacity - i.e. standing passengers) are specified.

Figure A.2 shows the trend in passenger journeys on the national rail network over the past ten years.

Figure A.2 - Passenger Journeys on National Rail Network

Source: DTLR, A Bulletin of Public Transport Statistics, 2000 and
A Bulletin of Rail Statistics, Quarter 4, 2000/01.

The Transport Act 2000 established the Strategic Rail Authority (SRA) which has subsumed the functions of OPRAF and the rail regulator. Section 205 of the Act sets out the primary purposes of the SRA, these being:

• to promote the use of the railway network for passengers and freight;
• to secure the development of the railway network; and
• to contribute to the development of an integrated system of transport of passengers and freight.

The SRA is now responsible for franchising and the re-franchising of the initial franchises is underway, although short-term extensions to the existing operators are currently being considered whilst longer-term objectives are determined.

Passenger Transport Authorities (PTAs) also have a role to play in the planning and provision of rail services within their areas. Under the 1968 Transport Act they were given powers to provide integrated bus and rail networks, although to a large extent that power was lost after the 1985 Transport Act when bus services were deregulated. They have, however, retained their co-ordinating role for rail services and continue to specify fares and services levels for their areas in conjunction with the SRA.

The Competitive Framework

Competition exists given the tendering position for the rail franchises. There is also some competition between the various TOCs over certain sections of route or between the same two places via different routes. There are, however, capacity restrictions on the railway and track access has to be limited to the available 'slots'. Future investment in the rail infrastructure may lead to additional 'slots' or 'paths' being available, but already a number of the TOCs have started operations beyond their traditional areas.

The railway industry is also subject to the provisions of the Competition Act 1998, although perhaps to a lesser extent than the bus industry. It is also subject to European Union competition legislation, particularly with respect to providing track access for international services.

Local Authority Duties and Responsibilities

In contrast to the provision of bus services, local authorities have no particular duties or responsibilities with respect to rail, except in the case of PTAs as outlined above.

The Transport Act 2000, however, does require local authorities to pursue integrated transport policies through the Local Transport Plan. A number of local authorities are now pursuing Quality Rail Partnerships with TOCs.

Light Rail and Tramway Systems

Light rail and tramway systems provide a very small part of the public transport infrastructure, but that is set to change over the coming years. The Blackpool tramway, still municipally owned and operated, is the only system that has lived through the trend away from fixed track public transport, but it is now joined by light rail and tramway systems in Newcastle, Sheffield, Manchester and Birmingham with others following in the next few years.

In most cases, with the notable exception of Blackpool, the systems are operated on a concession basis. These are rather like the franchise agreements for heavy rail except that, and unlike the national rail network, operators are responsible for all aspects of the system from track maintenance and signalling through to the actual operation of the vehicles. Most of the new light rail and tramway systems, set to come into operation over the next few years, are within the design, build, finance and operate (DBFO) concept.

Service frequencies, fares, and all aspects of the operation are controlled by the relevant local authorities; the only aspect of competition is with respect to gaining the concession for operation.

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27 Local bus services are defined in Section 2 of the Act as being services where passengers are carried at individual fares and where it is possible to both board and alight within 15 miles. This also applies for Ful Duty Rebate purposes. For drivers' hours regulations, the overall route length (50 kilometres) is trh dividing line between British and EU regulations.

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