The county's main commercial bus operators, Stagecoach, Arriva and Go North East, had campaigned tirelessly against the move. They will probably soon have to submit bids to Nexus on a route-by-route basis in order to continue operating in Tyne & Wear.
So what's actually going to change for the passenger? Currently, the bus network, timetables and fares are set by the private bus companies, who are answerable primarily to their shareholders. Nexus may fund additional services to fill in the gaps in that commercial network. This is how buses are run across the UK, with the exception of Greater London and Northern Ireland.
Tyne & Wear's local authorities have now voted to move to a system like that used in Greater London, where a public body accountable to the whole of society decides where the buses should run and sets the timetables and fares. It then franchises out the actual running of each route to a private company, but for passengers it won't matter which company runs which bus.
It's still not quite a done deal yet, but the county's elected representatives have voted unanimously and it'll be a bold review board that chooses to overturn that.
More details in The Journal, Shields Gazette and The Guardian. Nick Forbes, the leader of Newcastle City Council, states his case here.
It wouldn't particularly require a 'bold review board' to overturn the decision as the entire Nexus proposal is so riddled with holes such that it is on very shaky ground. It is based on no extra buses (a position I suspect the commercial operators wouldn't agree with), little extra benefit, fare increases largely in line with what commercial operators offer as long as no one cuts funding, no planning for possible future funding cuts, long term & on-going passenger loss into the future (after a somewhat ambitious jump in passengers caused simply by the fact the services are now regulated) & no compensation for the operators for the loss of assets (it is an established precedent that bus routes have a value that should be considered in any transaction even if no other assets transfer - see Finglands for the most recent such deal). It is very unlikely that the profit would be ploughed back into extra bus services as the contractors would need to still make a profit and Nexus have publicly stated that they intend to use any profit to fund the Metro that has been losing money & passengers for year, & yet Nexus lambasts the bus operators for losing passengers at a much lower rate than the Metro across their networks.
ReplyDeleteThis will not be London style regulation with each route tendered separately but area contracts involving 39 to 128 vehicle pvrs (so most will be far to big for smaller British operators to get involved with even if they wanted to) with all services to be Euro V or better within 3 years (which will be far more expensive than Nexus appear to be prepared to admit & I'm not sure there is enough capacity in the system to supply that many new buses in that timescale without affecting deliveries to other areas - it will certainly require major numbers of more expensive imported buses). Stagecoach has stated they will not bid for any work & both Go-Ahead & Arriva have indicated they will fight this decision through the courts so this is going to sour relations & destroy trust between Nexus & the British bus operators. The structure is also the very sort that British bus groups do not favour and have never really shown any success with (none of the British owned groups have ever successfully broken into European tendering on contracts like this, with Arriva now being German owned, Nat Ex is the closest with its Spanish involvement) so this will just involve transferring very successful UK owned businesses to European State operation. An added problem is that British Government (at both local & national levels) have shown themselves singly inept at contracting, it is the relationships between officers & bus company managers that keeps things going which is going to be destroyed by these proposals & bringing in of outside businesses without any local connections, with the contract negotiators of these big foreign contractor businesses eating them for breakfast. Nexus (and all local authorities) are also completely understaffed for this sort of system, TfL employ dozens of people in network planning & development roles whilst all PTEs & Local authorities I have dealt with have employed 1 or 2 people doing it, the cost of getting the staff is going to be high & staff skilled in these areas are not exactly available in large numbers - TfL themselves have stated you cannot do what they do without a huge subsidy (London receives as much subsidy for its bus services as the rest of England combined) and Nexus clearly do not have any extra money to pay for this.
The two main operators in Tyne & Wear are very high quality, both have some of the highest passenger satisfaction ratings in the industry (& the bus industry has satisfaction levels that most industries would kill for) and both have just been nominated for bus operator of the year so Tyne & Wear is hardly a failing area that needs rescuing.
An excellent summary, dwarfer1979. If this goes through, it's going to be a hugely expensive disaster and one has to feel sorry for the residents and existing bus company staff who are going to suffer. It'll be interesting to see exactly how Stagecoach reacts and how Nexus / other operators cover the loss of availability of several hundred buses and four depot sites that they seem to be relying on (although the latter may well ba available for purchase, at the 'right price', of course).
ReplyDeleteI wouldn't like to predict exactly what Stagecoach will do. Sir Brian has said publicly that he'll simply close down and pull out of the area. I'm not sure if he'll follow that through, but he might well start talks with Go-Ahead and Arriva to transfer routes and drivers across (but probably leasing the sites to them, so that Nexus can't get their hands on and asset-strip). The other two are, of course, based in the North East, so might find it politically to simply refuse to play.
ReplyDeleteI too believe that the next stage (when Nexus have to go public with their detailed proposals) will cause the whole sorry fiasco to fail (hopefully), but again, there may be a political will to make it work whatever the repercussions.
I also feel sorry for the staff - they'll be the big losers in all this.
Bus Drivers are on the way out as well. The first Driverless Bus trials will start soon. Still probably a decade away before we see them in service though
ReplyDeletehttp://www.telegraph.co.uk/news/uknews/road-and-rail-transport/11180429/Driverless-buses-on-the-way.html
Quality contracts are certainly the best way forward, despite the three main bus companies wanting to maintain the status quo.
ReplyDeleteIf as threatened Brian Souter wants to pull out of the area following the introduction of QCs, then good riddance to him. There will be plenty of other bus operators who would willingly take on the routes that Stagecoach currently operate.
Incidentally greenline727, what you are suggesting in your post is tantamount to a cartel which is illegal. However having said that, I believe the three major bus companies have in any event been colluding with each other for years to keep out any new entrants, and also to operate on a "you keep of our patch and we'll keep of yours" arrangement which is against the spirit of deregulation. Furthermore, if you need any evidence of collusion, you only have to refer back to the Competition Commission's report whereby it was discovered that both Go North East and Arriva were exchanging commercially sensitive information, which to all intents and purposes is nothing short of a cartel.
Public transport especially buses operated very successfully pre-deregulation before 1986 in Tyne and Wear, and there is no reason to suspect that it won't happen again. I'd prefer that bus companies are answerable to a public body rather than to shareholders any day of the week.
"you keep of our patch and we'll keep of yours" should read "you keep off our patch and we'll keep off yours."
DeleteIt's interesting, isn't it, how feelings over the developing situation in the North East are polarising between "bad bus companies" and "bad Nexus".
DeleteIn economics, a cartel is an agreement between competing firms to control prices or exclude entry of a new competitor in a market. It is a formal organization of sellers or buyers that agree to fix selling prices, purchase prices, or reduce production using a variety of tactics.
I understand that all three major bus companies (and some smaller ones) in Newcastle are free to compete on any route in any area of the city - that's called deregulation. What many people outside the industry seem to forget is that "freedom" also means that they do not HAVE to compete!
Go-Ahead do not have a garage in Sunderland. If they decide to run a network of competing services there, they'd need to (1) open a new garage or (2) operate from an existing garage many miles away. Even if they DID identify a gap in the market, it'd need to be a pretty profitable market to pay for the additional costs. Does that mean that Arriva and Stagecoach are colluding to prevent Go-Ahead from competing? No, I don't think so.
In Newcastle, are fares co-ordinated along corridors where there is more than one operator? If they are, it's only by accident.
There is competition law that forbids companies from talking directly to each other about fares; but there is a loophole whereby a Local Transport Authority is able to mediate between the companies for the greater good of the passenger.
However, there is no law that precludes any company from talking about selling part of their business to another company (witness the recent proposed sale of Co-op bank branches to Lloyds bank). That is what I meant by my comment about Stagecoach transferring routes and garages to another operator. If that other operator was Scarlet Band in Durham, would that be collusion, or the forming of a cartel? No, I don't think so.
And finally "Public transport especially buses operated very successfully pre-deregulation before 1986 in Tyne and Wear". Erm . . . no it didn't . . . it suffered from the same decline in numbers that other urban areas did in England.
The industry has changed in 25+ years in that we now concentrate on running buses when people actually want to use them, and not when people "might" want to use them. That was what deregulation intended, and it was also intended (by implication) that LTA's would "buy in" services that were deemed socially necessary but not commercially viable. In practice, many companies have attempted to operate services that are only marginally viable in order to maintain (and give passengers the benefit of) a "network". Is that operating as a cartel to prevent new companies entering the market? I don't think so . . . . and neither would many observers!
{In passing, there are many companies that have gone under that have tried to do just that and found that there isn't the money to sustain the business - think Pennine of Skipton. Think Velvet of Eastleigh. There'll be more to come}.
So rather than having a situation where buses run when and where the majority of people use them, we'll move to a situation where Nexus will have buses running where they'd like them to run. Are these extra buses? Apparently not, so are busy popular services going to be reduced, affecting the majority of people who already use them? Presumably.
DeleteThe trouble is that Nexus has assumed all its figures, which I suspect the industry believes are way to low. Take the example above - if Go Ahead bid for routes in Sunderland, their bid would have to allow for large start up costs and the setting up of a depot in the area; Stagecoach's wouldn't, so who's bid would be likely to be better value? Ditto for any other operator looking to enter the market. And if Stagecoach didn't bid, someone has to incur the costs of starting from scratch, finding/building a depot, buying/leasing buses and recruiting staff etc. I just can't see how Nexus can possibly expect to provide a similar/greater/better network without incurring huge additional costs and that's before you even consider all their extra planning and monitoring staff who don't currently exist.
I just love the idea expressed (not just here) about how wonderful and rosy everything was before deregulation when buses were run by the state, local authorites or PTEs. Go back to how bus services were in the 1970s? Heaven forbid.
Every member of the Transport NE Committee was elected as a representative of the Labour Party, that is they are all believers in the money tree. Am I glad that I live a very long way away from the NE.
ReplyDeletegreenline727:-
ReplyDelete"Go-Ahead do not have a garage in Sunderland."
Yes, they certainly DO have a depot in Sunderland at Deptford, and it is a sizeable depot too!
"In economics, a cartel is an agreement between competing firms to control prices or exclude entry of a new competitor in a market. It is a formal organization of sellers or buyers that agree to fix selling prices, purchase prices, or reduce production using a variety of tactics."
You have just neatly encapsulated exactly what the three major companies are doing in the region. I simply refer you to the actions of both Arriva and Go North East, when they were caught by the Competition Commission exchanging 'commercially' sensitive information. Enough said!
"And finally "Public transport especially buses operated very successfully pre-deregulation before 1986 in Tyne and Wear". Erm . . . no it didn't . . . it suffered from the same decline in numbers that other urban areas did in England."
Yes it did. I can remember the very efficient integrated transport system with both bus and Metro, which led to cheaper fares and there was certainly nothing wrong with the running of bus services. Post deregulation this was decimated and over the last 28 years the amount of bus rotes still operating, is less than half since 1986. Most of these are subsidised by Nexus in the evenings and on Sundays, so what benefit is that to the taxpayer when bus companies only want to run profitable routes during the day, and expect public subsidy at other times? None, I suspect!
Clearly you do not live in the North East, not knowing that there was a Go North East depot at Sunderland, but if you did you would be fully aware of the decline in bus services since deregulation especially in areas where Go North East operate, or should I say, no longer operate.
You're quite right - I do not live in the North East, and wasn't aware the Go Ahead had a garage in Sunderland (although the only Deptford I know is in S E London). No matter - my basic premise still stands (as noted by Anon @ 0921).
DeleteThe Competition Commission can take a wry view of what in other industries would be a commercially sensitive but not illegal conversation. Perhaps you'd be good enough to provide a reference to your comment? I've been unable to locate one.
And finally . . . that would be the same efficient and integrated transport system where all passengers from south of the Tyne were forced to transfer to the Metro for the last part of the journey, would it? I never visited the area in the 1980's, but all the commentaries that I've read decry that attempt at transport planning and note that it lasted for only a very short period of time.
I did visit Newcastle this summer for a couple of days, and was struck by the following:
1. Lots of buses, generally in good condition, and generally with good passenger loads. I stood at Haymarket Bus Station, where I was able to see departures from both sides, and watched for an hour. I'd be happy to see loads like that on my buses!!
2. Smartly uniformed and courteous drivers.
3. A smattering of non-low floor buses (to be expected, prior to the upcoming deadline for full low-floor buses). Even the older buses were in fair condition for their ages.
4. Plenty of publicity, both from the bus companies and Nexus (for non-commercial routes), although I was disappointed that there is no overall bus or bus/train/metro map published, which IS something that other PTE's manage to achieve.
On balance, I was impressed. With a proactive LTA working WITH the bus companies instead of against, I'd expect greater things. It's a shame that progress will, it seems, be stifled for the sake of dogma.
Anon 0921 here. Sorry, I too fell into the trap of forgetting that Go Ahead have a depot in Sunderland, No matter, substitute 'Go Ahead' with 'First', 'National Express', 'RAPT' or whoever you choose, the point is still valid.
DeleteI rather suspect that the Metro is at the heart of the whole issue here. In its early days people were forced to use it and bus services fed into it. Along comes deregulation and the bus companies start to offer people direct services taking them to where they wanted to go without being forced onto the Metro halfway through their journey. The PTE has had the hump ever since.
"The Competition Commission can take a wry view of what in other industries would be a commercially sensitive but not illegal conversation. Perhaps you'd be good enough to provide a reference to your comment? I've been unable to locate one."
DeleteThe source of reference is a document entitled 'Local bus services market investigation' See paragraphs 8.199 et seq in the subsection 'Communications between operators.'
"And finally . . . that would be the same efficient and integrated transport system where all passengers from south of the Tyne were forced to transfer to the Metro for the last part of the journey, would it?"
Yes, and this arrangement still exists at the major Metro interchanges. Bus passengers certainly didn't seem to mind, and indeed still don't, when they have to transfer to the Metro to complete their journey especially when as the journey was invariably quicker.
You could try the following link, but I am not sure whether it will it work?
webarchive.nationalarchives.gov.uk/+/...competition-commission.../lo..
Thank you for providing the reference. I have waded through this document (all right, tiptoed across the surface . . . I do have a life!) and would comment that it seems to be a fairly typical CC document . . . written in an unhelpful manner, with plenty of "it would seems" and "in our opinions".
DeleteIt does appear, though, that the conversations that took place were of a "you have this garage and we'll have that one, because we're both operating small garages that don't really pay their way" nature. This is a standard business practice (again - I refer to the sale of bank branches). Any such sale of garages wouldn't necessarily diminish competition, because there effectively isn't any anyway, with both operators sticking to the status quo network pattern and neither making much, if any profit (and remember . . .profit begats investment).
Suppose Company 1 was offered a route by Company 2, a commercial route that was some distance from Company 1's base, and was losing money. Company 1 supplied annualised revenue figures to Company 2. Company 2 have two choices . . .take the route on, or decline it. If they declined the offer, then Company 1 would withdraw the route, and effectively hand over responsibility to the LTA.
Was this an "illegal" conversation? Should both Companies be referred? What happened to the route? {I know the answer, but would be interested in the thoughts of the participants!}.
And just to round off the discussion for now . . . .
"Bus passengers certainly didn't seem to mind, and indeed still don't, when they have to transfer to the Metro . . . "
Ah, that'll be why many bus services from south of the Tyne continue through to Newcastle Centre, then. If the last part of those trips was run almost empty (because the passengers transferred at Gateshead or Pelaw), then would the buses continue? I don't think so.
Integration has its place where a short localised feeder service is operated to the Metro, but not where a passenger already on a bus for an hour (with a seat) is forcibly evicted to a metro train full and standing for the last 10 minutes of their journey.
I know what I'd do . . . . . get the car out!!!
It may be a 'typical' Competition Commission comment in your opinion, but this is from a powerful commission that has a great deal of clout. You only have to look at their decision relating to the purchase of Preston Bus by Stagecoach, when a complete divestment was ordered.
Delete"Ah, that'll be why many bus services from south of the Tyne continue through to Newcastle Centre, then. If the last part of those trips was run almost empty (because the passengers transferred at Gateshead or Pelaw), then would the buses continue? I don't think so.
Does that explain therefore why Go North East withdrew their X3 service from Sunderland to Newcastle due to low passenger numbers, because essentially they couldn't compete with the Metro on this section of route. Add that to the fact that their current X36 service from Sunderland to Newcastle runs virtually empty. I can't see that particular service lasting too much longer.
Furthermore, why do the number 4, M2 and M3 services terminate at Heworth when they could run to Newcastle? The answer is they tried it with service 194 (the predecessor to both the 4 and M1) and found they couldn't compete with the Metro!
Which mode passengers would prefer and whether they will be happy to change will vary with location and journey. Heworth is a decent distance out of Newcastle so the faster travel time of the Metro has more chance to compensate for the inconvenience of transferring. If there is passenger demand for a connection a commercial operator would provide it, if there is not demand for a service it won't be provided, the problem is that organisations like Nexus act as if they know better than their customers and force them to do what they ant not what the passengers desire. Before deregulation Tyne & Wear PTE forced all buses coming in from the south to terminate at Gateshead & change to the Metro (basically within site of the passengers destination of Newcastle City Centre) which was incredibly unpopular and drove passengers away. It took a small independent to challenge the situation, Low Fell Coaches actually doing this before deregulation, to allow them to provide the services customers want by not forcing them to change to the Metro for one stop when the bus would get them there as fast, if not faster, than having to change.
DeleteLocal government is not passenger focused and tends to be slow reacting and driven by pet projects that are often not in the customers interests (such as interconnectivity and inter modal connections that will often inconvenience more than they help). Local government is driven by vocal minorities and, at best, the wants of the voters - the issue is that many passengers are not voters for local governments (being outsiders coming in from neighbouring areas) & many voters will not be regular passengers so won't care about much if the offering. We know from experience over many years that the dead hand of local government won't produce good service - London offers a very poor service that is hidden behind huge amounts of subsidy that enable them to paper over the cracks - that funding is not, and never will be, available to Nexus to help out (TfL managers have said that you cannot replicate what they did without the subsidy, they should know they tried and failed in the late 80's & early 90's).
The Competition Commission has a history of coming up with strange decisions and has never appeared to understand the bus industry at any time. The simple fact that they stated that the bus industry does not compete with the car should make anyone take anything they say with a grain of salt - their reasoning appearing to be that because the bus companies don't list the car as a threat in every board report they clearly don't consider it a competitor (that is a bit like telling someone that they don't believe in God because they don't wake up every morning and say ' I believe in God' - it is a fact of life that doesn't require restating for it to be true). Most of what the CC found was rather childish posturing but certainly wasn't any form of collusion and the CC then had an issue with the deal that ended the skirmish completely ignoring the fact that said deal had been cleared by the OFT as not being anti-competitive which does raise issues in itself.
I can understand people becoming frustrated by the current system, but there does seem to be a sense of naivety as to the costs and funding of such a scheme.
ReplyDeleteBefore de regulation many of the 'gaps' did not exist, particularly if the buses were local authority owned. In most cases this was however only because they ran at a loss and were (often) heavily subsidised. This is the main reason why the 40+ such operations no longer exist.
There may be some scope to adjust the network and re-allocate buses to other (new or revised) services, but I suspect this would only deliver a fraction of the network that is desired. Each area will want its share of improvements which will open a political minefield as the votes that win prizes are sought.
Such a system will also have to be carefully managed, controlled and regularly monitored (to ensure public money is not wasted etc.). This will create a mountain of back-room systems and the people to operate them.
I don't believe you will get more for the same money.