News & Views

There’s one word on everybody’s lips in our industry at the moment, franchising. As I wrote in January, franchising could bring significant benefits to transport networks and come at a time when local bus networks are struggling more than ever before.

Franchising is being discussed at the highest levels of government. As ITP’s (self-appointed) Westminster correspondent, I recently attended the Transport Select Committee inquiry into bus services in England. The inquiry’s focus is on the role of buses in connecting communities and the need to address England’s declining bus network and falling passenger numbers. In one session of the inquiry, eight experts from authorities and operators were brought together to discuss franchising and enhanced partnerships. In this blog, I explore what was discussed and consider the benefits and challenges of both options.

Franchising

The road to franchising has been long, first entering national policy when the 2017 Bus Services Act enabled franchising for some authorities. The National Bus Strategy in 2021 and recently the Better Buses Bill have driven the process forward, opening the option to franchise for Local Authorities.

Over time, and especially since the pandemic, bus services have come under increasing financial pressure as costs increase and passenger numbers decline. In 2010, there were over 1,000 million bus journeys; in 2019, it was 904 million, and in 2024, it was 755 million. Buses increasingly fail to meet the vital role that they play in social well-being, decarbonisation and mode shift.

To some, the current model is broken, and the question is, does franchising fix it? Well, our MPs, through the select committee, asked the experts the same question. Franchising can be an opportunity to:

• Grow local bus networks by cross-subsidising the profitable routes to support loss-making services.
• Integrate bus services and other modes of transport e.g. tram, metro, rail.
• Offer better value for money for the taxpayers.
• Bring more democratic control and accountability over the network.
• Deliver simpler, cheaper and cross-network fares.

But, franchising brings risks, and some of them are large.

• Financial risk– Franchising, depending on the model followed, places significant financial risk on the authority, as any losses must be accounted for. A change in government funding, a reduction in fare box revenue, or tender prices above forecasts could disrupt financial sustainability.
• Staffing and resourcing – Franchising takes time, and it needs staff to drive the process forward. This means local authorities need to increase their staffing levels and build up expertise after years of shrinking teams.
• Public expectations – The public wishes to see improvements quickly. There needs to be tangible improvements to punctuality, fleet and information provision. Franchising alone does not achieve this but simply enables it.
• Neighbouring authorities and smaller operators – When going through the process of franchising, local authorities need to stimulate competition, ensure smaller operators can participate and allow cross-border services.
• Rural networks – franchising has only been applied in urban areas with large population centres and high passenger numbers. In rural areas with lower patronage and higher operating costs, the finances may not stack up.

Enhanced Partnerships

Enhanced Partnerships (EPs) aren’t new. The 2021 National Bus Strategy required all authorities not pursuing franchising to enter into an EP. EP’s bring together bus operators, authorities and other stakeholders to meet a set of shared goals. Those in the session highlighted two key strengths of EPs:

• Communication – EPs have created a forum for different stakeholders to work together for the first time, build dialogues and achieve (in some cases) lasting improvements.
• Less risk – Under an EP operators retain the financial risk of running the service.

Most authorities have an active EP, and yet patronage has not returned to pre-COVID levels across much of the country. Increasingly, some authorities see EPs as failing to deliver the change the network needs. So, something must be going wrong? Well, the panel highlighted the problems.

• Control mechanisms – EPs do not allow sufficient control for authorities to offer realistic accountability measures. For example, a local authority cannot prevent frequencies from being reduced for commercial services
• Varying success – EPs are only as strong as each constituent member allows them to be. To achieve improvements, there needs to be political leadership, funding and consensus around a shared vision which isn’t always reachable.
• Funding – To achieve improvements through an EP, there needs to be funding. A lack of a long-term funding settlement means that authorities cannot make long-term plans or investments. With an EP, there is no opportunity for cross-subsidisation.