Since January 2026, every local transport authority in England has been able to pursue bus franchising without the Secretary of State’s consent. An authority seeking greater control over its bus network therefore faces a choice. It can either achieve its objectives within the deregulated market, usually through a stronger partnership with operators, or specify and procure the network itself through franchising (re-regulation). Before committing significant resources to a franchising assessment, it should identify which of its objectives the present regulatory model is obstructing. That is the practical purpose of a case for change.
A typical case for change sets out what is wrong with the bus network. Common problems include falling patronage, reduced reliability, complex or expensive fares, weak coverage, and a lack of evening and weekend services. All of these may be genuine, well-evidenced challenges. None of them on its own makes a compelling case for franchising, because a well-funded and focused partnership with co-operative operators and highway authorities could address most of them.
Franchising changes who specifies the network, who manages revenue and costs, and who enforces service commitments. It also usually moves the farebox revenue risk that operators currently carry onto the authority, which is a significant change in its financial exposure. Where the main constraint is an insufficient operating budget, the authority will still need to address that constraint under either model. A case for changing the regulatory model must identify constraints that additional funding and stronger co-operation would not resolve.
We see four features of a deregulated model that can constrain what a network achieves, even where operators are willing to co-operate.
An enhanced partnership scheme can impose requirements on operators that choose to run services in its area. It cannot by itself require an operator to enter the market, continue operating a service or accept the financial risk of doing so. Where the authority needs to secure a particular service over time, rather than regulate the standard of services operators choose to run, partnership leaves the central decision with the operator. Some authorities are developing partnership arrangements that go considerably further than current practice, though those models have yet to be tested in operation.
In a deregulated market, the authority cannot direct an operator to use the surplus from one service to support another. Operators may choose to manage services as a portfolio, but that choice remains theirs, and it can be withdrawn where a service stops covering its costs. If socially necessary services fall outside the commercial network, the authority usually has to procure them separately, and cannot use revenue from the commercial network to pay for them.
Competition law constrains the extent to which independent operators can co-ordinate fares, timetables and capacity. Enhanced partnership legislation permits some co-ordination, subject to statutory requirements and a competition test. That test, rather than the authority’s own network plan, therefore sets how far integration can go.
A bus lane can reduce journey times and operating costs while increasing patronage and revenue. Under deregulation, that value goes to the operator, and the authority may have limited ability to secure a defined service return in exchange. Operators may reinvest some of the benefit, but the authority cannot necessarily require it to appear as additional frequency, wider coverage or lower fares. The Bus Services Act 2025 does allow an enhanced partnership scheme to require that passengers benefit from operating savings created by public investment, but how far that can be turned into a defined service return has yet to be tested.
An authority working through the four constraints above may find that none of them applies with much force locally. Where co-operative operators can meet the objectives, and there is reason to expect the co-operation to last, the regulatory model isn’t the obstacle. The work to improve the bus network belongs in the partnership.
The partnership route depends on operators being willing and able to make the necessary commitments. Where operators have declined to do so, or previous commitments have not endured, the authority may have direct evidence that a credible partnership would not deliver the objective.
Where a constraint does apply, the authority should ask whether franchising would give it the missing control, and whether that control is necessary to achieve the objective. It should also ask whether the likely benefit is enough to justify assessing a change to the regulatory model.
First, we would take each strategic objective for the bus network in turn and ask whether a credible and durable partnership, supported by realistic funding, could deliver it. Where it could, the objective may make the case for investment or stronger partnership working, but it doesn’t by itself establish the need for franchising.
Next, where the answer rests on one of the four constraints, the case for change should identify that constraint and the evidence for it. Evidence might include a partnership commitment that did not endure after a change in ownership or strategy, or public investment that created operating value without securing a defined service response.
Finally, we would test the argument against the strongest credible partnership alternative, before the formal assessment compares franchising with the enhanced partnership operators actually put forward. If the same evidence, largely unchanged, supports a better-funded enhanced partnership, the authority has made a case for investment rather than a case for changing the regulatory model.
Where the evidence identifies structural constraints that partnership cannot reliably resolve, it should shape the scope of the subsequent franchising assessment. An authority that knows which constraints affect its network, and where they arise, can focus its analysis accordingly. Without that clarity, it risks modelling every option across the whole network with no clear account of the problem each option would solve.
Three questions to test a case for change
Could a credible, durable and properly funded partnership deliver this objective?
If not, what stands in the way, and does the evidence show a limit of the regulatory model or a shortage of funding?
Might franchising supply the missing control, and is the likely benefit enough to justify a full assessment?
Talk to David Penn or your usual Grant Thornton contact about testing the case for changing your bus regulatory model before beginning a franchising assessment.
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