In March 2024 we hosted a roundtable to discuss the challenges and opportunities around bus reform. Jason Hurst shares the key takeaways.

Improving bus services is now at the forefront of the political and policy agenda in the UK, given this mode's importance to locally-focused public transport and decarbonisation. There are challenges, but now is the time to drive through change. To understand what this reform could look like, including managing these challenges and taking opportunities, we invited key stakeholders to share their views with us.

A wide-range of participants brought diverse perspectives to the conversation, including: Mayoral Combined Authorities (MCAs), the Department for Transport, funders, and bus operators, as well as legal and transport consultants.

Why does bus service delivery need to change?

There are several challenges facing our bus services: declining passenger numbers; service quality not matching passengers' expectations, lack of integration with other modes, and traffic congestion impacting reliability.

Deregulation of the industry, while bringing some benefits, has contributed to these challenges. However, participants did note that the industry has made strides during this period. For example, new technology has helped improve live updates for passengers on bus-service provision. Many of the original problems that emerged under deregulation, such as 'over-bussing' have improved over time.

There was a consensus that people do want to travel by bus, especially the younger generation, but service provision needs to improve. It only took one bad journey experience to dissuade them from using buses and that may still be the case.

The vision: whole-systems thinking

The MCAs highlighted that there's a clear vision for improving bus services. We need to avoid viewing different transport modes as competitors and instead ensure bus reform compliments a broader integrated transport strategy. Whole-systems thinking is critical to developing this vision. Collaboration among stakeholders, particularly MCAs and LAs, is key to developing this vision and ensuring that transport policies are aligned.

Participants strongly agreed that reversing patronage decline and growing the bus network is a key objective. More people using buses will help alleviate congestion and tackle climate change. Investing in policies that drive patronage is crucial.

Reducing emissions from buses through the rollout of zero emission buses (ZEBs) is an important objective, but it was pointed out that ZEB vehicles themselves are unlikely to drive patronage. A focus on service reliability, regularity, and quality has to be at the forefront. One of the most effective measures to achieve this, as witnessed globally, is through the development of bus rapid transit services and bus priority measures.

The options for reform

There was a widespread view that one size doesn't fit all and the model for reform had to be tailored and adapted to different geographies. Generally, it was recognised that, for bus services, it makes sense for decisions to be as local as possible and close to passengers. This is supported by current policy direction towards continued support for greater devolution.

In urban areas there's a wider range of public transport provision with light rail, heavy rail, and multiple bus operators. Coordination in these areas is vital to ensure that the transport system components are complementary rather than a substitute for each other. It was also recognised that often people rely on a blend of transport modes, rather than an ‘either' / 'or’ choice.

Bus franchising, where the public sector would gain control of the network and take on revenue risk while the private sector operates services, could be a more suitable option where greater control is appropriate. Franchising allows for the bus network to have a single guiding mind, but it should be accompanied by strong political leadership. It was also highlighted that franchising also enables both public and private stakeholders to have 'skin in the game,' which is important for incentives and collaborative working. It was highlighted, however, that franchising on its own isn't sufficient to improve outcomes and it's more about how an authority chooses to exercise its powers that has an impact.

In rural and other areas, alternative models such as enhanced partnerships between the local transport authority and private-sector bus operators could work more effectively. In these areas the transport network is less complex. Authorities may also have more limited capacity to leverage the benefits of franchising. Enhanced Partnerships may also be more effective in urban areas with a single dominant operator where there's a history of successful delivery.

Reform needs to balance the right role for the public and private sectors. With franchising there's often a focus on cost reduction, but it needs to also focus on revenue growth and hence revenue incentives to help grow the use of the network. Detailed specification solely focused on performance measures wasn't considered the right approach, instead participants considered that it's important to provide operators with broader targets and the flexibility to innovative. It was felt that the model in London got this balance right, with an outcomes-led approach to bus reliability. Incentives used in London include managing reliability where the performance regime allowed operators to control scheduling dynamically and has led to operators investing in control rooms and technological solutions.

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Funding and delivery

There was a widespread view that the lack of long-term funding certainty and challenges in relation to delivery are the key constraints to achieving this vision for buses. More clarity from central government over the long-term funding available to authorities for services would help support long-term planning.

This includes future rounds of funding for ZEBs, which are still expensive. Government support for the net cost of ZEBs through Zero emission bus regional areas (ZEBRA) had been crucial for the delivery of vehicles as from a rate of return perspective it's difficult for the private sector to make the investment case for ZEBs on its own.

Smarter funding and financing models for fleets are needed. The availability of commercial financing for buses is limited and that smaller operators find it difficult to finance them. Under-franchising and reconciling the useful life of a bus of 15-20 years with shorter franchising contracts must be resolved. A residual value mechanism would be required to transfer assets between contracts.

The delivery of ZEBs is also proving challenging. Manufacturers have constrained capacity to deliver to match demand, quality issues are emerging, and grid connectivity is proving problematic to obtain. More could be done to leverage economies of scale from larger orders for buses. The advantage of ZEBs versus diesels would depend on the future trajectory of electricity and diesel prices, but manufacturing costs should eventually come down once mandates to replace diesel buses are in place and the market matures.

The outlook

This rich conversation highlighted that while there are challenges, there's also a huge opportunity to deliver a locally-integrated approach to transport to significantly improve outcomes and increase numbers.

For more insights and guidance, get in touch with Jason Hurst.