Agenda item

To consider strategic developments in transport, including:

1.    The potential impact of the sale of West Yorkshire bus operators (First and Arriva) and the Combined Authority’s possible participation in the sale.

2.    The potential impact of the Blake-Jones Review, Williams Rail Review and Oakervee HS2 Review on the Combined Authority.

3.    Transforming Cities Fund (TCF) bid.

Cllr Kim Groves, Chair of Transport Committee, has been invited for this item.

The Committee considered a report of the Director of Policy, Strategy & Communications on strategic transport issues and their potential impact on the West Yorkshire Combined Authority.

• The sale of West Yorkshire bus operators (First and Arriva) and the Combined Authority’s possible participation;
• The Transforming Cities Fund submission.
• The potential impact of the Blake-Jones Review, Williams Rail Review and Oakervee HS2 Review on the Combined Authority;

The following were in attendance for this item:

·       Councillor Kim Groves, Chair of the Transport Committee

·       Ben Still, Managing Director

·       Dave Pearson, Director of Transport Services

Questions and discussion focused on the Combined Authority’s possible participation in the sale of bus companies in West Yorkshire and the Committee learned and concluded the following:

Influence over the current bus network

• There is a serious disproportion in that the Combined Authority spends around £70 million a year (almost a fifth of its total spending) on bus services but has very little control over the bus network.
• The authority needs some degree increased of control over services if it is to deliver on its strategic objectives and promises, such increasing bus use, budget efficiencies in subsidies and tackling climate change.
• Consequently, it is right that the Combined Authority is pursuing all legal and feasible options – pending technical advice – and is not counting anything out at this stage.

Details of the sale

• It is understood that First has put up their entire UK operation for sale, but the structure of the sale is not yet known. Possibilities include a buyer purchasing the entire UK operation outright or smaller bids for regional operations.
• Different regions perform differently commercially. Ultimately, any buyer will seek to maximise commercial value, which is bigger in urban areas than in rural areas. 
• First West Yorkshire is largely profitable but there is a disparity across districts where some urban areas, such as Leeds, are more profitable for the company than other areas.
• If First sold the West Yorkshire operation alone, it would likely attract many buyers as it is currently profitable. However, if it opted to sell the West Yorkshire operation together with neighbouring regions, it might generate less interest.
• It was felt that the large pension deficit liability might be one of the possible factors behind the First company being put up for sale and that this must be taken into account by any buyer or participant in the sale.
• First is a large local employer and any implications for employees must be taken into account regardless of what happens next.
• It is also understood that First plan to streamline their operations in the run up to the sale and conversations between First and the Combined Authority on how this will affect passengers are ongoing.

Legal and technical advice

• Legally speaking, the Bus Services Act 2017 says a combined authority cannot form a company itself, or with others, to operate buses. However, the Act is silent on whether a combined authority can purchase shares in a company that might run bus services.
• The Combined Authority has contracted a consultant to seek advice and understand the full breadth of options available to it, what the authority legally can and can't do, and determining as far as possible the profile, structure, assets and liabilities of the First company – including pensions.
• Scrutiny will be able to see the report, strategic advice and the commercial, legal, and operational information – possibly under exempt rules as any conditions of Non-Disclosure Agreements are unknown at this stage.
• Officers are also in contact with colleagues at the Greater Manchester Combined Authority who are currently working on possibly franchising bus services in their area after a similar sale.
• Officers have also agreed to share anything they learn with counterparts in neighbouring areas such as York, North Yorkshire and South Yorkshire. This was written into the consultation commission.
• Once the bidding stage begins, potential bidders, including the Combined Authority if it chooses to do so, will gain access to the data room which will provide far more detailed and comprehensive information.
• Though, non-disclosure agreements (NDAs) will likely also come into effect at this time and must be managed carefully so scrutiny’s role can be properly conducted.

Other options and franchising

• Participation is not limited to an outright purchase of the company. It could consist of purchasing strategic assets such as the bus depots, which are essential to managing bus services.
• In Greater Manchester, Transport for Greater Manchester (TfGM) is considering purchasing the bus depots and franchising the services.
• Franchising allows the authority to choose services, routes and fares but the public take on the revenue risk.
• According to the Bus Services Act 2017k, only mayoral combined authorities can choose to franchised services.
• For non-mayoral combined authorities, the consent of the Secretary of State for Transport is required.
• This would include a new parliamentary order either granting specific permission to the West Yorkshire Combined Authority, or all non-mayoral combined authorities in future, to franchise services.
• The previous Transport Secretary and departmental officials gave ‘positive indications’ but the process of approval from the Secretary of State is unclear and untested.

Systemic transport network issues

• Hypothetically, if the Combined Authority simply bought the company, it would be in the same position as the previous company running bus services in the current imperfect transport system.
• Like the issues in Northern rail, the idea that public ownership or franchising of bus services is a magic bullet should be dispelled.
• There is no cost-free or quick solution to improving the bus network, including Franchising. In any case, further public funding will be needed.
• In Greater Manchester, Phase 1 (reform) of the plan to franchise is expected to require further spending to bring the existing bus network to a level where Phase 2 (growth) can begin to be implemented and benefits realised.
• There are numerous challenges in all modes of transport, including bus, that needs resolving with investment in infrastructure and logistics.
• Regardless of who owns or runs the bus companies, the issue of road traffic on certain routes and in general must be tackled.
• One large element in bus reliability is road traffic. Work has been ongoing for some time on key bus route corridors to identify improvements in road infrastructure to help buses shorten journeys and time spent in traffic. Infrastructure improvements on a corridor-by-corridor approach could be as transformative for West Yorkshire buses as any change in ownership or control of services.
• The entire transport network as a whole requires reform in a holistic approach – bus, mass transit and rail.

Reliability of buses and other modes of transport

• Based on feedback, it was felt that reliability and affordability are the public’s priorities. The current system is broken and buses are too unreliable and expensive, especially if travelling on multiple buses and companies on a route. Taxis are often cheaper and more reliable.
• Despite the long-term downward trend in people using buses since the 1980s, there is still an optimism that bus patronage can be increased – particularly by targeting young people.
• It was also argued that it is necessary to increase patronage as without an increase in public transport use, increased congestion will hinder growth in urban areas and be detrimental to the environment and public health.
• The Combined Authority’s simple-rate daily ‘MyDay’ ticket concession aimed at young people has led to a 55% increase in bus use in that demographic.
• There is also other best practice to learn from in the North, such as in Liverpool where patronage has increased by 12% - though this requires further study.
• It must also be accepted as part of a wider strategic approach to the transport network, that some communities – such as rural ones – might not be best served by bus but by other modes of transport such as rail and, potentially, mass transit – which the region desperately lacks.
• While the Combined Authority has long argued for a mass transit system in Leeds and West Yorkshire, they do have an effect on bus services. Greater Manchester has seen some issues of competition between tram and bus services.
• There is still a large disparity within West Yorkshire in terms of transport infrastructure which limits some communities’ options. Many areas are lacking clean buses which Leeds has in abundance and other areas lack rail stations to access rail.
• A need for increased reliability is something the public share with businesses and employers. An affordable, reliable bus network gets people to work on time, anywhere in the region.
• The possibility of businesses and developers contributing to funding services should be explored more closely.
• The Combined Authority already has services, such as the Travel Plan team, that market sustainable travel and bus passes to local companies that it can build on in terms of business engagement and buy in.

Resolved: 

i)       That the report be noted and the Committee's feedback and conclusions be considered further. 

ii)     That the Chair, Deputy Chair and Transport spokesperson be kept updated on developments regarding the sale of bus companies and be given a copy of the consultant’s report and advice complete.

iii)    That a briefing note exploring potential employer and developer contributions to bus services be provided to scrutiny members.