Bus Regulation (Scotland Bill) Response by the Tayside and Central Scotland

Transport Partnership
1.

Do you support the general aim of the proposed Bill? Please indicate
yes/no/undecided and explain the reasons for your response.
Yes, insofar as legislative change which provides a framework for more bus network
stability and the potential for more effective coordination and integration of bus services,
and maintenance and improvement in quality standards, would be welcomed. The core
aims of the proposed Bill, to provide a modernised legislative framework which
empowers and enables transport authorities to exert greater influence in the delivery of
effective and integrated public services and facilities for people and communities across
Scotland, and ensures better value for the public purse, are supported.
However, it must be acknowledged that current patterns of funding and service provision
across Scotland vary widely. There is significant, and often largely effective, commercial
provision in many urban areas and on inter-urban corridors. However, in many rural and
sparsely populated areas, and also during the evenings and at weekends in more
heavily populated areas, service specification and funding from the public sector is
already significant and subject to growing pressures and demands. There are also
many areas and circumstances where provision by the voluntary and community sectors
is increasingly important in addressing needs which cannot be viably accommodated or
supported by the private or public sectors.
More detail and clarity is required on the proposals within the Bill to fully ascertain the
potential costs to the public and private sectors, opportunities and benefits, and the
wider legal implications of the proposed Bill.
There are other potential alternatives which could make a significant positive impact on
the bus market such as those currently being considered by the national Bus
Stakeholders Group.
Any new legislation or regulation must support the delivery of a more effective,
comprehensive, integrated, stable and socially responsible bus network across
Scotland, which is based on strong partnership working and ensuring maximum value
for the public purse, while utilising the innovative and commercial awareness and
potential of the private sector by ensuring that existing commercial role and appetite for
participation in bus service provision and innovation in service delivery is not eroded.

2.

What would be the main practical advantages of the legislation proposed? What
would be the disadvantages?
Tactran supports the principle of affording regional and local transport authorities greater
flexibility to influence the provision of bus services in their area based upon locally
determined circumstances, needs and partnership working. Proposals which maximise
the return on the significant investment made by the public sector, both in terms of
investment in provision of bus services and associated infrastructure, are to be
welcomed.

Currently many communities have limited levels of service or, at worst, no service at all.
In contrast, within heavily populated areas, commercially operated levels and standards
of service provision are good or at least adequate. Whilst not currently a significant
issue within the Tactran region, wasteful competition and duplication between operators
exists in other areas, and where this occurs, is not in the public interest.
The principle of transport authorities having greater powers in setting minimum service
levels and standards is also to be welcomed, although it should be noted that, in those
areas where the majority of the network is already heavily subsidised and subject to
competitive tendering, this is already the case.
It must also be acknowledged that there is significant potential for unintended
consequences arising from the proposals, as set out in the paper. These could include
potential market distortion within designated franchise areas (e.g. through loss of
smaller operators who may not be able to tender for extensive networks) and between
franchised and non-franchised areas (e.g. through the potential for predatory tendering
by operators with a strong franchised core network in adjacent areas) and more detail is
required on the proposals to fully assess these.
Greater powers for the Traffic Commissioner to support effective enforcement of any
revised regulatory framework are supported in principle. This would need to be
accompanied by appropriate resources to accommodate and effectively monitor any
new regulatory responsibilities and powers. Consideration also needs to be given to the
arrangements and relationships between the Traffic Commissioner and transport
authorities. For example, where financial penalties are imposed on operators for failure
to operate services in compliance with contracted or franchised arrangements as
specified by a transport authority, financial penalties (or at least a proportion of these)
should be returned to the transport authority.
More legislative flexibility to maximise the effective utilisation of local authority fleets in
providing public transport services is fully supported. RTPs and local transport
authorities have been pursuing this agenda over recent years across the public
transport, social work, education, health, community transport and demand responsive
transport sectors.
It is agreed that the current requirement to demonstrate market failure has inhibited the
wider application of potentially effective public/private sector partnership working
through use of current Quality Contract and/or Statutory Quality Partnership legislation.
However, further factors have been uncertainty over the long-term financial
consequences and also procurement/competition concerns. Whilst removal of the
market failure test could provide more encouragement and flexibility to explore the
potential for a Quality Contract or a franchising approach as a basis for growth of a more
fully integrated, socially responsible network, greater clarity is needed on what, if any,
criteria are proposed to replace the market failure test as a legally robust justification
for transport authority intervention, particularly where commercial provision may already
exist.
It is agreed that the concept of bundling profitable and non-profitable routes, including
the ability to internalise the benefits of network revenue cross-subsidisation, has
potential and is worthy of further detailed examination. However, this approach raises
many questions around potential costs; the potential for market distortion between
franchised and non-franchised areas; legislative competence in terms of domestic and
EU competition and procurement legislation; redefined private and public sector roles
and responsibilities; assessment of effectiveness and applicability in urban / rural
circumstances, all of which must be fully assessed.
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3.

In what ways do you envisage reregulation being used to improve bus services?
Given the significant changes which have occurred within the bus industry and the wider
transport market over the 28 years since the 1985 Transport Act, it is likely that a return
to full re-regulation of the type which existed prior to the 1985 Act, even if desirable,
would now be price prohibitive in terms of cost to the public purse. The opportunities
afforded by a franchise or more effective partnership agreement model is worthy of
further detailed consideration but, as noted above, requires detailed assessment.
It is suggested that these are matters which should be considered and developed further
through the existing national Bus Stakeholder Group. The RTPs are committed to
supporting the work of the national Bus Stakeholders Group and will continue to work
with industry partners within that forum to elicit positive change for their areas.
Whether through the proposed Bill, the work of the Bus Stakeholders Group, or another
route, it is increasingly evident that there is a momentum and desire for change within
bus in Scotland. Any potential interventions must be subject to - and pass - robust,
objective analysis of their costs and benefits (social, economic, environmental and
financial) prior to their adoption. The principal objective of any re-regulation must be to
ensure that the people and communities of Scotland receive the level and quality of bus
service they need to fulfil their economic and social potential.

4.

How can community transport be better utilised to serve local communities and
particularly low passenger volume routes?
The Community Transport sector has an increasingly key role to play in the future of bus
service delivery in Scotland. It is equally important that this is developed in a manner
which is effective, co-ordinated, and has appropriate governance, safety, training and
quality standards in place.

5.

Do you agree that the Traffic Commissioner should be able to impose greater
financial penalties on operators who a) fail to meet the terms of the franchise or b)
walk away from the franchise altogether?
The Traffic Commissioner plays a key role in ensuring that operators meet their legal
and contractual obligations. It is essential that the Commissioner is properly resourced
to do this. There are examples of RTPs assisting the Traffic Commissioner in
monitoring bus service compliance and there would be merit in this model being further
expanded provided appropriate resources were in place to support this.
The business case for the imposition of financial or other penalties under any future
regulatory regime must be robust and justifiable and it is, therefore, vital that more
analysis and greater detail is available regarding the proposals within the Bill to assess
this.
See also comments in response to Question 2 above,

6.

What is your assessment of the likely financial implications of the proposed Bill
to you or your organisation? What other significant financial implications are
likely to arise?
As a Model 1 RTP Tactran does not currently directly fund significant supported bus
service provision, these responsibilities resting with our partner Councils. However, as
noted elsewhere in this response, considerably more detail about the proposed
regulatory model and framework and detailed analysis of the policy and practical
implications of this is required to enable any comprehensive assessment of the financial,
and also wider impacts and implications, for both the public and private sectors.
At this stage, it is considered likely that the public subsidy costs associated with bringing
in greater regulation through a franchised model of bus service provision could be
significant. Whilst recognising that the current London franchise model is not
necessarily directly relevant to the varied circumstances pertaining across Scotland, the
public costs of this are high per head of population circa 100 per annum and
significantly higher than the costs which many Scottish transport authorities are able to
sustain in the current public sector funding environment. As indicated above the
financial costs of any such model would also need to be balanced with the potential
social, environmental and economic benefits and impacts.

7.

Is the proposed Bill likely to have any substantial positive or negative

implications for equality? If it is likely to have a substantial negative implication,
how might this be minimised or avoided?
A more effective regulatory regime has the potential to deliver a more stable,
comprehensive, integrated, and socially responsible bus network, which in turn would
benefit all equality groups and assist in reducing social exclusion. The impacts of an
ageing population, and the fact that not everyone can access a bus it is estimated that
there are 300m unfulfilled bus journeys in Scotland each year should be material
considerations in any debate on the future of the bus market and associated regulation.
Clearly compliance with the minimum requirements of equalities legislation applies
under any bus regulatory regime. However, affording transport authorities greater
influence in specifying service frequency and quality standards, including fares, has the
potential to support a re-balancing of commercial and social objectives in the
determination of bus service provision. However, as previously noted, filling these
gaps and/or addressing real or perceived market failure or deficiency on the provision
of bus services, fares levels etc., could come at significant cost to the public purse, and
these matters need to be fully assessed and considered prior to the adoption of any new
model.

8.

Do you have any other comment or suggestion that is relevant to the need for or
detail of this Bill?
Tactran supports the separate response which has been submitted jointly on behalf of
Scotlands seven statutory RTPs.
Please also refer to individual responses submitted by partner local transport authorities
for more detailed comments on local views and circumstances.

APPENDIX C
Bus Regulation (Scotland Bill) Response by the Chairs of the Regional Transport
Partnerships of Scotland
1. Do you support the general aim of the proposed Bill? Please indicate
yes/no/undecided and explain the reasons for your response.
Yes, insofar as legislative change which provides a framework for more stability and
potential for effective coordination and integration of bus services, and maintenance and
improvement in quality standards, would be welcomed.
The core aims of the proposed Bill, to provide a modernised legislative framework which
empowers and enables transport authorities to exert greater influence in the delivery of
effective and integrated public services and facilities for people and communities across
Scotland, and ensures better value for the public purse, are fully supported.
However, it must be stressed and acknowledged that current patterns of funding and
service provision across Scotland vary widely. In urban areas, while on the surface there
may appear to be significant commercial provision, there are still significant gaps (e.g. at
evenings, weekends) and the contraction of commercial service provision in these areas
over the last few years is a concern. In rural areas, where service specification and
funding already derive overwhelmingly from the public sector and also, in some
circumstances, the voluntary and community sectors, there continue to be many
communities who, at best, receive a minimal service, and at worst, no service at all.
More detail and clarity is required on the proposals within the Bill to fully ascertain the
costs (both to the public and private sectors), benefits and legal implications of the
proposed Bill.
The RTPs would highlight that there are also other potential alternatives which could
make a significant positive impact on the bus market, such as those currently being
considered by the national Bus Stakeholders Group (including, for example, SPTs Ten
Point Plan for Bus).
The RTPs remain committed to delivering and supporting a more effective,
comprehensive, integrated and socially responsible bus network across Scotland, based
on strong partnership working and ensuring maximum value for the public purse, while
utilising the innovative and commercial awareness and potential of the private sector,
and ensuring that the commercial appetite for participation in bus service provision and
innovation in service delivery is not eroded.
2. What would be the main practical advantages of the legislation proposed? What
would be the disadvantages?
The RTPs welcome the principle of ensuring transport authorities have the flexibility to
have greater control over bus services in their area as they see fit. There must be a
more active return for the significant investment made by the public sector, both in terms
of investment in provision of bus services and associated infrastructure, and any proposal
which supports this is to be welcomed. Currently, many communities have, at best, a
minimal service and at worst, no service at all; in contrast, where on the surface there
may appear to be adequate bus services, wasteful competition and duplication between
operators is commonplace in some areas and, where this occurs, this is not in the public
interest.

The principle of transport authorities having greater powers in setting minimum service
levels and standards is also to be welcomed, although it should be noted that, in those
areas where the majority of the network is already subsidised, this is already the case. It
must also be acknowledged that there is the potential for significant unintended
consequences arising from the proposals as set out in the paper (stifling innovation, short
notice inflexibility, market distortion within and between areas, for example) and therefore
more detail would be required on the proposals to fully assess these.
More legislative flexibility to maximise the effective utilisation of local authority fleets in
providing public transport services is supported. RTPs have been pursuing this agenda
over recent years, across the social work, education, health, community transport and
demand responsive transport sectors. SWestrans, for example, works closely with
Dumfries and Galloway Council who use their existing in-house bus fleet to provide a
number of socially necessary local bus services in the region.
A major stumbling block to more positive and meaningful partnership across the industry
has been the requirement to demonstrate market failure before a potentially effective
intervention such as a Quality Contract can take place. The RTPs believe that the
potential to pursue more effective control through application of current Quality Contract
and/or Statutory Quality Partnership legislation has been inhibited by this requirement,
coupled with uncertainty over the long-term financial consequences and
procurement/competition concerns. Whilst removal of the market failure test could
provide more encouragement and flexibility to explore the potential for a Quality Contract
or franchising approach as a base for growth of a truly integrated, socially responsible
network, greater clarity is needed on what, if any, criteria are proposed to replace the
market failure test as a legally robust justification for transport authority intervention
where commercial provision may already exist.
Notwithstanding the legislative barriers which currently render the concept of bundling
profitable and non-profitable routes (cross-subsidisation) impossible in theory if not in
practice the franchise, or indeed agreement, model remains an attractive one.
However, this comes with many caveats: potential costs (revenue risk allocation, for
example), legislative challenge, roles and responsibilities, urban / rural approaches, and
potential for market distortion between areas where franchised and non-franchised
operation apply, and all of these must be fully assessed, analysed and agreed in an
objective manner prior to any commitment being made.
3. In what ways do you envisage reregulation being used to improve bus services?
Given the significant changes which have occurred within the bus industry and market
over the 28 years since the 1985 Transport Act, it is likely that a return to full reregulation, even if desirable, would now be price prohibitive in terms of cost to the public
purse. The opportunity of a franchise or more effective agreement model is worthy of
further detailed consideration but, as noted above, this comes with significant caveats.
The RTPs are committed to the work of the national Bus Stakeholders Group and will
continue to work with industry partners within that forum to elicit positive change for their
areas. The ideas coming through the BSG, in relation to the registration process and
some of the ideas put forward in SPTs Ten Point Plan for Bus, most certainly would
appear to offer the potential for benefits.
Whether through the proposed Bill, the work of the BSG, or another route, it is
increasingly evident that there is a momentum for change within bus in Scotland. Any
potential interventions must be subject to - and pass - robust, objective analysis of their
costs and benefits (social, economic, environmental and financial) prior to their adoption.
6

Of utmost importance is the need to ensure that the people and communities of Scotland
get the level of bus service they need to fulfil their economic and social potential
wherever they are.
4. How can community transport be better utilised to serve local communities and
particularly low passenger volume routes?
Without doubt, the Community Transport sector has a vital role to play in the future of bus
service delivery in Scotland. It is equally vital however, that this is done in a manner
which is effective, co-ordinated, and has appropriate governance, safety, training and
quality standards in place. The recently inaugurated West of Scotland Community
Transport Network is a good example of efforts made in this regard, and RTPs have a
key role to play in taking this agenda forward.
5. Do you agree that the Traffic Commissioner should be able to impose greater
financial penalties on operators who a) fail to meet the terms of the franchise or b)
walk away from the franchise altogether?
The Traffic Commissioner plays a vital role in ensuring that operators meet their
obligations, and it is vital that this continues, and grows, in future. However, it is essential
that the TC is properly resourced to do this. There are examples of RTPs assisting the
TC in regard to service compliance, for example, and this model would have merit in
being further expanded in future provided appropriate resources were in place.
The business case for the imposition of financial or other - penalties under any future
regulatory regime must be robust and justifiable, and it is therefore vital that more
analysis and greater detail is available regarding the proposals within the Bill to assess
this.
6. What is your assessment of the likely financial implications of the proposed Bill to
you or your organisation? What other significant financial implications are likely
to arise?
As has been mentioned elsewhere in this response, more detail and analysis is required
about the proposed regulatory model and framework and its impact on the ground prior to
being able to provide a comprehensive assessment of the financial implications.
However, at this stage, it could be said that the likely costs associated with bringing in
greater regulation through a franchised model of service provision could be significant for
the public purse. The costs of the current London franchise model is high per head of
population circa 100 per annum which is significantly higher than the costs which
many Scottish transport authorities are able to sustain in the current public sector funding
environment but, as always, the financial costs of such a model need to be balanced with
its social, environmental and economic benefits.
Furthermore, there would need to be clarity about where the funding to support effective
and equitable implementation of any proposed changes was coming from. Would it be
new money (generated revenue and/or increased public sector subsidy) or simply a
reallocation of existing funds (through internal network cross-subsidy and/or reallocation
of public sector funding)? If it were the latter then this may not deliver the step-change
required to increase the current standard of service delivered.
It is also worth noting that there is the potential for significant and lengthy - legal
challenges from those negatively impacted by the proposals and the costs of dealing with
these issues could again be significant.
7

7. Is the proposed Bill likely to have any substantial positive or negative implications
for equality? If it is likely to have a substantial negative implication, how might
this be minimised or avoided?
A more effective regulatory regime has the potential to deliver a more stable,
comprehensive, integrated, and socially responsible bus network, which in turn could only
benefit all equality groups and excluded communities. Indeed, the impacts of an ageing
population, and the fact that not everyone can access a bus it is estimated that there
are 300m unfulfilled bus journeys in Scotland each year should be considerations as
the debate continues on the future of the bus market and associated regulation.
However, as previously noted, filling these gaps could come at significant cost to the
public purse, and these would need to be fully assessed and considered prior to the
adoption of any new model.
8. Do you have any other comment or suggestion that is relevant to the need for or
detail of this Bill?
The RTPs would welcome the opportunity to expand on the comments in this response.
Please also refer to individual RTPs responses for more detail on local views and
circumstances.