Welsh bus operators make 'too much' profit from subsidies services

[overthewater]

You could have fooled me, especial with the amount of times service end up being retended.


http://www.bbc.co.uk/news/uk-wales-politics-30026345

Bus companies are making too much profit from Welsh government subsidies, a think-tank sponsored by Welsh ministers has concluded.

The Public Policy Institute for Wales estimates firms could be making excess profits of as much as £22m a year.

Report author Prof John Preston said there was no "noticeable" benefit from higher subsidies paid in Wales.

Ministers say they will negotiate directly with operators on deals for key routes from next year.

Prof Preston, a transport expert, said: "Wales pays higher subsidies than the rest of Great Britain, outside of London, without any noticeable added benefit, and the lack of competition in some areas makes it likely that some subsidy leaks into operator profits.

"Our modelling suggests that this could be as much as 18%."

'National significance'
The report recommends using legal obligations in contracts to improve performance as part of so called "Quality Partnerships".

It also suggests door-to-door services allowing pre-booked tickets would work better in rural parts of Wales.

Ministers said they intended to negotiate deals over bus routes of "national significance" directly from late next year, rather than leaving the agreements to local authorities.

In a statement, the Welsh government said: "We have already established a new Bus Advisory Group to review policies and look at new approaches to funding.

"We asked Dr Victoria Winkler, director of the Bevan Foundation, to review the operation of bus services in Wales.

"In line with her recommendations we will be introducing Quality Bus Partnership Schemes across Wales and are changing procurement procedures to enable us to directly procure bus services from autumn next year."

 

[TheGrandWazoo]

You could have fooled me, especial with the amount of times service end up being retended.


http://www.bbc.co.uk/news/uk-wales-politics-30026345

Yep, Cardiff Bus, Stagecoach and Arriva withdrew services citing BSOG cuts and bus pass remuneration. With the exception of Swansea and a couple of Welsh Valleys, struggle to recall too many areas that have a private sector monopoly.

Report by a RAIL expert and then you have Victoria Winkler that, if you've read it, didn't display much knowledge or insight on bus service operation when talking about TrawsCymru.

 

[PeterC]

I don't see how an "excess profit" can be made under a competitive tendering regime unless it is being suggested that there was something underhand going on.

I am making no claims, I am just the "man on the Clapham omnibus" interpreting the statement as I believe any layman would.

 

[Baxenden Bank]

Reads to me like an attempt to centralise decision making and budget holding at (Wales) national level. Next stop will be to take that money spent on local bus services and spend it on grandiose, image enhancing, projects in one small part of the country.

Given the mess the Welsh ministry are making of the 'T' routes, I suggest they keep the heck out!

 

[Rich McLean]

The problem is that in some parts of Wales, only one operator bids to run the service, and often they know that they will be the only one bidding, hence tabling a high subsidy and threaten to walk away if that amount isn't met.

Interesting times

 

[Rhydgaled]

The problem is that in some parts of Wales, only one operator bids to run the service, and often they know that they will be the only one bidding, hence tabling a high subsidy and threaten to walk away if that amount isn't met.

Or, if I understood the reports on the TrawsCymru topic about the recent T2 tendering correctly, registers much of the route comertially making it pretty much impossible for anyone else to bid for the remaining portion of the service. Can't see any other reasons for excess profits, aside from only having one bidder as you suggest or concessionary travel pass payments exceeding the tendering authority's estimates.

Given the mess the Welsh ministry are making of the 'T' routes, I suggest they keep the heck out!

"The 'T' routes"... Not exactly very obvious is it? Had they used 'TC' as originally announced it would more-clearly stand for TrawsCymru, the title of the network. And not all of Victoria Winkler's limited TrawsCymru report appears to have been heeded anyway. She advised that routes should be more direct but everything I've seen so far suggests the next 'T' route in the pipeline will be even less direct than the existing ones.

 

[ECML180]

So privately owned companies are making profit from doing business...shocker. Good job we de-regulated a load of industries to make them more competitive and efficient!

I have to agree though, I'd love to see where this profit actually is.

 

[tbtc]

the lack of competition in some areas makes it likely that some subsidy leaks into operator profits

So privately owned companies are making profit from doing business...shocker. Good job we de-regulated a load of industries to make them more competitive and efficient!

I have to agree though, I'd love to see where this profit actually is.

Agreed - if the idea that private operators tender for work whilst calculating a profit margin actually shocks some The Public Policy Institute for Wales then I really wonder how insulated they are.

I'm not surprised that some routes cost more to subsidise in Wales - it's perfectly natural that some "public services" cost more to provide in a sparsely populated part of the UK (which is why the "Scotland and Wales get more money per head of population under the Barnet Formula" argument starts from a pretty silly starting point - of course it will cost more per head of population if you want to provide the same level of service in a rural area).

I'm also not surprised that if you have a route in a relatively rural area (which is where many/most tendered services are obviously going to be) that you won't necessarily see First submitting a bid that includes hundreds of miles of dead mileage a week from Swansea (or Stagecoach including hundreds of miles of dead mileage a week from the Valleys), which leaves the bidding to only a couple of firms with a real presence in the sticks.

I am surprised that this is news though. TBH, as an outsider, transport in Wales seems to be a real muddle, with some in Cardiff Bay wanting control over things that ends up leaving a really strange muddle of public/private - empire building? Or is this a debate between whether power lies with local authorities/ Cardiff Bay?

Do they want operators to be forced to tender for such work on a cost-price basis? Good luck with that!

 

[TheGrandWazoo]

TBH, look at the tendered services and the large groups don't really have that much of a monopoly to abuse....

Cardiff Bus and Newport Bus work out to Barry and Chepstow respectively. Arriva are consigned to the northern fringes and have P&O Lloyd, GHA, Express and various Anglesey firms involved. Meanwhile, First have SWT, Silcox and Morris Bros in various parts of their business (and even NAT sneaking in). Stagecoach have a bit more but in places like Cynon and Merthyr and Pontypridd, there's a few competing firms.

To be honest, much of the central part of the country (which is largely tendered) is mainly in the hands of independents such as Richard Bros, MWT, Lloyds, etc

 

[iantherev]

Perhaps if the WAG are worried about wasting money on tendered services they should begin with the exercise in moving fresh air between Cardiff and the Airport.