I'm fairly sure that, as the busway was a QA contract (i.e. regulated), most of the above could have been dealt with if the money was available. I suspect however that the money wasn't available and the authority still see the busway as a cheap tram and any future franchising plans will tend towards the tram good, bus bad mentality.
The availability of money is the point. For the busway to deliver a massive increase in bus patronage, there needed to be major investment both in new buses, and in route infrastructure (the busway itself, plus the East Lancs buslanes, plus the Oxford Road corridor works). All of which was possible through public money, the buses from the Green Bus scheme, the route works from both LTP Growth monies and the GM Transport Fund.
All of which amounts to special funds; the problem is replicating the same results in an evironment in which such funds are much more limited. Which is what Metrolink has been able to do (on top of special funding); in that a substantial element of funding is borrowing against the operating surplus from the extra patronage generated by the schemes in question. The transport authority takes the risk; but due to the franchising structure of the current tram operating contract (as distinct from the former DBOM contract), the profits from higher than expected patronage growth return to the authority, not the operator. So, in part, new trams can be bought out of their own increased fare revenue (through 'prudential borrowing'; and new lines built from the profits from user fares.
Its not ideal - there is still no mechanism by which incresed property values along a tram line can be captured for the benefit of the transport system, not the property owners - but the principle is a sound one; improving the transport system requires major investment, and the best way to fund that investment is from patronage growth. Which is where franchising comes into its own; under franchising , fare income accrues to the authority; so if it is possible to generate large operating surplus through investment in enhanced longer distance services, and then plough these profits into capital investment funds for future such schemes.
The money needed is avaiable; in the form of fare income generated by increased patronage. But for this money to be accessible through prudential borrowing to be used to support an improved bus network - better buses, faster routes, more buslanes - then the surplus has to accrue to the authority, not the operators. Those are the Treasury rules; for an authority to borrow against future income stream, that income has to accrue to the authority.
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