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West Yorkshire bus franchising

johncrossley

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All of this shows that the way the combined authorities are doing franchising may have unintended consequences.

This is pretty much as expected and is commonly how tendering is done in other countries and in other industries. The concern in London is the small number of bidders for each contract.
 
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BradK2017

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Bee Network contracts are for five years I believe so therefore First could lose the depot.
Rochdale depot was bought direct by First from Transdev with First then doing a large refurbishment of the facilities at their own cost as they only won the 'smaller' packages that didn't include their own depot.

As mentioned by someone else First still have a commercial unit run from there for contracts such as the Amazon at Manchester Airport & Rail Replacements so they could very easily place Todmorden outstation under Rochdale's control to allow the 590/1 to remain commercial. The 592 is more complicated due to being operated fully within West Yorkshire.
 

mattb7tl

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This is pretty much as expected and is commonly how tendering is done in other countries and in other industries. The concern in London is the small number of bidders for each contract.
Franchising in the capital works, but it is a flawed model if you are looking for genuine competition. It is a massive risk for any new entrant to move in when they have to source depots, vehicles, staff and operational infrastructure before they can realistically compete. The end result is that work tends to move around the same handful of established operators, unless someone buys an existing operation outright, as First Bus has recently done.

That is the key difference with our version of franchising. It removes a lot of that barrier to entry. If a company wants to enter the market, they do not need to somehow find a depot, build a fleet and set up from scratch before even bidding. They need to prove competence, price the work properly and submit a strong bid. If they win, they can be operating something like Bramley, using the authority provided depot and fleet. That makes competition much more realistic than the London model, where depot ownership alone can lock out serious challengers.
 

johncrossley

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Franchising in the capital works, but it is a flawed model if you are looking for genuine competition. It is a massive risk for any new entrant to move in when they have to source depots, vehicles, staff and operational infrastructure before they can realistically compete. The end result is that work tends to move around the same handful of established operators, unless someone buys an existing operation outright, as First Bus has recently done.

That is the key difference with our version of franchising. It removes a lot of that barrier to entry. If a company wants to enter the market, they do not need to somehow find a depot, build a fleet and set up from scratch before even bidding. They need to prove competence, price the work properly and submit a strong bid. If they win, they can be operating something like Bramley, using the authority provided depot and fleet. That makes competition much more realistic than the London model, where depot ownership alone can lock out serious challengers.

Obviously the government of the day wanted to sell the depots off so London ended up with route by route tendering and for quite a long time there were enough bidders to ensure value for money so it wasn't considered an issue. If London was starting from scratch today, however, they would probably do the same as what is being done in the north.
 

TheGrandWazoo

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Franchising in the capital works, but it is a flawed model if you are looking for genuine competition. It is a massive risk for any new entrant to move in when they have to source depots, vehicles, staff and operational infrastructure before they can realistically compete. The end result is that work tends to move around the same handful of established operators, unless someone buys an existing operation outright, as First Bus has recently done.

That is the key difference with our version of franchising. It removes a lot of that barrier to entry. If a company wants to enter the market, they do not need to somehow find a depot, build a fleet and set up from scratch before even bidding. They need to prove competence, price the work properly and submit a strong bid. If they win, they can be operating something like Bramley, using the authority provided depot and fleet. That makes competition much more realistic than the London model, where depot ownership alone can lock out serious challengers.
All that would be true if the following wasn't also the case...

Do routes transfer between operators? Yes they do.
Are operators making above market level profits? No they aren't, which would be the case if it wasn't genuine competition
No new operators have been able to enter the market, and they are all legacy operations/depot? No - whilst most do have their history in the old LT/LRT, operations such as Uno, Transport UK, Metrobus and Blue Triangle (as was) as well as many other entrants over the interim period. We did have Sullivan Buses but they exited citing commercial inflexibility from TfL.

Both models have pros and cons.

However, I have to smile at the statement that it removes barriers to entry. The reality of the Greater Manchester and the Liverpool CRA examples is that it essentially has created a much greater and different barrier to entry in that small operators have been effectively excluded from the process. That said, TfL now effectively excludes small and medium sized enterprises (SMEs) - all this at a time when central government is allegedly trying to increase SME participation.

It isn't because of the set up costs that SMEs aren't tendering for work. It's because tendering is onerous, they don't have economies of scale, and the profit margins (whether in London or Manchester) are relatively poor compared to what other work is available to small firms.
 

Andyh82

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We will have to see if any SMEs will win work in West Yorkshire. How can the likes of Stotts and Ross Travel compete with pretty much every major bus group in the UK who will also be bidding for their current services.

Normally when the Holme Valley locals are up for tender there will be a fairly small list of companies bidding for them, now there will be a dozen
 

TheGrandWazoo

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We will have to see if any SMEs will win work in West Yorkshire. How can the likes of Stotts and Ross Travel compete with pretty much every major bus group in the UK who will also be bidding for their current services.

Normally when the Holme Valley locals are up for tender there will be a fairly small list of companies bidding for them, now there will be a dozen
Hmmm.... we saw in Greater Manchester that aside from Vision Bus getting some schools work, there were no SMEs involved. In LRCA, they took the decision to abandon SME style smaller packages and fold them into the main ones but saying that the SMEs would get the chance on schools work... which went to Stagecoach and Warrington in a couple of instances and the rest to plucky upstart HTL (owned by Tower Transit).

So you'll see Huddersfield getting several corporate bidders, all pitching at a similar profit margin but better placed to absorb whatever contractuals and penalties that are proposed.
 

Man of Kent

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We will have to see if any SMEs will win work in West Yorkshire. How can the likes of Stotts and Ross Travel compete with pretty much every major bus group in the UK who will also be bidding for their current services.

Normally when the Holme Valley locals are up for tender there will be a fairly small list of companies bidding for them, now there will be a dozen
It all depends how the contracts are structured. Routes with a low PVR could be reserved for SMEs; or it would be possible to formalise what happened in Cornwall, whereby the SMEs are sub-contractors to the main tenderer. Indeed, in some German tendering, it is mandatory to work with local SMEs as sub-contractors, normally with a minimum value on the amount of work that the SME undertakes.
 

Kaliwax

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You have to feel sorry for some of the smaller companies, built a company up for decades, been in Yorkshire and ran in the family for generations, looked to lose a lot of their work, in which they have provided a great service for customers with regular and smart drivers, nice buses and they will go all out of the window because of franchising.

Stotts, Ross Travel, Lyles and Squarepeg will be majorly missed in Yorkshire to the passengers who used their services, if they don't win anything in franchising.
 

GoneSouth

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You have to feel sorry for some of the smaller companies, built a company up for decades, been in Yorkshire and ran in the family for generations, looked to lose a lot of their work, in which they have provided a great service for customers with regular and smart drivers, nice buses and they will go all out of the window because of franchising.

Stotts, Ross Travel, Lyles and Squarepeg will be majorly missed in Yorkshire to the passengers who used their services, if they don't win anything in franchising.
Probably very true, and nobody would miss First or Arriva who have both given West Yorkshire rotten service over the years yet will be there in some capacity after franchising.
 

mattb7tl

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We will have to see if any SMEs will win work in West Yorkshire. How can the likes of Stotts and Ross Travel compete with pretty much every major bus group in the UK who will also be bidding for their current services.

Normally when the Holme Valley locals are up for tender there will be a fairly small list of companies bidding for them, now there will be a dozen
Which is a good thing.

The reason many small operators struggle to compete is because the larger groups have spent decades hoarding the profitable services, while smaller firms are often left chasing lower margin tendered work that nobody else wants to run. That limits their ability to build capital, expand fleets, invest in depots and grow into serious competitors.

So with small companies expected to compete against every major group that is not really a failure of franchising. It is the result of a deregulated market that allowed local monopolies to form in the first place.
 

TheGrandWazoo

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Which is a good thing.

The reason many small operators struggle to compete is because the larger groups have spent decades hoarding the profitable services, while smaller firms are often left chasing lower margin tendered work that nobody else wants to run. That limits their ability to build capital, expand fleets, invest in depots and grow into serious competitors.

So with small companies expected to compete against every major group that is not really a failure of franchising. It is the result of a deregulated market that allowed local monopolies to form in the first place.
Not certain how a system (as shown in Manchester and Liverpool) that then puts them largely out of existence is enabling their ability to build capital, expand fleets, invest in depots?
 

JKP

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Which is a good thing.

The reason many small operators struggle to compete is because the larger groups have spent decades hoarding the profitable services, while smaller firms are often left chasing lower margin tendered work that nobody else wants to run. That limits their ability to build capital, expand fleets, invest in depots and grow into serious competitors.

So with small companies expected to compete against every major group that is not really a failure of franchising. It is the result of a deregulated market that allowed local monopolies to form in the first place.
Sounds more like convenience for the body overseeing the franchising.

Local monopolies were formed many years before deregulation with small operators mostly confined to marginal routes not wanted by the state owned or local authority operator.
 

Kaliwax

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Wasn't it like that before deregulation, as we had Yorkshire Woollen having the main services in Dewsbury/Heckmondwike, West Riding in Wakefield/Castleford. South Yorkshire Road Transport in Pontefract. Leeds had Yorkshire Rider and also Black Prince. West Yorkshire Road Car in Harrogate, Keighley, those areas.
 

mattb7tl

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Sounds more like convenience for the body overseeing the franchising.

Local monopolies were formed many years before deregulation with small operators mostly confined to marginal routes not wanted by the state owned or local authority operator.
And yet it is the reality.

It is not the independents fault that they have struggled to build up capital or scale, and yes, some of those market structures pre date deregulation. But it also is not the authorities job to deliberately redesign the network, or choose a more expensive bid, purely to keep a small operator functioning.

If they can compete on quality, competence and price, brilliant. They should absolutely win work. But if they cannot, that is not automatically a failure of franchising. It is the result of decades of a market where small operators were largely boxed into marginal work long before franchising even arrived.
 

TheGrandWazoo

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Local monopolies were formed many years before deregulation with small operators mostly confined to marginal routes not wanted by the state owned or local authority operator.
Wasn't it like that before deregulation, as we had Yorkshire Woollen having the main services in Dewsbury/Heckmondwike, West Riding in Wakefield/Castleford. South Yorkshire Road Transport in Pontefract. Leeds had Yorkshire Rider and also Black Prince. West Yorkshire Road Car in Harrogate, Keighley, those areas.
Before deregulation, there were smaller firms that had the right, through the licensing scheme, to operate certain routes. Of course, many were bought out by larger firms - West Yorkshire bought out Samuel Ledgard, WYPTE bought out United Services and Bingleys. SYPTE pursued a policy of buying out most of the independents (mainly around Doncaster) such as Blue Ensign, Dearneways, Rossie Motors and most notably, Booth and Fisher.

Some of those survived into the deregulated era whilst others are newer entrants.

== Doublepost prevention - post automatically merged: ==

And yet it is the reality.

It is not the independents fault that they have struggled to build up capital or scale, and yes, some of those market structures pre date deregulation. But it also is not the authorities job to deliberately redesign the network, or choose a more expensive bid, purely to keep a small operator functioning.

If they can compete on quality, competence and price, brilliant. They should absolutely win work. But if they cannot, that is not automatically a failure of franchising. It is the result of decades of a market where small operators were largely boxed into marginal work long before franchising even arrived.
Yes - it is the reality. Irrespective of how good a small independent is, they are likely to be collateral damage. They simply won't be able to compete on quality or competence - the system (if it replicates GM and LRCA) doesn't allow that.

They could design packages that enable SMEs to tender, and that was the plan for Liverpool, so they fully intended to design a network that would allow small operators to tender. However, they then chose not to follow that.
 
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mattb7tl

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Yes - it is the reality. Irrespective of how good a small independent is, they are likely to be collateral damage. They simply won't be able to compete on quality or competence - the system (if it replicates GM and LRCA) doesn't allow that.

They could design packages that enable SMEs to tender, and that was the plan for Liverpool, so they fully intended to design a network that would allow small operators to tender. However, they then chose not to follow that.
An authority can design the most SME-friendly lot possible, but small operators are still unlikely to submit the cheapest or strongest bid because they simply do not have the same capital, buying power or risk tolerance as the big groups.

That is why the narrative you sometimes see in bus magazines, that authorities are not doing enough for small operators, feels a bit simplistic. This is a structural issue. Keeping them in the market would often mean deliberately choosing a more expensive bid, regardless of how carefully the lots are designed.
 

Andyh82

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And yet it is the reality.

It is not the independents fault that they have struggled to build up capital or scale, and yes, some of those market structures pre date deregulation. But it also is not the authorities job to deliberately redesign the network, or choose a more expensive bid, purely to keep a small operator functioning.
Do the independents want to build up capital and scale?

I’m sure most are happy just running their small scale work.

It’s like if Tesco’s built a supermarket next door to a corner shop, it’s the corner shop owners fault for not expanding and becoming a chain big enough to open a supermarket themselves.
 

GoneSouth

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An authority can design the most SME-friendly lot possible, but small operators are still unlikely to submit the cheapest or strongest bid because they simply do not have the same capital, buying power or risk tolerance as the big groups.

That is why the narrative you sometimes see in bus magazines, that authorities are not doing enough for small operators, feels a bit simplistic. This is a structural issue. Keeping them in the market would often mean deliberately choosing a more expensive bid, regardless of how carefully the lots are designed.
Yes, it’s a race to the bottom where the ONLY thing that matters is the price. Quality or reputation count for nothing. It’s knowing the cost of everything but the value of nothing that gets you the job of handing out contracts.

I dread the awarding of these contracts to Arriva or First, but that’s what’s gonna happen. At least they shouldn’t be allowed to get away with their ludicrous timetabling AI bot running the show.
 

mattb7tl

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Do the independents want to build up capital and scale?

I’m sure most are happy just running their small scale work.

It’s like if Tesco’s built a supermarket next door to a corner shop, it’s the corner shop owners fault for not expanding and becoming a chain big enough to open a supermarket themselves.
Maybe, maybe not. But even if they did want to build up capital and scale, most have never realistically been in a position to do so.

Tesco analogy is actually a good one, because it shows how unfair markets can be for smaller or niche businesses. A corner shop might be perfectly competent at what it does, but that does not mean it can suddenly compete with Tesco. On price, scale, buying power or risk. That is not a moral failure of the corner shop. It is just how concentrated markets work.

Yes, it’s a race to the bottom where the ONLY thing that matters is the price. Quality or reputation count for nothing. It’s knowing the cost of everything but the value of nothing that gets you the job of handing out contracts.

I dread the awarding of these contracts to Arriva or First, but that’s what’s gonna happen. At least they shouldn’t be allowed to get away with their ludicrous timetabling AI bot running the show.
Quality is factored into the bidding process, but it still will not necessarily favour independents. That is the structural problem. It is not a reflection on their morals or commitment, but many simply do not have the newest fleets, the spare vehicle depth, the engineering resilience or the financial capacity to absorb problems over a long contract. A small operator relying on life expired second hand vehicles can be perfectly decent day to day, but if they suffer a long-term VOR issue, there is far less slack in the system.

As for Arriva and First, they are not bad operators. I say that as someone extremely critical of First. The issue is that they are poor at growing networks when left to make the commercial decisions themselves. Under franchising, that changes. They can operate the service, but they are no longer the ones deciding what the network should be. (WYCA also wants clock face timetables!)
 

Cesarcollie

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Maybe, maybe not. But even if they did want to build up capital and scale, most have never realistically been in a position to do so.

Tesco analogy is actually a good one, because it shows how unfair markets can be for smaller or niche businesses. A corner shop might be perfectly competent at what it does, but that does not mean it can suddenly compete with Tesco. On price, scale, buying power or risk. That is not a moral failure of the corner shop. It is just how concentrated markets work.


Quality is factored into the bidding process, but it still will not necessarily favour independents. That is the structural problem. It is not a reflection on their morals or commitment, but many simply do not have the newest fleets, the spare vehicle depth, the engineering resilience or the financial capacity to absorb problems over a long contract. A small operator relying on life expired second hand vehicles can be perfectly decent day to day, but if they suffer a long-term VOR issue, there is far less slack in the system.

As for Arriva and First, they are not bad operators. I say that as someone extremely critical of First. The issue is that they are poor at growing networks when left to make the commercial decisions themselves. Under franchising, that changes. They can operate the service, but they are no longer the ones deciding what the network should be. (WYCA also wants clock face timetables!)

Your point about ‘quality’ in bidding processes is an interesting one. There is a ‘quality’ score of varying percentages in many (but not all) local authority tenders. However, it is not a measure of ‘quality of service’ in the way most people - and certainly those on this forum - would interpret it!
 

Bristol LHS

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As for Arriva and First, they are not bad operators. I say that as someone extremely critical of First. The issue is that they are poor at growing networks when left to make the commercial decisions themselves. Under franchising, that changes. They can operate the service, but they are no longer the ones deciding what the network should be. (WYCA also wants clock face timetables!)

Not great commercial operators, but also not great at out of London franchising - a few routes in Rochdale for First, and er, thats it. Realise Arriva had ownership issues but not even to retain anything in Liverpool so far isn’t a great return.
 

TheGrandWazoo

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Quality is factored into the bidding process, but it still will not necessarily favour independents. That is the structural problem. It is not a reflection on their morals or commitment, but many simply do not have the newest fleets, the spare vehicle depth, the engineering resilience or the financial capacity to absorb problems over a long contract. A small operator relying on life expired second hand vehicles can be perfectly decent day to day, but if they suffer a long-term VOR issue, there is far less slack in the system.
As @Cesarcollie states, you and others are under a misapprehension about what "quality" actually means in public procurement.

Smaller operators would be quite able to meet quality requirements if it were about such areas as vehicle ages and engineering capability. In fact, construct the franchise packages appropriately and operators can embark on vehicle leases and invest accordingly with the knowledge of a seven year contract behind them. Or, of course, you simply provide many of the resources as part of the franchise award.

No, quality is not the standard that is set. That's a given. Quality is about demonstrating that you have the systems and processes, can demonstrate how you provide "social value", and that you can demonstrate how you do it. It is a highly onerous exercise to respond to franchises (which is why big corporates have dedicated teams to respond). There is no real reward for quality operation - you are operating to a fixed specification and are penalised for not meeting it. There may be a bonus/malus element where you can get a bonus for truly exceptional % operational compliance (i.e. no lost mileage etc) but it's so hard to earn, most firms don't factor it in.

There is absolutely no reason why smaller SME franchises can't exist (and indeed, government policy is to provide greater SME presence in public service provision) but then again, the Procurement Regs realistically act against it and the way in which GM and LCRA have conducted franchising also excludes smaller businesses.
Maybe, maybe not. But even if they did want to build up capital and scale, most have never realistically been in a position to do so.

Tesco analogy is actually a good one, because it shows how unfair markets can be for smaller or niche businesses. A corner shop might be perfectly competent at what it does, but that does not mean it can suddenly compete with Tesco. On price, scale, buying power or risk. That is not a moral failure of the corner shop. It is just how concentrated markets work.
Indeed, but as we've seen, smaller operators have demonstrated the ability to fashion a niche for themselves. They may have lesser purchasing power but also have lower central overheads. Most smaller operators are quite happy not to want to build up capital and scale - there was a quote from the owner of Delaine (back in the 1980s) that they would never wish to expand more than 20-30 vehicles because it wasn't readily manageable.

Not great commercial operators, but also not great at out of London franchising - a few routes in Rochdale for First, and er, thats it. Realise Arriva had ownership issues but not even to retain anything in Liverpool so far isn’t a great return.
Arriva didn't bid in Greater Manchester because of the paralysis of the DB ownership, and they were always likely to lose some of their Merseyside work in fairness.

First certainly hasn't got to grips with the new world of tendering (as that is what franchising essentially is). Go Ahead and Stagecoach clearly have. Is that because their margin expectations are higher, or that they haven't twigged how to play the quality game???
 

Dwarfer1979

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Obviously the government of the day wanted to sell the depots off so London ended up with route by route tendering and for quite a long time there were enough bidders to ensure value for money so it wasn't considered an issue. If London was starting from scratch today, however, they would probably do the same as what is being done in the north.
I would say London did try a proto-area franchising in a couple of areas early on and it was never repeated largely, it would appear, because every one needed to be bailed out before the initial contract term ended - the caveat is that all those operations were LT owned at the time (Harrow Buses, Bexleybus, Kingston Bus & London Forest) with the first 3 set up as pseudo low-cost operations so it may have been more down to LT getting their sums very wrong but it does mean TfL still shy away from large area contracts due to the risk of failure.

The problem London has with getting new entrants is largely down to how price/contract terms adjust during the life of the contract (essentially the inflationary increase is not tied to actual operating cost increases so it is difficult to have a price that will be profitable at the end that is low enough to win it at the start). The London business model effectively relies on operators making a profit on the contract in the first half to cover losses over the back end of the contract term which makes it difficult for new entrants to enter - if you get enough volume at the start to support an operation it is difficult to get the same volume into the operation in following years to bring the profit in for new contracts to cover the loses on the old ones.
Maybe, maybe not. But even if they did want to build up capital and scale, most have never realistically been in a position to do so.

Tesco analogy is actually a good one, because it shows how unfair markets can be for smaller or niche businesses. A corner shop might be perfectly competent at what it does, but that does not mean it can suddenly compete with Tesco. On price, scale, buying power or risk. That is not a moral failure of the corner shop. It is just how concentrated markets work.
There are lots of small operators who have successfully grown against big groups, many later sold out for large amounts of money as the owners got to an age where they wanted to retire early but they weren't distress sales (there are fewer now because of various government related risks & threats, not the least being franchising taking your business for no compensation, mean that the long term prospects for investment are weaker). There is a long list of successful independents who grew successfully at the expense of big companies and just to name a couple of current ones there are Centrebus/D&G, Stephensons of Essex, Compass Bus in Sussex & Central Connect at scale and slightly smaller people like Grant Palmer, Vision & Connexions in Harrogate.

It does depend on your definition of succesful competition, the on the road and head to head stuff is less common but that is as much the political climate (local politicians are less keen on this sort of "over bussing" and why risk drawing negative attention that could result in your business being taken away when there are other gaps & options), but I would certainly consider operators winning contracts & taking on marginal services commercially that big group operators are reducing as successful competitive actions by smaller operators.
Quality is factored into the bidding process, but it still will not necessarily favour independents. That is the structural problem. It is not a reflection on their morals or commitment, but many simply do not have the newest fleets, the spare vehicle depth, the engineering resilience or the financial capacity to absorb problems over a long contract. A small operator relying on life expired second hand vehicles can be perfectly decent day to day, but if they suffer a long-term VOR issue, there is far less slack in the system.
Quality considerations on these sort of tenders are far more about box ticking certain criteria & requirements than an actual promise of real world delivery and that is why smaller operators struggle more. They don't have the resources to get the accreditation that help tick those boxes nor do they have the Head Office resources that also help tick diversity and social boxes. I was told by someone who was aware of the situation that TfGM contracts did require companies winning contracts had to have a Health & Safety Manager & a dedicated Contract Manager (seperate from Depot, Department or Company managers) regardless of the size of the contract won which are more expensive/complicated for smaller operators but easy to provide by larger groups.

The big issue for SMEs in regards to these large area franchises as employed/proposed by all the Combined Authorities at the end of the day is the financial risk aspect of having all your eggs in a single complicated basket (& if you only ever owned 20 or 30 buses then a contract for 20/30 buses is a big contract for you). If a big group gets their sums wrong they have plenty of other operations & assets than can be used to cover losses incurred short term and financial mechanisms to cover indemnities, if you are a SME then there is no (or very little) other income to cover even a small miscalculation which could not only lead to complete company failure but due to the sort of financial guarantees that these sort of contracts carry in case of issues (to prevent operators just cutting and running when things get hard) mean you could see your entire family bankrupt & homeless if it goes badly. It just isn't worth the risk as a business and even more so if, like many of the Combined Authorities, they have a reputation/history for officiousness or inflexibility in terms of contract issues. The West Yorkshire suggestion, even if only around the edges in that case, of awarding some routes under traditional tendering mechanisms & terms would offer an established structure to award work in a way that SMEs can be suited for to keep local businesses in the market (& so keeping some money locally rather than awarding all the cash to national or multi-national businesses where profits don't stay locally) whilst allowing the big volume core networks to be managed at volume effectively alongside.
 
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Grumpy

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many were bought out by larger firms - West Yorkshire bought out Samuel Ledgard, WYPTE bought out United Services and Bingleys.
Bingleys was United Services (having previously bought out the original partners).
 

Grumpy

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Wasn't it like that before deregulation, as we had Yorkshire Woollen having the main services in Dewsbury/Heckmondwike, West Riding in Wakefield/Castleford. South Yorkshire Road Transport in Pontefract. Leeds had Yorkshire Rider and also Black Prince. West Yorkshire Road Car in Harrogate, Keighley, those areas.
Surely Black Prince only started "Stage Carriage" services after deregulation?
 

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