Tetchytyke
Veteran Member
There are two main issues with SMEs though: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.
1. The business model of the SMEs doesn't always lend itself to the new franchising model; and
2. The successful SMEs will become acquisition targets for the big boys.
Starting with (2), you mention HTL (Huyton Travel) who were a successful SME when Merseyside designed their franchising scheme to try and include successful SMEs like HTL. Which is exactly why Tower Transit came along and got their chequebook out. The owners of HTL quite sensibly decided to cash in. We've seen the same in West Yorkshire: Fourways Coaches would have been a well-positioned SME for the smaller contracts, which is precisely why they're now owned by Go-Ahead.
You can't really legislate against this. Owners of successful SMEs need to be able to cash in when the time is right.
As for (1), part of the point of franchising is to move away from the situation where the main daytime service is operated by the big operator and the evening/Sunday service is operated by the smaller operator.
TLC Travel use their buses during the daytime for the housing estate/supermarket/hospital routes under tender. But these tenders aren't enough of a business base by themselves so they use the same buses for the evening/Sunday routes dropped by the big operator. You can structure the housing estate/supermarket/hospital routes into a specific contract or set of contracts for SMEs but would those routes, by themselves, give the SMEs enough of a margin? I'm not convinced they would.
You could leave the situation as it is now with some of the Bradford routes recently cancelled by First- the daytime tender (replacing the First commercial route) is with Go-Ahead and the evening/Sunday tender is with TLC Travel. But that's messy from a franchising perspective.