Deregulation and ownership of buses

[mattb7tl]

The budget for 2025/26 presented to the Greater Manchester Combined Authority on 7 February this year. Reprdocued below: all figures in £000s.

That figure is from the budget, not actual expenditure. The figures I’m using are based on what has actually been spent in practice not what has been set aside. The budget for the previous year was £320 million, but they didn't spend anything close to £320 million.

 

[slowroad]

So it looks like the bus subsidy has gone up by around £100m, and this has been associated with an increase in passenger numbers of around 5% (but there may be other factors driving the latter figure). Is that roughly right? If so, it doesn’t sound great…..

== Doublepost prevention - post automatically merged: 23 May 2025 ==

So it looks like the bus subsidy has gone up by around £100m, and this has been associated with an increase in passenger numbers of around 5% (but there may be other factors driving the latter figure). Is that roughly right? If so, it doesn’t sound great…..

If the 5% was all due to franchising and the costs are right, in very round terms it looks as if each extra journey is costing about £10.

 

[Man of Kent]

That figure is from the budget, not actual expenditure. The figures I’m using are based on what has actually been spent in practice not what has been set aside. The budget for the previous year was £320 million, but they didn't spend anything close to £320 million.

As this current year is the first in which franchising applies for the whole year, it's not really possible to use prior years to show the full costs of franchising.

 

[asw22]

And as for the claim that the public sector isn’t experimental and adaptable? Honestly, that’s laughable. Some of the UK’s most creative, customer focused, and adaptive bus operators are publicly owned or controlled. Just look at Reading Buses, Nottingham City Transport, Blackpool Transport, and Lothian Buses all award-winning, all delivering high-quality, forward-thinking networks with strong ridership. If innovation were truly the private sector’s strength, you’d expect to see standout examples across the country especially after decades of private dominance instead a whole 70% of passengers in the country are carried by the top five bus companies, and they simply do not hold a candle to those examples and are flat out uninspiring...

Brighton, Oxford, Leicester?
The previously German government owned Arriva?
Was Abellio better than Transport UK?

There are examples of good and bad in both public / private ownership.

Usually it is good local management and staff who make or break the business, with decent infrastructure (including bus lanes and priority), clear fares, well maintained vehicles (don't need to be new, just reliable, clean and safe) and reasonable timetables.

Buses are funded by a combination of government / public taxes, fares and private operators at present in exchange for profit under deregulation. Under franchising everything is funded by fares / government / taxes - will the operators take care of the assets / grow the business when they might lose it in a year or so's time? And where do buses compare to NHS / schools / social care / other demands on local authorities?

 

[mattb7tl]

Brighton, Oxford, Leicester?
The previously German government owned Arriva?
Was Abellio better than Transport UK?

There are examples of good and bad in both public / private ownership.

Usually it is good local management and staff who make or break the business, with decent infrastructure (including bus lanes and priority), clear fares, well maintained vehicles (don't need to be new, just reliable, clean and safe) and reasonable timetables.

Buses are funded by a combination of government / public taxes, fares and private operators at present in exchange for profit under deregulation. Under franchising everything is funded by fares / government / taxes - will the operators take care of the assets / grow the business when they might lose it in a year or so's time? And where do buses compare to NHS / schools / social care / other demands on local authorities?

There are certainly some good examples of privately run networks, but when you consider that virtually the entire country operates under a deregulated, private system and yet you can count the genuinely successful ones on one hand (two at most) it's clear that these are the exception, not the rule. Highlighting a few high performing areas doesn’t change the broader picture the private model consistently fails to deliver a balanced good network.
As for bus priority measures, they’re no silver bullet. I speak from experience living in a region with substantial priority infrastructure bus lanes, junction priority, and so on. These measures only go so far. For them to make a meaningful difference, you need an operator that’s willing to accept lower margins and take on less profitable journeys commercially to maximise service provision. If you lost the bus operator lottery and do not have a good operator the deregulated private system offers no solution to that challenge beyond hoping that competition will somehow fill the gap. And more often than not, it doesn’t.
Franchising shifts the responsibility for growing and shaping the network to where it makes the most sense the transport authority. Operators under franchising aren’t expected to take business risks or make long-term planning decisions they’re contracted to deliver services to a specification. The authority, which also controls the infrastructure and funding, makes the strategic decisions. And crucially, operators can lose contracts to competitors for underperforming or providing a poor experience. That’s real competition.

 

[Tetchytyke]

As this current year is the first in which franchising applies for the whole year, it's not really possible to use prior years to show the full costs of franchising.

It’s also not really possible to use the expenditure in previous years to assess the cost of franchising. We’ve had several years of double-digit inflation in the sector, both wages and supplies. There’s also been significant investment in new buses and the infrastructure to support those new buses; its difficult to tell how that capital expenditure has been accounted for, but it doesn’t look as though it is amortised in the same way it would be on a private company’s books.

 

[edwin_m]

Buses are funded by a combination of government / public taxes, fares and private operators at present in exchange for profit under deregulation. Under franchising everything is funded by fares / government / taxes - will the operators take care of the assets / grow the business when they might lose it in a year or so's time? And where do buses compare to NHS / schools / social care / other demands on local authorities?

Private operators do not fund buses. A private bus operator is funded by revenue and by any applicable government subsidies. They may finance buses (borrow money to buy some) but their objective is to maximise profit and they will tailor their service pattern and fares accordingly.

Other types of operator have the same two sources of funding but their objectives are different. A public operator may have objectives set by government, such as maximising ridership. A franchised operator is also aiming to make a profit but to do so requires compliance with objectives set out by government in the terms of the franchise. The franchise terms may limit the amount of profit a franchised operator can make, but they may choose to accept this in return for protection from competition risk.

So, if running identical services with costs, revenue and everything else being equal, the public and private operators will make the same profit but the public operator can return theirs to government or invest them in improving the service. Where a franchised operator sits in this spectrum depends on the terms of the franchise.

Advocates of privatisation and deregulation believe this equality will never happen because the profit motive makes the private sector more efficient, and meanwhile competition keeps quality up and fares down. But in many places the private operator is dominant, and where competition is present it tends to result in a less attractive service (such as needing to stick to the same operator for the cheapest tickets). So the first half of that statement may be true but the second half often isn't.

Meanwhile a franchised or public operator can work to more social objectives, and by getting more people on the buses can achieve wider benefits for the community.

 

[LUYMun]

Lower fares are related to franchising, because without franchising most routes have to be commercial and will charge the fare they need to be profitable (and in some cases whatever fare they think they can get away with). Public subsidy to reduce fares could be a perfectly valid objective to deliver social benefits, but is virtually impossible in a deregulated environment.

You seem to forget the past two years of the £2/£3 single fare cap.

 

[edwin_m]

You seem to forget the past two years of the £2/£3 single fare cap.

Fair point, but it's a blunt instrument. Just like ENCTS the government pays out but doesn't get any influence over the operators, who will still be driven by maximum profit not by any social objective. Subsidy to a public operator or a franchise should bring much more benefit.

 

[Simon75]

Are there areas/companies since 2010 that are better than before 1986 ?

 

[mangad]

Are there areas/companies since 2010 that are better than before 1986 ?

If you look at old timetables for the Lake District there are certainly several services that are far better now than they were in the 1980s. The key tourist routes (516, 77, 78, 599 especially). But who is to say that they wouldn't have improved otherwise. Also a lot of the smaller routes have gone so it's a mixed bag

 

[Robertj21a]

Are there areas/companies since 2010 that are better than before 1986 ?

Aren't Brighton & Hove reported to be the company 2nd only to TfL in their loadings etc?
Nottingham is usually high up the list.

 

[asw22]

This sounds like an area run by one or more of the big groups that like to centralise control and therefore there's less focus on providing the local services.
Barriers for entry for smaller operators are quite high under deregulation, but both Manchester and London show that they're even higher under franchising (classic business model of undercut competitors first, wait till they exit the market, then start to increase prices as the first set of contracts come to an end).

As for bus priority measures, they’re no silver bullet. I speak from experience living in a region with substantial priority infrastructure bus lanes, junction priority, and so on. These measures only go so far. For them to make a meaningful difference, you need an operator that’s willing to accept lower margins and take on less profitable journeys commercially to maximise service provision. If you lost the bus operator lottery and do not have a good operator the deregulated private system offers no solution to that challenge beyond hoping that competition will somehow fill the gap. And more often than not, it doesn’t.
Franchising shifts the responsibility for growing and shaping the network to where it makes the most sense the transport authority. Operators under franchising aren’t expected to take business risks or make long-term planning decisions they’re contracted to deliver services to a specification. The authority, which also controls the infrastructure and funding, makes the strategic decisions. And crucially, operators can lose contracts to competitors for underperforming or providing a poor experience. That’s real competition.

Sorry I meant to say that a private operator takes in revenue and subsidies, then uses that to either reinvest or pay loans / shareholders. They have an incentive to maximise revenue and subsidies. Some will do their best to promote their products (marketing) and grow their business, whereas others won't do anything.

Under franchising that incentive has gone. I think of it like a home owner investing money into home improvements, whereas a tenant is much less likely to as it's never theirs. A good transport authority will ring fence the revenue and reinvest. An authority under pressure to fund social care, schools, waster collection, roads etc may not be able to, and combine this with operators content with their contracts then this is not a good outcome for buses.

One risk is where a franchise has been run by a decent operator which has managed to build up a good customer base, then loses it to one that doesn't live up to its promises. I remember the drop in reliability (including strikes) when Northern Rail switched away from Abellio / Serco to Arriva in 2016, with it being a long 4 years before it became an operator of last resort. The same risk applies to buses, and it is those (unable to afford a car) that will get hit, while others will go and buy a car (and no longer use buses).

Private operators do not fund buses. A private bus operator is funded by revenue and by any applicable government subsidies. They may finance buses (borrow money to buy some) but their objective is to maximise profit and they will tailor their service pattern and fares accordingly.

Other types of operator have the same two sources of funding but their objectives are different. A public operator may have objectives set by government, such as maximising ridership. A franchised operator is also aiming to make a profit but to do so requires compliance with objectives set out by government in the terms of the franchise. The franchise terms may limit the amount of profit a franchised operator can make, but they may choose to accept this in return for protection from competition risk.

So, if running identical services with costs, revenue and everything else being equal, the public and private operators will make the same profit but the public operator can return theirs to government or invest them in improving the service. Where a franchised operator sits in this spectrum depends on the terms of the franchise.

Advocates of privatisation and deregulation believe this equality will never happen because the profit motive makes the private sector more efficient, and meanwhile competition keeps quality up and fares down. But in many places the private operator is dominant, and where competition is present it tends to result in a less attractive service (such as needing to stick to the same operator for the cheapest tickets). So the first half of that statement may be true but the second half often isn't.

Meanwhile a franchised or public operator can work to more social objectives, and by getting more people on the buses can achieve wider benefits for the community.

Without going off topic, I wonder why we don't nationalise / franchise supermarkets and care homes.

 

[Leedsbusman]

And as for the claim that the public sector isn’t experimental and adaptable? Honestly, that’s laughable. Some of the UK’s most creative, customer focused, and adaptive bus operators are publicly owned or controlled. Just look at Reading Buses, Nottingham City Transport, Blackpool Transport, and Lothian Buses all award-winning, all delivering high-quality, forward-thinking networks with strong ridership. If innovation were truly the private sector’s strength, you’d expect to see standout examples across the country especially after decades of private dominance instead a whole 70% of passengers in the country are carried by the top five bus companies, and they simply do not hold a candle to those examples and are flat out uninspiring...

You really ought to edit Blackpool Transport out of that - their operation is dire with heavy reductions in frequency over the last few years that would make even Arriva blush. They lost their way in 2009 with one manager cutting back and stopping the investment and their replacement cutting back further and buying a virtually new fleet with massive loan repayments, a failed notion of a max five year age (the minimum is nearly that now)! They have also failed to progress their Zebra 1 scheme.

 

[geoffk]

Does anyone living in Council areas now controlled by Reform know yet what their policies will be on bus service support (assuming they have any)?

 

[edwin_m]

Without going off topic, I wonder why we don't nationalise / franchise supermarkets and care homes.

Because competition largely works in those markets. If you aren't happy with your supermarket or care home you can choose a different one. Admittedly somewhat more difficult for care homes, which is why they are inspected.

For local transport, having multiple operators with separate fare structures is usually a disbenefit to passengers. If there are several operators on the same route then a passenger has to choose one of them, with an effective reduction in frequency, or pay more to return home on the other one. If there are several within an area then passengers will pay more to make a journey of the same length if it happens not to have the same operator throughout. Generally it works best for passengers if there is a single operator, but that is effectively a private monopoly, still motivated by maximising profit and under no obligation to do what is best for the wider society.

 

[joieman]

Does anyone living in Council areas now controlled by Reform know yet what their policies will be on bus service support (assuming they have any)?

I would be surprised if any changes happened overnight. It would be foolhardy to automatically put any plans made by a previous administration on hold.

Here in Leicestershire another round of service changes largely affecting the west of the county are to take effect soon, although a fair bit of it seems to be being advertised at short notice. I've yet to see notice of all the changes on the Choose How You Move website.

 

[Tetchytyke]

Without going off topic, I wonder why we don't nationalise / franchise supermarkets and care homes.

Supermarkets don’t exist in a natural monopoly.

Care homes probably should be: rampant price gouging to send the profits to the British Virgin Islands: https://www.bbc.co.uk/news/uk-59504521

The finances of some of the UK's biggest care providers should be investigated by the competition watchdog, according to the former health secretary Jeremy Hunt.

Three of the UK's biggest care home groups are owned by private equity companies and are saddled with significant amounts of debt.

BBC Panorama has been looking at what this means for people living and working in the homes run by two of those groups, and for the future of care in this country.

"It's the Wild West out there," says Mr Hunt. "We need the Competition and Market authority to make sure that market is operating in the interest of consumers, particularly the very vulnerable people who need that sector."

You know it’s bad when Jeremy Hunt says they’re ripping people off!

 

[Pinus contorta]

I think "often" is the key word here. Not always, not never, but often.

Here's the thing. You can have bad operators, you can have middling operators and you can have good operators. You can have FTSE owned companies, large private operators, small independent operators, publicly owned operators. And you can have any combination of the former with the latter.

Likewise de-regulation was never a panacea for perfect services. You can have good deregulated services, middling ones, poor ones. Same for regulation.
There is no perfect system.

What should be pretty obvious is that the deregulation of 2025 is very different to the deregulation of 1986 in terms of operators, quality and services. I was thinking about this with the launch of the Bee Network. Prior to deregulation my parents house (where I grew up) was served by one bus route run by GM Transport (let us call it route A) that ran every 15 minutes in peak, 20 minutes off-peak. Within a few years of deregulation, there were three routes (A, joined by B and C.) In one direction, eight buses an hour ran. In the other, ten. Three companies running down the same bit of road.

Skip forward a few decades, and only the original route (A) remains. Prior to franchising it had (as it still does) four buses an hour peak, three buses an hour off-peak, served by one operator, Stagecoach. One of the new operators lost its licence to operate due to safety concerns, the other got swallowed up by First who then retreated from the area.

That was the reality of bus de-regulation near my parents. A flurry of activity, new routes, all manner of stuff. And all that remains is the original bus service, running in a very similar way to what happened if deregulation had never happened in the first place. I wonder how often that pattern has been repeated across the country.

(Whilst I haven't named the route for personal privacy reasons, I checked the timetables using the Railmedia Timetable Archive)

Where i used to live there was cross boundary Merseyside / Greater Manchester commercial activity in the years after 1986 but that withered away in the 1990's. Now there's currently cross boundary subsidised services that sandwiches the small passenger flows together and provides an hourly( lowish) level of bus service . My big worry after the Merseyside franchising comes in soon is that we have a further reduction in cross boundary services and another nail in the coffin of integration.

 

[geoffk]

Across the West Yorkshire/Greater Manchester boundary, in an area where I used to live, I see there's now only an hourly service between Rochdale and Todmorden. This route will be franchised by West Yorkshire and it will be interesting to see what service level they specify - half-hourly again? Many years ago buses from each side used to meet and turn round at the Summit Inn above Littleborough, with a through service only on Saturday afternoons. This is the most populated of the trans-Pennine routes and buses have disappeared altogether on some of the others (Oldham - Halifax and Barnsley - Manchester are examples).