Greater Manchester Bus Franchising Assessment

[TheGrandWazoo]

I presume you have read this

https://publications.parliament.uk/pa/cm201617/cmselect/cmtrans/611/611.pdf

You obviously disagree.

I sense that some bus enthusiasts would rather have more people going by car than losing bus passengers to a train or tram. An interconnecting network can also mean changing between different bus services, meaning that more people find the bus useful compared to now. It doesn't always mean bus losing to train/tram/metro. When people object to the concept of a system where more change of vehicle is required, they ignore the potential in journey possibilities that currently don't exist or are unattractive.

The question is, what approach leads to a greater overall modal share for public transport? If indeed providing direct services along the British format is more optimal, then other countries would follow the British example. Taking Zurich as an example. Most bus services from outside the city terminate at the end of the tram network. Instead, they could extend those bus routes to the city centre. It would cost money in extra buses and drivers, but it's a rich country so they could afford it.

If "forced interchange" doesn't improve the modal share for public transport, then there would be no point doing it.

Clearly from what I wrote, I had read it and disagree with it. However, you feel it is fine to sell an operation in good faith, another firm then acquires it including goodwill, and then can be effectively nationalised without compensation?

You'd agree with the same principle on council housing then Radamfi?

As I said, my concern is that forced interchange is going to be used as a way to funnel passengers to justify the major capital investment of the Metrolink. Where the Metrolink (or any local train) is quicker, then buses tend to be unable to compete anyway.

 

[Stan Drews]

Note, I'm not talking about deregulation vs franchising for this argument. This is about whether more patronage is achieved by competition, or when competition doesn't happen and those resources are deployed elsewhere in the transport network. Competition between modes existed before deregulation and still exists to an extent in London so franchising does not necessarily imply the end of competition.

Note, I'm not talking about competition vs no competition for this argument. This is about whether more patronage is achieved by public funding, or when public funding doesn't happen and those resources are deployed elsewhere. Public funding exists across different modes of transport, although the levels vary widely and franchising does not necessarily imply that those levels will change.

 

[TheGrandWazoo]

Note, I'm not talking about competition vs no competition for this argument. This is about whether more patronage is achieved by public funding, or when public funding doesn't happen and those resources are deployed elsewhere. Public funding exists across different modes of transport, although the levels vary widely and franchising does not necessarily imply that those levels will change.

Exactly - I'm dubious that there is anything approaching new money!

 

[radamfi]

Clearly from what I wrote, I had read it and disagree with it. However, you feel it is fine to sell an operation in good faith, another firm then acquires it including goodwill, and then can be effectively nationalised without compensation?

As explained by the Transport Committee, incumbent operators will still be permitted to bid for franchised routes. When the bus companies were sold to the employees, that didn't include an absolute right to be able to run commercial services at all, never mind in perpetuity. They can even continue to run commercial services outside GM, assuming neighbouring areas don't introduce franchising. The new owners were free to do whatever they wanted with the depot and buses. Clearly, once the companies were sold on, any lingering argument about nationalisation is lost. If the existing owners want compensation, then they can lodge their claim with the former bus drivers of GM Buses.

 

[TheGrandWazoo]

As explained by the Transport Committee, incumbent operators will still be permitted to bid for franchised routes. When the bus companies were sold to the employees, that didn't include an absolute right to be able to run commercial services at all, never mind in perpetuity. They can even continue to run commercial services outside GM, assuming neighbouring areas don't introduce franchising. The new owners were free to do whatever they wanted with the depot and buses. Clearly, once the companies were sold on, any lingering argument about nationalisation is lost. If the existing owners want compensation, then they can lodge their claim with the former bus drivers of GM Buses.

Yes, they are permitted to tender for franchises but as I said "Imagine you'd bought a former council house. It had been sold to a previous tenant under right to buy for a discounted price. You'd subsequently bought it. Then the council comes along and says that it's not fair, and that they'd made a mistake in the past. They're now going to take it off you and sell it in a raffle but you are free to buy tickets for that raffle....."

Did you not read that bit?

As for lodging a claim with the former bus drivers of GM Buses.... Are you for real? I mean - was that really a suggestion?

Not withstanding that it isn't the acts of those former staff that are causing this loss to First or Stagecoach. You'd look to obtain the loss from people who may not be alive now or most likely not earning....even if it means them losing their homes?

Blithely saying that they can redeploy the assets ignores the concept of goodwill i.e. the actual worth of the business, not just the physical assets. They're free to redeploy the assets though how you can redeploy a depot in the centre of Manchester when it's lost its work, lord knows. Note the number of LBL depots that disappeared when they lost their work!

I do wonder what rarefied atmosphere you live in; as for the politicians, we know how desperately out of touch they are so that the Transport Select Committee said that is not a surprise. In short - they would say that, wouldn't they?

Let me absolutely clear about this. I don't have an issue in principle with franchising but the operators should be compensated. If anyone bought something in good faith, had it taken off them and were told they could apply to still have it, there'd be hell to pay.

I really do want to believe that we can have a properly funded provincial example but I just don't see any additional money in the long term, except a bit of a bung (dowry) to effect the process? It doesn't appear so and the margin requirements of any business (look at the margins that operators like RATP and CDG make around the world) mean that there's precious little there to be had. So we have the same old lies as with the big society - absolving central government of responsibility and funding and devolving the issue to local politicians to manage.

As for painting all the buses one colour (i.e. orange), that's some ridiculous sop to a nostalgic golden age that never was..... Just like the blue passport that we will have to wave some day.

PS - you can quote all the European examples you want. You do realise that some of us actually use them AND know the drawbacks etc? Also, some of us are old enough and Northern enough to remember the days before deregulation in Tyne and Wear!

 

[Shaw S Hunter]

PS - you can quote all the European examples you want. You do realise that some of us actually use them AND know the drawbacks etc? Also, some of us are old enough and Northern enough to remember the days before deregulation in Tyne and Wear!

During a spell of living in Europe (NL) I quickly found that that my need to travel by car was very low and the experience left a lasting impression on me of just what can be achieved by way of integrated public transport if there is sufficient political will to make it happen. And while I am unable to say whether I am as Northern as you I too am old enough to remember the days before deregulation: Greater Manchester Transport was a decent operator and dare I say is much missed. Free market competition is all very well when there is reasonable scope to grow the market but if the market declines then margins get squeezed and investment suffers. Deregulation has failed the end-users and it is definitely time to try a different way. My only concern regarding a return to more direct control by politicians is the attempts that will inevitably made by some to promote improvements solely in their own Ward regardless of the effect on the "greater good".

 

[TheGrandWazoo]

During a spell of living in Europe (NL) I quickly found that that my need to travel by car was very low and the experience left a lasting impression on me of just what can be achieved by way of integrated public transport if there is sufficient political will to make it happen. And while I am unable to say whether I am as Northern as you I too am old enough to remember the days before deregulation: Greater Manchester Transport was a decent operator and dare I say is much missed. Free market competition is all very well when there is reasonable scope to grow the market but if the market declines then margins get squeezed and investment suffers. Deregulation has failed the end-users and it is definitely time to try a different way. My only concern regarding a return to more direct control by politicians is the attempts that will inevitably made by some to promote improvements solely in their own Ward regardless of the effect on the "greater good".

Indeed - my point being that there are others who have also experienced European public transport. However, their improved public transport connectivity doesn't happen by fluke - it is done so with consistent public transport funding. Not seeing that this is actually going to do this improve (and god, I'd wish it would). Sadly, our politicians let us down consistently, and in GM, they decided to have a referendum on congestion charging rather than a consensus for "the greater good".

We are seeing some fundamental shifts in society - anyone catch the 5% drop in retail footfall for Boxing Day? Things may well need to change and I'm concerned that we're into "something has to change - let's do X as it can't be as bad as the present" as that was the thinking behind many a Leave voter. Concerned that this will simply land people into a nether world of f*** all public funding and politicians gerrymandering.

 

[radamfi]

Yes, they are permitted to tender for franchises but as I said "Imagine you'd bought a former council house. It had been sold to a previous tenant under right to buy for a discounted price. You'd subsequently bought it. Then the council comes along and says that it's not fair, and that they'd made a mistake in the past. They're now going to take it off you and sell it in a raffle but you are free to buy tickets for that raffle....."

Did you not read that bit?

Yes, but I don't think the situations are comparable. I also don't think that companies that have ancestry including the former-PTE companies should be treated more favourably. If you compensate them, then you should also compensate the other companies operating commercial services. What is now Stagecoach Manchester and First in GM are quite different to GM Buses. Depots have been closed, operations given up with routes handed to other operators. First and Stagecoach have also taken over several small operators.

I don't think I'm particularly extreme in my view that compensation isn't required. Other people on here have stated the same thing. Compensation would be so expensive that it would mean that franchising would not be possible. Of course, that is why opponents of franchising, or those who claim they agree with it in principle but have so many objections that it is hard to believe them, push that argument so hard.

As for lodging a claim with the former bus drivers of GM Buses.... Are you for real? I mean - was that really a suggestion?

Not really, it was clearly a joke to emphasise the illogicality of compensation.

PS - you can quote all the European examples you want. You do realise that some of us actually use them AND know the drawbacks etc? Also, some of us are old enough and Northern enough to remember the days before deregulation in Tyne and Wear!

If plcd1 is reading this, he has written comprehensively about the joys of Tyne & Wear transport before deregulation on other forums. But, whilst that was reasonably well integrated, not quite to the levels of the usual European standard, there was no franchising back then.

I was 12 in 1986 but had already experienced the PTE operations in GM and West Yorkshire. That was probably the peak of my interest in public transport and used to travel a lot in either of those two regions most Saturdays. (It was quite normal for a 12 year old to go out by themselves in those days). GM was the one PTE area that hadn't had a low fares policy, although fares had been largely frozen since the early 80s. Apart from the introduction of the multi-modal Saver and Wayfarer tickets, GMPTE's involvement in trains was not particularly obvious, unlike WY where trains were branded as "Metrotrain". You could even argue that GMPTE was anti-train, as they considered there was no point running Sunday train services on busy lines like the Bury line, because normal bus routes could cover the route adequately. WY was more advanced in terms of integration. It was nothing like T&W, but it had introduced the SaverStrip ticket for use on both buses and trains with similar low off-peak fares.

 

[ivanhoe]

I think most people agree that deregulation has not worked for the end user. The question is what do we replace it with,given scarce resources.
Let’s look at the current situation.
Current expertise and assets all reside with the Bus Companies.
LA’s pay for non commercial services.
LA’s recompense the Bus Companies for the likes of ENCTS .
Whether franchising is the answer, I do not know. What I want to see is a legal agreement that encompasses all Bus Companies operating at first, in City Regions which agrees what routes should be covered and indeed frequencies. The Colour of the buses is secondary . Indeed I would love to see a Company formed that included all current operators and the City Region to deal with all Bus matters. Government need to allow City Regions to invest and a Public/Private partnership could work.
What I don’t know, is the extent to whether current Bus Companies(First,Stagecoach,Arriva,etc) are actually interested in real change. They constantly give the impression that anything that threatens their deregulation is worse than Satan.
If City Regions are allowed to borrow to invest, then it should not be seen as a means to fill the troughs of the Bus Companies. They could actually thrive through Partnership, if they changed their ways.
Awaits TheGrandWazoo for his cobblers remarks.

 

[TheGrandWazoo]

I think most people agree that deregulation has not worked for the end user. The question is what do we replace it with,given scarce resources.
Let’s look at the current situation.
Current expertise and assets all reside with the Bus Companies.
LA’s pay for non commercial services.
LA’s recompense the Bus Companies for the likes of ENCTS .
Whether franchising is the answer, I do not know. What I want to see is a legal agreement that encompasses all Bus Companies operating at first, in City Regions which agrees what routes should be covered and indeed frequencies. The Colour of the buses is secondary . Indeed I would love to see a Company formed that included all current operators and the City Region to deal with all Bus matters. Government need to allow City Regions to invest and a Public/Private partnership could work.
What I don’t know, is the extent to whether current Bus Companies(First,Stagecoach,Arriva,etc) are actually interested in real change. They constantly give the impression that anything that threatens their deregulation is worse than Satan.
If City Regions are allowed to borrow to invest, then it should not be seen as a means to fill the troughs of the Bus Companies. They could actually thrive through Partnership, if they changed their ways.
Awaits TheGrandWazoo for his cobblers remarks.

Only said it was cobblers because it was - it was factually incorrect and by a distance!

 

[TheGrandWazoo]

Yes, but I don't think the situations are comparable. I also don't think that companies that have ancestry including the former-PTE companies should be treated more favourably. If you compensate them, then you should also compensate the other companies operating commercial services. What is now Stagecoach Manchester and First in GM are quite different to GM Buses. Depots have been closed, operations given up with routes handed to other operators. First and Stagecoach have also taken over several small operators.

I don't think I'm particularly extreme in my view that compensation isn't required. Other people on here have stated the same thing. Compensation would be so expensive that it would mean that franchising would not be possible. Of course, that is why opponents of franchising, or those who claim they agree with it in principle but have so many objections that it is hard to believe them, push that argument so hard.



Not really, it was clearly a joke to emphasise the illogicality of compensation.



If plcd1 is reading this, he has written comprehensively about the joys of Tyne & Wear transport before deregulation on other forums. But, whilst that was reasonably well integrated, not quite to the levels of the usual European standard, there was no franchising back then.

Joke? Don't think a career in light entertainment beckons! Certainly less comical than some of your previous posts - the one where you said Ed Miliband would get elected - now that was funny!

You're not extreme in your views? You don't read anything that you won't agree with. Won't travel on a deregulated bus on principle. The pragmatic voice of reason - I think not.

The illogicality of compensation.... now correct me if I'm wrong but didn't BET get compensated when the National Bus Company was formed? Didn't TWPTE purchase Economic, Armstrong and Galleys? Didn't SYPTE purchase Booth and Fisher, Severn, Dearneways et al? Didn't they pay for more than just the assets but also the goodwill?

I respect Paul Corfield's views and I don't disagree that there were positive aspects to the Metro and integration. There still are. I still enjoy travelling around T&W and was reacquainting myself there just a few short weeks ago. However, there were some rather stupid aspects as well. Not least that you could buy an Explorer in Northumberland and Co Durham and use them into T&W but not for services wholly within T&W. Or forced integration so if you lived in parts of Gateshead that your journey could take a third longer and necessitate decamping in Gateshead Metro and having to get a train across the bridge. It's that sort of silliness that what was witnessed first hand.

 

[edwin_m]

Yes, they are permitted to tender for franchises but as I said "Imagine you'd bought a former council house. It had been sold to a previous tenant under right to buy for a discounted price. You'd subsequently bought it. Then the council comes along and says that it's not fair, and that they'd made a mistake in the past. They're now going to take it off you and sell it in a raffle but you are free to buy tickets for that raffle....."

That would indeed be unfair, leaving the person concerned with nowhere to live. But I suggest it is irrelevant to the situation we are discussing.

After franchising the bus operator will still own the buses, depots and any other assets. They can choose to sell the fixed assets and operate the buses in a different area, or to liquidate the business. They haven't lost the "right" to run certain bus services in Manchester, as that right was available to anybody who complied with the relevant safety standards. The goodwill (if there is any, considering the reputation of some of them) would stand them in good stead in the franchise competition.

A much more comparable situation happened to a relative of mine. She ran a nursing home which was built or at least heavily modified to meet the space standards set by the local authority. Then they increased the minimum amount of space per resident and it would have been necessary to knock rooms together, costing more and creating a building that wasn't competitive. No compensation for loss of business, but she did do quite well when it was sold off and demolished for flats.

Other examples could be a food business having to spend money complying with new hygiene regulations or go out of business, or a private hire firm which is faced with new rules regarding the number and quality of vehicles it can operate (as in London a few years back).

It was mentioned upthread that some bus operators withdrew from the London market because they didn't make enough margin - they obviously didn't value their goodwill enough to stay in the market, or to sue...

 

[radamfi]

now correct me if I'm wrong but didn't BET get compensated when the National Bus Company was formed? Didn't TWPTE purchase Economic, Armstrong and Galleys? Didn't SYPTE purchase Booth and Fisher, Severn, Dearneways et al? Didn't they pay for more than just the assets but also the goodwill?

But those firms were genuinely nationalised. Franchising does not equal nationalisation. Many agree with me and many agree with you. I'm not the only one on here who shares my point of view on this matter. This may well be decided in court.

Or forced integration so if you lived in parts of Gateshead that your journey could take a third longer and necessitate decamping in Gateshead Metro and having to get a train across the bridge. It's that sort of silliness that what was witnessed first hand.

If I recall, even if we assume this was "silly", there were other "forced interchanges" in T&W as well. How do we know that the extra fuel, drivers and buses required to duplicate the Metro into Newcastle would not be better used elsewhere, leading to more patronage overall across all public transport? That's the side of the argument that the critics of integration always ignore. That's the main reason for such apparent "silliness". As ever, the key question is, does "forced interchange" lead to improved patronage overall? If not, then there's no reason to do it.

 

[Dentonian]

There has to be some strategic reason for this bus war. There is unlikely to be a financial benefit as I would have thought that both operators are losing money. The best reason I can think of is that they need to demonstrate that there is some competition in GM, enabling them to "prove" that it isn't a cartel.

"Least worst" rather than best.

Only said it was cobblers because it was - it was factually incorrect and by a distance!

Which bit is "cobblers"?

 

[TheGrandWazoo]

"Least worst" rather than best.


Which bit is "cobblers"?

Ivanhoe said of the incumbent First and Stagecoach "They own the assets, although their acquisition in some cases was nothing short of legalised theft. " - given that they were sold to their respective management/workforce teams and that their current owners paid the market rate (including goodwill), it was factually incorrect.

 

[Xenophon PCDGS]

Is there any current legal understanding of the phrase "legalised theft", as I understood that theft itself was an offence in law covered by the legal code.

 

[HSTEd]

Governments take rights away from people and businesses all the time without compensation, why should this be any different?

The bus companies will still be in possession of all their staff and capital equipment the day after franchising comes in and will have suffered no more a loss than people suffer every time the council fits a one way system or a weight limit on a bridge

 

[TheGrandWazoo]

Governments take rights away from people and businesses all the time without compensation, why should this be any different?

The bus companies will still be in possession of all their staff and capital equipment the day after franchising comes in and will have suffered no more a loss than people suffer every time the council fits a one way system or a weight limit on a bridge

That’s an additional cost that can be borne via greater efficiencies or price increases, same as any legislative change whether that be WTD or minimum wage.

Back door nationalisation is something different and whilst they may have the assets, they may not be able to realise their value (firesale) or redeploy AND it still ignores the inherent goodwill of the business that they paid for when purchasing it from the previous owners.

 

[carlberry]

That’s an additional cost that can be borne via greater efficiencies or price increases, same as any legislative change whether that be WTD or minimum wage.

Back door nationalisation is something different and whilst they may have the assets, they may not be able to realise their value (firesale) or redeploy AND it still ignores the inherent goodwill of the business that they paid for when purchasing it from the previous owners.

The problem is that, dispite the joy some people appear to have with the idea that First/Stagecoach/etc may get shafted by franchising the end result will be that any loss from back door nationalisation in Manchester will actually be passed onto bus passengers eventually, and quite possibly not in Manchester. Somebody somewhere will pay more or will lose services as a result, it wont be the shareholders!

 

[HSTEd]

Back door nationalisation is something different and whilst they may have the assets, they may not be able to realise their value (firesale) or redeploy AND it still ignores the inherent goodwill of the business that they paid for when purchasing it from the previous owners.

The franchising of buses is unlikely to crash the value of buses in the marketplace though, even if PVRs fall drastically the Manchester bus fleet is still a small fraction of he national fleet.

Inherent goodwill is expended in years, not decades.

 

[radamfi]

Back door nationalisation is something different

Franchising is not "back door nationalisation". If franchising = nationalisation, rail franchising wouldn't be so controversial and the Labour Party wouldn't be pledging to bring the railways back into public ownership.

 

[TheGrandWazoo]

The franchising of buses is unlikely to crash the value of buses in the marketplace though, even if PVRs fall drastically the Manchester bus fleet is still a small fraction of he national fleet.

Inherent goodwill is expended in years, not decades.

In this instance, goodwill isn’t expended in years, decades or plancks but is simply ignored.

 

[TheGrandWazoo]

Franchising is not "back door nationalisation". If franchising = nationalisation, rail franchising wouldn't be so controversial and the Labour Party wouldn't be pledging to bring the railways back into public ownership.

A comparison so flawed, one can scarcely know where to begin....

 

[radamfi]

A comparison so flawed, one can scarcely know where to begin....

When bus franchising started in London, was that "back door nationalisation"?

 

[Bletchleyite]

When bus franchising started in London, was that "back door nationalisation"?

It was privatisation, as London never deregulated. Funny how the bit where the politicians live never went for the free for all.

 

[TheGrandWazoo]

When bus franchising started in London, was that "back door nationalisation"?

<sigh> - the sale of London Buses Ltd subsidiaries to the private sector was done in the full knowledge of what the situation was, the likely margin expectations, and was so reflected in the sale price. Also, goodwill would be negligible given that they will have no ability to innovate or add value being in a regulated environment

 

[radamfi]

<sigh> - the sale of London Buses Ltd subsidiaries to the private sector was done in the full knowledge of what the situation was, the likely margin expectations, and was so reflected in the sale price. Also, goodwill would be negligible given that they will have no ability to innovate or add value being in a regulated environment

Whether or not LBL was sold off is irrelevant. LBL subsidiaries were competing for tenders even as publicly owned companies. GM Buses was competing for passengers for many years after deregulation still owned by the PTA.

Clearly I see why there might be an argument for compensation but that should or shouldn't apply regardless whether the company is publicly or privately owned. If GM Buses was still owned by the PTA they could still claim to have lost the right to run commercial services. Same for Rosso, had it stayed in council ownership. They both had to exist as commercial entities at arms length from the council(s).

Even if I agreed with you that First and Stagecoach deserve compensation, I still wouldn't call it nationalisation. The state aren't buying any private companies.

Do you think other companies other than First or Stagecoach deserve compensation? Would Rosso deserve compensation from TfGM if it continued to be owned by Rossendale Council? Now Transdev own it, or will do within days, should Rossendale Council or TfGM compensate Transdev?

 

[TheGrandWazoo]

Whether or not LBL was sold off is irrelevant. LBL subsidiaries were competing for tenders even as publicly owned companies. GM Buses was competing for passengers for many years after deregulation still owned by the PTA.

Clearly I see why there might be an argument for compensation but that should or shouldn't apply regardless whether the company is publicly or privately owned. If GM Buses was still owned by the PTA they could still claim to have lost the right to run commercial services. Same for Rosso, had it stayed in council ownership. They both had to exist as commercial entities at arms length from the council(s).

Even if I agreed with you that First and Stagecoach deserve compensation, I still wouldn't call it nationalisation. The state aren't buying any private companies.

Do you think other companies other than First or Stagecoach deserve compensation? Would Rosso deserve compensation from TfGM if it continued to be owned by Rossendale Council? Now Transdev own it, or will do within days, should Rossendale Council or TfGM compensate Transdev?

It is relevant when you consider than any purchase price would have reflected the likely value and return of the business. Is that impossible for you to grasp?

It is back door nationalisation when you consider that the (local) government is to gain control of said services; the back door being the point that they AREN'T being purchased yet have the potential to lose their business.

And yes, I don't discriminate on the basis of large groups. Take Jim Stones - they have built up their business very assiduously over the years, filling the gap after First closed Atherton depot. Imagine that Leigh area is tendered as a package and someone like Stagecoach win. They would lose their business overnight, lovingly developed over many years without a penny. It just is not right.

 

[Bletchleyite]

Would it work better if the areas were given to their present operator, with a presumption of renewal (unlike the "fresh tender each time" approach used on the railway)?

 

[radamfi]

And yes, I don't discriminate on the basis of large groups. Take Jim Stones - they have built up their business very assiduously over the years, filling the gap after First closed Atherton depot. Imagine that Leigh area is tendered as a package and someone like Stagecoach win. They would lose their business overnight, lovingly developed over many years without a penny. It just is not right.

But they didn't buy any publicly owned operation. Until now, your argument for compensation has been based on the fact that at some point in history, you can find a link between an existing operator and a former PTE operator.