West Yorkshire bus franchising

[mangad]

In any case with these franchises so much of the customer facing role is taken on by the Combined Authority, if for no other reason that they are pretty reluctant to tell passengers who runs each bus & route (TfGM don't clearly list the actual operator on their timetables & apart from the legal lettering there is no apparent reference to the operator on the vehicles) so it is not hugely relevant how good or bad existing customer services systems are.

Not reluctance. It's more irrelevance. Under franchising there is no reason at all for the passenger to know nor care who the operator is. It's a Bee Network/Weaver Network/Whatever Network/Some Service Not Named Network Network service, not a Stagecoach/Go-Ahead/First/Whoever service. The authority wants to network to be seen as a unified entity, a cohesive whole. That can't happen if the passenger needs to know that for the 27 they need to contact BugginsBusCo for information, but if they misplace their umbrella on the 49 then contacting BugginsBusCo will be no good because the route's run by Jim's Tours, despite the fact that there's a big authority logo on the side of the bus.

 

[MotCO]

Interesting, thanks.

Out of interest, why do they have lower costs, considering their disadvantages arising from economies of scale? I always assumed it was lower staffing costs, related to lower levels of unionisation. (I’m not suggesting life working for a big corporate is a cosy either, by the way).

I'm not in the industry, but at a guess....

For big groups, each route has to pay a small contribution to the group's CEO salary (which is probably 10 times the salary of the small owner,) plus there is the cost of HR departments (rhe small owner may do his own HR), H&S etc etc likewise.
Also, it may be that a small operator has 5 routes, and overall the company makes a small profit, but the owner doesn't really know how much each route makes because the buses and staff inter-work. However, a large company will want to know the profitability of each route, and has staff and software to access this. Lastly, the profit expectations of large groups is higher than for the small independent operator. Against this though, big companies can probably get advantageous fuel prices, cost of spares, and new bus prices/lease deals.

Also, take the example of the 5 routes above. If the franchise splits these routes into different lots, then the small owner will not know how much to bid for each of these routes, and has no real experience of costing each route, so is at an immediate disadvantage to the big boys.

 

[TheGrandWazoo]

I'm not in the industry, but at a guess....

For big groups, each route has to pay a small contribution to the group's CEO salary (which is probably 10 times the salary of the small owner,) plus there is the cost of HR departments (rhe small owner may do his own HR), H&S etc etc likewise.
Also, it may be that a small operator has 5 routes, and overall the company makes a small profit, but the owner doesn't really know how much each route makes because the buses and staff inter-work. However, a large company will want to know the profitability of each route, and has staff and software to access this. Lastly, the profit expectations of large groups is higher than for the small independent operator. Against this though, big companies can probably get advantageous fuel prices, cost of spares, and new bus prices/lease deals.

Also, take the example of the 5 routes above. If the franchise splits these routes into different lots, then the small owner will not know how much to bid for each of these routes, and has no real experience of costing each route, so is at an immediate disadvantage to the big boys.

There will be the requirement to pay for overhead recovery so all those things like senior management and back office functions. That is one thing. With an SME, the owners will be doing a number of roles in a business. They may also be using an existing site that has been in the family and is wholly owned (rather than leased) so there's a lower cost exposure too. Also, SMEs may indeed have lower pension provision and lesser terms and conditions of employment... and you might wonder why people would work for them but then again, it might be some people prefer working for smaller, more personal and family orientated firms, rather than working for a faceless corporate beast even if it means a slightly smaller pay packet.

Secondly, there is the margin expectation. Corporates are owned by shareholders - usually asset management and pension funds who will invest in the business and expect a minimum return. An SME may have a lower margin expectation - they might be happy to accept 5 or 6% whilst corporates would be nearer 8-10%.

 

[Megafuss]

Not reluctance. It's more irrelevance. Under franchising there is no reason at all for the passenger to know nor care who the operator is. It's a Bee Network/Weaver Network/Whatever Network/Some Service Not Named Network Network service, not a Stagecoach/Go-Ahead/First/Whoever service. The authority wants to network to be seen as a unified entity, a cohesive whole. That can't happen if the passenger needs to know that for the 27 they need to contact BugginsBusCo for information, but if they misplace their umbrella on the 49 then contacting BugginsBusCo will be no good because the route's run by Jim's Tours, despite the fact that there's a big authority logo on the side of the bus.

Tell that to "Better Buses for West Yorkshire", who have went nuclear over First being awarded contracts!

 

[TheGrandWazoo]

Tell that to "Better Buses for West Yorkshire", who have went nuclear over First being awarded contracts!

Perhaps they'd best head to Manchester or London and see how First are performing.

 

[mangad]

Tell that to "Better Buses for West Yorkshire", who have went nuclear over First being awarded contracts!

I'll happily tell them they're comparing apples to pears. And that they'd be best waiting and seeing before passing judgement. Don't expect they'd listen, but that's what I'd say.

 

[Andyh82]

Tell that to "Better Buses for West Yorkshire", who have went nuclear over First being awarded contracts!

Yes and for some reason that’s the angle the BBC have gone with

Not the actual franchise award but the fact that some random at a made up organisation doesn’t like First

 

[TheGrandWazoo]

Yes and for some reason that’s the angle the BBC have gone with

Not the actual franchise award but the fact that some random at a made up organisation doesn’t like First

Angry click-baity type angle? It does sort of ignore the whole premise of moving to a franchise model.

Do any of our WY experts know when we're likely to hear of any smaller package/schools package awards for Hudds/Woollen?

 

[Leedsbusman]

In both GM and WY several SMEs have failed and led to emergency re tendering as they are often more exposed to cost issues (eg fuel at the moment) - they aren’t necessarily best outfits for a long term contract. Even those who survive longer eventually come to a conclusion when owners retire or die unless there is a succession plan.

They have carved a niche by being cheap which is what WYCA wanted on tenders. Now they want a quality price mix and that is what is putting SMEs out as the claim not to have the time to explain how good they are. I believe there are some ‘lighter’ bids included in the smaller batches but still more than typing a number in a box which is the current approach to bidding. SMEs could form consortia or work with a cheap retired specialist to help a bid.

 

[Tetchytyke]

Tell that to "Better Buses for West Yorkshire", who have went nuclear over First being awarded contracts!

That’s because the West Yorkshire bus network is as bad as it is largely because of First. I have to say I raised an eyebrow that First won the first franchise awarded.

But that’s the deal with franchising, you can’t exclude or mark down First’s tender because of their appalling commercial network performance. It’s a level playing field. At least the authority now have control over them.

 

[TheGrandWazoo]

But that’s the deal with franchising, you can’t exclude or mark down First’s tender because of their appalling commercial network performance. It’s a level playing field. At least the authority now have control over them.

Correct - this is something that people don't appreciate.

There is no "prior knowledge" or prejudice (good or bad) in assessing tenders submissions in public sector procurement. However, in the future, First and all other firms will be judged on their compliance with a detailed operational specification.

 

[Dwarfer1979]

Interesting, thanks.

Out of interest, why do they have lower costs, considering their disadvantages arising from economies of scale? I always assumed it was lower staffing costs, related to lower levels of unionisation. (I’m not suggesting life working for a big corporate is a cosy either, by the way).

It should probably be noted that WYCA take CSR extremely seriously, especially in procurements. I get the point about box ticking, but there would have to be some alternative way of demonstrating that they are ‘good employers’.

Staff will often accept lower wages for other advantages that come from working for an SME (often less anti-social hours work but often simply more personalised shifts and routes but it may be better located as well - our pay rates as a smaller group tend to run some percent below the neighbouring big group for this reason but it isn't a big gap and rates tend to rise in similar ways because if you let the difference become too large you find the advantages of smaller businesses aren't that attractive any more) - this goes for management & many back office staff as well as drivers (there will be some positions where the advantages of SME don't factor and they will be closer to market rates). Also, when you are talking about these small and often remote routes I have suggested be seperated out as SME focussed contracts, you will find scheduling agreements at big groups can be more restrictive (& so expensive) than the flexibility of smaller operators. Often breaks away from designated points come with extra payments or a requirement to bring drivers back to such a point (so either having extra work time or higher pay) because they will be based around worst case concerns of the Union for everyone rather than being adapted to the specific needs and wants of the specific staff.

The big difference though is the lack of big head office structures sat behind that need funding (IT departments & HR teams for instance) plus more of the senior management roles will be done by a single person (often the owners & family who is paid less in "wages" as most income will come from "dividends" from profit though because it is their business they are probably taking home a lot less than a single big group manager even when everything is added in). Even below that most senior level you will find "smaller" operators run with less back office staff than similar big group operators - my previous job was with a medium sized group and the subsidiary I worked for had 1 depot and 2 outstations that had grown out of an ex-NBC so had a back office management structure much more similar to a big group subsidiary and they had more people in their Commercial Department than my current employers (as a medium sized group that started out of a late 90's independent start up) had when I joined even though my current employers had twice as many buses and four times the depots (and even now the Commercial Team has only grown to a similar size to that old employer despite being 4 times the size of that "big" company in buses). It is much harder to ask someone to take on lots of extra work due to redundancy (beyond a certain point at least) than it is to ask someone to take on extra tasks that no one previously undertook until that point when you work out you are working overtime and weekends and doing the work of 3 or 4 people.

Not reluctance. It's more irrelevance. Under franchising there is no reason at all for the passenger to know nor care who the operator is. It's a Bee Network/Weaver Network/Whatever Network/Some Service Not Named Network Network service, not a Stagecoach/Go-Ahead/First/Whoever service. The authority wants to network to be seen as a unified entity, a cohesive whole. That can't happen if the passenger needs to know that for the 27 they need to contact BugginsBusCo for information, but if they misplace their umbrella on the 49 then contacting BugginsBusCo will be no good because the route's run by Jim's Tours, despite the fact that there's a big authority logo on the side of the bus.

If a bus has just hit my car I want to talk to the representative of the company responsible, not a 3rd party representative who has no legal relationship to the insurance matter being discussed and can't do anything but fill out a form and send it to someone else (I wonder if they even have the insurance details of all of their contractors to pass on?). Simply the process of taking the initial contact and passing it on through the system can bring a significant issue around reaction and data gathering before you get to the victim struggling to actually talk to anyone who can make a decision on recitifying the issue.

Lost property may be different to an extent, in that there may be a core central management function, but if I have just lost my house keys I want to talk to someone who can get it back to me today not in a couple of days when it feeds through the system as I can't get into my house. Our Customer Service team can message drivers whilst they are still out on the road in emergencies and have access to schedules and depot teams to arrange quick returns and I'm not sure how that stands for TfGM CS staff.

London is one system and most Customer Service needs go through TfL but they still have the operator name on the outside and inside if you need to identify it for those circumstances where talking to the contractual authority won't actually be helpful.

 

[Cesarcollie]

But this is franchising, not tendering! The requirements by definition need to be more onerous. Your way to achieve what you want is to abandon franchising, it seems.

But franchising is really just tendering. It has acquired a new name (well, actually the wrong name - McDonalds run franchises but if I don’t win one I can still open a burger bar next door!).

 

[mangad]

If a bus has just hit my car I want to talk to the representative of the company responsible, not a 3rd party representative who has no legal relationship to the insurance matter being discussed and can't do anything but fill out a form and send it to someone else (I wonder if they even have the insurance details of all of their contractors to pass on?). Simply the process of taking the initial contact and passing it on through the system can bring a significant issue around reaction and data gathering before you get to the victim struggling to actually talk to anyone who can make a decision on recitifying the issue.

That is a bit of a niche and rather uncommon scenario. But if a bus has just hit your car, and you're there, then you're going to have the bus driver there to talk to. And if they refused (for some unknown reason) to talk to you, you'd be able to see the legal lettering on the vehicle. And at very worst case, you'd contact customer services or whatever, tell them what happened, and get the information from them. And if you're not there, well how do you know which particular bus did it?

Lost property may be different to an extent, in that there may be a core central management function, but if I have just lost my house keys I want to talk to someone who can get it back to me today not in a couple of days when it feeds through the system as I can't get into my house. Our Customer Service team can message drivers whilst they are still out on the road in emergencies and have access to schedules and depot teams to arrange quick returns and I'm not sure how that stands for TfGM CS staff.

Well they may well have a system. I have no idea. But the operators can contact the drivers, and if it's anything like London, TfGM will be able to contact the operators. It's an extra layer, but so what? Because in your scenario in franchising, how does the average person know they're on a BlogsCo bus not a TodsCo bus in the first place? You've got off the bus, the bus has gone, you realise your keys may be on it. So how do you know who to contact? The only way to come close to knowing would be to have massive logos on the side and operator specific liveries. Otherwise no one is going to have a clue. And that defeats the whole object of the exercise.

London is one system and most Customer Service needs go through TfL but they still have the operator name on the outside and inside if you need to identify it for those circumstances where talking to the contractual authority won't actually be helpful.

I'd put good money on the fact that very few people know nor care about who is operating their bus. The operator logo may be there, but who pays attention to it? It's red, it's a bus, it's going where you want it to. That's the extent of what people care about.

 

[Pyewipecarshed]

In both GM and WY several SMEs have failed and led to emergency re tendering as they are often more exposed to cost issues (eg fuel at the moment) - they aren’t necessarily best outfits for a long term contract. Even those who survive longer eventually come to a conclusion when owners retire or die unless there is a succession plan.

I think this is the crux of the problem. I don't think the combined authorities want SME operators because of having their fingers burnt in the past when such outfits have failed with zero warning. Not that they are able to say that publicly.
And the reality is that with the increasing cost of wages, insurance, fuel, compliance etc. SME operators are more likely to go under than MegaGlobalTastic Transport Corporation INC. or whoever.

Staff will often accept lower wages for other advantages that come from working for an SME (often less anti-social hours work but often simply more personalised shifts and routes but it may be better located as well

All of this is true, but unfortunately there have been examples of less "nice" reasons why staff want to work for an SME.
I recall photographing buses in Leeds about a decade ago when an SME had just appeared. I got chatting to a member of First's training team who said "I look at their buses and they're all being driven by people who used to work for us but got sacked, either for cash irregularities or having accidents"(!)

And let us not forget that the large operators have killed off more independent bus companies through anti competitive behaviour and the realities of a concentrated deregulated market than franchising ever could

In some cases this may be true, but not in as many as people seem to think.
The big groups bought many of the independents, not by turning up in the middle of the night and storming the depot but by making an offer the owner couldn't, or didn't want to, refuse.
And a lot more scuppered themselves by"fattening " i.e. expanding rapidly and aggressively in the hope that Messrs Arriva, Stagecoach, First etc. would get sick of them and buy them out- for an inflated price on account of all their extra vehicles.
Unfortunately for the firms concerned the big groups soon learned to defend their position to varying extents, but otherwise sit back and wait for the competitor to fail because they had expanded too quickly.

 

[mattb7tl]

In both GM and WY several SMEs have failed and led to emergency re tendering as they are often more exposed to cost issues (eg fuel at the moment) - they aren’t necessarily best outfits for a long term contract. Even those who survive longer eventually come to a conclusion when owners retire or die unless there is a succession plan.

They also tend to be less willing to operate antisocial hours, I believe this was cited as one of the reasons some small companies lost work in Greater Manchester. That creates a problem from the authorities perspective because the objective is not simply to find the cheapest operator for current timetables, it is to have an operator that can support the network, as it develops.

If you have a year of strong financial performance and want to add an evening service to what was previously a generic tender service, you do not want to create a headache every time the network needs to evolve. You could contract that evening service to another operator, but that creates another problem. You are effectively asking a second operator to take on the antisocial part of the work without giving them the daytime work that would normally accompany it and help offset that burden.

That is not particularly fair on the second operator. They are being given the undesirable hours while the original operator retains the more attractive daytime work. You could end up disproportionately loading the evening, weekend and other antisocial work onto operators who are willing to take it, simply because the original operator is not prepared to do it.

 

[Mollman]

In both GM and WY several SMEs have failed and led to emergency re tendering as they are often more exposed to cost issues (eg fuel at the moment) - they aren’t necessarily best outfits for a long term contract. Even those who survive longer eventually come to a conclusion when owners retire or die unless there is a succession plan.

They have carved a niche by being cheap which is what WYCA wanted on tenders. Now they want a quality price mix and that is what is putting SMEs out as the claim not to have the time to explain how good they are. I believe there are some ‘lighter’ bids included in the smaller batches but still more than typing a number in a box which is the current approach to bidding. SMEs could form consortia or work with a cheap retired specialist to help a bid.

Similarly, big operators have walked away in other places (First in Southampton and Cornwall for example).

Out here in the non-metropolitan areas small family run operators often provide a range of services - tendered local bus, home to school, coach hire etc. Some have kept contracts for over 10 years.

 

[stevieinselby]

Similarly, big operators have walked away in other places (First in Southampton and Cornwall for example).

There is a difference between a company that goes bankrupt and closes overnight, and a company that makes a planned withdrawal from an area. Presumably with franchising there would be penalty clauses in the event that an operator pulled out before the contract was complete, which would be easy to enforce against a large company that was still trading but not against an ex-company with plenty of other creditors already in line ahead of you.

On the other hand, you would hope that an SME running a franchised service would have a stable enough long-term income that it would put them at less risk of collapse than others – although given the number of them primarily running subsidy contracts and school transport who have failed, it is not necessarily any guarantee.

But it does seem somewhat unfair if an authority is working against SMEs getting contacts on the basis that they are more likely to fold, when there are plenty out there who have long-standing and successful businesses and are being collectively punished for the failure of a few others.

 

[Ballyheigue]

They also tend to be less willing to operate antisocial hours, I believe this was cited as one of the reasons some small companies lost work in Greater Manchester. That creates a problem from the authorities perspective because the objective is not simply to find the cheapest operator for current timetables, it is to have an operator that can support the network, as it develops.

If you have a year of strong financial performance and want to add an evening service to what was previously a generic tender service, you do not want to create a headache every time the network needs to evolve. You could contract that evening service to another operator, but that creates another problem. You are effectively asking a second operator to take on the antisocial part of the work without giving them the daytime work that would normally accompany it and help offset that burden.

That is not particularly fair on the second operator. They are being given the undesirable hours while the original operator retains the more attractive daytime work. You could end up disproportionately loading the evening, weekend and other antisocial work onto operators who are willing to take it, simply because the original operator is not prepared to do it.

Fair enough but there should be work available to smaller operators who don't want to work evenings/weekends simply because many a driver won't want to work evenings/weekends. With all these daytime services developing into anti social services, where will they get the drivers from because not everyone wants to work anti social hours, I don't in my sector and will never going forward, you're going to come across many a person like me who will simply refuse to amend their contract. Even if a company has separate daytime employee contracts and evening/weekend contracts, you're still not going to address the issue of what happens when a driver rings in sick on an evening/weekend.

 

[MotCO]

But it does seem somewhat unfair if an authority is working against SMEs getting contacts on the basis that they are more likely to fold, when there are plenty out there who have long-standing and successful businesses and are being collectively punished for the failure of a few others.

I'm not sure if you would count The Delaine (Lincolnshire) as an SME, but imagine if their services were included in a franchise and they failed to win any Lots?

 

[Shaw S Hunter]

I'm not sure if you would count The Delaine (Lincolnshire) as an SME, but imagine if their services were included in a franchise and they failed to win any Lots?

The reality is that most people have fallen out of love with deregulation so change is now almost inevitable. The big unknown is what approach will be taken in more rural areas. Franchising seems a good fit for the large metropolitan areas and could well be suitable for larger "free-standing" cities (Bristol, Leicester, etc) but what model would work well for larger rural areas like Lincolnshire or Norfolk is not clear. But certainly the likes of The Delaine could well disappear at some point. The political winds are not blowing favourably for smaller bus companies.

 

[stevieinselby]

I'm not sure if you would count The Delaine (Lincolnshire) as an SME, but imagine if their services were included in a franchise and they failed to win any Lots?

That isn't what the conversation was about though – there was a suggestion that franchising authorities might prefer not to have SMEs because there was a higher risk of them going bust and closing down overnight, as has happened in recent years to Hulleys and CT4N plus plenty more over time, leaving the authority with the headache of finding a new operator at short notice and likely being out of pocket on top. It isn't about whether those SMEs would have a viable business in the event that they didn't win any contracts – while it's a shame to see companies fold, especially companies with a long history of providing a good service, that isn't really the authority's business.

 

[YorkRailFan]

That isn't what the conversation was about though – there was a suggestion that franchising authorities might prefer not to have SMEs because there was a higher risk of them going bust and closing down overnight, as has happened in recent years to Hulleys and CT4N plus plenty more over time, leaving the authority with the headache of finding a new operator at short notice and likely being out of pocket on top. It isn't about whether those SMEs would have a viable business in the event that they didn't win any contracts – while it's a shame to see companies fold, especially companies with a long history of providing a good service, that isn't really the authority's business.

Or to find a recent case of this in West Yorkshire, Yorkshire Buses who closed on 1st April (not a joke) with roughly 24 hours notice. It was put down to fuel costs. In most cases, the Combined Authority could find a replacement operator within a few days but the 118 went 2 months without an evening or Sunday service.

Similarly, big operators have walked away in other places (First in Southampton and Cornwall for example).

That's a very different kettle of fish compared to a franchised region.

 

[markymark2000]

Or to find a recent case of this in West Yorkshire, Yorkshire Buses who closed on 1st April (not a joke) with roughly 24 hours notice. It was put down to fuel costs.

I don't believe for a single minute that fuel costs were the actual reason for ceasing to trade. A contributory factor maybe, but I refuse to believe that was the actual reason behind it.

 

[317 forever]

But franchising is really just tendering. It has acquired a new name (well, actually the wrong name - McDonalds run franchises but if I don’t win one I can still open a burger bar next door!).

Another reason why "franchising" is not the most applicable definition is that the franchise winners do not have freedom to do what they want where they have won. They run the exact network and timetables specified by the CA, and at fares specified by the CA.

 

[YorkRailFan]

I don't believe for a single minute that fuel costs were the actual reason for ceasing to trade. A contributory factor maybe, but I refuse to believe that was the actual reason behind it.

Fuel costs were most likely the final nail in the coffin.

 

[TheGrandWazoo]

Another reason why "franchising" is not the most applicable definition is that the franchise winners do not have freedom to do what they want where they have won. They run the exact network and timetables specified by the CA, and at fares specified by the CA.

I made this point on #654 when someone was trying to make a distinction between tendering and franchising. The use of the word Franchising is a total misnomer. Franchisees, such as those who run McDonalds or Costa branches or even hotels, have a certain leeway to operate as they see fit in terms of prices charged and hours of operation.

With these new operating environments, there is no leeway. They are merely contractors working a defined specification, and they obtain those contracts via a tendering process. I doubt that anyone thinks that Viridor or Biffa are franchisees when they are collecting your refuse - they too are providing resources and services to a fixed specification.


As for reasons why some SMEs fail? They are wide and varied from having poor cost control, over expansion, or just poor financial foundations in the first place. Now the former can never be addressed in any industry and any commercial environment. However, a franchising model such as this should be better for many SMEs as they will have a 5-7 year period of stability in which to operate to and within the tendering framework, you can build in safeguards on financial standing. Furthermore, it is perfectly possible to have a fuel price escalator mechanism (to manage fuel price shocks) and an inflation mechanism plus derogations for cost increases caused by legislation e.g. the increase in NICs that Rachel Reeves placed on employers.

 

[MotCO]

Furthermore, it is perfectly possible to have a fuel price escalator mechanism (to manage fuel price shocks) and an inflation mechanism plus derogations for cost increases caused by legislation e.g. the increase in NICs that Rachel Reeves placed on employers.

Although it is possible, does it happen in practice? A lot of tenders in London have been handed back, presumably because of cost increases not reflected in the contract price.

 

[TheGrandWazoo]

Although it is possible, does it happen in practice? A lot of tenders in London have been handed back, presumably because of cost increases not reflected in the contract price.

Good question - as @Dwarfer1979 has mentioned, a lot of London operations basically work on making money in years 1 to 5 and then you're just surviving. Procurement people love a fixed price contract so they know what the cost will be, and avoid bad Daily Mail headlines.

In the private sector, fuel escalators are more common but they're better able to change their revenues too.

 

[Dwarfer1979]

Although it is possible, does it happen in practice? A lot of tenders in London have been handed back, presumably because of cost increases not reflected in the contract price.

I suspect not, at least in a formal and contractual sense - most London contracts haven't been "handed back" technically, it is that the operator have declined to take up the optional 2 year extension (either TfL or the operator could chose to decline to take this up - for TfL they will tend to not do it due to quality issues whilst for operators it will normally be cost issues) but it does highlight that contract prices are not keeping up with cost increases at the present time as they would so the losses start earlier in the normal contract so cannot be born as far into the contract to allow these optional extensions.

It would often appear that the issue is that the procurement people who write the underlying contractual terms don't understand transport so tie cost increases to standard inflation terms (CPI or RPI) rather than bus industry costs (which often jump in sudden acts well above standard inflation, such as fuel costs) whilst the transport teams who write the service specs aren't able to adjust the standard T&Cs (you also often see it in some of the questions you are asked on the forms where there are several questions that make no sense, or are entirely irrelevant, to a bus operator and so are difficult to answer but is necessary and logical for another activity a council may buy in). In the provinces the councils often show some flexibility and are willing and able to negotiate price increases outside normal timescales when these changes occur, in London as has been previously said contractors price in losses in the last third of the contract into the prices of new bids going in to ensure ongoing viability (which is why smaller operators struggle so much, the contract price increases didn't keep up with operating cost increases but their facilities weren't big enough to allow them to win new work every year). You would hope that with these single large contracts the Combined Authorities have a more robust and industry focussed base for their annual cost review as there isn't the variability to spread the losses across the contracts.