UK on the way to take back public ownership on the bus networks via franchising?

In the UK outside London, there’s growing media attention on the prospect of public ownership of the bus network via franchised services. Can this hybrid model of public ownership with private operation arrest the decline in bus patronage? 

Margaret Thatcher, UK Prime Minister between 1979 and 1990, was once rumoured to have said something like “If a man finds himself a passenger on a bus at the age of 26, he’s a failure in life”. Evidence doesn’t support whether Thatcher said this, but for some critics of today’s largely privatised UK bus network, the meaning is more important. In 1986, Thatcher’s government de-regulated the UK bus network outside of London, transferring publicly run ownership and management to privately run bus operators. The rationale was that private ownership and market competition would improve services – unless you believe the sentiment of the quotation, rightly or wrongly attributed to The Iron Lady.  

This article, authored by Alex Byles, was previously published on the February 2024 issue of Sustainable Bus magazine. It was then out before UK general election held on 4th July, with small updates concerning events happening between February and the date of publication

Public transport in UK: on the way to franchising?

Since de-regulation, in general, private bus operators in the UK have provided services based on commercial viability. However, patronage across most areas of the UK has continued to decline since de-regulation, and governments over recent years have tacitly accepted the need for improvement in the model.

This has seen stages of adjustment, most significantly drawing on powers presented in the Bus Services Act of 2017, where the government’s Bus Back Better national bus strategy of 2021 acknowledged the need to change from a situation where services are planned on a purely commercial basis. 

Today, local transport authorities must provide services via two main options.

• The first involves an agreement with bus operators known as an Enhanced Partnership, that includes shared goals on service improvement. Crucially, operators still retain control – and financial risk – over operational decisions like routes and frequency.
• Alternatively, Mayoral Combined Authorities, covering 10 areas in England outside of the capital, mainly focussed on large urban areas, can also use franchising powers. Franchising gives greater control to regional government with freedom over service provision similar to that granted to London. Under franchised powers, authorities can choose and amend routes, frequencies, and operational hours, and control ticket pricing. To achieve this, authorities buy the service from operators, issuing contracts to run routes according to negotiated prices. As such, franchising forms a middle option between a privatised system and state-controlled operation.  

Emerging franchised services in UK

So far, Greater Manchester has launched a franchised service, with Liverpool City Region to follow, and this March, West Yorkshire also recently announced its intentions to franchise. Wider in the UK, the devolved governments are also progressing the opportunity. The Strathclyde Partnership for Transport in the west of Scotland, including Glasgow, also announced in March that it would launch franchising. In Wales, the government is set to decide on new legislation, which if successful could see franchising starting from 2026.  

Authorities set to exercise franchising believe that its people will be better served with a bus service run with greater local government control. Transport for Greater Manchester (TfGM) says that since 1986, the number of bus journeys across city districts dropped from around 355m to 182m in 2019, whereas in London, where buses were not deregulated, the number of bus journeys roughly doubled in the same period. Instead, TfGM’s Bee Network franchised service, launched in September 2023, has objectives to grow bus patronage by 30 percent by 2030, and says the volume of bus users are already up, alongside service punctuality.

Greater Manchester: franchising and zero emission buses

The increased public accountability of a franchised service also has the potential to accelerate the zero-emissions transition. Greater Manchester aims to deliver a fully electric bus fleet by 2032, and towards this goal, since launching bus franchising, the Bee Network is running 50 new zero-emission buses, with a further 120 requested for delivery by January 2025. 

To achieve its objectives, TfGM has received more than £1bn from the UK central government’s City Region Sustainable Transport Settlement, where £5.7bn in total has been awarded to eight city regions outside of London. The Manchester authority will also allocate government-issued Bus Service Improvement Plan (BSIP) funding. While TfGM says that route specifications and fares will need to be set at a sustainable level that keeps buses attractive to customers, it confirms the need to balance commercial viability. Moreover, its strategy acknowledges the requirement for additional government investment. 

“One reading of Andy Burnham’s (Mayor of Greater Manchester) Bee Network is that it is a direct challenge to Keir Starmer to say: this needs to be funded”, says Professor Jon Shaw, University of Plymouth, who specialises in the geography of transport, travel and mobility. Andy Burnham is a Labour party member, and Keir Starmer, leader of the UK’s left-centre party, the traditional adversary to the Conservative party that de-regulated the bus service, is currently in a strong position in the opinion polls to win the next UK election, taking place later this year (editor’s take: Keit Starmer finally won the election held in July 2024). 

The economics of franchising 

Jon Shaw adds: “If Manchester runs its network well, it will be expensive, but this investment should bring back revenue long term because more people will be using it”. 

Meanwhile, in April 2024, the Labour party has just announced that if it forms a UK government, it will effectively extend the option of franchising powers to all local authorities that want it. Already, areas not designated a Mayoral Combined Authority can apply for franchising powers, but they have to meet criteria relating to reliability in service delivery and financial management. 

“The economics of franchising comes down to who bears the risk”, says Professor Graham Parkhurst, Director, Centre for Transport and Society at University of the West of England, Bristol. “Currently, the UK bus network is operated at pretty low cost, even though it receives a lot of subsidy, because the risk is in the private sector. If you’re going to take that away, the public sector will take on the risk premium, and this is sometimes lost in the public discourse. Revenue is key, so the issue comes back to fair pricing, and franchising doesn’t automatically mean that fares will be lower”.

Vital to establishing commercial viability is increasing patronage, which largely depends on service reliability. 

Public transport in UK: increasing patronage will be key

Buses need to be on time, whether through prioritisation, plus improvements that reduce dwell times, or by minimising congestion. TfGM’s strategy includes plans to increase bus average speeds on key routes. However, between 2011 and 2021, the number of cars available for household use in Greater Manchester grew by 13 percent. The city has stopped short of introducing schemes to disincentivise car driving, like those in London and other urban UK areas, but to increase bus ridership, authorities who believe in greater public control have difficult decisions to make. 

“In order to run a bus service effectively, it comes with politically difficult issues, like reallocating road space to buses, so there is still massive constraint within which an incoming government would be able to make franchising fully work, even if they had more sympathy to a regulated model”, says Jon Shaw. While comparisons to the relative success of London’s franchised system and high patronage is contrasted against the large subsidy allocated to the capital, a key factor is the city’s relatively low car ownership per household. 

Currently, the UK bus network is operated at pretty low cost, even though it receives a lot of subsidy, because the risk is in the private sector. If you’re going to take that away, the public sector will take on the risk premium, and this is sometimes lost in the public discourse. Revenue is key, so the issue comes back to fair pricing, and franchising doesn’t automatically mean that fares will be lower

Professor Graham Parkhurst, Director, Centre for Transport and Society at University of the West of England, Bristol.

“Is that low car ownership caused by external factors, like lack of road and parking space, or is it that a far more comprehensive public transport system makes it possible for people to manage with a lower level of car ownership in London?”, asks Professor Peter White, expert on public transport systems, University of Westminster. “Many cities like Manchester, for example, have a higher level of car ownership that’s grown since the mid ‘80s. I don’t think franchising on its own is going to reverse the car ownership level”.

London’s success in bus ridership is also down to the city’s integrated transport, and franchising presents the opportunity to enhance the passenger experience, similar to London’s more joined-up approach. “London has a very longstanding multi-operator ticket and this is the one area where franchising could unlock significant change if there is real willingness to fund it”, says Graham Parkhurst.

“Franchising might enable better coordination of timetables to give regular headways along a route where several operators operate”, adds Peter White. “That could offer the convenience of integrated ticketing systems, and it would also reduce dwell time”.

Is franchising the only way?

Some UK areas have seen some modal shift from car to bus without requiring franchising. Oxfordshire is the best performing English ‘county’ region in terms of bus use per capita, with 59 journeys per head of population in the county as a whole, including rural areas, according to recent figures. The city of Oxford also has an effective and long-standing park and ride system. 

“Small, independent operators may find it’s very difficult to operate under a franchised framework in terms of the financial risks they would take when bidding for service contracts, especially in rural areas”, says Peter White. “Larger operators may be able to take on more risk in bidding for that work, and that could squeeze out smaller operators. Long term, that could be quite harmful: they do play a very useful role in service provision”.

The Confederation of Passenger Transport (CPT) that represents the bus industry in the UK also says that outside the large cities, local leaders may find they can meet their ambitions for local transport more quickly and with less risk by continuing to work in close partnership with bus operators, rather than opting for franchising. The organisation adds that whether a region is franchised or not, the priorities are the same: making sure passengers have more buses going to more places, more quickly and reliably.

“What matters is how well an operation is run, rather than ownership as such”, says Peter White. “The issue is more about factors like reliability. Authorities need to look at the outcome that’s being produced. Franchising is a means to an end, rather than an end itself”.

So far, the uptake for franchising remains relatively restrained, and is still very much in a period of emergence. In this respect, the situation is largely untested so far in the UK.

“Both the initial deregulation in the ‘80s and franchising are, in effect, experiments in how you run a bus service”, says Peter White. “It’s a pity that we didn’t experiment with franchising when buses were deregulated in the first place, so that we might have had some long-term conclusions from franchising in some of the large metropolitan areas outside London. Instead, we need to allow a couple more years to make any sensible judgment on the outcome”. Alex Byles