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Bus Regulation (Scotland Bill) Response by the Chairs of the Regional Transport

Partnerships of Scotland
1. Do you support the general aim of the proposed Bill? Please indicate
yes/no/undecided and explain the reasons for your response.
Yes, insofar as legislative change which provides a framework for more stability and
potential for effective coordination and integration of bus services, and maintenance and
improvement in quality standards, would be welcomed.
The core aims of the proposed Bill, to provide a modernised legislative framework which
empowers and enables transport authorities to exert greater influence in the delivery of
effective and integrated public services and facilities for people and communities across
Scotland, and ensures better value for the public purse, are fully supported.
However, it must be stressed and acknowledged that current patterns of funding and
service provision across Scotland vary widely. In urban areas, while on the surface there
may appear to be significant commercial provision, there are still significant gaps (e.g. at
evenings, weekends) and the contraction of commercial service provision in these areas
over the last few years is a concern. In rural areas, where service specification and
funding already derive overwhelmingly from the public sector and also, in some
circumstances, the voluntary and community sectors, there continue to be many
communities who, at best, receive a minimal service, and at worst, no service at all.
More detail and clarity is required on the proposals within the Bill to fully ascertain the
costs (both to the public and private sectors), benefits and legal implications of the
proposed Bill.
The RTPs would highlight that there are also other potential alternatives which could
make a significant positive impact on the bus market, such as those currently being
considered by the national Bus Stakeholders Group (including, for example, SPTs Ten
Point Plan for Bus see Appendix A).
The RTPs remain committed to delivering and supporting a more effective,
comprehensive, integrated and socially responsible bus network across Scotland, based
on strong partnership working and ensuring maximum value for the public purse, while
utilising the innovative and commercial awareness and potential of the private sector,
and ensuring that the commercial appetite for participation in bus service provision and
innovation in service delivery is not eroded.

2. What would be the main practical advantages of the legislation proposed? What
would be the disadvantages?
The RTPs welcome the principle of ensuring transport authorities have the flexibility to
have greater control over bus services in their area as they see fit. There must be a
more active return for the significant investment made by the public sector, both in terms
of investment in provision of bus services and associated infrastructure, and any proposal
which supports this is to be welcomed. Currently, many communities have, at best, a
minimal service and at worst, no service at all; in contrast, where on the surface there
may appear to be adequate bus services, wasteful competition and duplication between
operators is commonplace in some areas and, where this occurs, this is not in the public
interest.
The principle of transport authorities having greater powers in setting minimum service
levels and standards is also to be welcomed, although it should be noted that, in those
areas where the majority of the network is already subsidised, this is already the case. It
must also be acknowledged that there is the potential for significant unintended
consequences arising from the proposals as set out in the paper (stifling innovation, short
notice inflexibility, market distortion within and between areas, for example) and therefore
more detail would be required on the proposals to fully assess these.
More legislative flexibility to maximise the effective utilisation of local authority fleets in
providing public transport services is supported. RTPs have been pursuing this agenda
over recent years, across the social work, education, health, community transport and
demand responsive transport sectors. SWestrans, for example, works closely with
Dumfries and Galloway Council who use their existing in-house bus fleet to provide a
number of socially necessary local bus services in the region.
A major stumbling block to more positive and meaningful partnership across the industry
has been the requirement to demonstrate market failure before a potentially effective
intervention such as a Quality Contract can take place. The RTPs believe that the
potential to pursue more effective control through application of current Quality Contract
and/or Statutory Quality Partnership legislation has been inhibited by this requirement,
coupled with uncertainty over the long-term financial consequences and
procurement/competition concerns. Whilst removal of the market failure test could
provide more encouragement and flexibility to explore the potential for a Quality Contract
or franchising approach as a base for growth of a truly integrated, socially responsible
network, greater clarity is needed on what, if any, criteria are proposed to replace the
market failure test as a legally robust justification for transport authority intervention
where commercial provision may already exist.
Notwithstanding the legislative barriers which currently render the concept of bundling
profitable and non-profitable routes (cross-subsidisation) impossible in theory if not in
practice the franchise, or indeed agreement, model remains an attractive one.
However, this comes with many caveats: potential costs (revenue risk allocation, for
example), legislative challenge, roles and responsibilities, urban / rural approaches, and
potential for market distortion between areas where franchised and non-franchised
operation apply, and all of these must be fully assessed, analysed and agreed in an
objective manner prior to any commitment being made.

3. In what ways do you envisage reregulation being used to improve bus services?
Given the significant changes which have occurred within the bus industry and market
over the 28 years since the 1985 Transport Act, it is likely that a return to full reregulation, even if desirable, would now be price prohibitive in terms of cost to the public
purse. The opportunity of a franchise or more effective agreement model is worthy of
further detailed consideration but, as noted above, this comes with significant caveats.
The RTPs are committed to the work of the national Bus Stakeholders Group and will
continue to work with industry partners within that forum to elicit positive change for their
areas. The ideas coming through the BSG, in relation to the registration process and
some of the ideas put forward in SPTs Ten Point Plan for Bus, most certainly would
appear to offer the potential for benefits.
Whether through the proposed Bill, the work of the BSG, or another route, it is
increasingly evident that there is a momentum for change within bus in Scotland. Any
potential interventions must be subject to - and pass - robust, objective analysis of their
costs and benefits (social, economic, environmental and financial) prior to their adoption.
Of utmost importance is the need to ensure that the people and communities of Scotland
get the level of bus service they need to fulfil their economic and social potential
wherever they are.
4. How can community transport be better utilised to serve local communities and
particularly low passenger volume routes?
Without doubt, the Community Transport sector has a vital role to play in the future of bus
service delivery in Scotland. It is equally vital however, that this is done in a manner
which is effective, co-ordinated, and has appropriate governance, safety, training and
quality standards in place. The recently inaugurated West of Scotland Community
Transport Network (see Appendix B) is a good example of efforts made in this regard,
and RTPs have a key role to play in taking this agenda forward.
5. Do you agree that the Traffic Commissioner should be able to impose greater
financial penalties on operators who a) fail to meet the terms of the franchise or b)
walk away from the franchise altogether?
The Traffic Commissioner plays a vital role in ensuring that operators meet their
obligations, and it is vital that this continues, and grows, in future. However, it is essential
that the TC is properly resourced to do this. There are examples of RTPs assisting the
TC in regard to service compliance, for example, and this model would have merit in
being further expanded in future provided appropriate resources were in place.
The business case for the imposition of financial or other - penalties under any future
regulatory regime must be robust and justifiable, and it is therefore vital that more
analysis and greater detail is available regarding the proposals within the Bill to assess
this.

6. What is your assessment of the likely financial implications of the proposed Bill to
you or your organisation? What other significant financial implications are likely
to arise?
As has been mentioned elsewhere in this response, more detail and analysis is required
about the proposed regulatory model and framework and its impact on the ground prior to
being able to provide any comprehensive assessment of the financial implications for
transport authorities.
The financial impact on tendering authorities will ultimately be dependent upon the scale
of local application of any such discretionary powers, which will in turn be influenced by
the extent and character (i.e. balance of commercial and subsidised service provision;
level and quality of competition for service delivery, etc.) of the local bus market and the
resultant financial ability of authorities to effectively invoke and manage a franchised
model. It is expected that the availability of such discretionary powers will also lead to
increased public expectations on transport authorities to intervene where the public
perceives commercial market failure, raising again concerns regarding the need for clarity
on replacement of the market failure test, as highlighted in the response to Q2 above.
On the basis of current experience it is considered that a franchised model of service
delivery is likely to generate significant additional costs, which could not be
accommodated within current Local Government financial resources unless additional
Central Government funding is provided, which is considered unlikely in the current public
sector funding environment. For example, the costs of the current London franchise
model are high per head of population circa 100 per annum which is significantly
higher than the costs which Scottish transport authorities are able to sustain in the
current public sector funding environment. It is also envisaged that, in addition to
increased service subsidy costs, transport authorities would incur potentially significant
additional overhead costs associated with increased contract administration, monitoring
and management requirements.
Widespread adoption of a franchised model for public transport operation also raises
concerns around the potential for smaller operators to be squeezed out of the local bus
market, with potential cost implications for the delivery of other public sector funded
transport services, such as statutory and non-statutory schools and social work transport
services, and also wider economic consequences.
In summary, there is a need for much greater clarity about the scale of public sector
funding required to support effective and equitable implementation of the proposed
changes and how it is envisaged this will be funded.
Would it be new money
(generated revenue and/or increased public sector subsidy) or simply a reallocation of
existing funds (through internal network cross-subsidy and/or reallocation of public sector
funding) ? If it were the latter, this may not deliver the step-change required to increase
the current standard of service delivered. It should also be recognised that, to varying
degrees, there is likely to be a potentially significant element of cross-subsidy occurring
within existing commercially operated networks, for which there is no currently
transparent indication of the level and/or potential financial or social consequences of
transferring associated risks and costs to the public sector under a franchised regime.
It is also worth noting that there is the potential for significant and lengthy - legal
challenges from those negatively impacted by the proposals and the costs of dealing with
these issues could again be significant.

7. Is the proposed Bill likely to have any substantial positive or negative implications
for equality? If it is likely to have a substantial negative implication, how might
this be minimised or avoided?
A more effective regulatory regime has the potential to deliver a more stable,
comprehensive, integrated, and socially responsible bus network, which in turn could only
benefit all equality groups and excluded communities. Indeed, the impacts of an ageing
population, and the fact that not everyone can access a bus it is estimated that there
are 300m unfulfilled bus journeys in Scotland each year should be considerations as
the debate continues on the future of the bus market and associated regulation.
However, as previously noted, filling these gaps could come at significant cost to the
public purse, and these would need to be fully assessed and considered prior to the
adoption of any new model.
8. Do you have any other comment or suggestion that is relevant to the need for or
detail of this Bill?
The RTPs would welcome the opportunity to expand on the comments in this response.
Please also refer to individual RTPs responses for more detail on local views and
circumstances.

Appendix A

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