Pioneering plans for a major bus services shake-up which would see routes run by North East councils have been rejected.
The North East Combined Authority (NECA) - made up of the region’s seven local authorities including Sunderland City Council and South Tyneside Council - agreed last year to drive forward with a bid for a London-style Quality Contract Scheme.
Local people will be sorely disappointed with today’s report on the future of bus services in the North EastBridget Phillipson MP
The North East was the first part of the country to reach this stage under legislation introduced in 2000, in a move which was set to signal the biggest changes to the way buses operate across the region since de-regulation in the 1980s.
The scheme, by Metro-operator Nexus, would see bus companies bidding for contracts to provide routes for the NECA.
But the project has hit a major roadblock after being rejected by the traffic commissioner today.
The Quality Contract Scheme board scrutinising the plan on behalf of the traffic commissioner said the bid had failed to win the green-light because of a lack of compensation for bus firms - £226million would need to be set aside for this according to the commissioner’s report - and added that NECA could not demonstrate that it would increase use of bus services because its affordability had not been demonstrated.
Bus operators had proposed an alternative Voluntary Partnership Agreement, which would see bus companies working with the Combined Authority under a formal voluntary agreement.
Houghton and Sunderland South MP Bridget, who has campaigned for the changes for several years, condemned the decision.
“Local people will be sorely disappointed with today’s report on the future of bus services in the North East,” she said.
“Over the last five years many constituents have contacted me to express their deep dissatisfaction about the cost of fares and the level of service currently being provided by the private bus companies.
“The Combined Authority was absolutely right to try to change this by proposing a London-style Quality Contract Scheme (QCS) that would integrate routes and fares and ensure taxpayer subsidies were used to maintain and improve services.
“That is why today’s acknowledgement by the QCS board that the scheme would offer local people a transport system unrivalled outside London is welcome.
“However, it beggars belief that the QCS board believe operators should be compensated for the loss of future profits. The QCS board are wrong to expect the people of the North East to compensate bus operators in return for a better deal.”
The decision cast doubt on Chancellor George Osborne’s plans for North East devolution,” she added: “This report calls into question the Chancellor’s ability to deliver one of his key devolution commitments.
“Ministers need to rapidly resolve this confusion in the forthcoming Buses Bill to guarantee our new devolution deal is worth the paper it’s written on.
“The interests of local people must come before the profits of shareholders.”
NECA and passenger transport executive Nexus are now considering what action to take in light of the ‘disappointing’ decision.
Nexus managing director Tobyn Hughes said: “We are extremely disappointed.
“We want to introduce a simple, affordable and integrated public transport system in this area, and the board recognises our proposal could achieve this. It should not be this difficult.
“The board’s opinion is that we should not go ahead largely because we are not providing compensation to bus companies for profits they may lose in the future, and the board has taken a negative view of our proposal as a result.
“We simply disagree with many of the board’s conclusions, and we will be discussing next steps with the North East Combined Authority.
“The QCS board has recognised that our proposal offers local people a ‘transport system unrivalled in Great Britain outside London’, and gives Nexus ‘significant credit for compiling a proposed scheme that genuinely aims to, and has the potential to, improve the lives of Tyne and Wear citizens’.
“In light of that, we are extremely disappointed that the board’s opinion is negative regarding the proposal, and there are aspects of it that we simply do not agree with.
“Of particular concern is that the board took a highly pessimistic and surprising view of financial risks, suggesting that Nexus must budget for costs to be up to 40% higher than we know them to be, while at the same time suggesting the bus companies should be compensated out of public funds for missing out on future profits from the very same network of routes.
“The Combined Authority’s Leadership Board will consider the opinion of the QCS board at its next meeting. It will be up to the Leadership Board to decide whether to ask Nexus to refresh the technical analysis and submit a revised proposal, or whether to pursue other options.
“It is now highly unlikely that the Combined Authority can reform local bus services in 2017 as planned. As well as introducing a high quality integrated public transport system, we set out to stop bus usage declining, and maintain vital local services at a time of national financial austerity. The QCS Board’s opinion will make those things all the more difficult to achieve.”
“The Board was not convinced by aspects of the economic modelling of the benefits of the proposal, and was concerned by changes to the presentation of economic benefits after consultation. Nexus will look at whether these issues can be rectified.
But the decision has been welcomed by bus bosses.
Stagecoach said the Quality Contract Scheme would have proved ‘unaffordable, inflexible and high risk’.
Chief Executive Martin Griffiths said: “We welcome the review board’s confirmation that the core franchising proposal was unaffordable, inflexible, high risk and not in the public interest.
“Tyne and Wear already has 90% bus customer satisfaction, amongst the highest levels of bus use in the country, and smart ticketing is being introduced across the region. Franchising does nothing to build on that successful, high-quality network.
“Nexus’s franchising plans envisaged no more buses, no new routes and no more services. When subjected to proper public scrutiny, it admitted its plan had a close to 1 in 3 chance of financial failure, it had no money to fund the bus network after 10 years and it had made numerous multi-million-pound mistakes in its calculations.
“We would urge the North East Combined Authority to respect the findings of the Review Board, and put passengers and local people first, by abandoning the misguided franchising plans.
“Instead, we call on them to work in partnership with bus operators to build on Tyne and Wear’s excellent bus network and deliver on our joint responsibility to give local people even better bus services.”
Kevin Carr, Managing Director of Go North East added “The report, which follows the formal board hearing in July at which Nexus’ plans were independently scrutinised, confirms our belief that the proposed scheme for Tyne and Wear would not be good value for money for bus passengers or council tax payers when compared to the partnership proposal.
“Go North East has always believed that it already provides good quality, value for money services that meet customer’s needs at no risk to the tax payer. This is supported by one of the highest passenger satisfaction ratings in the UK, of 90%, by the governments own independent watchdog Transport Focus.
“Collaboration and partnership working are particular strengths for Go North East and we believe that this approach provides the best foundations for a good public transport network. We will, therefore, continue to work with our key strategic partners, including the North East Combined Authority, to continually improve services for our customers and the North East economy.”