With the announcement of the National Bus Strategy (NBS) in March 2021, the UK Government confirmed its intent to overhaul the UK's established model of privatised bus services. This has potentially business-ending implications for incumbent bus operators and offers opportunities to the wider bus operating market. Local authorities will be given the power to take bus services back into much greater public control – but what might this look like, what should operators expect to see and what opportunities might there be?

The deregulated market

London has remained a regulated bus market, with Transport for London and its predecessor organisations retaining responsibility for determining bus service provision and contracting out those services to the private sector. Outside of London though, deregulation of the bus services markets began in the 1980s. Since then, private bus operators have been able to control bus networks: planning routes, frequencies, timetables and fares based on commercial considerations and their view of market needs. Whilst sometimes local authority financial support was offered to set up new routes or maintain existing routes, largely whether a route was profitable would dictate whether it was provided or not.

A subsequent decline in patronage coupled with increasing ticket prices to keep routes viable and the depletion of 'socially-necessary' bus services has led to calls for a levelling up of the UK's bus transport system. Whilst increasing ticket prices have been offset recently by the government's £2 fare scheme on many routes across the country, this is only temporary until the end of March.  Many have argued that the most effective strategy for achieving levelling up would be to hand control of bus services back to Local Transport Authorities (LTAs) and this approach is one of the options that the UK Government is now actively choosing to pursue.

The first step towards change was the Bus Services Act 2017 (the Bus Act). This empowered LTAs to implement either an Enhanced Partnership (EP) with bus operators or a 'London-style' bus franchising scheme. As a result, LTAs may now choose to exercise controls over bus services that have for many years been the preserve of private operators. LTAs opting for a franchising model will enjoy powers to devise new bus services according to public need and select the operators to run services by competing them. In addition to this, under the NBS, LTAs will now be supported by the Government to deliver improvements to bus services if they choose to do so by implementing either an EP or a franchising model.

These new powers are already being put into use, with Transport for Greater Manchester (TfGM) being the forerunner. Despite an attempt at legal intervention by bus operators Stagecoach and Rotala in March last year, the procurement process for TfGM's newly franchised bus services is now well underway. The first contract awards were announced in December 2022 and the process for the next tranche of contracts is ongoing. With a number of other LTAs – including Liverpool City Region, Cambridgeshire and Peterborough, South Yorkshire, and West Yorkshire – set to follow suit, bus operators can expect to see significant changes to the market in the coming years. Operators looking to capitalise on the potential opportunities this change will create should be aware of where in the UK bus franchising is most likely to be introduced next.

The significance of enhanced partnerships

The NBS gives LTAs the freedom to choose how closely they will work with operators to deliver bus services. For some LTAs, particularly those in regions with a single dominant operator, an EP may be a better fit than a franchising model. LTAs who opt for an EP will be able to collaborate with local bus operators to formalise their existing relationship by way of a Bus Service Improvement Plan (BSIP). This option will no doubt also be favoured by the established operators wishing to maintain their presence in the region. For bus operators who are not already established in this way, EPs alone are unlikely to present many new opportunities.

At the time of writing, the LTAs for Cambridgeshire and Peterborough, the West Midlands, the North East and York, and North Yorkshire have either already introduced an EP model or are in the process of doing so.

However, this should by no means be treated as the end of bus franchising potential in these regions. On the contrary, operators should be aware that these and other LTAs may choose to implement an EP as an interim solution to meeting levelling-up requirements. This may be because an EP is quicker and easier to introduce than franchising, or because the LTA does not yet have the necessary powers to introduce franchising. As an example, Cambridgeshire and Peterborough Combined Authority (CPCA) introduced an EP in April 2022. CPCA is also undertaking a formal Assessment of bus franchising and has indicated that the early implementation of this EP is intended to allow for the delivery of BSIP improvements whilst the franchising Assessment takes place.

Similarly, the LTA for the North East is also pursuing plans to implement an EP whilst signalling a serious interest in the franchising model. Unlike CPCA, the North East LTA does not currently have the devolved powers necessary under the Bus Act to implement franchising. The region is in ongoing talks to obtain those powers. Although these talks have stalled recently due to economic and political uncertainty, the LTA for the North East has given strong indications that franchising will be the preferred model if this option becomes available.

Elsewhere, The Council leaders for York and North Yorkshire have recently received the devolved powers necessary to introduce franchising in the region. Although current plans indicate that an EP will be implemented with private operators in York, local pressure to make more "radical" changes persists amongst members of the community who are calling for buses to come back under local control. With the powers in place, York and North Yorkshire are now well positioned to consider a franchising model at some point in the future.

Whilst EPs alone will not present the market with many new opportunities, their existence should not be treated as a definitive indication of a region having no franchising potential. Prospective operators should not therefore underestimate the possibility of new opportunities emerging from regions with EPs in the long term.

Bus franchising in England

We have already noted that bus franchising is already now well underway in Greater Manchester. Elsewhere in England, LTAs are in the process of determining whether they too will pursue a franchising model to deliver bus service improvements. In order to properly investigate the business case for introducing franchising, LTAs are – in accordance with statutory requirements – undertaking the following five-stage process:

As of December 2022, the LTAs for Greater Manchester, Liverpool City Region, Cambridgeshire and Peterborough, South Yorkshire, and West Yorkshire have all initiated this process and are now at various stages along the way.

TfGM has progressed the furthest and is in the Transition stage for its initial tranche of routes, having solicited bids from and awarding contracts to operators for its franchised bus services. This will be rolled out across the region in three tranches, with the initial tranche commencing from September 2023 and the next tranche currently being procured by TfGM. The Tranches are as follows:

• Tranche 1: Services will be rolled out across Wigan and Bolton as well as parts of Salford and West Manchester on 24 September 2023.
• Tranche 2: Bury, Rochdale, Oldham and parts of North Manchester is next, with franchising being implemented by the end of March 2024.
• Tranche 3: Stockport, Trafford, Tameside and South Manchester as well as remaining parts of Salford, will be rolled out from 5 January 2025.

TfGM recently awarded contracts to its preferred bidders for Tranche 1. At a press conference on Friday 23rd December 2022, Andy Burnham announced that, from September 2023, all buses in Wigan and Bolton will be run by Go North West (Go-Ahead Group) and Diamond Bus North West (Rotala). The procurement process for Tranche 2 is already well under way and  bidding for Tranche 3 is due to open early this year. Operators interested in opportunities to win bus contracts from TfGM should register with the LTA's eTendering system, 'Pro-Contract'. Once registered as a supplier on the platform, operators will be able to view tender opportunities and apply for them.

The Liverpool City Region Combined Authority voted in March this year to confirm franchising as the preferred future model for the region's bus network. The initial Assessment stage of the franchising process is underway, and it is anticipated that in the early part of this year the LTA will be asked to consider an independent audit of the franchising Assessment and decide whether to progress to the Consultation and Engagement stages. A decision will be taken in the Summer of 2023 about whether to proceed. If franchising goes ahead, we predict that operators should expect procurement to commence in late 2023 or early 2024.

In June 2021, West Yorkshire Combined Authority (WYCA) published its notice of intent to progress an Assessment of bus franchising. The timeframe published by WYCA indicates that the initial Assessment should have concluded in December 2022 and that the independent audit of the Assessment will then run until April 2023. The outcome of this audit will then determine whether the matter is progressed to a public consultation. WYCA is also assessing the possibility of an EP for delivery of the BSIP. The proposed timescale provided by WYCA indicates that if franchising is found to be the preferred option, a scheme will be operational from late 2025 to early 2027. This means that the procurement process for this region could commence in 2024.

In early March 2022, the South Yorkshire Combined Authority local leaders announced that the city region will begin formal Assessments of bus franchising. There is little information available as to the timeframes but progress in this area should be monitored by any bus operators with an interest in this region.

Franchising in Scotland

The Transport (Scotland) Act 2019 gives local authorities the option to franchise and establish their own bus companies, In March this year, Transport Scotland announced the commencement of powers for local authority run bus services and the intention to introduce secondary legislation to enable bus franchising and partnership options by the end of 2023.

Franchising in Wales

On 31 March 2022, the Welsh government published a white paper called "One Network, One Timetable, One Ticket: Planning Buses as a Public Service for Wales March 2022" which sets out proposals to reform the bus networks in Wales. The white paper proposes a franchising model to achieve this. The franchise would be run by a centralised franchising team within Transport for Wales; providing network planning support to local authorities and letting and managing franchise contracts.

The white paper consultation closed on 24 June 2022 and the subsequent response is currently under review.

What the next few years look like

There are plenty of opportunities coming up for bus businesses in the next few years and a summary of the expected timeline is set out below. Please do check out the full version of this timeline here which includes comments and the key.

So there are plenty of upcoming bus-iness opportunities as the bus markets start to become regulated once again. This offers real challenges to incumbent operators, but real opportunities to those who want to be involved in bus operations in particular areas.