Local Transport Authority Bus Services

The consultation paper noted that during the passage of the Bill that became the 2019 Act, a number of LTAs indicated a desire for a clearer legal framework to afford the option to run their own buses. In order to do this, the LTA must be satisfied that the provision of such services will contribute to the implementation of their relevant general policies. The 2019 Act also provides that the Scottish Ministers may issue guidance in relation to the exercise of the new functions and that LTAs must have regard to any guidance.

This guidance would set out specific matters that LTAs must take into account when considering whether it is appropriate to establish and run local bus services. This would be in addition to the requirement in the legislation that doing so must contribute to the implementation of the LTA’s relevant general policies. Before bringing into force the powers for LTAs to provide bus services, Transport Scotland sought views on what any associated guidance should contain, as well as any other resources that may support the implementation of this new function. The first consultation question asked:

Question 1: Is there anything which should be set out in guidance that LTAs mush have regard to in exercising their new functions for running their own bus services?

A total of 47 respondents opted to provide additional commentary in support of their answer. The majority of respondents made comments specifying areas of guidance perceived as needing attention in order for Local Transport Authorities (LTAs) to successfully exercise their new functions for running bus services; however, a large minority chose to provide their views on how bus services should be run.

Four dominant themes – each discussed by a large minority of respondents – emerged amongst the guidance topics mentioned as needing attention. These were: legislative requirements, financial implications, competition impacts and bus service business models and how to assess them.

Amongst legislative requirements, the following areas were pinpointed as needing to be set out in guidance, each by a few respondents largely consisting of local authorities:

Guidance details concerning “Registration of a local bus service where the Local Authority is the operator and supports a short notice change and the opposite where a Local Authority would not support the short notice change of a commercial operator” (Three Local Authority organisations). One respondent commented that this was another reason why the municipal bus company needs to be separate from the Council’s Public Transport Unit.
Governance structures (including the role of the Traffic Commissioner).
Workers’ protections.
Statutory minimum levels of service and frequency.
The powers of local authorities to trade.
The potential impingement of other local authority or regional transport authority statutory duties on the ability to run services (e.g. to avoid conflicts of interest); a local authority continued by specifying that “…should an LTA become the local bus service registration authority, in response to the current Department for Transport Consultation on ‘Review of Traffic Commissioners for Great retain function, guidance should be provided on how any conflict of interest should be avoided.”
Clarity about rules and regulations regarding tendering and franchising.
Details about the regulatory body overseeing legislative requirements.

In addition, several local authorities wished to clarify the use of Section 19 and Section 22 permits, in particular in relation to whether there was a requirement to hold a Public Service Vehicle (PSV) licence in order to gain or hold these. Points of view were expressed as follows:

“…would like clear guidance on the current workings of LTAs which undertake school, social care and non-registered supported bus service work under Section 19 Permits – this is crucial and the guidance should make it clear if an arm’s length company would be required to hold a PSV operator’s licence should the LTA wish to hold a Section 19/22 permit.” (Local Authority)
“In some cases, use of a Section 19 or Section 22 Permit may be appropriate rather than a full PSV operator’s licence. Guidance should state that Permit operation should be limited in scale to what might be typically expected of a community transport group operating under Permits, and that legally, the same entity cannot hold both a PSV Operator’s Licence and Permits. There are implications here for school minibuses (used for excursions etc); it may be that these should remain directly under the control of the Local Authority while registered (home to school and public) buses would be operated by an arms-length company; however the operational arrangements should be for each Local Authority to decide, within the constraints of the law.” (Local Authority)

Several Regional Transport Partnerships and Local Authorities wished the guidance to flesh out or clarify the meaning of an LTA’s ‘relevant general policies’ as stated in the consultation document with regard to the provision of bus services contributing to the implementation of these. Aspects where more detail was required included who might have the final say on whether this condition has been met, transparency, guidance regarding the process, and what might be required to make the case. It was also suggested that without clarity any local authority proposals could be subject to a challenge. A Regional Transport Partnership suggested:

“…the most appropriate definition of “general policies” within this context should be the relevant statutory Regional Transport Strategy for the area in question, supported by the relevant Local Transport Strategy or Strategies and the statutory National Transport Strategy.”

Details regarding the following financial implications were desired to be set out in the guidance:

Resource requirements.
Infrastructure and maintenance costs.
Start-up capital requirements (with suggestions to use the Scottish National Investment Bank).
A need for transparent accounting.
Taxation implications.
Ring-fencing in local authority budgets.
Meeting subsidy rules.

Respondents expressed a need for LTAs to see route maps, assessments and economic cases set out for various municipal models for running bus services, in order to facilitate decision-making. Case study reviews and a best value approach were recommended. Notably, many respondents wished to see such analysis broadened to models in addition to the direct LTA ownership and arms-length company ownership models cited in the consultation. These possibilities included public ownership, franchise models, private-public partnerships, joint ventures and acquisitions of existing bus operators. Two trade unions suggested incorporating a summary matrix of the performance of each option against key assessment criteria.

Within the guidance, a need was identified to incorporate competition impacts and concerns; various issues were raised including the following:

Effects on existing or commercial operators.
Anticompetitive claims from other operators (e.g. regarding state aid).
Consideration and agreement with operators on fare structures where sharing a service or route.
Ensuring a level playing field with other operators regarding fair competition.
Maintaining competitive tendering processes (in particular guidance on how contracts operated in-house should be monitored to ensure consistency with contracts operated by commercial operators).
Clarity on any requirement to have a “firewall” between a LTA’s transport unit dealing with policy/tendering etc. and any operational unit delivering bus services under a PSV operator’s licence.
Clarity about the circumstances in which the LTA is permitted to run a service (e.g. market / operator failure, insufficient provision of services).

A significant minority of respondents wanted guidance or analysis about the risks involved in managing bus services to the transport body and/or local authority, in terms of finance, safety, reliability, commercial competition and whether it results in best value overall.

Small numbers of respondents also desired consideration of the following areas to be set down within guidance:

Decision-making regarding services to be monitored with respect to Human Rights obligations.
Personnel requirements (jobs and job roles, e.g. drivers).
Encouragement of local authorities to collaborate, showing the benefits of coordinated networks and examples of best practice.

A large minority of respondents chose to espouse their views on how bus services should be run more generally, without reference to guidance. The largest numbers reinforced that Scotland must have reliable bus services (e.g. network, timetables) and must meet the needs of citizens as well as climate targets; the current system was perceived as unreliable, dysfunctional and expensive. A significant minority were in favour of taking local needs (e.g. demographics, rural or urban setting) into account when designing bus services, avoiding a one-size-fits-all approach. Points were also made that powers to run buses must be backed by the provision of sufficient funding, resources and expertise; for the latter, public transport experts and developers of road layouts were recommended, along with LTA panel members.

A significant minority of respondents, consisting almost entirely of trade union / campaign organisations and individuals, advocated the perceived benefits of publicly-run buses as opposed to private ownership with the latter seen as having resulted in fewer services and decreasing numbers of passengers; deregulation was viewed by these respondents as a failure. Varying examples were given of municipal operators viewed as a success (Lothian Buses, and in cities including Munich, Vienna and Zurich) but also facing challenges (the sell-offs of Thamesdown Transport and Rosso Buses). Small numbers of respondents advocated improved bus infrastructure (e.g. lanes, electric buses, ability to take bikes, passenger assistance options), with others desiring car use to be discouraged (e.g. through provision of less road space for private vehicles or through better alternative transport provisions).

Question 2: What further information and resources would be useful for an LTA considering providing local bus services?

A total of 45 respondents opted to provide commentary in response to this question. Many of the answers expanded upon or reiterated the suggested contents for guidance at Question 1.

The greatest numbers of respondents – a large minority – suggested the sharing and generation of data and information for planning public transport networks; examples included vehicle statistics, passenger count data, ticket sales, origin and destination data, advanced knowledge of building developments (for route planning) and knowledge of the intentions of neighbouring local authorities.

Examples of best practice for a range of bus service model scenarios was suggested by similar numbers of respondents; these were viewed as helpful for assessing the risks, costs and economic cases for a variety of operational set-ups. Case study provision was also desired for detail surrounding bus operations including fleet size, costs, revenue, staff structure, driver hours, shift patterns, operating depots, maintenance arrangements, lessons learned and benefits accrued. In particular, several respondents asked for examples of municipal operations elsewhere.

In terms of resources, a large minority of respondents across most sub-groups cited that funding (in particular by way of working capital or start-up capital) should be made available to LTAs, without going into further detail. A variety of sources were suggested including the Scottish Government, Transport Scotland, the Scottish National Investment Bank and the Community Bus Fund (when introduced).

Other requests for information and resources were made by smaller numbers of respondents and largely reflected comments made at the previous question as follows:

More bus infrastructure (e.g. rural provision, more provision for the elderly and disabled, cycle, pram and bag storage facilities).
Pricing and ticket reform (e.g. one interchangeable ticket on all operators).
Provision of expertise in how to develop proposals and set up bus services, with a suggestion for a dedicated team within Transport Scotland for this purpose.
A ‘frequently asked questions’ section amongst the information provided.
Information about financial requirements (e.g. tax implications).
Information about legislative requirements (e.g. GDPR compliance regarding customer information, UK competition legislation).
Information about competition effects (e.g. on how this intersects with the Transport Act).
Information on potential risks involved for the LTAs or local authorities, together with possible mitigations.
Information on personnel requirements (e.g. salaries, conditions, skills and training requirements, driver hours’ regulations).
Clarification of what constitutes an LTAs ‘relevant general policies’ to help prevent legal challenges.

In addition, small numbers of respondents brought up other operational considerations perceived as requiring attention when considering local bus services. One or two mentions were made about each of the following:

Appropriate depot or garage premises.
Vehicle registrations, costs, suitability and environmental and accessibility requirements.
Public liability insurances.
Operator licensing.
Ticketing and fare collection methods (e.g. concession reimbursement arrangements with Transport Scotland).
Promotion of services.
CCTV & regulation.
Trade union arrangements.

Small numbers of respondents also urged action in other areas to facilitate bus service operations. These included encouragement for local authorities and RTPs to collaborate on or share functions, for the benefits of economies of scale or to pool knowledge, and to take local needs into account.

Finally, a number of respondents (mainly trade union or campaign organisations) reiterated their views that publicly run buses would be better than private operations, citing discontinued services since deregulation and bemoaning subsidies received by private operators. A small number also voiced their opposition to the Business Partnership Fund model, saying this fails to solve the issues faced by buses or that proportionate funding should be made available to LTAs to support municipal services instead.

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