Local motion

MORE people in England travel to work by bus than by all other forms of public transport combined—about 12% of the working population. Bus passengers make 5 billion journeys a year, three times as many as train passengers. And yet English buses are spluttering.

Outside booming London, bus passenger journeys have fallen by 37% over the past three decades. Critics believe that deregulation has played a part in the decline: in 1986 Margaret Thatcher privatised the then publicly run bus networks outside the capital. Several commercial bus companies have come to dominate parts of England and Wales, and their fares have increased by at least 35% more than inflation between 1995 and 2013. “There can be few business sectors where profits continue to rise while customer numbers fall so significantly,” says Nick Forbes, leader of Newcastle city council.

So he, and others, are trying to re-regulate their regional networks. The aim is not renationalisation but taking control of the franchising of routes run by commercial operators. Recent commitments by the government to regional devolution have given the moves momentum. The bus companies are resisting strongly.

Deregulation after the 1980s did not always bring more competition. A 2014 report by IPPR, a think-tank, found that 37% of weekly services outside London did not face any effective head-to-head competition, and just 1% of weekly services faced effective competition over all or most of their routes. Bus companies pick the most profitable routes to run. Local authorities subsidise the operators to run less lucrative lines, often to rural areas—in the North East this cost £9.5m ($15m) last year. With local councils’ budgets now badly squeezed, the less popular routes are under threat.

There are two ways in which cities and regions are trying to take control. The first is using a law, passed in 2000, allowing re-regulation. Nexus, the transport executive of the new North East Combined Authority (NECA), which covers seven local authorities in the region, is the first to try. In July the region’s traffic commissioner chaired a board that heard evidence from all sides and will decide shortly if such a move is in the public interest.

The aim, says Mr Forbes, is for Nexus to regulate the services and enable seamless switching between buses and other modes of transport, as with London’s electronic Oyster card. Under the proposed new regime, bus companies would bid for contracts to operate routes, rather than just operating the ones they like. Nexus would collect fares, pay the operators and invest some of the money (which the companies currently keep as profit) back into the system to boost subsidies. It says operators would still make a healthy margin.

The NECA also wants to integrate its buses with other publicly funded services. The Departments of Health and Education, for example, spend £1.4 billion a year on transport around England for school runs and hospital shuttles. But they are not always linked efficiently with other services.

A second route to re-regulation has recently appeared. The new Conservative government is dangling control of buses as a carrot to encourage devolution to local authorities. In the Queen’s Speech in May, it signalled that it would give powers over local bus networks to any authority that accepted an elected mayor.

The model has worked well in London. Operators bid for routes from Transport for London in return for a set price per route operated. Bus patronage in the capital has increased by 72% since 2000, and in 2013 and 2014 was higher than the rest of the country combined. With its young, densely packed population, London is unlike any other city, and its success may be hard to replicate. Nonetheless, Greater Manchester is adopting this system as part of its own devolution deal, and more such agreements may soon be announced.

The three main commercial bus companies in the North East—Stagecoach, Go-Ahead and Arriva—say the shake-up is unnecessary and represents a big gamble with public money. “Passenger satisfaction is 90%,” claims Robert Montgomery of Stagecoach. He points to a study by the TAS Partnership, a consultancy, which suggests that providing a London-style bus service for the rest of the country could cost as much as £3.2 billion a year. The North East traffic commissioner’s recommendations are due in October. He may yet throw the operators under their own bus.