On 27 April 2017, in the midst of the election purdah, the Bus Services Act 2017 received royal assent and quietly arrived onto the statute books.

The lack of fanfare reflected the development of the legislation itself. During its 11 month passage through Parliament (after a prolonged consultation period), the Bus Services Bill attracted broad parliamentary consensus. This is despite the Act being one of the most radical reforms of bus regulatory powers outside of London since privatisation.

Current status

The core new bus powers and obligations will come into force on 27 June 2017.

How has the Bus Services Act changed from the bill?

The core new bus regulatory structures remain largely intact from those set out in the bill: Advanced Quality Partnerships (AQPs), Enhanced Partnership Plans and Schemes (EPPS) and Franchising. Those structural models are summarised below.

So too do the proposed obligations on open data sharing and powers to make multi-operator/ multi-modal "advanced ticketing schemes". Powers to make regulations compelling the provision of accessible passenger information for disabled persons have also been added.

The devil is in the detail of the new powers and structures and much of that detail has been reserved for regulations and guidance yet to be made by the Secretary of State for Transport.

Recognising this, the Department for Transport (DfT) consulted on a set of draft regulations and guidance in February/March 2017. Although the government response to that has not been released, here is a sense of the underlying detail and, perhaps, where some of the challenges and controversies will lie.

Based on the timescales in the Act for the relevant powers to come into force, it can be anticipated that the first regulations and guidance in final form will start being issued soon after the General Election.

Some of the key points from the consultation drafts are summarised below. These did not address the issues of open data or accessible passenger information. All are subject to mandatory regulations and guidance yet to be made.

The Bus Services Act 2017: in brief

Advanced Quality Partnerships

  • Area-based statutory partnership replacing Quality Partnerships.
  • Minimum five years.
  • LTA commits pro-bus facilities and/or measures.
  • LTA can prescribe vehicle standards, payment methods, information and publicity requirements.
  • Can additionally prescribe maximum fares and service frequency/timing but only if no "admissible objections" from "relevant operators".

Subject to consultation, AQPs will be available where the local transport authority is satisified they will:

  • contribute to implementing local transport policies; and
  • improve service quality; or
  • reduce/limit congestion, noise or air pollution; or
  • increase, or prevent decline in, patronage.

Enhanced Partnership Plans

  • New area-based statutory partnership policy/objectives framework under which one or moer partnership schemes made.
  • Can be indefinite, varied and/or revocable.
  • No mandatory requirement for LTA to commit pro-bus facilities or measures.
  • LTA can prescribe not only the same characteristics as an AQP but also entitlement passes, on-bus information equipment, vehicle and ticket appearance, ticketing arrangements (including multi-operator ticket prices, timetable change windows and other scheme facilitating arrangements.
  • Plans and schemes cannot be made where a "sufficient number" or "operators of qualifying local services" object.

Subject to consultation, EPPs will be available where the local transport authority is satisified they will:

  • improve service quality or effectiveness; or
  • reduce/limit congestion, noise or air pollution.

Franchise

  • Replaces Quality Contracts.
  • At the outset, only mayoral combined authorities to have Franchising Authoirty powers (non-delegable).
  • Granting of an exclusive right to operate specified local services on specified terms (including frequency, fares and standards) and which may include public authority payments.
  • Service permits may be granted to others to operate in franchise area if it benefits local service users in the area and "will not have an adverse effect" on franchised services.
  • Based on assessment, auditing, consultation and, if it proceeds, procurement.
  • Authority may require local service operators to provide information to futher a franchise exercise.

Subject to consultation, Franchising will be available where mayoral combined authority has:

  • compared to "one or more other courses of action"
  • Assessed following a "consideration" of a five-case business case covering strategic fit, value for money, feasibility, affordability, and deliverability
  • obtained an independent audit of the quality of its assessment (information and anaylsis) and compliance with guidance.

General guidance

DfT's proposed general guidance on improving bus services reminds local authorities of its suggested ways to improve bus services, with varied case study examples. The general guidance reinforces the government's stated intention to make the Bus Services Act a "toolkit" of options as opposed to advocating any particular option. Operators will be pleased to see the encouragement in the draft guidance to exploring partnerships.

Advanced Quality Partnerships

Previously under a Quality Partnership an authority was required to invest in improved "facilities" at specific locations along bus routes (e.g. bus stops or bus lanes) and operators that wished to use those "facilities" were required to provide a service of a particular standard. The new AQP structure offers more flexibility for authorities as they can enter into it where they agree to take "measures" that indirectly improve bus services for example, increasing car park charges and/or where they commit to providing pro-bus "facilities" for example investing in bus stops. In addition, the scope of what authorities can prescribe that operators provide (as a minimum) in the absence or otherwise of operator objections has increased to include for example, smart ticketing. The risk remains that an AQP could potentially be a one-sided mechanism in the absence of a robust consultation, assessment and objection mechanism for operators.

The current proposals:

  • largely mirror the existing Quality Partnership process
  • permit authorities to commit and include existing facilities in a partnership if they are over five years old (without the previous 20 year limitation) if no operator objects.

As with existing Quality Partnerships, when it comes to the setting of maximum fares or frequencies, affected operators can object on the basis of workability or commercial viability so as potentially to block those.

Time will tell whether or not carrying across the same procedural processes applied to Quality Partnerships creates any challenges for those seeking AQPs. However, as with existing Quality Partnership proposals, the most effective use of each stakeholder's efforts is likely to remain at the development/ consultation stage of any proposed partnership.

Enhanced Partnership Plans and Schemes

EPPSs have attracted interest in discussions about the bill around the potential to create 'franchise-like' local services and ticketing through overarching partnership frameworks.

Key concerns at the bill stage included ambiguity over what appeared to be onerous information requirements of operators to support the development and operation of EPPSs and the threshold of qualifying objections that would block the introduction of an EPPS.

The draft regulations indicate that operators could also be asked to provide information including:

  • how and when are local services being used by passengers
  • the structure of fares for journeys
  • the types of tickets used by passengers, and by particular types of passenger
  • time taken for journeys, and parts of journeys including punctuality
  • the total distance in miles, covered by all vehicles used by the Operator in operating qualifying services.

The proposals (so far) steer away from cost and revenue information but some local authorities are pressing for this.

Current proposals on objections contemplate two tests based on a combination of market share and number of operators. If either test is satisfied the proposals cannot progress any further until they are revised and the operators are given another opportunity to object.

  • The first test proposes that operators representing [25]% of operated mileage should be able to object to proposals, with that [25]% being made up of at least [3] individual operators.
  • The second test proposes at least [50]% of Operators must object and that together those objecting Operators must represent more than [4]% of operated mileage.

The figures in square brackets are the proposed figures included in the consultation.

The tests are intended to balance the voices of large and small operators. It is likely that the ultimate mechanism will retain this structure (if not the proposed specific percentage thresholds).

Franchising

Understandably there are significant concerns over the detail of the proposed franchising arrangements. The government has confined the powers to Mayoral authorities (and other pre-approved authorities such as Cornwall) for now. This is on the stated basis that conditions of decision-making capability and accountability are more appropriate at that level. The assessment and decision-making process of a franchise may come under intense scrutiny.

The Act itself has confirmed that local authorities will have extensive information request powers by which to develop and assess a case for franchising. To that, the draft regulations have added:

  • information as to fixed and variable costs of operating
  • Information as to vehicles used.

As the word "confidentiality" does not appear once in the Act (or the draft regulations), stakeholders are naturally concerned. On that front, there is little detail so far to assure operators.

By contrast, in respect of the assessment and auditing criteria for a franchising proposal, the proposed regulations and guidance do provide significantly more detail and go some way to reinforcing the fact that, whilst decision-making is being devolved, a robust business case is required.

References to the "5 business case" model of public decision-making is nothing new. However, explicit references to the Treasury's Green Book and the DfT's specific guidance provide some reassurance that the expected quality of decision-making at local level is not intended to be any less rigorous than that of central government.

The draft regulations provide greater clarity on what a robust audit should include, including suggested content headings (for example verifying sources of information relied upon by an authority). Importantly, reassurance is given that it is not about the decision but the process including the accuracy and robustness of information used.

Next steps

The outcomes of the Mayoral elections will in short order confirm the extent to which the new powers under the Act are about to be tested. By that point, final regulations and guidance may be in place. Although the Act itself has arrived in a low key way, the promise of local bus service reform has featured heavily in Mayoral campaigns underpinning wider transport discussion. It will be an interesting time for the next phase in the bus market.