Rural operators “petrified” by bus reforms

By Chris Haines, ICNN Senedd reporter

Rural bus operators are petrified by the Welsh Government’s plans to introduce a London-style bus network in Wales, the industry warned.

At the Senedd, Scott Pearson, chair of the Coach and Bus Association Cymru, gave evidence on the bus bill which seeks to bring buses into public control, with operators bidding for contracts.

Mr Pearson, who has been running bus services for 25 years, cautioned against a regional approach or modelling reforms on other franchise systems such as Greater Manchester’s.

“That’s a massive population in a big urban area,” he told the Senedd’s infrastructure committee. “Wales is not like that: you’ve got three big cities in the bottom, one at the top and, in between, a whole load of hills and mountains. 

“The rural aspect to this, our members – the SME [small- and medium-sized enterprise] membership – are petrified about this bill.”

‘Missed a trick’

Expressing concerns about smaller operators being squeezed out, Mr Pearson told the meeting on May 15: ‘“Petrified is the right word to use because we don’t have detail.”

Aaron Hill, director of the Confederation of Passenger Transport Cymru, agreed: “Scott is right, buses are inherently a very local service and respond to very local needs. We would be missing a trick if local authorities didn’t have a bigger role in how we shape the network.”

Mr Hill warned of significant barriers for SMEs, with six-figure costs in some parts of the UK to bid for franchises and regulatory hurdles to clear to even take part in the procurement.

“We need, if we’re going to do it successfully in Wales, to overcome that,” he said.

Mr Pearson stressed: “If you hand a guy who’s got 10 buses a 150-page document for the franchise and say ‘do you want this?’... they’re not going to do it, they’re going to sell up.”

‘No guarantee’

Mr Hill cautioned a change in the regulatory model will not guarantee success, warning the bill does little to take buses out of traffic, coordinate roadworks nor speed up journey times.

He said: “The bill doesn’t actually change the economics of running bus services in Wales – so many of the challenges that the network faces today, the network will still face on the other side of re-regulation.”

Raising examples of other franchised networks, Mr Hill said London has historically had a gap of around £700m between the cost of the service and the income generated.

He said the gap in Greater Manchester, which took control of buses in 2023, is about £250m and the Welsh bill exposes the network to similar affordability challenges.

Mr Hill told Senedd members: “We think the bill only lends itself to one type of franchise, a gross-cost franchise – that is the franchise that carries the most risk for taxpayers.”

Mr Pearson warned the public purse will shoulder all the risk under the bill as drafted.

‘Faux pas’

Mr Hill warned a regulatory impact assessment (RIA) published alongside the bill was insufficient, with “at least” £200m of additional costs not factored in. 

“That feels to me to be a significant question that hangs over the viability of franchising,” he said, pointing to examples including national insurance tax hikes and staff costs.

In written evidence, the Confederation of Passenger Transport Cymru warned: “We are concerned that the assessment of the financial implications are overly optimistic and based on weak assumptions and unrealistic forecasts.”

Mr Pearson similarly criticised a lack of detail in the bill and impact assessment, making it difficult to understand the costs and challenges.

He said: “If we’re trying to do the same with the current funding, and adding a whole load of costs into it from TfW [Transport for Wales], for instance, it’s just simply not going to work because you can’t get more for less.” 

‘Different ball game’

Mr Pearson added: “It talks about patronage increase in the RIA – that’s a big, big faux pas because nothing in this bill… looks at the main cause… which is congestion.

“It’s not dealt with at all. I think we’ve got a once-in-a-lifetime opportunity here and we’re not… addressing the main problems that we currently face as operators.”

Mr Hill added: “There’s a real risk here: we’ve built up public expectation, in the same way… as with the railways, then delivery or significant improvement doesn’t follow for a long time.”

Asked about the scope of the bill, with councils rather than ministers remaining responsible for school transport, Mr Pearson questioned the logic of separating the two.

He raised the example of a rural operator, which provides bus services and school transport, missing out on a franchise, asking: “What happens to the home to school, the local authority picks it up? That’s a whole… different ball game… I don’t think that is going to work well.”