Pioneering plans for the biggest bus services shake-up in decades – which was set to see South Tyneside routes run by council chiefs – have been hit by a major roadblock.
The North East Combined Authority (NECA) – made up of the region’s seven local authorities including South Tyneside Council – agreed last year to drive forward with a bid for a London-style Quality Contract Scheme.
The scheme, which was set to signal the biggest changes to the way buses operate across the region since deregulation came into force in the 1980s, would have seen transport companies bidding for contracts to operate routes in the borough and throughout Tyne and Wear.
But the project was yesterday rejected by the Quality Contract Scheme Board, chaired by the traffic commissioner for the North East, Kevin Rooney.
The transport project, led by councils in partnership with Metro operator Nexus, would have included powers to set ticket prices, routes and timetables.
NECA had argued that fares under private control are rising sharply and proposed that under the QCS, fares would have been limited to inflation levels and only changed once a year, with profits re-invested locally.
Bus operators were opposed to the deal – insisting it could leave taxpayers with a heavy burden – and proposed an alternative Voluntary Partnership Agreement, which would see bus firms working with NECA under a formal voluntary agreement.
Stagecoach, along with Go North East and Arriva, proposed a partnership package, which includes smartcard multi-operator ticketing, better-value fares, information, on-board facilities, and a formal customer charter.
The Quality Contract Scheme board scrutinising the plan said the bid failed to win the green light because of a lack of compensation for bus firms – up to £226million would need to be set aside for this, according to the commissioner’s report – and added that NECA could not demonstrate that it would increase use of bus services, and the scheme would not provide value.
NECA and Nexus are now considering what action to take in light of the ‘disappointing’ verdict – but insist it may not be the end of the road for the bus bid.
Responding to the report, Tobyn Hughes, managing director of Nexus, said: “We are extremely disappointed. We want to introduce a simple, affordable and integrated public transport system in this area, and the board recognises our proposal could achieve this. It should not be this difficult.
“The board’s opinion is that we should not go ahead, largely because we are not providing compensation to bus companies for profits they may lose in the future, and the board has taken a negative view of our proposal as a result.
“We simply disagree with many of the board’s conclusions, and we will be discussing next steps with the North East Combined Authority.
“The QCS Board has recognised that our proposal offers local people a ‘transport system unrivalled in Great Britain outside London’, and gives Nexus ‘significant credit for compiling a proposed scheme that genuinely aims to, and has the potential to, improve the lives of Tyne and Wear citizens’.
“The Combined Authority’s Leadership Board will consider the opinion of the QCS Board at its next meeting. It will be up to the Leadership Board to decide whether to ask Nexus to refresh the technical analysis and submit a revised proposal, or whether to pursue other options.
“It is now highly unlikely that the Combined Authority can reform local bus services in 2017 as planned.”
A spokesman for the North East Combined Authority, said: “The Quality Contract Scheme proposal was put forward in the best interest of passengers. We are very disappointed with this outcome and will consider our response. The North East devolution proposal includes an alternative mechanism for achieving improvements to bus services.”
But the decision has been welcomed by bus bosses.
Stagecoach says the Quality Contract Scheme would have proved ‘unaffordable, inflexible and high risk’.
Stagecoach group chief executive Martin Griffiths said: “We welcome the Review Board’s confirmation that the core franchising proposal was unaffordable, inflexible, high risk and not in the public interest.
“Tyne and Wear already has 90% bus customer satisfaction, amongst the highest levels of bus use in the country, and smart ticketing is being introduced across the region. Franchising does nothing to build on that successful, high-quality network.
“Nexus’s franchising plans envisaged no more buses, no new routes and no more services. When subjected to proper public scrutiny, it admitted its plan had a close to one in three chance of financial failure, it had no money to fund the bus network after 10 years and it had made numerous multi-million-pound mistakes in its calculations.
“We would urge the North East Combined Authority to respect the findings of the Review Board, and put passengers and local people first, by abandoning the misguided franchising plans.
“Instead, we call on them to work in partnership with bus operators to build on Tyne and Wear’s excellent bus network and deliver on our joint responsibility to give local people even better bus services.”
Kevin Carr, managing director of Go North East, added “The report, which follows the formal board hearing in July at which Nexus’s plans were independently scrutinised, confirms our belief that the proposed scheme for Tyne and Wear would not be good value for money for bus passengers or council tax payers when compared to the partnership proposal.
“Go North East has always believed that it already provides good quality, value-for-money services that meet customer’s needs at no risk to the tax payer. This is supported by one of the highest passenger satisfaction ratings in the UK, of 90%, by the government’s own independent watchdog Transport Focus.
“Collaboration and partnership working are particular strengths for Go North East and we believe that this approach provides the best foundations for a good public transport network. We will therefore continue to work with our key strategic partners, including the North East Combined Authority, to continually improve services for our customers and the North East economy.”