When the bus company UK North decided to go head-to-head with Stagecoach in Manchester last year it surely meant a good deal for customers looking for lower fares and more services, didn’t it?

Not quite. There were more services but they clogged up the roads and brought the city centre to a standstill. Rush hour tram services were even suspended, adding to commuters’ misery.

It was a bad advert for bus deregulation – established 20 years ago last October – which promised a better deal for passengers through open competition. To cap it all, UK North’s buses were pulled off the roads at Christmas for a variety of safety violations and the business went into receivership in January.

This was all great ammunition for the cross-party Greater Manchester Passenger Transport Authority (PTA), which has been calling for some form of re-regulation – a possibility if new proposals become law.

The PTA shapes policy for the Greater Manchester Passenger Transport Executive (GMPTE) which co-ordinates public transport across ten districts. It thinks deregulation has been a failure. Services have been lost, delays widespread and fares have risen by 42 per cent above inflation. Passengers have voted with their feet. Between 1986 and 2005 the number of annual bus journeys in Greater Manchester fell by 39 per cent.

As for competition? Well, UK North’s stand against Stagecoach was unusual. Most operators avoid competition.
The Government estimates that just four per cent of UK bus services are subject to direct competition. In Greater Manchester, Stagecoach and First Bus operate more than two-thirds of services.

“Passengers have neither the benefits of competition nor of a monopoly provider acting in the interests of the public,” says Graham Stringer, former Manchester council leader, now a Labour MP and chairman of the House of Commons Passenger Transport Executive Group (PTEG) which brings together and promotes the interests of the six PTEs in England.

“The operators are acting in the interests of their own profits. At present, there are periods of intense competition which cause havoc with timetables and schedules and then you go back to a virtual monopoly with First in the north and Stagecoach in the south.”

Stringer supports a new Department for Transport document – Putting Passengers First – which contains plans to pass more power to the local authorities.

Transport secretary Douglas Alexander says he does not want to return to the ‘old days of nationalism’, but his proposals could make it far easier for PTAs to put routes out to tender (known as quality contracts or franchising) – the system used in London.

If this happens in Manchester, it will push the balance of power from the operators to the PTA, giving it the ability to decide which services run and where.

This is at the top of the PTA’s wish list but this agenda has put it at loggerheads with the bus companies.

The smaller independent operators are particularly nervous because they believe that franchising will push them out of the market (and out of business) altogether. This means that Roger Jones, chair of the PTA and a Labour councillor in Salford, is not very popular with Manchester’s bus industry. Plenty of bad blood has already flowed between the councillors and the operators. Any mention of his name to the bus bosses elicits a weary sigh. But Jones, who admits they’ve waged a ‘verbal war’, says he’s willing to put all this behind him and wants to reach out to the operators in the interest of the greater good.

Although he thinks it’s ‘outrageous’ that private operators determine the network, Jones would much rather come to an agreement than resort to franchising.

“I want to meet the operators halfway and say, ‘let’s not carry on this silly argument. Let me admit you’re running the buses and let us have a say in the network of Greater Manchester’,” he says. “If we can’t reach that sort of agreement I would prefer a system not unlike London where we could determine what we want. But my number one preference would be to sit down and agree a network without recourse to some legal document.”

Jones is particularly angry at the way services are axed because they’re deemed commercially unviable. The pursuit of profitable routes has left some areas without decent services while some major roads, such as the busy Wilmslow Road student corridor, are clogged with buses vying for fares.

Axed services considered socially necessary are subsidised by the PTE, which now shells out about £20 million a year, up from £10 million in 2000.

“Over the last three years bus operators have withdrawn services knowing the public sector will step in with public money,” Jones continues.

“Our budget for subsidised services has gone up astronomically. It’s totally corrupt if you’ve got a system where a private business can make more money by withdrawing a service. That’s why I’m saying the PTE must decide the network and we get the operators to run it.”

He smarts as he recalls First buses using the slogan ‘use it or lose it’ on one route.

“It’s outrageous. No other private business would do that. Your job is to sell your business. The operator should be saying, ‘This is how reliable we are, this is how low fares are’.”

Fares are the last thing that First could brag about. It introduced increases of up to ten per cent in January (£13 for a weekly ticket), blaming higher fuel costs and investment in new buses. The Manchester division still managed a pre-tax profit of £6.9 million in the year to April 2006, down from £7.5 million. (During the same period Stagecoach recorded a pre-tax profit of £7.1 million, down from £10 million).

But are the operators really responsible for all the problems? Bus use did not start declining in 1986; passenger figures have been dropping off since the 1950s when cars became more affordable.

According to government figures, the number of households without cars has fallen by a third since 1986 to 24 per cent. This surge in car ownership has clogged up the roads and contributed to poorer bus services.

A PTE survey found that 58 per cent of bus delays were due to traffic. These delays increased journey times by 20 per cent. Longer journeys mean higher fuel bills for the bus companies. They say they have spent the past decade reducing overheads and now see less scope for such cuts. So, in turn, they put up prices – much to the ire of the PTA, which believes this is pushing more people into their own cars and adding to the congestion. And now it looks likely Manchester will have its own congestion charge. In London rush hour bus use has leapt by 38 per cent since Ken Livingstone’s congestion charge was introduced in 2003.

Manchester needs a public transport system that can cope with that change, says Jones: “We can’t possibly go into an arena where there’s potential for congestion charging if we don’t have control of the network.”

The bus operators do not see it that way. Mike Dunstan, founder and general manager of the Bluebird Bus Company, says major changes need to be made to the environment in which the buses operate, not the system in which they exist.

A former driver for the council owned Greater Manchester Transport, he started Bluebird in 1988. It now has 48 buses and around 100 staff. Dunstan wants to see Piccadilly “reinstated as a major terminal for buses”, and for the city centre and neighbouring town centres to be made more bus-friendly: “That will deal with congestion and make using the bus more attractive.”

At Stagecoach Manchester, managing director Mark Threapleton also identifies congestion as “the largest impediment” to running good quality bus services.

“Our journey speeds are slower so we have less attractive services and it costs more to operate them. Costs are increasing by 6-7 per cent a year – two to three times the rate of inflation.”

Tackling congestion is the answer, not quality contracts, says Threapleton.

Ian Davies, managing director of First Manchester, which operates around 900 buses, thinks the PTA is barking up the wrong tree.

“The regulatory system – who controls what – is not the issue. The real issue is how to make bus services more reliable. Changing the regulatory system will not change that at all.” Davies believes the PTE has enough existing powers to influence the network and to avoid the sort of congestion caused by UK North’s decision to challenge Stagecoach. And he wants to see more done to help bus companies deliver reliable services.

“It’s easy to criticise the bus operators, but nobody listens to our side,” he continues. “Roads are dug up regularly with no notice and very little is being done in terms of bus priority routes.”

Davies is unapologetic about fare increases, insisting they are commercial rates that reflect business costs and £35 million of investment in new buses during the past two years. He argues that the franchising model used in London requires a huge public subsidy and, besides, the PTA would have a serious fight on its hands if it tried to introduce a similar system: “The whole rationale behind what the local authority is trying to do would meet with very strong opposition.”

The Government’s review, ‘Putting Passengers First’, may give greater powers to local authorities but it also stresses greater collaboration between the PTEs and bus operators. Its ideas are likely to become law and a draft Transport Bill is expected in May of this year.

But unless Greater Manchester’s transport supremos can overcome the key issue of who controls the network there will be little chance of greater collaboration – and it will be the passengers who lose out.

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