Assessment presents a range of cost and benefit estimates for the planned ‘Bus Reform’ in Wales, which will see all local bus services re-regulated

 
TrawsCymru services are already publicly controlled

 
The cost of transitioning to bus franchising across Wales is estimated at over £300m in the Regulatory Impact Assessment on the Bus Services (Wales) Bill, which was introduced into the Senedd on March 31.

The assessment presents a range of cost and benefit estimates for the planned “Bus Reform”, depending on which methodology was used and whether demand sensitivity or cost sensitivity were applied. The transitional costs range from £316.5m to £354.9m, in 2023 prices. Recurrent costs of bus reform range from £110.4m to £297.7m in total over 30 years.

The alternative of “Statutory Partnerships” is assessed as cheaper to establish but with higher recurring costs and lower overall benefits, leading to a higher Cost Benefit Ratio for Bus Reform. The largest single difference between the two in the transitional costs comes from depot acquisition for Bus Reform but not for Statutory Partnerships. Depot acquisition is estimated to cost £275.2m to £302.7m in the tables of costs and benefits. Elsewhere in the document, the cost to the government of depot acquisition is estimated at around £178m.

“This arrangement will involve operators tendering to operate bus services from a depot owned by Welsh Government, but with the depot equipment and bus operations under the responsibility of operators – providing a stable operating environment from year-to-year and contract-to-contract,” says the assessment. “This arrangement represents a conservative approach, as in practice it is feasible to award contracts for bus services to operators utilising their own depots for the duration of a franchise period.”

The high cost of transitioning to the new model reflects the Welsh Government’s policy that buses will be franchised in all areas of Wales, including rural ones, by 2030

The high cost of transitioning to the new model reflects the Welsh Government’s policy that buses will be franchised in all areas of Wales, including rural ones, by 2030. When England and Scotland passed their equivalent legislation, they allowed different models to be applied in different areas and with no deadlines for franchising to be rolled out.

If passed by the Senedd, the transition costs will not fall to the current government but the next one, to be elected in May 2026.

Patronage under Bus Reform is expected to increase by 22% in major urban areas, 12% in towns and 17% on rural networks by 2040, based on case study networks in Cardiff, Wrexham and Pembrokeshire. No increase in bus kilometres after franchising is assumed, but service rationalisation would allow “some additional services to operate”.

Ken Skates, Cabinet Secretary for Transport and North Wales, indicated that local authorities would have the option of seeking permits to run buses when he spoke about the Bill in the Senedd. He said the Bill would lift the ban on local authorities setting up new publicly owned bus companies. “Therefore, for example, in rural areas that have historically been poorly served by the deregulated model and where there may be limited market interest in a franchise contract under the new system, local authorities will be empowered to bid for contracts or seek permits to run the bus services needed in their communities.” 

Passenger Transport sought clarification from the government and was told that a local authority would have to set up bus company in order to apply for permits. This appears to make it difficult for Pembrokeshire County Council, which operates many bus services as part of its in-house fleet, to apply for permits to avoid the costs of competing for the inaugural franchise contracts in rural areas where there has been limited or no interest in competing for bus contracts in recent years.

Pembrokeshire is prevented by the 1985 legislation from establishing a municipal bus company until the new Bill comes into force. Franchising is due to be rolled out in its region in 2027. However, the government said the timescales “should give authorities enough time to establish a bus company should they choose to”.

The government also said that any municipal bus company will be subject to the same provisions as any other operator within the Bill. “The municipal operator will be required to formally bid for contracts along with any other operator.”

 
This article appears in the latest issue of Passenger Transport.

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