Monopoly in Public Transport: Bus Services

Chapter 1: Introduction

Historically speaking, the bus and coach services sector has been driven and dominated by established operators. The first public bus service is claimed to have been started in 1824 by a toll agent named John Greenwood from the Market Street in Manchester. Later soon, there was an increase in competition. The first bus service in England began in July 1829 by George Shillibeer. Mr. Greenwood and other operators formed the Manchester Carriage Company that ended the competition. With the increase in train transport, the bus transport services also increased. With the first train service out of Leeds on 22 September 1834 came Leeds’ the first bus service, which was operated privately. This also led to competition and sharing of routes. For example, the Headlingley and Chapeltown routes were shared between operators between 1840 and 1863. This also removed other competitors. It could, thus, be stated that market competition does not seem to have favoured new entrants. The control of the market by big operators is still continuing. In the year 2018 and 2019, over 4.8 billion passengers used the local bus services, which is majorly owned by private companies. This gives a sense of continuous monopoly of the market by the established big players. The introduction of legislation also seems to have favoured this situation. The Road Traffic Act 1930 introduced a regulation of bus services. This was because by the end of the 1920s where any individual could start a bus service without a license leading to excessive competition. The Act of 1930 ended this situation with a license system. The existence of new entrants shows that the established network was not adequate enough to meet market demand. However, regulation of the bus services seems to have favoured an existing established network rather than building a new one considering emerging developments such as the rise of new and small private entrants. The control of the market by established players may bring certain benefits to the passengers. White (1997) observed that a comprehensive network planning and marketing along with competitive services can deliver substantial benefits. Button and Gillingwater (2021), while assessing future policy based on historical developments, stated that the Act of 1930 was introduced based on rising public concerns due to increasing number of vehicles on the road causing congestion and accidents. They observed the number of buses also rose due to reduced operating costs. However, at the same time there were also attempts by the railway companies to seek power in the road transport, which directly competed with the bus operators. They further observed that the Act of 1930 was meant to introduce governmental control through licensing regarding vehicles, services and employees, and entry in the market. However, it gave substantial priority to established operators. Based on the above observation, it could be stated that the goodwill of the established players influenced the regulatory decision making. This is supported by the observation of Button and Gillingwater (2021) that the government played a passive role by managing the licensing system without disrupting the functions of the established players. The Road Service License introduced by the Act of 1930 weeded out smaller operators or influenced them to come under the network of bigger operators. For instance, in February 1931, Thomas Tilling Ltd, through its subsidiary Tilling Motors Services, acquired a controlling share in National Omnibus & Transport Co. Ltd. British Electric Traction and Trilling dominated the bus industry. Currently, as White and Robbins (2012) found, the National Express, the major operator, occupies the dominant position, but smaller independent operators are on a decline. This allows competition only from other large groups, particularly Stagecoach ‘Megabus’. This situation bears similarity with the effect of the Act of 1930 that removed small time operators and maintained the dominance by big operators.

In this light, it could be stated that legislation and regulation directly impact the public transport industry, particularly the bus and coach sector. The government through its legislative power could shift its policy decision and adopt varying approaches. As seen above, it allowed nationalisation and privatisation at the same time. Similarly, there was the the Transport Act 1947 that nationalised road haulers with A and B licenses engaged in long-distance carriage but left the C license holders free. This Act of 1947 did not nationalise the bus and coach services, but the government could acquire bus undertakings and to prepare Area Schemes within which an undertaking can be brought under a public ownership. The policy measures seem to have a certain level of inadequate organisation and a lack of a master plan. On one hand, the government through its power deriving from nationalisation can regulate the bus and coach services. On the other hand, it seems to be reluctant to intervene in the space dominated by major private operators.

1.1. Research Aims & Objectives

As seen above, the bus and coach services industry has been led by private players with the government playing an administrative management role regarding the competition in the market. In this context, the aims of this research will be as follows: understand the following:

To seek to understand the aspects of the relevant authorities and stakeholders in this industry and whether or not they influence or are impacted by the relevant legislation. To seek to understand the aspects of the relevant authorities and stakeholders the aspects of the various authorities and stakeholders that shape the functioning and policy making of the bus and coach services sectors. To critically analyse the relevant regulations to determine the economic and operational efficiency of this service industry

The objectives of this research will, therefore, be as follows:

To understand the impact of the legislative or regulatory framework on the competition in this sector and the relevant authorities and stakeholders. To understand whether or not this sector is delivering economic and operational efficiency including benefits to the consumers as a result of the legislative framework in place. To identify any gaps in between the policy measures in place and ground reality with the aim to provide recommendations.

1.2. Research question

Given the policy measures that have been taken since the Act of 1930, it seems there is a lack of a cohesive objective and system that could regulate and promote the bus and coach services. The relevant question is to analyse the operation of the bus and coach services in order to understand the role of privatisation and nationalisation in particular regard to the objectives of this service segment. Given the policy developments, the main research question is as follows:

Does (de)regulation of the bus and coach services have led to a reverse effect in the form of marketisation of the public service and reduced competitiveness affecting public services benefits? Do practices of the stakeholders in this industry, particularly established players, shape relevant legislation?

Based on these research questions, this research will analyse the regulatory framework governing the bus and coach services.

1.3. Hypothesis

This research will start with the assumption or proposition that the established players influence the relevant legislation and regulation. In other words, the deregulation of the bus and coach services leads to a reverse effect where these public services have taken a form of marketisation and have reduced competitiveness affecting public services benefits. Bayliss and her colleagues (2021) stated that deregulation and privatisation of bus services along with other essential services started in 1980 by the Thatcher government. This contradicted the nationalisation approach by the Transport Act 1947 of larger companies. The 1980 deregulation and privatisation led to the Transport Act 1985, where bus services belonging to the government, such as the subsidiaries of National Bus Company were sold to the management and employees, and all bus services, except in London and Northern Ireland, were deregulated. Bayliss and her colleagues (2021) stated that such deregulation and privatisation impacted the distribution of the services. This is supported by Sutton (2015), who while discussing the sustainability of the transport policy, stated that the privatisation changed the landscape for public transport operations and planning. Services and ridership declined outside major cities with the contest for bus services occurring in the marketplace. Sutton further stated that this led to the manipulation and dominance by large companies. Except for London, most of the other areas saw a fall in the number of passengers. London is governed by the municipality through franchising This means that where there is some governance through the local authority, there is no fall in passengers. At the same time, Sutton also stated that the high level of deregulation and privatisation meant that such governance was not so in most of the areas.

1.4. Limitation

This research will analyse the impact of legislation and the regulation upon the services sector, which would cover the operation of the services, the dynamics of the diverse, and fragmented network of segments and stakeholders to name a few. Hence, this research will involve a broad and a general approach to understanding the research components, as identified in the aim and objectives. Meeting the aim and objectives of this research may, thus, be challenging given that this research is not merely a unilateral analysis of the legislation and the regulation relevant to the bus and coach services sector. This research is limited in one specific aspect, which is the substantive review of the impact of the regulation of both the operation and the services of the bus and coach services. This research will not involve interviews or surveys to gauge the extent and the type of impact on the real experiences of the service users, the service providers who operate the services concerning the challenges due to the regulation, and the competitive challenges faced by the service providers that ultimately impacts the service users. Thus, the research will be based on the secondary data derived from literature review.

Chapter 2 - Interaction between legislation and bus and coach services sector

2.1. Introduction

The aim of the chapter is to analyse whether or not legislation advances this aspect or the purpose of offering bus services to the public. This question is relevant given that the purpose of nationalisation or privatisation for that matter has not advanced the purpose of offering public services. This is supported by the data from the Department of Transport (2020) showing a decreased of the bus mileage in England by 3.1% in 2020 when compared with 2018/19; decline of 238 million journeys (5.5%) in 2019-20 when compared with 2018-19; decline of bus and coach registrations by 582 vehicles (-58.5%) in the first three months of 2021; and a double-digit decline in all the segments with single-deck bus registrations (91 units/ -72.6%). Post war impact saw the government enter into the administrative planning era where nationalisation was favoured. During that time, private transport (car ownership) emerged; railways were in a downfall; and the urban growth and change that created the transport problem. A legislative intervention, such as the Road Traffic Act 1930, since that time has served as the key solution to transport problems and other areas of government responsibility. Dudley and Richardson (2004) studied the factors that led to policy changes, particularly regarding road transport. One factor they identified was the government used the transport segment for radical policy changes. The 1945-1951 Labour government selected the transport industry for its nationalisation programme. The Thatcher government used the bus industry as an experiment to bring policy changes. As such it was subjected to top ministerial initiatives exposed to political vulnerability. Dudley and Richardson (2004) claimed that this approach was hollow in character. While nationalisation occurred, there was also large scale privatisation. There was the 1984 Buses White paper that called for abolition of licensing outside London; offering services through the local authorities using tenders for subsidised services; and creation of private and independent companies. It seems that the private players majorly operate the bus and coach services. In the five main segments of the bus and coach industry, the private operators seem to be the main players. The independent operators run small fleets and offer the local scheduled services. The regional bus companies run within the towns the main interurban network and services. The three largest groups (StageCoach, FirstGroup and Arriva) represent over 70 percent of the local bus market covering rural, interurban and urban services and local authority bus fleets. It is the London area that is covered by the Greater London Authority under contract with the Transport for London offering the contracted services through independent and regional companies. The Transport Act 1985 privatisation left the fleets of the local authorities ceased operation or privatised. The National Express Ltd, a publicly limited company, dominates the express coach services. Referring to these five main segments, it could be seen that the government has always favoured private run-operations. In this context and related to the primary research questions, this chapter will analyse the impact of the events of deregulation and privatisation upon the operation, competition and efficiency of the bus and coach service industry. It will analyse the causal link between deregulation, privatisation and competition and its socio-economic impacts.

2.2. Deregulation and privatisation – impact on efficiency

Greater efficiency drives the change in any current position of the transport services. Efficiency also drives the change in the regulation or ownership of the bus and coach services. There are three general ways that could promote efficiency of transport services considered by both the private and public operators. They are the changes in the financial management by the operator; the control over entry into the market; and the assets ownership for service provisions.At the same time, the shortcomings of government provisions or limited intra-model competition in the urban area impacts changes in the operation of urban buses. Technical and economic grounds, such as low productivity, lack of economy in scale, inflexible work practices, and political interference in management effect changes. In such circumstances, the mixed delivery involving both the public and private delivery system has gained attention. The service provision is no longer purely public or purely private. Albalate, Bel and Calzada (2011) studied the governance and regulation of urban bus transportation in Barcelona. They found that the competition between the public and private bus operators in addition to regulation of concessionaires can generate incentives amongst the players to promote services efficiency and quality. This means there is a competitive bidding that brings discipline among the two sets of operators increasing the regulator’s bargaining power. In relevance to the research question, it may be essential to analyse whether there is a genuine mixed service provision that is regulated properly to provide the required level of services, and whether the regulation of concessionaires brings better benefit to the bus and coach service provisions. This question may be dealt with by the question of deregulation brought about by the government. Deregulation and privatisation of bus services along with other essential services started in 1980 by the Thatcher government. This contradicted the nationalisation approach by the Transport Act 1947 of larger companies. The 1980 deregulation and privatisation led to the Transport Act 1985, where bus services belonging to the government, such as the subsidiaries of National Bus Company were sold to the management and employees, and all bus services, except in London and Northern Ireland, were deregulated. The deregulation and privatisation impacted the distribution of the services. Sutton (2015), while discussing the sustainability of the transport policy, observed that the privatisation changed the landscape for public transport operations and planning. Services and ridership declined outside major cities with the contest for bus services occurring in the marketplace. This led to the manipulation and dominance by large companies. Except for London, most of the other areas saw a fall in the passengers. London is governed by the municipality through franchising. This means that where there is some governance through the local authority, there is no fall in passengers. However, the high level of deregulation and privatisation meant that such governance was not so in most of the areas.

Sutton (2013) argued that the deregulation and privatisation did not bring long term benefits. There were certain claims of advantages, such as better quality of buses and innovative services or fares reduction and extended route network. Sutton (2013) argued that the new changes pushed more people to use cars rather than the bus services. Further, there was a heightened monopoly of the transport services by the National Bus Company, operating as National Express. New entrants to the industry became difficult to make their presence felt. Hutton gave the example of the National Express, which built an efficient manner of ticketing network thereby strongly establishing its brand and offering of services. It became a management entity from being an owner. It used its network built by practicing competitive bidding from small operators. It undercut prices of the competitors and offered the services through them under its brand. In this manner, the private players monopolised the industry through a brand that is public in character. Butcher (2010) summarised the deregulation in the 1980s, particularly covering the Transport Act 1980 and 1985. He cited the report of the Transport and Road Research Laboratory, which covered three trial areas: Norfolk, Hereford and Worcester, and Devon in 1984. He found that there was gradual decline in rural bus services. He reported that the deregulation allowed operators to experiment on new services, but the procedures of the license system deterred small operators. However, the bus services in urban and inter-urban areas were profitable. The report stated that the Transport Act 1985 brought a substantial change. It removed service licensing and introduced registration and the duties of the local authorities to coordinate public passenger transport. All the licensing authorities and the traffic commissioners lost most of their power. Service operation was now according to the specification upon registration. The operators could change the time tables and bus stops positions without consulting. This Act 1985 promoted privatisation. For example, Part II of it allowed the sale of national bus company subsidiaries to the private sector. However, contradicting the purpose of liberalisation, privatisation and competition, Butcher (2021) stated that it produced a predatory behaviour and power of the regulatory authorities. There was a lack of regulatory framework that was evidenced by the conflicts between the rival operators. This condition seems to be insufficient to make the government make necessary changes. For instance, the report stated that after a 1993 consultation exercise, there were no major changes. It merely introduced minor alteration to the power of the traffic commissioners giving them power to regulate the number of buses and control the use of duplicate buses. Gwilliam, Nash and Mackie (1985) recommended addressing such problems by a competition for licenses without deterring the competition on the road. They recommended a comprehensive franchising of the good and bad routes while at the same time allowing a transparent cross-subsidy. They recommended competition framework should be supported by a unified planned timetable. Their recommendation suggests more of a formal setting comprising partnership documents. According to White (2018), the Local Transport Act 2008 brought about such a formal setting. This Act of 2008 amended the Act of 2000 providing for franchising and contract services. This led to the 2011 Nexus (Tyne and Wear Passenger Transport Executive (PTE) report to the North East Combined Authority (NECA)) that proposed a Quality Contract Scheme (QCS) in the metropolitan areas around the city of Newcastle. According to the QCS, the Nexus would have had control the entire bus network and plan, the franchise routes and awards of competitive tendering and removed competition. However, White (2018) stated that the 2000 and 2008 Acts did not result in franchising schemes outside London. The reason may be because, as Rye and Wretstrand (2014) argued that levels of profit are lower in such franchised schemes than a deregulated system. They may prefer an informal set up, which may deliver more in terms of fair pricing and service levels and incur lesser risks. This is evidence by the argument that majority of passenger transport authorities or such equivalent authorities outside of London currently do not have any immediate plans to use the formal approach or franchising. It seems the aim of promoting competitiveness through deregulation and privatisation has led to other adverse results. To reiterate Hensher (1991), the goal of greater efficiency led to the change in the regulation or ownership of the bus and coach services. There is a change in control over entry into the market, financial management and assets ownership. However, there are literatures that suggest that the deregulation of the bus transport services is a failure. It failed in affordability and supply of services. It failed in preserving the integrity of the public transport system, which has become fragmented. The deterioration of service provision represents a lack of political will to intervene for a government intervention. London saw an increasing demand for bus services, but outside London, the situation was different. However, in both these areas, the costs and subsidies have increased since 2000. These kinds of situations raise questions about the benefit of deregulation and the competitive tendering that it desired. It was also seen that since 1997, the cost of public travel has risen faster when compared with the overall cost of goods and services. Travelling costs of buses, coaches and taxis increased by 131%.

2.3. Governance and monopoly

The Office of Fair Trading in 2010 reviewed the deregulated bus market regarding the competition in the local bus services in the UK in the area of quality and value of services provided to the citizens. The deregulation led to monopoly in the manner of operating bus services, including the price, the route and the competition. It also produced a limited competition between the operators, which raised the prices. This did not, however, increase the quality of the services to bus users. The Office of Fair Trading further stated that because of weak competition for services local areas, it might have contributed to cost increase. There were low levels of bids. The lack of competition and lower bids reflects monopoly by a few operators. For example, the Office of Fair Trading observed that only a single operator served non-corridor routes. Similarly, a particular operator that supplies most of the services consolidated depot ownership in large regions. The situation represents an exclusive approach by the few actors. They positioned their services to that effect. They deployed numerous buses particularly as a strategy to deter new entrants. The monopoly after deregulation led to maximum privatisation of the bus and coach services. This meant that there was a restrictive competition excluding or preventing new players in the industry. This could have been a sufficient approach to attain the desired outcome of healthy competition to benefit users of the services. The 2010 report mentioned above led to referring the issues to the Competition Commission in 2011. It did not find direct competition and many local markets were highly concentrated. This resulted in short-lived rivalry causing a barrier to new entrants. At the same time, the Commission also found that in areas where direct competition was present, it delivered significant benefits to the users of the services. The concentration of local markets meant that there was geographical market segregation, which was found in the North-East of England with only two operators. The competition was not just on fares, but on the routes that operators have control over. This is supported by the customers’ view that fares had little effect on their use of buses. It very much depended on the offers an operator could make on a particular route. The deregulation and privatisation and its effect show that there was no master plan. The result was no direct competition and monopoly of the market. It reduced the competitiveness in the market with the decline of the small operators. It brought instability in governance with the rise in travelling costs, unreliability of the services, and non-delivery of benefits to the passengers. However, even when there was a lack of competitors from smaller operators, new competition emerged from other large groups. White and Robbins (2012) monitored the express coach services system covering the service changes, data on ridership, financial performance of the main operator groups, and technical press coverage. They found that the major operator, National Express, dominated the market. The smaller independent operators in the all-year-round daily network declined continuously. It was only other large groups that emerged, for example Stagecoach ‘Megabus’ in 2003. The fact that the new competition is from only large groups has to be read with the Transport Act of 1985 deregulating the local bus industry in Britain outside London. This is necessary to understand that the competition is open to big operators with the capacity to take advantage of the removal of the restrictions on the routes, service levels and fare provided by the Act of 1985. White (2010), thus, observed that removal of the restrictions resulted to a negative impact affecting the services coordination between different operators. This is important to note as the five main segments of the bus and coach services, leaving the London area, are mainly operated by the private operators. Thus, there is a fragmented governance mechanism representing a lack of local control and coordination of bus services. White (2010) wrote that the introduction of the competition law applicable to other industries to the local bus sector by the Act of 1985 did not help as it contradicted policy objectives, for instance bringing harmony to the ticketing systems to stimulate more use of public transport. White (1997) had also found major concerns regarding the stability and the reliability of the services. White stated that deregulation increased the supply and reduced the cost per bus-kilometre. However, it did not deliver real benefits to the passengers.

The findings of the Office of Fair Trading in 2010 mentioned above regarding the increase of monopoly relating to the bus services, pricing, the routes and the competition seem to be rooted to the liberalisation of the road and transport services. Studies by Cross and Kilvington (1985), Foster (1985), Gwilliam, Nash and Mackie (1985) and a report by Butcher (2010) evidence this view. Cross and Kilvington (1985) studied the impact of deregulation of inter‐city coach services and stated that the public transport has been traditionally operated under regulation. For example, the Road Traffic Act 1930 had imposed controls upon the quantity and quality of transport regulations. It had abolished the quantity controls governing the inter‐city coach services to remove restrictions on entry to the market and promote competition. Cross and Kilvington studied the impact of the 1930 Act covering coach operators, such as British Rail and inter‐city travellers and found competitive and deregulated public transport services. This gave the consumer only short‐term benefits. The competition was concentrated to the principal trunk routes, which was distributed between the state‐owned undertaking of National Express and British Rail. This finding is also supported by the study conducted by Foster (1985) regarding the economics of the bus deregulation. Foster drew a comparison between liberalisation and bus regulation, both of which he held not to have produced any favourable consequences. He cited the experience of road haulage licensing in relevance to the bus regulation stating that bus drivers might revert to the old 1920s practices of chasing, tailing, etc. that were stated to majorly caused consumer dissatisfaction. Considering the developments before and after the Act of 1930, the measures introduced could be stated to have aimed for bringing harmony in the competition and the services provided to the passengers. They aimed to drive maximum efficiency in a regulated manner, which was undertaken through the licensing system. In a way, as Hensher (1991) stated, the aim for greater efficiency brings changes in policy making decisions impacting the regulation and ownership pattern of the bus and coach services. Thus, the private and public operators focus on financial management; market control and assets ownership to promote efficiency of transport services.

2.4. Local authorities involvement and services coordination

local government has the primary role. Morris and colleagues (2005), however, observed that the local government did not exercise control over this industry. They only promoted bus services. The root cause for the problem might be the rapid market consolidation. The privatisation shows the lack of control over the bus and coach transport industry by the local authority. This lack of control and network between the operators and local authorities may be the result of the deregulation. White (2002) wrote that the government exercises lesser control over quantity and price. It is through the Public Passenger Vehicles Act 1981, which provides the area Traffic Commissioners to exercise quality control of bus and coach operators through the Operator license governing reputation, maintenance facilities and financial support. However, outside London, the operators determine the kind of commercial services they operate. The involvement and dominance of the private operators and lesser control by the local authorities may result to a complex regulatory framework given the different types of stakeholders involved in the bus and coach services. The private-public partnership was under the Transport Act 2000 to provide improved services. It gave more powers to the local authorities to sign Quality Contracts for bus services (Section 124(3)). The Coalition Agreement of the Conservative-Liberal Coalition Government in 2010 aimed for a joint working between the bus operators and the local authorities. This was also seen by the Conservatives as a re-introduction of the Local Transport Act 2008, which provided for introducing Quality Contract to regulate bus networks to prevent free competition between the bus operators. Some form of formal agreement between the government and private operators might have resulted in positive results. For example, Zhang and Durango-Cohen (2012) examined the government's tax policy to bring private investments in transportation infrastructure by using a concessionaire between a local authority and a private party responsible for engaging a set of service providers. They found that commitments in the form of partnership agreements governing became critical in determining the success of such partnership where the parties participated and were self-interested. Some level of flexibility such as tax exemption of returns from the fixed cost portion also influenced the success of the partnership. Irrespective of the form of partnership between the public and private operators mentioned above, the Liberal Democrats favoured more regulation with more powers to the local authorities. The introduction of the new legislation, the Bus Services Act 2017, may increase the enforcement of the Competition Act 1998, which prevents bus operators from agreeing to timetables, which makes services frequencies and routing inefficient. However, as Lucas (2004), while assessing legislative and institutional barriers to accessibility planning, observed that the efficiency in accessibility planning may be difficult to achieve when there are legislative barriers. For example, the prohibition of agreeing to timetables by the Act 1998 may not be effective as introducing community-owned service providers cannot be possible given the insurance system for drivers. This made monopolies possible, which the Office of Fair Trading found itself reluctant to intervene. Problem is seen in integrated ticketing despite the block exemption guidelines according to the Transport Act 2000. The Bus Services Act 2017 entrusted the local authorities with new powers. The Department for Transport in its guidance for the new powers and opportunities of the local authorities under the Act of 2017 recognised the decline in passenger numbers despite the increase in bus patronage, and that the benefits of reliable and innovative bus service are not reaching more people. The Act of 2017 provided for higher level partnership and quality partnership with private operators with new ticketing powers to the local authorities making it easier for passengers to use buses, better fare, routes and timetables and different modes of transports. White (2018) stated that the Bus Services Act 2017 continued the trend towards a stronger franchising power through the simplification of the franchising process. The Act of 2017 has removed the requirement to submit an application to the QCS Board or equivalent authority, which was found in the earlier transport legislations. The Act of 2017 requires an independently audit of the proposals for franchising before their submission to the Secretary of State. Thus, the powers under the new Act of 2017 are unlike the little regulation that local authorities used to exercise.

The 2017 Act brought about better regulation of the partnership between the bus operators and the local authorities through the Advance Quality and Enhanced Partnership Schemes, which require the operator to meet specific local standards, including service frequency and maximum fares, supported by steps laid down by the authorities. Further, the local authorities have the bus franchising power replacing the Quality Contract Schemes. Under this power, it is only through a contract that a bus operator can provide services in the designated, franchised area. Further, the Act gives the local authority an upper hand to establish an advanced ticketing arrangement that is multi-operator and multi-modal ticketing system. The price of multi-operator or multi-modal tickets will be agreed with the relevant operators. The Bus Services Act 2017 was introduced to strongly encourage partnerships between operators and local transport authorities within the free market initiative. This is evidenced by the powers entrusted to the local authorities in that regard. For instance, the Act of 2017 has empowered the local authority to make an Advanced Quality Partnership Scheme (AQPS). They are obligated to take measures supporting local bus services and in return the bus operators must meet specific local standards, regarding better journeys, better places such as better transport connections and better value in terms of maximum fares for given routes or services. The local authority has an upper hand in the bargaining regarding bus-related facilities including bus stops, shelters, and shelters or depots. In regard to the franchising scheme, they will determine the details of the services such as the routes, place, time and standards. The Act of 2017 provides for the bus operators to provide their services under the contract to the local authority, which has the discretion to determine the kind of contract that it feels appropriate. Without the agreement, no other services could operate in the franchised area. The Act of 2017 has continued bus services to be provided by commercial operators and not local authorities. This means that the authorities cannot set up any new municipal bus companies that could compete for franchised services. At the same time, such commercial operators can continue to operate into and out of the franchised area. They can spot and fill gaps in service provision overlooked by the local authority subject to the conditions that they do not conflict with the franchisee arrangements. The franchising agreement is meant to consider the needs of small and medium sized operators non-commercial community transport operators. Considering the new approach as envisaged by the Act of 2017, Porta and colleagues (2019) examined the concept of integrated transport planning in that regard. They treated the new approach introduced by the Act of 2017 as the rehabilitation of that concept to address the fragmented and less attractive local public transport system. In that light, they identified the increase in demand for greater coordination within the public transport sector to meet the social, environmental and financial sustainability. In regard to the Act of 2017, they argued that it has provided for more incentives to increase coordination and also the rehabilitation of the concept of integrated transport planning. Their arguments suggest that such an integrated transport planning has gradually happened over the years involving a negotiation between the negative and positive aspects of the regulations and between competitive and coordination mechanisms that found both the public and private actors to make a fully sustainable public transport. Thus, they argued that the transport sustainability found in Britain represents a mix of market and partnership, and hierarchical mechanisms. The integrated planning concept suggested by Porta and colleagues above represents a centralised system of coordination and assigning bus services routes and details by the local authorities. However, the Act of 2017 itself seems to have also restricted the local authorities to set up any municipal buses competing with the franchised authorities. Further, it also seems to have given a high level of discretion in awarding contract and to commercial operators to operate in and out of the franchised area and to identify gaps, which might have been under the discretion of the local authorities. McTigue, Monios and Rye (2020) took a principal-agent perspective to the relationship between the public transport authority (which is the principal) and the bus operators (which are the agents) to analyse the issue of privatising and outsourcing of public utilities. They took the case study of UK “Quality Contract Scheme” and analyse the question of “how can a public transport authority (the principal) motivate bus operators (agents) to achieve the authority's goals (more and better public transport) when their respective interests may not align?”. They stated that agency theory examines how the principal (the local authority) could achieve their aims by employing an agent. Their research questions seem to be relevant with the current research aims and objectives. They examined how the principal could motivate the agents to achieve the goals of more and better public transport even when their interests may not align. They stated that public authority aims to increase ridership, but the agent may not aim to invest in improving the service. They stated that even when the principal created new formal partnership arrangements between them, their use may remain low. In regard to the Quality Contract, Godfrey and Taylor (2018) stated that there are three primary outcomes of such a contract. The aim to secure or accelerate investment; strengthen relations and align objectives of the parties; and modify market behaviour. They argued that on one hand, local authority faces challenges due to political issues, change in operators’ involvement, and public objecting to bus priority measures. On the other hand, the operators face the challenges of lack of credibility in the local authority offer and changes in the market conditions.

Even though the Bus Services Act 2017 aims to bring a centralised or a regulated mechanism to address the issues of competition in the bus and coach service industry, there seems to be a higher bargaining power on the part of the bigger established players. The aim for a stronger franchising power does not seem to have delivered the desired effect as private players do not either find credibility in the local authority or do not find the franchising agreement profitable. As such, the fragmented nature or the regulations of service industry does not seem to be addressed by the legislation so far.

2.5. Social and economic cause

The bus and coach transport sector is subject to a power relation between the local authorities and the operators and between the operators. Bayliss and colleagues (2021) studied the effect of privatisation of essential services with relation to inequality and poverty. They observed that it is the investors that profit from such essential services rather than benefiting the public with quality services. Unfortunately, the users who pay the bills and the fares financed such profits, but do not have access to better services in terms of affordability. This is true for those households belonging to lower-income groups. This supports the social exclusion notion suggested by Mackett and Thoreau (2015). They wrote that transport plays a key role in giving access to healthy food, healthcare and recreation facilities. However, they identified cost as a barrier to travel. As Power (2012) observed, low income households cannot have access to either the mass ownership of cars that have displaced public transport, or access to the bus and coach services as they are from the poorer neighbourhoods. The expensive bus and coach travels socially exclude such low income neighbourhoods. This represents a gap between the objectives and the implementation measures. The existence of the above-mentioned gap means that the existing regulatory system has failed to provide adequate social protection. The deregulation and privatisation of public assets and the monopoly by private actors is systematic in nature. As such, Bayliss and colleagues (2021) found adverse social outcomes in terms of inequality regarding access to public essential services. The solutions driven by political initiatives, as seen earlier, have also failed to address the negative impact of the monopoly over essential services. The reason seems to be the markets and competition driven policy measures that prohibit establishment of more collective and equitable services. This has resulted in deterioration of service provision and fragmented service industry that excludes low-income households from accessing better public services. The difficulty in regulation of the industry in question represents the flaws in the system set up in place. The accessibility planning cannot be effective if the local authorities cannot focus on local concerns specifically. Lucas (2004) discussed the question of inequalities in the transport system affecting certain groups and communities. The government recognises the inability to access essential services due to the poor system. This has led to a social exclusion issue. Lucas pointed out that the accessibility planning is defective in that the local authorities are not local specific, but cover large areas including numerous metropolitan and councils. This is an administrative challenge to engage with multiple layers of local administration. This resulted in mixed results where a few local authorities made advanced delivery regarding jointly-funded and managed projects, while some were found figuring how to proceed with the partnership arrangement. This represents a gap between the authorities and the bus operators. As long as there are no integrated services and no hierarchy of regulatory authority, passengers may not have better access to bus and coach services. Thus, any plan of accessibility may keep on failing. The network established so far based on privatisation seems to have been strongly rooted that it looks difficult to untangle. To reiterate, the Office of Fair Trading (2010) found itself reluctant to intervene in the monopolistic transport industry in question. Monopoly seems to be deeply rooted where even the government does not seem to have a better alternative solution. For example, the Local Government Association in 2021 report states that the main challenge against the delivery of local public transport ambitions is funding. It reported that the government has reduced spending on local transport by about 40% over the last decade. This does not help the problem of the long-term decline in bus patronage and the loss of commercial bus services. The decline in bus patronage may be stated to represent lack of motivation on the part of the operators, the distraction from customers’ focus and the weak contractual or incentivised arrangement between the local authorities and the operators. Schaaffkamp (2014) stated that authorities are not satisfied with the outcome of the contract schemes. This has been seen earlier with regard to the franchising arrangements. This outcome is also applicable with the patronage development and delivery customer benefits. He stated that the contracts are not effective in creating and growing sufficient public transport market share. He argued that the tendered contracts have strong incentives to reduce costs, but not strong enough to motivate operators to invests in passengers and expanding the market share.

There have been studies that have generally found the deregulation of the bus services as a failed experiment. Bayliss, Mattioli, and Steinberger (2021) argued that the bus provision has underperformed in terms of affordability and supply of services; cited O'Sullivan and Toral Patel (2004) to state service deterioration because of the fragmented regulation and service provisions; and have resulted to social inclusion of low-income households. They argued that these problems arose from the rapidly private market consolidation. They stated that the outcomes are complex given that the policies aimed to bring investment and efficiency through a competitive mechanism and to promote better and cheaper services, the agenda was more a privatisation of state assets. Bowman and colleagues (2014) argued that the mechanisms of privatisation and deregulation create an industry that does not serve national welfare interests. This is evidenced by the cut in public spending of public transport giving rise to more private monopoly of the operators. This is a result of the deregulation that has also gave rise to fare increases, costs of public transport; and decline of bus travel in parts as operators concentrated its services in cities cutting out peripheral services. The bus and coach transport is a competitive market and as such it does not seem that there is any incentive for operators to implement cross-subsidies or coordination amongst themselves or with local authorities. This was seen with the large reduction of direct public subsidies regarding for non-profitable routes in the 1980s and 1990s; the reduction in local authority spending regarding buses by 43% between 2009–2010 and 2018–2019; and consequently, the reduction of over 3000 local authority supported bus services between 2009 and 2019.

2.6 Conclusion

The literature review has reviewed the events and developments regarding regulation of bus and coach service industry. The nationalisation, large scale privatisation, and deregulation and all other events that have happened, including the 1945-1951 Labour government effort, the Transport Act 1985 privatisation, or the 1980-2985 deregulation, seem to have overall found lacking in providing an efficiency bus services to the public in general. The literature review suggests that where the governance of bus services involves the role of the local authorities, there is a certain level of controlled management of the industry. For instance, London is governed by the municipality through franchising. However, except for the London area, most of the other areas that were impacted by manipulation and dominance by large companies, saw a fall in the passengers. The literature review suggests monopoly of the concerned services by a few established players. A lack of regulatory framework, as evidence by liberalisation, privatisation and deregulation, may have resulted to such situation. This has affected the accessibility, affordability and supply of bus services, and their integrity leading to fare rise and denial of the services to lower-income groups or those in non-metros areas. Thus, there is a gap between the objectives and the implementation measures that may be serving only short‐term benefits. The Bus Services Act 2017 is found to have brought a favourable regulation of the concerned services benefiting the public, through measures including better regulated partnerships between the bus operators. However, this overall message derived from the literature review is that established commercial operators still have some leverages in determining the operation of the services, where even the local authorities cannot compete with them in certain areas of franchised services.

Chapter 3- Research Methodology

Saunders and colleagues (2012) stated that research involves a systematic process based on the research objectives, research questions or thesis. It involves a methodological structure that specifies the particular method to be applied in the research. The research structure and design is formulated based on the research aims and the objectives. A researcher accesses multiple journals, books, and databases. The research methodology enables the researcher to refine the data and information from these sources to select and use only the relevant ones. This is possible through the research methodology formulated by the researcher to focus on the subject matter of research. This method helps in refining the research; identifying the appropriate data to answer the research questions; and giving context to the data.

3.1. Qualitative research

This research has used the qualitative research method. The subject matter of this research is multi-layered and multi-faceted. This research is not only regarding whether the relevant authorities and stakeholders in the bus and coach service industry influence the relevant legislation but also whether they are affected or impacted by the legislation. This study involved critically examining these aspects from the economic and operational efficiency perspective. For instance, it analysed how the Road Traffic Act 1930 intervened towards transport problems, and how the 1945-1951 Labour government selected the transport industry for its nationalisation programme; but at the same time there was a large scale privatisation. This research identified the gap between government legislative actions and the reality practices in the bus and coach service industry. While doing so, this research also examined whether the efficiency perspective benefited the consumers. For instance, it analysed the deregulation and privatisation measures by the government and its impacts including service distribution that excluded major cities affecting bus services. Due to the multi-layered and multi-faceted nature of the research, the research design is open and flexible enough to derive more insight regarding the subject matter and perspectives of the participants in this study. This designed allowed the researcher to get more details from the participants within the flexible framework.

3.1.1. Deductive approach

This research has adopted a deductive approach, which commenced with the hypothesis that the established players influence the relevant legislation and regulation. This assumption was then applied to the bus and coach service industry while examining the relevant legislation. This means that this research identified a general theory and applied it to a specific case or context. Thus, a deductive theory was applied where the research started with a theory, collected data and observation and validated the theory. For doing so, the researcher employed a systematic literature review that eliminated bias while selecting relevant literatures. All empirical evidence that fits pre-specified eligibility criteria, as defined in the objectives and aims, were collated to answer a specific question”.

3.1.2. Doctrinal method

The research has adopted a doctrinal methodology to identify, analyse and synthesise the impact of the relevant laws upon the bus and coach service industry. The doctrinal method allowed capturing and categorising relevant legislation and regulation allowing to present the position of both the legislative practices, players in the market and the bus and coach service industry itself, and then particularly the impact of deregulation and the monopoly of the established players. It enabled the critical analysis and interpretation of the positions and has enabled this research to meet its aims and objectives. The doctrinal method has enabled the research to approach and present in a coherent manner the research subject, its content and the findings. It helped present the government policy measures and the industry practices. For example, this research approached legislation such as the Transport Act 2000, the Local Transport Act 2008, and the Bus Services Act 2017 to categorise and analyse its purpose and particularly the impact. This method helped address the primary research questions regarding deregulation and its impact on the bus and service industry. It helped differentiated the laws and practices and identified popular practices with their rationales, such as the rationales of the laws regarding the regulation and as for example, why the laws have increased monopoly of established players, but declined in bus services outside the cities. The doctrinal method helped the researcher to interpret and apply legal reasoning skills to evaluate the relevant regulations, laws, and practices in regard to the main research questions in hand. This method helped to critically evaluate the research questions, aims, and objectives and to formulate legal recommendations to inform future legal policy measures.

3.1.3. Thematic approach

This research subject is subjective in nature. It therefore involved collecting secondary data through the literature review. This helped in a thematic analysis of the data collected and have identified recurrent themes in the research. Therefore, major themes were created in the study based on the core messages gathered from the secondary data collected. For example, the literature review found that there is a fragmented services sector, regulation of the industry and representation of stakeholders. The themes identified helped draw the understanding of the impact of deregulation, which represents the liberalisation and privatisation approach of the government in conjunction with the role of established operators. They represent the recurrent themes in this study recognised by the researcher that allowed drawing meaningful and useful results. For example, there is lesser involvement of the local authorities or the government since the initial period of the bus service industry. Provision of this service is left largely to the bus operators and that they impact the decision-making process regarding the regulation of this service industry.

3.2. Data collection and analysis

This data in this study is secondary data. These are data collected from conducting the literature review. The method of collecting the secondary data is based on a desk-based research. It means that the research was conducted online involving the use of online search engines and platforms. As such, the researcher used Google Books, Google Scholar and other online platforms that gave access to relevant literature, data and information. Data and information relevant with the research area and questions were collected from reviewing and analysing the research articles, commentaries and opinions of many scholars. The desk-based research method allowed the researchers access to data and information from books, journals, articles, reports and other such materials. This online-based research offered the researcher the advantage of accessing numerous literatures and of speedy review of those literature.

Chapter 4 - Findings and Discussion

4.1. Introduction

Britain bus and coach service industry has been pioneered by the private operators since the operation of the first bus service company, the Manchester Carriage Company to the current days dominated by private operators such as three largest groups, StageCoach, FirstGroup and Arriva. This industry has always been influenced by the established players. Relevant legislation, such as the Road Traffic Act 1950, The Transport Acts 1980 and 1985 or the most recent The Bus Services Act 2017 have maintained that position. Based on this context as derived from the literature review, this chapter will discuss the main findings of the literature review and analyse them in relation to the primary research question.

4.2. Main findings

The relevant legislation intended to bring out proper regulation of the industry with the objectives of delivery efficiency in services. However, there are two distinct and opposite aspects to it. On one hand, legislation such as the Road Traffic Act 1930 introduced a license system regulating excessive competition, with the intended aim to bring about a comprehensive network planning and marketing and competitive services to deliver substantial benefits. On the other hand, this did not interfere the established players but weeded out small operators. The effect could still be seen currently where established players, such as the British Electric Traction and Trilling, the National Express or Stagecoach ‘Megabus’, dominate or compete in the bus industry, and there is a decline of the smaller independent operators. Nationalisation pursuit by the government favoured the private operations.

4.2.1. Deregulation and service efficiency

Similarly, legislative intervention in the form of deregulation through the Transport Act 1980 and 1985 brought more concretisation of the role of the established private layers. Based on the rationale of efficiency, these laws shifted the control of the bus and coach services towards the hands of the private players, which led to the decline of the service integrity. For example, the Transport Act 1985 allowed government bus services being sold to the management and employees, and deregulation of all bus services, except in London and Northern Ireland. As such, this privatisation changed the landscape for public transport operations and planning. As a result, deregulation seems to have failed the purpose of efficiency. Deregulation declined affordability and supply of services, fragmented the public transport system, reduced accessibility to bus services (outside London) and ridership declined outside major cities with the contest for bus services occurring in the marketplace; increased costs and subsidies have increased since 2000; and increased on travelling costs of buses, coaches and taxis by 131%. Thus, the bus and coach services became under the manipulation and domination by large companies. Even London that is governed by the municipality is operated through franchising. The smaller operators are deterred from joining the competition due to the procedures of the license system. Thus, only the three largest groups (StageCoach, FirstGroup and Arriva) represent over 70 percent of the local bus market covering rural, interurban and urban services and local authority bus fleets.

4.2.3. Fragmented system and passenger’s benefits

The Impact Assessment 2015 regarding the Bus Services Bill highlighted the issues with the bus services. Its finding demonstrated the fragmented nature of the services. There was absence of centralised sources of ticketing information and effective provision regarding collection of fares data. This affected the passengers’ decision regarding a comparative pricing decision. Similarly, due to a lack of a statutory obligation, there was a lack of sharing punctuality data between the operators that affected real time information to passengers about the services. Alston, Khawaja and Riddell (2021) of the Center for human rights and global justice wrote that privatisation outside London, Scotland, and Wales made the service expensive, unreliable, and dysfunctional. Philip Alston is a former UN Special Rapporteur. She criticised that national bus strategy for England offers ineffective half measures. Their report (2021) stated that the costly, fragmented, and inadequate bus service have caused loss of jobs and benefits for many people; barriers to access healthcare, education, and food and utilities, and connectivity challenges affecting relations with friends and family. Similar findings were found in the 2017-2019 session report of the Transport Committee, House of Commons. They argued that the overall result is the fragmented services; declining routes, frequency, reliability, ridership, and coverage; inefficient competition; poor information; and costly fares. The literature review has found similar results of the legislative or regulatory intervention. The Office of Fair Trading in 2010 found deregulation to have caused monopoly allowing a limited competition, where, for instance, a single operator serves non-corridor routes, or a particular operator supplying most of the services consolidates depot ownership in large regions. Hutton (2013) also pointed out the absence of direct competition where many local markets were highly concentrated geographically. The short-lived rivalry deters new entrants, where major operators such as National Express, dominated the market leading to decline of smaller independent operators, but emergence of only other large groups such as Stagecoach ‘Megabus’ in 2003. The competition was more on the routes rather than the fares, which would have delivered quality, affordable services. The exclusive approach, thus, caused fare price rise and decline in the quality of the services.

4.2.4. Same challenges – Old and Now

The challenges are not new. The literature review covered studies from 1985 until recently and have consistently found the negative impact of privatisation or deregulation. In addition to the above-mentioned literature, the literature review also referred to Cross and Kilvington (1985), Foster (1985), Gwilliam, Nash and Mackie (1985), report by Butcher (2010), Morris and colleagues (2005), and Bayliss and her colleagues (2021) among others. Even though the relevant regulation intended to liberate the bus service industry by removing restrictions on entry, competitive and deregulated public transport services. This gave the consumer only short‐term benefits and hence, dissatisfaction. The lack of regulatory control exercised by the local government also caused a rapid market consolidation, which resulted to operators making profit but delivering inequality, poverty, and lack of quality services. Similarly to the report by Alston, Khawaja and Riddell (2021), literature review also found that low-income households cannot access mass ownership of or the bus and coach services, as the costly services excluded them. Such adverse social outcomes demonstrate the failure of the political initiatives. The fragmented system represents a defective accessibility planning, an administrative challenge, a lack of specific role of the local authorities, and a lack of a collective and equitable services, which has deteriorated the services resulted to social exclusion.

4.2.5. Recent regulatory developments and (non)impact

Recent regulatory developments have touched upon the institutional challenges, particularly the varying availability and quality of information concerning bus schedules, routes and stops. The Department of Transport, ‘Bus open data implementation guide’ 2020 provides that the primary demand of the passengers is to have access to a more centralised sources of information regarding bus times, routes and fares. The Bus Services Act 2017 aims to address these challenges regarding publication of information. The Bus Services Act 2017 empowered the local authorities with. the objectives of delivering reliable and innovative bus service to more people. For example, it has the new ticketing powers to ease passengers to use buses, better fare, routes and timetables and modes of transports. There is also the 2020 the Public Service Vehicles (Open Data) (England) Regulations. Accordingly, local bus operators must publish data about their services including the timetable, fares, real time vehicle location and punctuality. The Bus Services Act 2017 required publication of the location and simple fares; punctuality data; and complex fares data by 7 January 2023. The new regulatory developments seem to be unable to curb the bus crisis. This is demonstrated in the comparative study conducted by the Center for human rights and global justice in July 2021 by referring to the 1984 ‘Buses White Paper’ by the Department of Transport, Scottish Office, Welsh Office, Buses, and the 2021 ‘National Bus Strategy For England’ by the Department for Transport. The former represented that the bus deregulation would bring competition that will deliver lower fares, new services and more passengers. However, the latter found that the services have become unstable and confusing with lower quality, but higher fares. The former stated that there would be more traveller. However, the latter found a decline in the bus services, which is also found in the literature review. Literature review found that the Act of 2017 continued the commercial operators and not local authorities to provide bus services, where even the local authorities cannot set up competing municipal bus companies and allow the operators to operate into and out of the franchised area. This goes against the intention of the 1980s deregulation, as stated by the White paper, to offer alternative travels. Currently, daily bus services are not accessible to many communities. The former stated that competition was to bring pressure to keep prices down. However, the later found that the fares have risen to 403% since 1987. This has also been found by the literature review. The free market initially intended did not result in a quicker response than a regulated system as expected. It has led to confusing services with a non-centralised ticketing system. The transfer of the public transport system has led to more commercialisation, which cannot serve the community. The informal measures as were adopted have not led to few incentives for operators to work collectively. This aligns with literature review findings where Schaaffkamp (2014) argued that the partnership contracts are ineffective in creating and growing sufficient public transport market share and the tendered contracts do not equivalently provide for both stringer incentives to reduce costs as well as to motivate operators to invest in passengers and to expand market share.

4.2.6. Service (Non) Competitiveness

The current situation of the bus services industry cannot be stated to be delivering a competitive service in terms of affordability and accessibility. The legislative intervention so far does not seem to have changed the structure of control, ownership and management. The literature findings and the statistics, as shown here so far, have been showing the continuous dominance of the established private players with some level of public-private partnerships. Literature review has found an underperformance of the bus; deterioration of the services and fragmented regulation and service provisions; and social injustice or social exclusion. Hence, Bowman and colleagues (2014) argument privatisation and deregulation are not serving national welfare interests. A basic research confining the period since the passing of the 2017 Act points towards the indication that the deregulation mechanism has failed. In the 12 months to March 2020, before Covid 19 pandemic, there were 2bn bus journeys outside the capital, which represents a decline of a fifth from levels over a decade ago. This is 45% lower than before deregulation. This is the same situation as was in earlier times with the result that the enhanced partnerships are ineffective in terms of services and bus use, a lack of a more centralised planning to cap and simplify cap fares, and a lack of priority on bus lanes. The system is still fragmented and complex. The negative impact, however, could not be seen in London that showed a jumped of 80% in under four decades. This also means that the private operators are investing and focussing in the city areas cutting out peripheral services, and the deregulation did not impact London, which is governed by the municipality through franchising.

4.2.7. Funding and incentives

The literature review cited the 2021 Local Government Association report that stated that funding is the main challenge against the delivery of local public transport ambitions. The funding on local transport is stated to be reduced by 40% over the last decade. In. terms of providing incentives for the operators, the informal measures, which is deregulation, have not provided any sufficient incentives for operators to work collectively. Even the contractual arrangements could not create sufficient public transport market share as they were more focussed on reducing costs than motivating operators to invest in passengers. The Act of 2017, which was intended to provide the necessary incentives, did not yield the desired results. Hayfield (2021) stated that the bus funding models in other European countries are far more comprehensive and effective than the UK model. He stated that Sweden, Germany and Denmark devote significant funding to their electric bus market. Denmark is ahead as having the most zero-emission buses on European roads with 78% of the buses are electric. Germany has invested €1.25 billion into electric buses. The UK has also announced the Bus Back Better initiative to provide £3bn to improve the bus services. It has also pledged to introduce 4,000 new electric or hydrogen buses for the country’s roads. The bus operators have also invested over £1.3bn in cleaner buses. However, the criticism is that the initiative lacks a guaranteed national funding to enhance the performance of the bus service sector and to create greener fleets. There is already a £700m annual funding gap before the pandemic outbreak. However, in terms of the greener fleets’ agenda, the operators have taken actionable measures. For example, First Bus and Stagecoach have announced a target for a zero-emissions bus fleet. Battery manufacturer BYD and bus manufacturer Alexander Dennis have supplied National Express 29 electric double decker buses.

4.3. Conclusion

The informal set up of the bus and coach service system aimed for a free market allowing competition in the market to increase efficiency and provide better accessibility and affordability. However, it has produced an adverse result negatively impacting the bus service system and the passengers and the society at large. Firstly, the control and management of the bus and coach services is under the dominance of the established private players, which do not seem to allow emergence of smaller players. This affects the purposes of competition, which has adversely affected the price and cost of travelling. Secondly, the concentration of the established players is in major traffic areas, particularly cities excluded many areas falling outside the cities. The high costs and this exclusion have resulted in social exclusion implicating human rights concerns. Thirdly, the fragmented service system has led to a non-integrated ticketing, fare, timetable and route systems. This has resulted in a confusing service set up indifferent to and demotivating the passengers. The challenges since the 1980 deregulation have remained despite the later legislation to regulate the bus service industry. One could still see the public transport services is not open to competition or regulation, delivering only short‐term benefits; rapid consolidation with certain private players that are more focussed on profit than addressing the issues of inequal access; lack of quality; adverse social outcomes; and most important deteriorating equitable services. The same old problems are still existing despite newer legislative intervention, including the Bus Services Act 2017 and the 2020 Public Service Vehicles (Open Data) (England) Regulations. The lack of funding and incentives of operators is also enhancing the problem.

Chapter 5 - Conclusion

This research started with the understanding that bus and coach services sector has been driven and dominated by established operators. The first public bus service and the subsequent increase in competition, which was led by the private players and the decrease in competition then all lead to this understanding. The research problem and question focussed on this aspect with the understanding that private operators, especially the established players play the key role in the bus and service provision, including impacting the regulation and related decision making process. With this understanding, the research proceeded the study to explore in detail the events and developments regarding the legislative events concerning bus and coach service provision and its regulation. The discussion of deregulation, the influence of established operators and their impact on the services formed the substance of this study. These three elements represent a complex dynamic between these factors in understanding more specifically the impact of the regulation and the operation of the bus and coach services. The literature of Dudley and Richardson (2004) Sutton (2013, 2015), Butcher (2010) and White (2018) among others depicted the change in the bus service industry due to deregulation evidencing that the policy changes brought about in terms of privatisation and liberalisation to increase competitiveness did not bring favourable services to the users of the services. For instance, the ability of the operators to change the time tables and bus stops positions without consulting is one practice that affects the quality of services. The promotion of privatisation by the Act of 1985 pushing the sale of national bus company subsidiaries to the private sector is another instance where bus service is affected, particularly in terms of fare rate and connectivity to areas that do not commercially favour the operators. This research has found a multilevel of interaction of many elements that define the bus and service industry. For instance, this research suggests a link between the fixation of rates and routes and commercial goals of the operators. Literature of White (2018), Rye and Wretstrand (2014), and White (2018) among other evidence this aspect. For instance, this research has suggested that the operation of the bus services is firmly established and controlled by the private players, StageCoach, FirstGroup and Arriva. Regulations have not so far impact this position and the practices of route and rates and other decision-making process seem to have not been impacted. For instance, the 2000 and 2008 Acts did not lead to franchising schemes outside London. It is influenced by the lower profit margin in franchised schemes than in a deregulated area. Thus, deregulation has maintained the system favourable to the discretion of the established players, which is an informal set up allowing them to determine the pricing, service levels, and level of risks that commercially suit their bus and coach operation. Based on the findings, it may be appropriate to derive that a less regulated, formal system suits the operation of the service and better yet the commercial objectives of the operators. This forms the basis for constructing the research question. Accordingly, the research attempted to understand the aspects of the relevant authorities and stakeholders in this industry and whether or not they influence or are impacted by the relevant legislation. Thus, the study critically analysed the relevant regulations and legislation to determine the economic and operational efficiency of the bus and coach service industry. While addressing the research question, the research has found some major themes or pattern. Firstly, there seems to be a close inter-link between the monopoly, which causes increase consolidation of privatisation and increasing price rise. The 2010 report of the Office of Fair Trading, the 2011 report of the Competition Commission, and the literature of Hutton (2013) present this aspect. This study has found that operators adopt a tactics to consolidate its market position in the form of retaining and controlling the routes and supporting practices that are commercially favourable to them and also deter competitions or new entrants. For instance, a single operator serving non-corridor routes; consolidation of depot ownership in large regions by a particular operator that supplies most of the services; and strategically deploying numerous buses to deter new entrants are examples of tactics to exclude other operators. The 2011 report of the Competition Commission also evidences these tactics. Highly concentrated local markets, which were found in many, deterred direct competition. There competition or rivalry is short lived, which means new entrants cannot challenged the established players.

The discussion of the theme above leads to the second observation. The findings of the link mentioned above means that significant benefits were not delivered to the users because of the lack of direct competition. The bus service operation seems to be territorial where market is segregated. Because of such segregated and consolidation, the control of fares is also with the operators that control a particular geography. Even though Hutton (2011) argued that fares had little effect on their use of buses, which may probably be appropriate for those users that do not belong to lower income households, this research has also found literatures that show that households belonging to lower-income groups do not have access to better services in terms of affordability. This aspect is shown in literatures by Bayliss and her colleagues (2021), Mackett and Thoreau (2015) , Power (2012), Bayliss and colleagues (2021) and Lucas (2004). The affordability issue and lack of better quality services have somehow contributed to social exclusion and inequality, where profit-oriented services exclude consideration of offering services benefit to taxpaying public and that cost-barrier could actually deprived users from low-income households from accessing healthy food, healthcare and recreation facilities due to inability to user bus services that are costly. Thirdly, the current study has found a fragmented service industry where benefit of the bus services is not available or accessible to all the users, particularly to those who cannot afford costly fares, living outside London or and outside major cities. The fragmentation of the services is not just that it is not accessible to many, but also that the services is not provided centrally. This is evidenced by an absence of a more centralised sources of information regarding bus times, routes and fares, and a centralised ticketing system. Thus, the fragmented and complex system has resulted to fares that are not capped; a lack of regulating issues of consolidation of bus routes and services to a few operators; and inability to extend the investment and focus of the operators beyond the city areas to include peripheral services. The research has found that the fragmented industry has ultimately result to services being deteriorated in terms of affordability and of decreased users of the services, which demonstrates the failure of or the lack of policy initiatives to address the main cause of the problem, which is monopoly over the essential services. Fourthly, the research has found that there has been a systematic retention of the informal bus service system. The research findings have suggested a gap between the objectives and the implementation measures, which shows that the informal or deregulated system is the most preferred or suitable system. This may also serve as an evidence of the defective accessibility planning. The lesser involvement of the local authorities is a result of the deregulation, which may have resulted to the system that is not centralised. Determining of services based on geography may be the result of the informal system, which do not provide local specific services. The research finding suggest that even the recent policy changes, including those brought about by the Bus Services Act 2017 have not disrupted the informal system. Even though the Act of 2017 attempts to foster a stronger partnership with private operators and build a franchisee system, and also regulate ticketing, fare and timetable system, it is faced with adminstrative challenges and still gives leverages to private players deterring competition from the local authorities themselves. For instance, there has been challenges for some local authorities to to proceed with the partnership arrangement. Further, local authorities cannot set up any new municipal bus companies competing for franchised services while still allowing commercial operators to operate into and out of the franchised area. Further problem is in the form of cut in funding, lack of incentives for operators regarding cross-subsidies or coordination amongst themselves or with local authorities.

To reiterate, the research limitation has been the lack of primary data. The area of this research is a broad subject. If only primary data were available, it would to a great extent validate the research aims and objectives. This research has adopted a multilateral analysis of the research questions, from the aspect of impact of deregulation on the competition, the challenges in existing legislative framework in relevance to the bus and services available to the public, and the challenges faced by service users. If only adequate statistical data were available, there would have been a substantive review of the impact of the regulation of both the operation and the services of the bus and coach services. This area of limitation, thus, serves as a potential opportunity for further or future research. Further research could involve a broad range of primary data, collected from participants who can be: i) groups as service users that can be further sub-categorised as those in the metro areas and those in non-metros areas; ii) representatives of small operators and/or bus and coach drivers and service managers, concerning their access to the types of routes, the number of users, revenues earned, and impact of deregulation or the competition from established players; iii) representatives of established operators and/or bus and coach drivers and service managers, concerning their access to the types of routes, the number of users, revenues earned, and impact of deregulation or the competition from established players; iv) representatives of local authorities concerning decision making related to bus routes, time tables, and their allotment to gauge the level of competition and factors influencing decision making.

5.1. Recommendation

The research recommendation is derived from the research findings and limitations. Based on the research findings, it could be stated that unless an integrated and centralised system is brought about, a regulated bus service system cannot be possible. The 2017 Act policy measures provide some potential with the involvement of the local authorities regarding a centralised system of routes, fares cap, timetables and accessibility. Based on certain aspects of this and challenges found in the current service system, this research would attempt to make some recommendations that might offer help in future policy decision-making process. Firstly, recognition should be given to the benefits and service operation of the established players. The London bus operation is a good example that could be followed as a format in other areas facing challenges. For example, the management of the operation, the types of users, the routes determination, fares practices and the quality of the services could be studied to formulate a strategy regarding operation of an efficient bus services. This means that the positive or efficient aspect of the service must be retained. Then, areas that need regulation or better involvement of the local authorities, may be based on the powers as designated by the 2017 Act, could be identified and regulated through a stricter, centralised system. For instance, fare is one area that needs regulation in terms of capping it. The local authorities can introduce a system linking competitive pricing (lower fares) with the grant of best suitable routes, time tables and other such measures. This could address the incentives issues where the grant is the incentive to those operators that provide the most competitive fares. If the competitive pricing based plan does not work, which ever operators that provide a better quality service and with most favourable routes and timetable could be subject to a percentage tax, which can be used to address the issue of the lack of incentives for operatives identified in the research. To reiterate Albalate, Bel and Calzada (2011), public and private bus operators in addition to regulation of concessionaires can generate incentives amongst the players to promote services efficiency and quality. The first recommendation is align with their view regarding there competitive bidding that increases the regulator’s bargaining power. This leads to the second recommendation is regarding formulation of an incentives generating system. The data from all the operators or routes specific data should be consolidated and centralised. The data can be categorised based on connectivity between places that have maximum traffic, connectivity involving non-city area, the route patterns of the operators, the fares system, time table and ticketing system. A study can be conducted to analyse the data with. the purpose of identifying the patterns of operators, regarding services and other items mentioned above related to those in the metros, non-,metros, areas of low income households, high traffic routes, quantity of users, user types based on capacity to pay the fares, etc. Then, formulate the incentives. For established players specific to the most concentrated area, the above mentioned incentive scheme could be followed. For those operators that would be designated to areas where low-income households are concentrated or to users belonging to low-income households, the operators could be given incentives and coordination support from the local authorities. Similar plan could be adopted for those operators that could provide peripheral services or connect areas outside city limits. The formulation of incentives above aligns with what Gwilliam, Nash and Mackie (1985) recommended for a competition for licenses that do not disrupt competition on the road. The franchising system, as provided by the 2017 Act should be made more comprehensive. Gwilliam, Nash and Mackie recommended franchising the good and bad routes with a transparent cross-subsidy.

To conclude, the bus and coaching services should be user-oriented. At the same time, it should also incentivised bus operators. The recommendations aim to build a nexus between the government and private operators that is enforceable through the regulation could bring a formal setting that is also flexible enough to incentivise the operation. They may enable the government to intervene the monopolistic practices in the bus and coach service industry. It The government may attempt to generate incentives as well as to invest funding to break this monopoly and offer better and more accessible services. If appropriate measures are taken, there will be increase in bus patronage and gain in commercial bus services.

5.2. Self-reflection

The researcher started with the attempt to understand whether there was any form of regulation of the bus and service industry when it all started. In due course, the researcher understood the dynamics between the private operators and the role of the government regarding the bus and coach services. The researcher has built an understanding and a belief based on such understanding that, firstly, the role of private bus operators cannot be strictly subservient to any regulatory control; secondly, that the established private operators (and are more capable – example London area) shape the regulation and the service provisions; and thirdly, that the determination of the current and next course of action in terms of the service provisions is shape by what and how the established players determine. In the course of the research, the researcher has found that the bus and service provision is not merely about offering the services to the public in general, but also about the existence and development of operation. This means that there should be services available to the users and at the same time, the operators’ business and their business objectives should also be developed in a commercial manner. In this manner, the researcher has found that the research question encompasses the operational, commercial, economically, sociological and regulatory aspects. The research subject encompasses a broad range of perspectives. Thus, the researcher achieved an understanding while conducting the research that the subject matter of research acts both as a constraint for the research as well as an larger opportunity to conducted a substantive research involving potentially a large amount of primary data. Thus, if only primary data were available, this research could have been able to provide some level of comprehensiveness to the research findings. This serves as the final belief of the research that in a multi-dimensional research study, primary data holds a crucial role to develop an in-depth understanding of a research question.

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