Buses: franchising

This note provides information about the policy of bus franchising, how it operates in London and the legislation that exists in England to set up ‘Quality Contracts’, a form of franchising. It also provides information on statutory Quality Partnerships.

The local bus market in England was deregulated in the 1980s. This involved local authorities being forced to sell the municipal bus companies that they owned and opening the market to commercial operators. Ever since then there has been an ongoing debate about whether deregulation has delivered more and better bus services in local areas.

Those who contend that deregulation has been unsuccessful (and in some cases damaging) have continually called for local authorities to be given powers to operate franchised services, much like what happens in London. The Labour Government legislated to give local authorities franchising-like powers to implement what are known as Quality Contract Schemes. No local authority has ever used these powers, or even got to the point of making a formal application to the Secretary of State to use them, though there are constantly stories in the press that one or more area is about to do so.

Alongside the provisions for Quality Contracts, the Labour Government also legislated for statutory Quality Partnerships. This is an arrangement whereby local authorities and bus companies enter into mutual agreements to provide services and infrastructure. These have been more successful.

In December 2011 the Competition Commission published a report into the local bus market in England, which rejected mandatory franchising as a solution to the problems in that market. The Coalition Government published its proposals for the future of the bus industry, including its response to the Competition Commission, in a March 2012 green paper.

As bus policy is devolved, this paper focuses only on policy in England.