Bus deregulation in Great Britain

Bus deregulation in Great Britain came into force on 26 October 1986, as part of the Transport Act 1985.

The 'Buses' White Paper (under the Conservative government of Margaret Thatcher) was the basis of the Transport Act 1985, which provided for the deregulation of local bus services in the whole of the United Kingdom except for Northern Ireland and Greater London. It proposed the abolition of road service licensing and allowed for the introduction of competition on local bus services for the first time since the 1930s.

Two kinds of bus service can be provided: commercial and subsidised. Any bus operator can run whatever commercial services it wants to as long as it gives 56 days notice of an introduction of a new service, withdrawal of a service or timetable changes. Commercial services are those provided without any subsidy (except for the provision of concessionary fares and the mileage-based subsidy which offsets most fuel duty) and there are no restrictions on fares.

There is no need for an operator to cross-subsidise services under deregulation. Cross-subsidy (where the profits from better paying services are used to pay for unprofitable routes) was an essential part of the previous regulated system. Despite this, operators sometimes cross-subsidise to maintain a network at all times of the day so to keep customer loyalty or so to maintain the attractiveness of that company's travelcard (one which is only valid on that operator).

If there are gaps in the commercial bus network, local authorities (in shire counties) and PTEs (in metropolitan areas) are able to design bus services which bus operators can be paid to operate. These are routes which the local authority or PTE considers as socially necessary, but are not commercially viable. The fares, routes and times of these subsidised services are set by the local authority or PTE. However, local authorities and PTEs are normally required to seek competitive tenders for these services.

Subsidised services in urban areas (also known as tendered services) are often evening, early morning or Sunday journeys on routes which are commercial during the day on Monday to Saturday. Many rural routes and some urban routes are subsidised at all times of their operation.

Initially, most local authorities made significant savings by seeking tenders for subsidised services, but increased costs in the industry, together with falling patronage, has resulted in increasing bills for subsidy.

The law now allows for 'Quality Partnerships' between local authorities and operators, where an operator agrees to improve a service, in return for infrastructure improvements paid for by the local authority (usually bus lanes or bus stops/shelters). Such partnerships do not normally allow the local authority to set fares or service frequencies.

Effects
Even though the advent of competition has in some places improved service levels and reduced fares, many of the more outlying areas have seen significantly reduced service, especially off-peak. Fares have also increased significantly in some areas, particularly where there are local monopolies. As service levels were declining anyway before 1985, it is not clear whether the reduction is a consequence of deregulation or of other factors such as increasing car ownership. Certainly deregulation has not stopped the decline in bus usage.

Aside from competition on service levels and price, critics have claimed deregulation has caused some undesirable effects. For example, large companies like Stagecoach and FirstGroup can use their considerable buying power to completely take over the market in a region, using services and tactics that are meant to drive out competition rather than serve the customer better. Some areas see several companies running the same services at roughly the same times with the express purpose of drawing customers away from each other. Such "bus wars" often end in the smaller companies ceasing to operate the route, leading to increased patronage of the larger provider. An example of this practice is the lucrative 192 bus route in Manchester where two large companies began a "bus war" in March 2006, leading to complaints of increased traffic congestion and concerns over safety of passengers and pedestrians.

Critics of bus deregulation have pointed out that bus usage has fallen considerably since deregulation (in South Yorkshire, by 70%, although fares were subsidised in this area before 1985) but in London where regulation is still in operation, bus usage has risen by 55% over the same period. This may reflect the unique travel patterns of the capital as well as significant investment in new services and vehicles, but this effect pre-dates the London congestion charge which came into force in 2003; bus usage in London has been rising since 1993.

Supporters of bus regulation however, argue that de-regulation is more cost effective. This is because while the services are in the hands of the operators and are commercially run that this will have no effect on taxpayers. The reasoning behind this is that in London the general public must pay taxes to fund the services for TfL.

Where bus use has increased outside London it has been in areas where the transport policies of the local authorities are well coordinated through Quality Partnerships and where investment in public transport infrastructure, such as bus lanes, is prioritised. Prime examples are in Brighton and Oxford, but also passenger growth has been seen, for example, through Kickstart projects where initial service subsidy leads onto full commercial operation.

Whilst London may have seen a considerable amount of growth over the past few years, Stagecoach have announced that the relaunch of the bus network in Cambridge during late-2001 (branded as Cambridge "Citi") has seen growth of 77% compared to 34% in London from the same time. During the time of the relaunch, Stagecoach and the local authority went through a Quality partnership for the network, this has ensured that the fleet is run by modern low-floor vehicles, that bus priority measures are implemented and that the bus service information has been improved. Stagecoach enjoys a virtual monopoly in Cambridgeshire; the only other major bus operator being local company [Go Whippet]. A further effect was a rise in levels of cycling in areas where bus fares rose significantly.

Bus War
Bus War is a phrase coined to describe intense competition between rival bus companies in an area following bus deregulation in 1986.

In many cases the competition has seen dangerous practices: buses speeding, cutting-up rival operators and jumping red traffic signals were common. Service also suffered as bus passengers were often ignored at stops with low passenger numbers in order to ensure that the bus would reach the more lucrative stops first. In some areas buses would turn around if a queue could be observed in the other direction and they had no passengers. It was also common for drivers to be running buses by radio to sit at stops until the large operator approached before moving off ahead. In some areas bus drivers were offered a cut of the fare-money as an incentive. Timetables at stops largely disappeared as bus companies cut costs. Buses are often timetabled to run minutes apart, it being not uncommon for buses to have a 30 minute service &mdash; consisting of 3 operators running buses 3 minutes apart every half hour. So many buses also cause traffic congestion, and harm the environment, the very thing public transport is trying to prevent.

Large operators such as Stagecoach, often protected their business by introducing their own low-cost operation onto the route in order to squeeze the business of the competitor, or offering discounted tickets on their large bus networks which smaller operators couldn't compete with. In certain circumstances large companies often offer tickets at an unrealistic and uneconomic cost, using their financial muscle to try to out-price the competition.

Despite competition large areas are now virtual monopolies after competition ended, and in general fares rise steeply after the end of a bus war, whilst passenger numbers and drivers wages and service standards fall. London Buses, where the market was not deregulated, has in general seen a rise in passenger numbers, coupled with realistic fares and wages. Scotland has bucked the trend in recent years, but only due to a national concessionary scheme allowing over-60s free bus travel throughout the country.

In certain areas unscrupulous tactics have occurred including driver and passenger intimidation by rival operators, damage to vehicles, deliberate blocking of vehicles at stops to prevent other companies moving off ahead, and running non-timetabled 'phantom buses' ahead of rivals to damage their business.