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The following press release has also been issued
STAGECOACH CONSULTATION SUBMISSION EXPOSES FLAWS IN NEXUS TYNE AND WEAR BUS CONTRACTS PLAN
- Nexus proposals unaffordable and fail to meet mandatory Government tests
- Independent economists reveal £157m shortfall over 10 yrs in authority plan
- Fares need to rise by 5.3% above inflation every year to make strategy affordable
- Proposals could see bus passenger journeys fall by 83million over a decade
- Partnership expected to deliver more for passengers at less cost to taxpayers
Transport operator Stagecoach today (22 November 2013) submits its full response to proposals by Nexus to introduce bus contracts in Tyne and Wear, exposing how massive flaws in the plan will impact on living standards for bus passengers and taxpayers.
A detailed review by independent
economic experts Oxera of the proposals by the transport authority in
Tyne and Wear has established that the plans are fundamentally
flawed, unaffordable and fail to meet key mandatory Government tests.
It concluded bus operators’ partnership proposals were the better
way forward to improve bus services.
The news comes just a week after
more than 7,000 passengers and bus employees across the region signed
a petition opposing the Nexus proposals. They are concerned about the
impact of the plans on bus fares, council tax bills, bus workers'
jobs and pensions.
Tyne and Wear currently has one
of the best used bus networks in the country, with customer
satisfaction at 85%. Around 90% of the bus network in Tyne and Wear
is provided commercially by bus operators, with Nexus currently
spending £10million a year on direct support for socially necessary
but otherwise unviable services.
Analysis by Oxera has now
revealed that, despite attempts by Nexus to manipulate the business
case for bus contracts, there is a funding shortfall of £157million
over 10 years. The deficit is even after accounting for use of
£78million in contingencies set aside by Nexus.
Oxera has calculated that, for
Nexus’s plans to be affordable, fares would have to rise by 5.3%
above inflation every year. The only other options to close the gap
would be huge council tax rises or cuts to services.
Oxera has found that the level
of fares increases needed to make the bus contracts scheme affordable
would lead to 83million fewer bus trips being made in the region over
a 10-year period than if the current system were to remain in place.
The analysis also shows that Nexus has overestimated the bus
patronage forecast in its proposals by 149million passengers over a
decade.
Stagecoach commissioned Oxera to
provide an independent economic assessment of both the bus contracts
scheme (QCS) from Nexus, and the alternative partnership proposals
(VPA) put forward by the North East Bus Operators’ Association
(NEBOA).
A local transport authority
seeking to introduce a bus contracts scheme must demonstrate that the
scheme will be affordable and will meet five public interest
criteria. This includes its impact on bus use, quality of service,
meeting local transport policies in an economic, efficient and
effective way, as well as the effect on bus operators and people in
the area.
Oxera - which has advised
companies, government departments, competition authorities and
regulators across the world – concluded that the bus contracts
scheme failed on virtually every measure. It also identified "a
number of weaknesses" in the modelling used by Nexus to underpin
its proposals, highlighting inconsistencies, omissions and a lack of
transparency. Nexus had also failed to use the mandatory Government
tests in assessing the case for a contracts scheme.
In an authoritative assessment
of the financial basis of the bus contracts plan, Oxera said “there
are a number of substantial deficiencies in the numerical modelling
undertaken by Nexus, which means that it is not possible to have
confidence in the results”.
Oxera found that Nexus had
understated costs, its economic forecasts were “not consistent with
the historical pattern” and it had also overstated the impact on
school services and tendered bus services of not proceeding with a
bus contracts scheme.
An estimated 2,500 bus drivers - as well as around 680 support and ancillary staff – are employed at 17 different bus operators across Tyne and Wear. Nexus has failed to appreciate the complex pensions and TUPE implications for bus workers, who could face cuts of up to a third in their future pension benefits.
Phil Medlicott, Managing
Director of Stagecoach North East, said: “The Oxera report is a
damning independent analysis of a scheme that has already seen
hundreds of thousands of pounds of public money squandered and not
one single bus improvement put in place.
“It backs up 100% what
customers, bus workers and operators have all said about the Nexus
proposals. These misguided plans would hit living standards for
ordinary people in Tyne and Wear and damage the bus network.
“I
hope the transport authority will now fully understand the widespread
objection to the contracts proposal and instead work in partnership
with bus operators on improvements and investment that we want to
start delivering for people right now.”
Bus
partnerships are in place in most other metropolitan areas in
England, with operators and transport authorities working together to
improve services. In South Yorkshire, the award-winning voluntary
Sheffield Bus Partnership has helped transform bus use since it was
launched in October 2012. Reliability of services is around 99%,
customer satisfaction is up and complaints down by 30%. Recent
figures show adult fare-paying passenger numbers have risen by 14%
compared to last year. Operators have invested millions of pounds in
new greener bus fleets, while the partnership has also secured
additional Government funding. Further investment in Sheffield’s
bus network and roads - including enhanced bus stops, real-time
information and improvements for all traffic at key junctions - will
begin in January 2014.
Bus
operators in Tyne and Wear have proposed a similar comprehensive and
updated package of improvements to services. It would deliver all the
benefits passengers want, without unnecessary costs and delay, and
would save Nexus money.
Under
a proposed partnership with the transport authority, customers would
benefit from:
- smartcard multi-operator ticketing and better value fares.
- commitments on investment in extra buses and new low carbon vehicles.
- better information, on-board facilities, and a formal customer charter
- financial savings for taxpayers.
- a better voice for customers and local communities in their bus network
Oxera found the partnership
proposals were affordable, more likely to boost bus use, improve the
quality of bus services through investment, save public money, and
meet the objectives of the transport authority’s bus strategy in an
economic, efficient and effective way. It concluded:
“The VPA
is a preferred policy option to the QCS, as it results in higher
patronage, lower costs to local taxpayers and lower fare rises”.
The
consultation on the Nexus bus contracts proposals closes today (22
November 2013) and members of Tyne and Wear Integrated Transport
Authority are expected to decide on its preferred way forward in
March 2014.
