DfT launches bus market review

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The DfT has launched a review of England’s bus market outside London as more parts of the country express interest in franchising.

Six key questions were identified by the DfT:

  • Under what circumstances would a change in the bus market operating model be a better option for passengers in local communities and deliver better value for money for the taxpayers?
  • Are there likely good candidate places where these circumstances occur, and what are their characteristics?
  • How can we best assess the costs and benefits of a different operating model in a local bus market, so that we have an available framework to assess the value for money of a different operating model robustly, in specific, localised bus markets, for conurbations that may be considering it in the future?
  • What are the commercial consequences of changes to the bus market driven by the desire of conurbations to sacrifice competition for simplified fares, smart ticketing and greater service co-ordination?
  • Is a different operating model likely to lead to reduced margins and, if so, who would benefit and what scope is there to recycle the savings?
  • What would the English bus market outside the conurbations have to look like to preserve adequate coverage and see continued investment in quality services?

The department has appointed consultant KPMG to assist the work, and the project will inform the 2015 spending review. KPMG has been asked to have regard to the ongoing review of Bus Service Operators’ Grant (BSOG).

KPMG expects to supply ministers with a progress report on the market study in early March with a final report to be submitted by the end of June, after May’s general election.