Stagecoach calls QC scheme ‘fatally compromised’

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Phil Medlicott, Stagecoach North East MD: "This week's decision will have far-reaching implications.”
Phil Medlicott, Stagecoach North East MD: “This week’s decision will have far-reaching implications.”

Managing Director Phil Medlicott slams Nexus for ‘secretly cutting’ 18 new buses out of its proposals

Stagecoach has written to the leaders of theNorth East Combined Authority (NECA), warning that the credibility of a plan by Nexus to introduce a bus contracts scheme in the region is ‘fatally compromised.’

Stagecoach also claimed Nexus has failed to carry out proper consultation with local communities and had ‘moved the goalposts’ by asking the NECA to approve a third set of proposals which people had never been given the chance to comment upon. It also said Nexus had made unrealistic financial assumptions, compounded by what it called a £111m ‘schoolboy accounting error.’

Stagecoach and the region’s other biggest operators, Go North East and Arriva, have instead proposed a partnership package, which includes smartcard multi-operator ticketing and better value fares, commitments for investment in extra buses and new low carbon vehicles, better information, on-board facilities and a formal customer charter.

In contrast, Stagecoach cited analysis by independent economic consultants Oxera which shows that

  • Nexus admits the latest bus contracts proposals could lose North East taxpayers up to £114m, which could see the region’s local authorities having to make further cuts to stretched budgets and public services;
  • Nexus has acknowledged earlier versions of its plans failed to fully meet the five public interest tests required of a bus contracts scheme;
  • The costs and alleged financial benefits of the QCS have been ‘seriously misjudged’; and
  • A ‘basic error’ by Nexus in failing to understand the accounting difference between leased and purchased vehicles means its projected surplus from a bus contracts scheme becomes a £111m deficit.

Phil Medlicott, Managing Director of Stagecoach North East, said: “This week’s decision will have far-reaching implications for communities, taxpayers and the future of people and businesseswho provide bus services in our region. It is crucial the Combined Authority leaders make the right decision.

“Nexus has been unableto demonstrate that the current system of delivering bus services has failed the North East, which has one of the highest levels of bus use and customer satisfaction in the country.

“The fact is that Nexus has now presented three different versions of its proposals, which at every turn have been exposed as having serious and continuing practical and financial flaws. Despite moving the goalposts and spending further taxpayers’ money on consultants; it has not been able to find a way to make the bus contracts case stack up. The credibility of the bus contracts plan is fatally compromised.
“Local communities and stakeholders have also been badly served. Not only have they been provided with an inaccurate picture during the consultation, they have been denied the opportunity to have their say on the latest proposals being considered by NECA.

“For these reasons, we are clear that a decision to proceed with a bus contracts scheme would be irresponsible, damage local communities and their bus services, and put the financial future of taxpayers at risk.

“Instead, we would urge the NECA to listen to the voice of local people and support the strong partnership proposal from the region’s bus operators. It will deliver fast and effective measures to benefit bus customers without the need for any financial risk to be placed on local taxpayers.”

Stagecoach has also claimed that proposals for a bus contracts scheme in Tyne and Wear would not deliver a single extra bus for local people.
It says Nexus has cut 18 buses from the original proposals it put to people in the North East in its original consultation.

Phil Medlicott added: “It is shameful that Nexus has tried to bury bad news and secretly cut the number of buses planned for Tyne and Wear under its latest proposals.

“This is yet more proof of broken promises and clear evidence that passenger improvements are not at the heart of the Nexus proposal. Their plans are about cutting costs and attempting to fill a financial black hole they are partly responsible for creating.
“It has always been clear that the bus contracts scheme would cost taxpayers millions and result in huge upheaval for bus passengers and bus workers in the region – now passengers are not even getting one single extra bus. In contrast, our partnership plans offer dozens of extra buses, plus a host of other improvements at no cost to the North East taxpayers.
“Council leaders must now surely be questioning the credibility of the Nexus plans and see that taxpayers’ money is being bet on a huge financial gamble for no gain.”
“Tyne and Wear has one of the best used bus networks in Britain and amongst the highest passenger satisfaction anywhere in the country. A decision to press ahead with bus contracts could only be for one reason: putting politics before passengers. We would urge the Combined Authority leaders to make the right choice for passengers and taxpayers so we can deliver the real and lasting benefits of our partnership plans.”