DfT commissions report into local bus market

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The Department for Transport (DfT) has commissioned KPMG to study the local bus market in England outside London.

Key findings of the report include:

  • Local bus markets show considerable variation reflecting differences in socio-demographic factors, land use, the relative attractiveness of alternative modes of transport, wider transport policy and government expenditure, as well as the performance of local bus operators;
  • Local authority and bus operator objectives are reasonably well aligned and centred on market growth, but sometimes differences exist between stakeholders on the best way to achieve those objectives;
  • There is a range of policy levers available to government to influence demand and supply in local bus markets. In most instances the policy levers available in de-regulated markets enable local authorities and operators to meet their objectives; and
  • Where there is pressure for market reform, there is a need to carefully consider the impact of interventions on passengers, operators and local authorities. Each local bus market is unique and each requires a tailored approach to help it deliver local objectives.

The report added: “Where de-regulated markets fail to deliver stakeholder objectives, both partnership and franchising approaches can provide an additional set of policy levers to influence market outcomes, especially in areas that need greater integration between infrastructure, traffic management and bus operations. However, the franchising approach provides greater flexibility for authorities to influence market outcomes, subject to budget constraints.

“In many instances the partnership approach works well, providing Local Transport Authorities (LTAs) and operators with a great deal of flexibility to influence the demand and supply of local bus services. What is missing however is the ability of the LTA to incentivise operators to enter into binding agreements where the LTA has limited funds to improve infrastructure and/or improve traffic management, at least in the short term.”