HAMPSHIRE COUNTY COUNCIL

ENVIRONMENT AND TRANSPORTATION ITEM 9c

SELECT COMMITTEE

2 OCTOBER 2008

SCRUTINY: TRANSPORT IN THE COMMUNITY

Responses and follow-up to recommendations for Passenger Transport Group dated July 2008

Recommendation C That the HCC Passenger Transport Group report to the Environment and Transportation Select Committee on progress with increasing competition for bus tenders through smaller tender areas six months after the publication of this report

PTG has already begun this work. The Romsey and Waterside tendering areas that have traditionally been tendered as one area are currently going through the tender process as two separate networks. The aim is to break down the work into smaller areas which may help to attract new operators to bid for work.

Background

There are 310 local bus services in Hampshire. The County Council financially supports 200 bus services carrying 5 million passengers at a cost of £6.5 million a year. The support may vary from particular journeys to complete services which would not run as they do without County funding but are provided to get people to work, school or college, health trips or shopping, especially from Hampshire's more rural areas.

In percentage terms, the County Council provides around 28% of Hampshire's bus services with just over 70% operating without subsidy.

All the bus services in Hampshire are operated by commercial companies and supported bus services are awarded through competitive tender every four years.

In recent years contracts for local bus services in Hampshire have been divided into 10 areas based on geographical areas for tender purposes and have been renewed on a four year rolling programme.

An advantage of larger tender areas is that services on adjoining routes can be interworked allowing bus companies to gain economies so giving them the ability to pass on these savings in lower prices to the County Council. A disadvantage of larger areas is that these favour the larger bus companies which are able to offer combination bids for all or most of the routes in an area. This can work against a smaller operator which only has the resources to bid for one or two routes.

Progress to date

In the interests of increasing competition for local bus tenders and encouraging smaller local operators to bid for tenders the first of the local contract areas due for retendering has been subdivided both geographically and by area of work.

The Romsey and Waterside contract area which was due for retendering in May 2008 as part of the four year programme was divided into three areas:

To further encourage operators to bid for services in more than one area - they might not have the staff time or vehicle resources to bid in several areas at once - the dates were separated as follows:

The results to date have been encouraging in what was potentially a more challenging area now that Marchwood Motorways, Solent Blue Line and Wilts & Dorset which were previously under separate ownership are now all part of the Go Ahead group and would not be expected to compete against each other.

Romsey Local Bus Tenders

Bids were received from three companies and although underlying tender prices rose significantly against a background of rising costs, especially fuel and a withdrawal of funding by Southampton City Council, Stagecoach bid strongly for services previously operated by Wilts & Dorset enabling economies to be kept to a minimum and limited the final increased cost to the County Council.

Totton and Waterside Tenders for buses mainly used by scholars

Bids were received from four companies for services previously operated by Solent Blue Line and Wilts & Dorset. A competitive bid from First, which had not previously operated tenders in the district, allowed the introduction of yellow school buses and, combined with a price reduction from Wilts & Dorset, produced a budget saving for the County Council.

Totton and Waterside Local Bus Tenders

Tender support in the area was substantially increased in February 2008 when the incumbent operator, Solent Blue Line, deregistered a number of services. Bids were received from three companies and although individual tender prices rose sharply necessitating some economies, a combination bid from Solent Blue Line allowed the existing network to be largely retained with a modest saving to Hampshire.

Conclusion

The results for local bus tenders in Totton and Waterside show that in some circumstances, a combination bid from an established bus operator may still offer the best option for the County Council, nonetheless the modest saving here, the larger saving for the Totton and Waterside services used by children and the introduction of new operators, albeit large operators established elsewhere, has shown the value of the introduction of smaller tender areas.

9437/PS