Councils face compensation bill for bus changes

Councils could have to compensate companies if they try introduced franchised buses

The concern has emerged after an attempt to give local authorities in the North-East more control over bus services was rejected today.

The independent board considering the measure found that operators could lose between £85 and £226 million and that the Government should consider whether compensation should be offered as part of such arrangements.

The judgement has been reached as the combined authorities in West and South Yorkshire make moves to introduce London-style bus franchising as part of their devolution discussions with the Government.

Ministers are now being urged to make sure the Government’s proposed Buses Bill protects cash-strapped councils from having to compensate bus companies.

Shadow Transport Secretary Lilian Greenwood said: “The Board’s recommendation that bus operators receive hundreds of millions in compensation from stretched local authorities is a huge blow to the devolution agenda, and the recommendation risks leaving George Osborne unable to deliver one of his major ‘Northern Powerhouse’ commitments.

“It’s now vital that the Government does not cave in to pressure and duck the need to include radical measures in its forthcoming Buses Bill.”

Franchised bus services were part of the devolution deal agreed between South Yorkshire councils and the Treasury last month.

The power to introduce franchised bus services is also one of the requests put forward by West Yorkshire councils in their devolution discussions with the Treasury.

Coun Keith Wakefield, chairman of the West Yorkshire Combined Authority’s transport committee, said: “While we need to look at the specifics of this ruling it appears to reflect the failings of the current legislation that applies to bus services outside of London, which we hope the government will address in its forthcoming Buses Bill.

“With people in West Yorkshire using them to make around 180 million journeys each year, buses are key to the future growth of our economy so it is vital that the new Bill addresses the current legislation’s failings and enable us to develop the reliable, affordable and joined up services passengers tell us they want.

“In West Yorkshire, we have at each stage considered all the options available to us to improve bus services and while the situation is far from perfect, we feel that our open and frank discussions with operators have already achieved improvements including limited fare rises and the introduction of MCard smartcards.”

Laws introduced by the last Labour government gave councils outside London the power to exercise more control over buses through ‘quality bus contracts’.

But the law has been criticised for being unworkable and no area had ever pursued the process until the attempt by North-East councils which was rejected today.

Martin Abrams, from the Campaign for Better Transport, said: “Passengers, communities and businesses want better and more joined up transport networks.

“The Government has made it clear local authorities should deliver this but, as the decision in the North East shows, this is still far too difficult to make it happen.”