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MCAs could be invited to manage bus recovery funding


05 February 2021

Mayoral combined authorities may be given responsibility for managing the DfT’s new Covid-19 bus recovery grant in their areas.

The DfT’s bus strategy, expected to be published this month, is likely to propose bus recovery partnerships as a way of transitioning the industry back to more normal arrangements as Covid lockdown restrictions ease. 

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Recovery partnerships are expected to be supported by a  new grant that will replace the existing Covid-19 Bus Service Support Grant (CBSSG). CBSSG can be withdrawn at eight weeks’ notice.  

In a report to last week’s West of England Combined Authority meeting, Peter Mann, WECA’s head of strategic transport integration, said: “Our current understanding is that the Government will propose a transitional arrangement (a bus recovery partnership) as a bridge from the current emergency support to a longer-term delivery model such as an Enhanced Partnership. 

“This may involve an offer to devolve Government funding to mayoral combined authorities in the short to medium term,  although this would not cover all Government funding because Bus Service Operators Grant (BSOG) is unlikely to be included. Authorities that have an adopted bus strategy may be prioritised.

“In the event that the Government invites WECA to take over the direct funding of bus services with an appropriate offer of funding and powers, a rapid decision is likely to be required,” said Mann. WECA’s chief executive will take the decision in consultation with the  chief executives of the three constituent councils.

Mann said the Government’s continuing support for the bus industry was likely to be tapered to match a predicted recovery in demand. “Choices will need to be made over which bus services to support with the limited funding available,” he said.

WECA is exploring how it can work with neighbouring North Somerset Council in the recovery phase. “The Government has indicated informally that it recognises the need to consider the West of England sub-region as a single unit,” said Mann.  “Informal discussions with bus operators on the shape of a possible future partnership have included officers from North Somerset Council.” 

WECA currently provides  financial support for 80 bus services, which carry ten per cent of the area’s bus patronage. Forty-four contracts are due to expire on 28 February and nine on 31 August. Those expiring in February will be extended to August, subject to operator agreement.  

“We are seeking approval to carry out a procurement process for new one-year contracts (with optional one-year extensions) to start on 1 September,” said Mann.

WECA is weighing up whether to award tenders on a gross cost basis, whereby the combined authority retains fare revenue, or on a minimum subsidy basis, whereby revenue is retained by the operator. 

“Our perception of the market at the present time is that operators have become more risk-averse,” said Mann. “Elsewhere in the country, recent tenders for new like-for-like [minimum subsidy] bus contracts have been up to 30 per cent higher because operators are taking a pessimistic view of the recovery of demand – and therefore fares revenue.” 

WECA’s contracts for park & ride services in Bath and Bristol end on 4 September but will be extended for another year, subject to operator agreement.

“Patronage levels on P&R services did not recover to more than 40 per cent of pre-Covid levels prior to the second national lockdown, so officers consider that re-tendering these contracts at the present time would not give a favourable outcome,” said Mann. 

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