south yorkshire INTEGRATED transport authority

07 JUNE 2012

REPORT OF THE PASSENGER TRANSPORT EXECUTIVE

VISION FOR BUSES IN SOUTH YORKSHIRE

1.PURPOSE OF REPORT

To update the ITA on progress with the differing options for delivery of improved bus services across South Yorkshire and seek approval to move the Sheffield Partnership option to the consultation stage.

2.RECOMMENDATIONS

That the ITA:

2.1notes the progress on Partnerships across the County;

2.2endorses the signing of the Sheffield Heads of Terms Agreement

2.3approves ‘in principle’ the certifying of Qualifying Agreements on corridors where bus service timetables are co-ordinated subject to Schedule 10 Part 2 of the Transport Act 2000 and considers that the Agreements:

a)are in the interest of persons using the local bus services in the ITA’s area; and

b)do not impose restrictions on Operators which are indispensablefor the attainment of securing improvements to local bus services or improving congestion.

2.4notes that Sheffield City Council and SYPTE Officers will be briefing member groups prior to consultation and will seek full Council and ITA approval post consultation and prior to launch.

3.EXECUTIVE SUMMARY

3.1Buses play a key role in supporting economic growth by linking people to key facilities, education and job opportunities. This is particularly relevant in South Yorkshire where there is a dispersed population and relatively low levels of car ownership. This innovative partnership aims to improve the service offer, grow patronage and support economic growth.

3.2Research indicates customers are seeking is an acceptable bus product, namely one that is simple to understand, easy to use, affordable and delivers the right customer experience. The current situation is variable in its delivery of these service attributes and as such hinders people’s ability to use the bus to access employment and training opportunities as well as achieve social inclusion and environmental objectives.

Furthermore the delivery of the bus network is not sufficiently punctual, reliable or stable such that customers choose to use the bus and that patronage in turn grows.

3.3VOLUNTARY PARTNERSHIP OPTION

Having negotiated with the main local Operators, the Voluntary Partnership option appears to have merit by giving Local Authorities more input to ‘specifying services’ with delivery by private suppliers. This paper proposes that we move to consultation on a Voluntary Partnership(Partners are SCC/SYPTE/First/Stagecoach/TM Travel/SCT) and enter into a non-binding Heads of Agreement document covering the following:

  • Work together to improve services, to grow patronage, improve access to support economic growth and encourage modal shift.
  • Provide a stable bus network linked to customer demand with changes (other than minor timings) to be agreed by parties and limited to 3 dates per annum.
  • An affordable, simple to understand ticketing arrangement.
  • Supported by a customer service plan, joint marketing and an information strategy.
  • Agreed minimum standards and progressive improvements to bus specifications.
  • Where bus resource is saved this will be reinvested in the customer offer by agreement.
  • Investment also made by SCC/SYPTE.
  • Measured through agreed KPIs.
  • The duration is a minimum of 5 years from 28 October 2012 with exceptions in extreme circumstances linked to financial or other undermining Partner actions.
  • That the Agreement is subject to competition rules/laws.

In summary therefore the Partnership proposal offers customers a stable network supporting access to employment and training and matching demand to resource more consistently, with plans to introduce simpler and more affordable ticketing, with a better customer offer in terms of both service and delivery. This should lead to patronage growth compared to current negative trends.

3.4QUALITY CONTRACT PROGRESS

Work continues on the Quality Contract option in refining costs, modelling, reducing risks and refining specification. The work shows that this is a realistic option but one which shifts the onus on risk onto the public sector. Work is ongoing in all areas, with the aim of being in a position to help the ITA make a preferred way forward decision by September.

4.BACKGROUND INFORMATION

4.1The differing options for delivery of improved bus services across South Yorkshire was last reported to ITA in July 2011, and in October for the Optio Partnership in Sheffield. At these meetings Members were briefed on the progress under the differing arrangements under which improved bus services might be achieved, namely:

i)Voluntary Partnership Agreements[1](VPA)- where agreement is reached between Operator(s), SYPTE and Council on a package of measures to improve bus satisfaction, introduce stability and affordability and thereby grow patronage. The VPA will set out what the local Transport Authority will provide, and to what standards Operators will provide their services.

ii)Statutory Quality Partnership Schemes (SQPS) - where the Council/SYPTE improve the physical facilities on, or along, the line of a bus route(s) and in turn for using these facilities Bus Operators must meet certain physical attributes in their services.

iii)Quality Contracts (QC) - this option replaces the existing on-street competition with a franchised network option which is put in place, following a tender process. SYPTE specify the franchise but take on associated risk.

iv)Do nothing–This option is not considered in this report but in view of the falling bus patronage across many parts of the County is not considered an option.

4.2At the July 2011 meeting ITA Members noted the improvements made in Barnsley, Doncaster and Rotherham in partnership with local Bus Operators and endorsed that the VPA approach continue to be worked up and be formalised where the opportunity exists.

4.3ITA Members have also approved the implementation of the first two phases of the Voluntary Agreement for Sheffield (Optio Orange and Red), the Certification of the co-ordination of timetables, and in turn endorsed the delivery of a VPA across the whole of the Sheffield area.

4.4In parallel with the VPA option outlined above, ITA Members also endorsed that further preparatory work be undertaken on the Quality Contract option for south Rotherham and Sheffield to better refine the risks and financial sensitivities. The inclusion of the south Rotherham area reflects network risks associated with Olive Grove depot which, if First are unsuccessful in winning a QC franchise, could result in the depot shutting, thereby prejudicing services in south Rotherham.

4.5This paper firstly reports on progress made in partnership with Bus Operators in Barnsley, Doncaster and Rotherham and then goes on to report in more detail on the parallel work in Sheffield, reporting on progress made with both the Voluntary Agreement option and on the alternative Quality Contract Scheme option, and associated issues with each option.

5.PARTNERSHIP PROGRESS TO DATE

5.1 BARNSLEY

A Statutory Quality Partnership Scheme was implemented in May 2010. This covers the Interchange, town centre and A61 (Wakefield Road) but by default captures a very large proportion of the bus services across the borough. This initiative along with the Mi-Card has led to 0.24% growth over the last 12 months (this figure is 1% above the County background trend).

The potential benefits of a supplementary VPA with the major Operator Stagecoach is currently being evaluated with Council Officers.

More detailed scoping and the drafting of the VPA will follow the work which is being undertaken on VPAs for Rotherham (see below).

5.2DONCASTER

An outline Business/Public Interest Test for a QC has been completed and the public were consulted in 2009. The QC was not implemented but is ‘on the shelf’ for potential future use after discussion between Operators and the Mayor.

Following discussions with the Mayor, First havedelivered the majority of their commitments including 100% low-floor bus fleet to the borough,matching Stagecoach in terms of a fully accessible fleet. Whilst SYPTE has held discussions with the Council on the bus offer [the Mayor remains keen to pursue an agenda to open up bus lanes and Doncaster to all road users equally, and expresses concern that his former dialogue with First has gone backwards], there are no plans for the introduction of any formal Partnership at present.

5.3 ROTHERHAM

The potential benefits of bespoke VPAs with the two major Operators are currently being considered along with Council Officersand a comprehensive review of bus service delivery within the borough has been undertaken. Influenced by other decisions in this paper, these VPAs could now cover the whole of the borough. Both Stagecoach and First have offered to enter into separate VPAs.

6.WHY IS INTERVENTION NEEDED IN SHEFFIELD?

6.1As described in the summary section of this paper, the falling bus market in Sheffield needs arresting for the reasons outlined. This is being addressed by developing both the VPA and QC options. In particular SYPTE’s customer complaints and market research show that the main areas of passenger dissatisfaction are:

  • Bus routes and times of operation;
  • Bus quality (including facilities, ability to get a seat and cleanliness);
  • Value for money (including product range, interchange ability, cost and variation in fares across Sheffield), in particular by First customers[2].
  • Wait time at the stop (including punctuality/lateness, reliability and frequency);
  • Driver standards (including driving standards, customer care and failure to stop);

Passenger Focus research (2012) says passengers across South Yorkshirewant to see the following improved:

  • Punctuality of bus 25%
  • More frequent buses 9%
  • Improved driver attitude8%

6.2In Sheffield there is a marked difference between the two main bus operations, these can be characterised as follows:

  • First – the main Operator with around 60% of Sheffield bus services, providing both frequent main road services and a less frequent but comprehensive network penetrating into residential areas. This secondary network is equal to around 40% of their high frequency network. Associated with meeting the costs of funding the more socially necessary services is a lower patronage level, and as a result of this characteristic has maintained higher ticket prices (e.g. First Day Sheffield £4.60). First’s history has been one of struggling to afford its customer offer and profit margins and as a result has repeatedly increased fares and reduced network, both of which have resulted in reputational damage and a failure to put in place a sustainable business model.
  • Stagecoach – As the secondary Operator, offering around 30% of Sheffield’s bus services, Stagecoach operate a predominantly main road network (their lower frequency services equal around 11% of their high frequency network), whilst at the same time offering customers a considerably cheaper travel option (e.g. Sheffield Bus Day Rider £3.40 (Bus and Tram = £3.90)) and carry a passenger volume well in excess of their market share. Stagecoach not only compete on price but quality, have built a solid reputation (when compared to First or Yorkshire Terrier), and have progressively expanded since they entered the marketin late 2005.

The implication of this dynamic is that through providing a better customer offer on the busier main corridors, Stagecoach are growing market share from First and in doing so reducing the cross-subsidy between the better used services and those which are commercial, at a higher fare value, but socially necessary. In an ideal world the high frequency main road services would support a similar level of secondary network, an option possible under a QC, but under the free market the current arrangements place the secondary network at significant risk - a risk which SYPTE does not presently have the funding with which to intervene from either the Tendered Services or other budgets. Therefore, it is in the public’s interest to intervene in the market.

7.VOLUNTARY PARTNERSHIP AGREEMENT OPTION FOR SHEFFIELD

7.1OPTIO ORANGE AND RED

Optio Orange and Red were introduced in Sheffield in July and October 2011 respectively, against a background decline in bus patronage. These pilot schemes have allowed us to trial key elements of partnership, learn lessons for future phases (e.g. consultation) and evidence success. This has led to growth of +1.9% for Orange services (Period 5-10) and +5.16% for Red (Period 8-10), although growth has fallen in 2012 due to weather, holidays and market conditions. As well as co-ordinated timetables, more flexible ticketing, bus investment and marketing, other measures of success contributing to this growth include:

a)Punctuality and reliability are higher than other Sheffield services and are better than achieved by the Optio services during the same 3/6 months in the previous year. There is still work to do to further improve delivery and the Partners are collaborating on this.

b)SYPTE Mystery Shopper audits show higher standards of service than the average across Sheffield or South Yorkshire.

As well as increasing patronage, Optio Orange service users are overall positive about the bus service offer, whereas across Sheffield and South Yorkshire they remain negative overall. The exception to the above is from the Fulwood community who continue to be unhappy with the Optio Orange changes, notwithstanding steps to address or mitigate their concerns.

This work,whilst not addressing the differing market dynamic between First and Stagecoach, did prove collaboration and interavailability of ticketing were achievable, advantages which had previously proven to be elusive through negotiation.

7.2Progress on the Sheffield-wide Partnership proposal has proved to be challenging through the need to address and re-balance the differing Operators’ positions; as well as helping and working with the Operators to understand and ensure compliance with the prevailing legal obligations as regards competition legislation when bringing together proposals covering:

  • Network design and timetable co-ordination.
  • Public Sector and Operator investment in buses and infrastructure to raise quality standards and improve punctuality.
  • To introduce a range of cost attractive fully retailed inter-available tickets.
  • Marketed as a whole with improved information provision.

7.3The current state of play can be described as follows:

i)WP1 – Network

Discussions have resulted in broad agreement on a network at an officer level, based largely around the existing network but with local variation, to reduce the volume of buses where demand does not justify overbussing and increases in frequency on a number of corridors where current service is lower than found in other parts of the City. It was heavily influenced by the Bus Vision consultation undertaken in the summer of 2010. A key element of this Work Package is not only to offer a good bus network better linking people to jobs, training and facilities, but importantly also bringing stability to the market and in doing so making the network easier to understand.

Stagecoach are interested in retaining a network largely based on expanding their existing network, but are open to operate more. To activate a long term sustainable business (with more cost attractive ticketing), First have made clear which parts of the network they wish to retain, a proportion of which they wish to share with other Operators as they are less profitable.

ii)WP2 – Investment

The base fleet and LTP investment is known, Operator investment is still being negotiatedbut the aim is to offer a higher quality bus offer so that customers feel safe and comfortable whilst the service operates reliably and to time.

iii)WP3 – Ticketing

The ticket discussions aimed at introducing a simplified ticket range offering more affordable fares to customers, is centring on improving the multi-operator Travelmaster range of products, with Operators free to maintain their own ranges. The advantages of going through Travelmaster is that it allows more influence over future price rises, encompasses Supertram and other Operators, encourages the move to ‘Smart’ and has a moderating effect on individual Operator price rises/fare levels.

The proposed Travelmaster ticket types is attached as Appendix 1, although Operators remain free to retain their own tickets, negotiations are now progressing on product price and other potential products (for example a transfer single ticket), it is hoped to be able to brief the ITA on this element at the meeting following a Travelmaster Panel meeting scheduled for 31 May 2012. The ITA will recall that the current Travelmaster Sheffield Day Ticket is priced at £5.00.

iv)WP4 – Information & Marketing

It is proposed to jointly agree information and marketing collateral, to help both existing and potential customers know the travel options on offer and understand that is now easier and more cost attractive to use than the bus, but at present work is focusing on branding and consultation activities linked to the possible network and ticket changes. Subject to approval at today’s meeting, it is intended to consult the public and stakeholders on the proposed ticket and network plans as set out in Appendix 2).

v)WP5 & 6 – Intelligence & Management

It is intended that the Partnership is supported by a Legal Agreement. To pave the way for this, a non-binding Heads of Terms document (outlined above) is proposed and the ITA are asked to authorise the Chairman to sign this document.

7.4As already stated above, before a commitment is given to the final Network solution, it is proposed to undertake localised consultation, reflecting learning from Optio Orange in particular. This is proposed to take place June/mid-July. The target implementation date is the 28 October 2012 service change date. It will also be necessary for Sheffield City Council to approve entering into the VPA.

At this stage it will also be essential to apply a bespoke Competition Test to the proposed VPA, which the ITA will need to consider.

7.5The key risks with the VPA option rest with the Operators. The consultation will allow us to gauge public feedback and respond accordingly. This option therefore contains much less risk to the ITA.

7.6NEXT STEPS

Provided the ITA are comfortable with progressing the Partnership option and consultation does not throw up any unresolvable issues, then the intention is to bring a report to the August ITA meeting to agree to enter into the VPA and related documents.