Written evidence submitted by the Human Rights and Privatization Project at the Center for Human Rights and Global Justice, New York University School of Law (BUS0004)

The Human Rights and Privatization Project is dedicated to advancing global understanding of the human rights impacts of privatization around the world. This submission has been prepared by the Project’s Co-directors, Bassam Khawaja and Rebecca Riddell, as well as CHRGJ Faculty Director and former UN Special Rapporteur on extreme poverty and human rights Philip Alston. We commend the Committee on taking up this inquiry and welcome the opportunity to provide input.

This submission reflects the findings of our recent report, “Public Transport, Private Profit: The Human Cost of Privatizing Buses in the United Kingdom,” available at https://bit.ly/3pRjedS

Bus Back Better

Almost four decades of privatization and deregulation have left England with a dysfunctional and expensive bus system that severely impacts people’s lives—including their access to jobs, their ability to participate in their communities, and their rights. The COVID-19 pandemic has exacerbated these issues, while the government’s Bus Back Better strategy has failed to meaningfully change the situation. Almost one year since its launch, the strategy has made almost no meaningful improvement to the bus crisis, funding for buses is wavering, and bus operators are threatening to cut a full third of existing services.[1]

This is almost entirely due to flaws in the strategy itself rather than failures in execution. Although Bus Back Better rightly recognizes that bus services cannot be run on a purely commercial basis without abandoning entire communities, the strategy doubles down on the role of private companies to deliver a public service.[2] It does not address the reasons private companies have failed in the past or meaningfully expand options for public ownership and control. Its marginal reforms, which do not address the structural problems, are already proving inadequate.

Bus Back Better does little more than tinker with the existing system. It neither commits the government to legalizing new municipal bus companies nor removes the severe barriers to achieving bus regulation that local authorities face. It does not address power imbalances between local transportation authorities and bus operators. And it does not impose any obligation on local authorities to provide a minimal service, leaving the core of the deregulated system fully in place. A year later, the government has not simplified procedures for franchising or revisited the ban on new municipal bus services as promised.

Much more decisive change is needed. The COVID-19 pandemic has left bus operators even more dependent on costly public support.[3] Local authority budgets are under enormous strain.[4] And virtually all metrics under the current system—cost, ridership, and coverage—are pointing in the wrong direction.

Challenges Facing England’s Bus System

The UK government imposed an extreme form of privatization and deregulation on the bus sector in England in 1985. Private companies now run the routes largely on the basis of what is profitable. Over the past four decades, this approach has provided a master class in how not to run an essential public service, and left residents with an expensive, unreliable, fragmented, and dysfunctional bus system that is slowly falling apart. Bus operators have prioritized profits and dividends—extracting money from the system—and cut essential routes. Meanwhile, cash-strapped local authorities have been left to plug the gaps at additional public expense. Unsurprisingly, fares have skyrocketed[5] and ridership has plummeted.[6] While the public good has suffered, the private sector has profited handsomely.

Deregulation has left England with a vital public service run almost entirely by the private sector, with no minimum service frequency standards, and no authority responsible for ensuring local buses meet residents’ needs.[7] People interviewed for our report said they had lost jobs, missed medical appointments, been forced out of education, sacrificed food and utilities, and been cut off from friends and family because of an expensive and inadequate bus service. Numerous reports from civil society and official institutions document a system that is broken and at odds with the United Kingdom’s own social and transportation objectives and climate change goals.

The government originally touted deregulation as a way to reverse declining bus use and deliver lower fares and improved service. A 1984 white paper promised that competition would provide an opportunity for “lower fares, new services, more passengers” and “a better service to the passenger at less cost.”[8] But more than three decades later, the promised benefits have not materialized, and the current service is failing by all of these metrics and most others.[9]

The lack of any overall planning or control has resulted in less of a functional bus system and more of a collection of routes that too often do not work for those who need them. Passengers described a broken system, with disappearing routes, lower frequency, poor reliability, falling ridership, limited coverage, inefficient competition, inadequate information, and no real integration. Deregulation has led to a deeply fragmented service, with multiple operators competing in the same areas and sometimes on the same routes, timetables that do not line up between operators or modes of transportation, and endless ticketing options that add needless complication.[10]

Privatization has not delivered a service that provides good value for the money. Private operators’ primary goal is to earn a profit for shareholders, rather than provide the best possible service. Companies extract profits in the form of dividends, which otherwise could be reinvested in the system.[11] They largely choose to run only profitable routes, resulting in cuts or forcing local transport authorities to step in at additional public cost. And far from taking buses off the government books, privatization has left the public on the hook for billions of pounds a year in subsidies.[12]

These failures are not just an inconvenience—they have resulted in serious human rights impacts for those who rely on the bus, including to access work, education, healthcare, and food, and to move out of poverty. This has been especially severe for those in rural areas, older people, women, and people with disabilities. Inadequate transport systems also jeopardize a great many people’s ability to take part in their society and cultural life, such as their ability to visit local community centers, access libraries, attend football matches, and spend time with their families and friends. Because bus services are operated by effectively unaccountable private companies, those impacted often have

little meaningful recourse.

The Way Forward

A new approach is needed, one that provides equitable, reliable, and affordable service for those who need it, guarantees access to human rights, and meets the United Kingdom’s climate goals. The evidence shows that the deregulated system has not been able to provide this, despite significant public subsidy. Maintaining the current system outsources responsibility for a vital public service and prioritizes the preservation of corporate profits over providing the public with a decent bus network.

Public Control

Various forms of regulation, often referred to as franchising in the United Kingdom, can deliver a cohesive bus system built around what passengers need, irrespective of commercial viability. Franchising allows an authority to take public control of the bus network, deciding where and when buses operate, how passengers pay for them, and what service and quality standards apply.[13]

The government in its 2021 national bus strategy for England committed to supporting any local transport authority wishing to access franchise powers “which has the capability and intention to use them at pace to deliver improvements for passengers.”[14] However, the government has not provided the meaningful technical and financial support that authorities sorely need, and significant barriers remain in place. Only Greater Manchester has made significant progress in this direction—and this is due to extraordinary efforts by policymakers and civil society, which cannot be duplicated widely.

The process for taking public control of buses remains complex and difficult, presenting significant barriers that authorities must navigate on their own. Unsurprisingly, none have yet succeeded in doing so.[15] In England, only certain authorities have an automatic right to franchise bus services—all others must apply to the Secretary of State for permission.[16] The initial one-off costs to prepare contracts and purchase depots are sizable,[17] and many authorities don’t have the necessary expertise and need to bring in external resources.[18] They also face lawsuits[19] and aggressive campaigns from private operators.[20]

The current requirements effectively preclude most authorities from taking public control of their buses. If the government is going to support franchising, a new approach is required to ensure that bus regulation becomes not just feasible, but the norm. This should include a clear statement of support for franchising, funding conditioned on this shift, a more simplified franchising process that removes the current barriers and unnecessary bureaucracy, and a government team with the expertise and resources to support local transport authorities, achieve economies of scale, and address legal challenges from commercial vested interests. It will also require greater human and financial resources for local authorities.

Public Ownership

When the UK government privatized buses, it argued that public sector ownership was an obstacle to providing for community needs.[21] However, the hallmarks of public ownership, including control, profit retention, and accountability, makes it precisely well-suited for operating a strong service. Public bus services are common around the world, but their creation was banned by the Transport Act of 1985.[22] It is far past time to lift current restrictions and revisit the potential of publicly owned bus companies.

There is strong evidence that public ownership can dramatically improve service. It would allow local authorities to benefit from area-wide fares, coordinated schedules, reliable service, quality vehicles, and good jobs.[23] And it can provide greater flexibility in a period of rapid change spurred by COVID-19 and the climate crisis.[24]

Public ownership has a proven track record. It is the norm in cities across Europe,[25]and France has seen a strong trend back toward municipal ownership with cities shifting from franchising to public operation in order to cut costs by eliminating private profit margins.[26] Within the United Kingdom, a small number of municipally owned bus operators have performed remarkably well, albeit functioning as private companies without the benefit of a public monopoly.[27] They generally don’t pay out a dividend to their owners and instead reinvest profits into improving service.[28]

The UK government should permit, actively encourage, and provide political and financial backing for the creation of new publicly owned municipal bus operators. This Committee has already called for all local transport authorities to have the option of creating a municipal bus company[29] and the government’s 2021 national bus strategy for England found the ban was “ripe for review.”[30] Maintaining a ban on new public bus companies only entrenches the current dysfunctional system, protects corporate profits, and denies local authorities a powerful tool for creating a better bus service.

Partnerships

Successive UK governments have introduced various forms of bus partnerships over the years, with the goal of encouraging cooperation[31]  and the 2021 bus strategy for England is heavily focused on incentivizing partnerships.[32] While voluntary partnerships between local transport authorities and bus operators are often pitched as a possible reform, they have failed to remedy the underlying dynamics and deficiencies of the deregulated system. They are not a substitute for publicly owned or controlled transportation and do not deliver the same range of benefits.

Private operators and some transport advocates argue that most benefits of regulation can be achieved through partnerships more quickly and without the extra cost to the public.[33] And they have undoubtedly lead to some tangible benefits.[34] However, partnership arrangements leave decisions about the network, fares, and standards primarily to commercial operators, and have not delivered the same benefits as regulated systems.[35] Partnerships do not allow for full control and organization of the bus network[36] and do not provide the centralized control required to deliver an integrated transport service. They are voluntary by nature, lack accountability, and have a history of poor performance.[37]

Partnerships leave crucial power in the hands of commercial bus operators, particularly at the point of renewal or significant changes to the scheme. They do not correct the fundamental misalignment between commercial objectives and the best outcome for the public. It is time partnerships are recognized as a tried-and-failed approach that should be retired in favor of regulation of public transport.

Recommendations

Given the deterioration of local bus systems under deregulation, the impacts of the COVID-19 pandemic, the need for strong public transport systems to fulfill rights and combat climate change, and the failures of the Bus Back Better strategy to meaningfully address these issues one year on, the United Kingdom should:

• Embrace public control of bus transport: The notion that public transport provision can be left to the private market should be explicitly rejected. Public control of bus transport should be the default system, barriers to franchising and unnecessary bureaucracy should be eliminated, and new municipal bus companies should be expressly permitted. Voluntary partnerships should be phased out in favor of public control and ownership, and public funding conditioned on that shift. Where private companies operate buses under franchising arrangements, conditions should be imposed that acknowledge the public nature of the service, including a dividend cap, transparency measures, and social responsibilities.
• Guarantee access to public transport: The social, economic, and environmental necessity of a strong, integrated bus system should be recognized, and the national government should take responsibility for its development. A statutory minimum level of service and frequency should be legislatively required, with necessary funding allocated. Proposed cuts to bus routes should require full public consultation, and all cuts should be tracked, publicized, and re-assessed regularly. The 2010 Equality Act’s socio-economic duty should be implemented with regard to the bus sector.
• Support local transport authorities: Local transport authorities should be provided with sufficient, stable, and long-term funding for the provision of public bus services that meet the social and economic needs of residents. Financial and political support should be offered to those pursuing public ownership or control, and government teams should be created with the expertise and resources to support those efforts, achieve economies of scale, and address legal challenges from commercial vested interests.
• Ensure affordability: Concessionary bus travel should be available to those on government benefits, asylum seekers, and those aged 60 and older. Fares should be regulated and governments should ensure equality in transport benefits across the country, and consider concessionary travel for younger people in particular need.
• Combat climate change with a strong bus system: Buses should provide a viable and attractive alternative to more emissions-intensive forms of travel and the system should be designed to make the strongest possible contribution to meeting the United Kingdom’s climate change targets and international climate agreements.

March 2022

Endnotes