Local Bus Market Study - KPMG

Local Bus Market

Study

Report to the Department for Transport

January 2016

uk

Contents

Abstract

1

1

3

Executive summary

1.1 Introduction

3

1.2 Context

3

1.3 Local bus market trends

4

1.4 Rationale for government intervention in the market

6

1.5 Government influence over the local bus market

8

1.6 Developing the case to intervene in the market

10

1.7 Final thoughts

12

2

13

This report

2.1 Objectives

13

2.2 Approach

13

3

15

Market overview

3.1 Background

15

3.2 Current market structure

17

3.3 Market trends

18

3.4 Geographical variation in demand

35

3.5 Stakeholder perspectives

42

3.6 Summary and discussion

54

4

56

Rationale for government intervention

4.1 Introduction

56

4.2 Stakeholder needs and objectives

56

4.3 Market imperfections

59

4.4 Prevalence of market imperfections

60

4.5 Summary and discussion

62

5

64

Government influence over the bus market

5.1 Introduction

64

5.2 Bus service attributes

64

5.3 Government policy levers

67

5.4 Influence of government policies on local bus services

69

5.5 Stakeholder perspectives

75

5.6 Summary and discussion

89

6

91

Developing the case to intervene in the market

6.1 Introduction

91

6.2 QCS Public interest criteria

91

6.3 Establishing a case for regulatory change

92

6.4 Department for Transport business case

92

6.5 Summary and discussion

100

Appendix 1 Stakeholder interviews

102

Appendix 2 Stakeholder questions

103

Important notice

This report has been prepared on the basis set out in our Proposal addressed to the Department for

Transport (¡®the Client¡¯) dated 23/02/2015 (the ¡®Services Contract¡¯) and should be read in conjunction

with the Services Contract (and the Contract Award Letter dated 12/03/2015).

Nothing in this report constitutes a valuation or legal advice.

We have not verified the reliability or accuracy of any information obtained in the course of our work,

other than in the limited circumstances set out in the Services Contract.

This Report has not been designed to be of benefit to anyone except the Client. In preparing this

Report we have not taken into account the interests, needs or circumstances of anyone apart from

the Client, even though we may have been aware that others might read this Report. We have

prepared this report for the benefit of the Client alone.

This Report is not suitable to be relied on by any party wishing to acquire rights against KPMG LLP

(other than the Client) for any purpose or in any context. Any party other than the Client that obtains

access to this Report or a copy (under the Freedom of Information Act 2000, the Freedom of

Information (Scotland) Act 2002, through the Client¡¯s Publication Scheme or otherwise and chooses

to rely on this Report (or any part of it) does so at its own risk. To the fullest extent permitted by law,

KPMG LLP does not assume any responsibility and will not accept any liability in respect of this

Report to any party other than the Client.

In particular, and without limiting the general statement above, since we have prepared this Report

for the benefit of the Client alone, this Report has not been prepared for the benefit of any other

person or organisation who might have an interest in the matters discussed in this Report.

List of abbreviations

AVL

Automatic Vehicle Location

BBAF

Better Bus Areas fund

BSOG

Bus Service Operators Grant

CBA

Cost Benefit Analysis

CC

Competition Commission

DDA

Disability Discrimination Act

DfT

Department for Transport

EU

European Union

IA

Impact Assessment

ITA

Integrated Transport Authority

KPI

Key Performance Indicator

LA

Local Authority

LSTF

Local Sustainable Transport Fund

LTA

Local Transport Authority

MOT

Multi-Operator Ticketing

PTE

Passenger Transport Executive

QCS

Quality Contracts Scheme

QPS

Quality Partnership Scheme

RPC

Regulatory Policy Committee

RTPI

Real Time Passenger Information

SQP

Statutory Quality Partnership

VQP

Voluntary Quality Partnership

WPL

Workplace Parking Levy

? 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (¡°KPMG International¡±), a Swiss entity. All rights reserved.

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