Buses Bill update: CMA intervention puts franchising at the back of the queue

On 12 October 2016, the Department for Transport (DfT) published the Government’s response to the Competition and Market Authority’s (CMA) recommendations in relation to the Bus Services Bill.

In relation to bus franchising, DfT has accepted the CMA’s recommendations that the new legislation should include provisions that:

• Local Transport Authorities (LTAs) must assess whether any other options could deliver their objectives before seeking to introduce franchising arrangements;

• where an LTA has decided that only franchising can deliver the desired objectives, the LTA must have considered fully the implications for consumers arising from the loss of competition within the market and how to mitigate this harm; and

• the CMA should be a statutory consultee on the introduction of any new franchising schemes, to ensure that competition issues are sufficiently identified and addressed.

These provisions create significant additional hurdles to any LTAs interested in launching a franchising scheme with a view to improving local bus services in their region. In practice, it may be that these barriers dampen enthusiasm for bus franchising completely and, instead, LTAs will prefer to explore how to make the best of existing and new forms of partnership with local bus operators.