- This report deals
with a number of existing contracts that have been surrendered prematurely
by Chiltern Queens Ltd with effect from 7 September 2002. They were
originally awarded to run until July 2003 (Contract PT/S 135) or July
2004 and the presumption is therefore in favour of their continued operation.
The termination date on Contract PT/S 135 will be changed to July 2004
in line with other contracts in that area. In view of the short notice
of termination (three months), local councils have not been consulted
on these changes nor have any recent usage surveys been completed.
Reasons
why this item is Exempt
- Financial information
associated with this report is exempt because its discussion in public
might lead to the disclosure to members of the public present of the
amount of expenditure proposed to be incurred by the County Council
under particular contracts for the supply of services. All prices must
be treated as strictly confidential until such time as the Executive
decides whether or not to provide financial support for each service,
because revealing operators’ prices before then would prejudice the
Council’s position if tenders or propositions have to be sought again
for any of these services.
Services
affected
- Contracts surrendered
for which tenders have been invited are:
PT/S
30 Henley Town, Services H1-H3 (Monday to Saturday)
PT/S
72 Stadhampton – Wallingford, Service D (Friday only)
PT/S
135 Pangbourne – Woodcote – Henley, Services C/G (Monday to Friday)
PT/S
141 Nuffield – Reading, Service 136 (Monday to Saturday)
PT/S
176 Didcot Town, Services D1-D3 (Monday to Saturday)
Full
information on these services is given in Annex
1.
- Tender documents
are due to be returned for 10 July. Details of the bids with officer
recommendations will be contained in an Exempt Annex 2 that will be
circulated later.
Background
circumstances
- Chiltern Queens
Ltd had been experiencing various financial and operational difficulties
and was bought by Horseman Coaches of Reading. The Company was taken
over on 14 April 2002 and since that date Mr Horseman has been taking
action to try and revive the Company’s fortunes. However Chiltern Queens
Ltd was ordered to appear before the Western Traffic Commissioner on
30 May when the decision was taken that the Operators Licence held by
Chiltern Queens would be revoked "On the grounds that the Company no
longer satisfies the requirement to be of good repute". The licence
remains in force until 30 September which your officers understood was
to give Mr Horseman time to absorb the Chiltern Queens operation into
his own business. However Mr Horseman has now advised us that he feels
he has no alternative but to give the County Council notice to terminate
the above Contracts.
- Chiltern Queens
Ltd entered in to an agreement with Oxfordshire County Council on 19
April 2001 to provide a fully accessible Low-floor bus on Contract PT/S
135. Chiltern Queens purchased the bus and in return for an agreement
to use this or an equivalent bus on this contract (or other agreed Oxfordshire
service) for five years received a capital grant from the Council of
£24,030.
- The agreement
with Chiltern Queens provided for repayment of part of the grant in
the event of premature termination. Officers are exploring possible
action under this agreement in the current circumstance, with a view
to at least obtaining a repayment. However, in your officers’ view it
would be preferable if the bus could continue in service on the contract,
albeit presumably under a different operator. Options for achieving
this, without financial disadvantage to the Council, are also being
explored, and I hope to report further on this in Annex 2.
Commercial
Withdrawal of Bus Services
- Chiltern Queens
also operates a commercial service between Wallingford, Woodcote and
Reading (Service I). Mr Horseman’s letter implies that he will be deregistering
this service soon but at the current time no formal surrender has been
received. Although essentially commercial this service does contain
some early and late journeys which receive some County Council de-minimis
subsidy (Contract PT/S 48).
- If and when notification
is received of its withdrawal details of this service will be supplied
to other operators with a hope that another operator will be offered
the chance to continue operation of the subsidised journeys under the
same de-minimis agreement.
- However should
a search for an operator to continue Service I commercially be unsuccessful,
then officers will seek to enter into a short term subsidy contract,
under delegated authority, to continue a closely equivalent service
until February 2003. This will allow consultation, review and retendering,
and I shall report to the Executive in December 2002, in accordance
with normal practice, on the options for the longer term future of the
service.
Financial
Implications
- The current cost
of each of the subsidy contracts concerned is shown in Annex
1. Tender prices will be included in the later Annex 2, together
with a statement of the amount by which the lowest tender exceeds or
undercuts the current subsidy cost in each case. The current position
of the Council’s bus subsidy budget (treating both Rural Bus Subsidy
Grant and Main Budget as one, in accordance with recent practice) is
as follows:
£000s Variance
Total
finances available 2002/3 3,569 (of
which £165,000 is a one-off carry forward from last year)
(1a) Forecast
out-turn 2002/3 if no replacement
when contracts end 2,895 -19%
(1b) Forecast
out-turn 2002/3 if all contracts replaced at prevailing rate of price
change 3,189 -11%
(2) Current
annual rate of expenditure 3,167 -11%
- This indicates
that there is scope for an increase in subsidy payments if necessary
to continue these services. However, members may wish to avoid fully
committing this budget at this stage in the financial year. Some slack
is also desirable to allow for any further withdrawals of commercial
services or contract surrenders, and likely subsidy cost increases once
the Information Strategy is in force.
RECOMMENDATIONS
- The Executive
is RECOMMENDED to make decisions on subsidy for services described in
this report on the basis of the tender prices to be reported subsequently
in exempt Annex 2.