Meeting documents

The Executive
Tuesday, 11 December 2001

EX111201-22E

ITEM EX22E

EXECUTIVE - 11 DECEMBER 2001

BUS SUBSIDIES

Report by Director of Environmental Services

Introduction

  1. This report and the associated annexes deal with a number of public transport items that need decisions by the Executive. In summary these are:

    2. Section A - Revenue Budget report

    Section B – Withdrawal of subsidised services that have led to protests

    Section C - New Rural Bus Subsidy services

    Section D - Rural Bus Challenge services

    Section E - Changes in arrangements for subsidised services (with Annex 1)

    Section F - Commercial withdrawals of bus services (with Annex 2 and Annex 3 (Exempt))

    Tender prices obtained for contracts specified in Sections C – F will be contained in a supplementary Annex (4), to be circulated later.

    Reasons why this Item is Exempt

  2. All the financial information associated with this report (in Annexes 3 and 4) 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.

    3. Section A

    Financial Position – Main Budget and Rural Bus Subsidy Grant

  3. The County Council can draw from two separate sources for bus subsidy funding; the Main Budget and the Rural Bus Subsidy Grant (RBSG). Until financial year 2001/02 RBSG was strictly ring-fenced, and could not be used to subsidise pre-existing services. This has now changed somewhat as described in paragraph 12 below.

    4. Main Budget

  4. Main budget finance available in the bus subsidy budget in 2001/02 is as follows:

    5.   £000s
    Base Budget 1,757
    Carried forward from 2000/01 30
    TOTAL AVAILABLE 1,787

    Existing expenditure commitments are as follows:

     

     

    £000s

    Variance

    (1a)

    Forecast out-turn in 2001/02 if no replacement when contracts end

    1,683

    -6%

    (1b)

    Forecast out-turn in 2001/02 if all contracts replaced at prevailing prices

    1,718

    -4%

    (2)

    Current annual rate of expenditure

    1,821

    +2%

  5. Figures (1a) and (1b) indicate that a small under-spend is likely in the current year. This is likely to happen almost irrespective of any decisions made by the Executive at this 11 December meeting, because the decisions will affect only a few contracts for a small proportion of the year (seven weeks).

  6. Figure (2), however, gives cause for concern. This indicates that if the funding agreements now in existence were to continue for a full year, expenditure would be above the base budget. This means that, even without any contract price increases or replacements for withdrawn commercial services (which are known to be imminent), the main budget is heading for an overspend in 2002/03.

    7. Rural Bus Subsidy Grant (RBSG)

  7. The Government grant for new rural bus services is as follows:

    8.   £000s
    2001/02 1,184
    2002/03 1,355

  8. Expenditure commitments are as follows:

    9.  

     

    £000s

    Variance

    (1)

    Forecast out-turn in 2001/02 if no new contracts introduced

    1,088

    -8%

    (2)

    Current annual rate of spend

    1,145

    -3%

  9. The incipient under-spend arises from the increase in the grant since 2000/01; the decision by Public Transport Sub-Committee not to fund any new hourly services pending the outcome of the consultant’s study into such services (now deferred due to the resignation of a key member of staff); and the difficulty which officers have experienced in persuading bus operators to take on any new services.

    10. Transfers Between RBSG and Main Budget

  10. RBSG cannot be carried forward from one year to the next; any grant not spent within the year will be lost. On the other hand, under-spends on the main budget can be carried forward and used to fund some of the following year’s expenditure.

  11. With effect from 2001/02, the Government has relaxed the requirement that RBSG can only be used for new services. Now, up to 20% of RBSG can be used for pre-existing services. This opens up the possibility of using RBSG in 2001/02 to fund services that the Executive might otherwise have agreed to be funded from the main budget. This would avoid RBSG under-spend, instead increasing the under-spend on the main budget, which can be carried forward to ease the anticipated financial pressures on the main budget in 2002/03.

  12. Officers are checking with Department of Transport, Local Government & the Regions whether there would be any problems or constraints in a funding arrangement of this sort. I shall report to the Executive on any issue that arises. Subject to that, I recommend that the above course be followed.

    13. Section B

    Withdrawal of Subsidised Services which have Led to Protests

  13. The last Public Transport Sub-Committee (PTSC) meeting on 30 August 2001 decided not to re-award a contract for one late evening journey in each direction between High Wycombe and Thame via Princes Risborough and Chinnor on the grounds of the high cost per passenger journey.

  14. The journeys concerned departed High Wycombe at 22.00 and Thame at 23.00 Mondays to Saturdays) (Service 231, operated Arriva the Shires Ltd). They were therefore withdrawn after 27 October 2001.

  15. Whilst a regular hourly daytime service (supported financially by Oxfordshire and Buckinghamshire County Councils) operates between Thame/Chinnor and High Wycombe until 19.10 (ex Thame) there are now no other public services between Thame and Chinnor after this time.

  16. A request for reconsideration of the decision not to continue to fund these journeys has been received in a letter from Chinnor Parish Council dated 23 October 2001. This states that "the Parish Council is sympathetic to your (the County Council’s) problems in running the above service, but asks whether it would be possible for the late evening service to continue to operate on Thursdays, Fridays and Saturdays, when it seems to be used most."

  17. Other details of the late night journeys are:

    18. Cost of replacement: Tender prices obtained in August 2001: -

    Mondays to Saturdays (6 Nights) - £18, 295 p.a.

    Fridays and Saturdays (2 Nights) - £18, 450 p.a.

    Saturdays only (1 night) - £ 3, 881 p.a.

    Ave pass per day 4 - (usage higher on Fridays and Saturdays, lower in the

    (To/from/in Oxon) earlier part of the week).

    Cost/passenger jny £15.00 (6 nights operation) or £18.75 (Saturdays only)

    Local Councils served (in Oxfordshire): 6

    Previous History: 29 October 1998: Three additional evening journeys in each direction introduced using RBSG funding. Jointly supported by Buckinghamshire and Oxfordshire, the new journeys ran late PM peak period, mid-evening and late evenings (Mondays to Saturdays).

    30 October 1999: Following a review of usage, the mid-evening journey in each direction was withdrawn, and at the same time Bucks C.C. withdrew their contribution.

    23 July 2001: The PM peak bus was amalgamated into the main daytime service (which is jointly supported by both County Councils). following retendering.

    The late evening journey was initially continued under a short-term arrangement until being retendered in August 2001. Bids were considered at the PTSC meeting on 30 August 2001 but were considered too expensive

  18. The Executive is asked to consider what action (if any) should be taken on the above request. Options available include:

    • instruct Officers to invite tenders for a specific service immediately.

    • add the service to the "Waiting List" of services kept by the Public Transport Section for possible implementation as and when funds become available.

    • refer the service to Oxfordshire Rural Community Council (for investigation as a local transport initiative or Rural Transport Partnership) (RTP).

    • take no further action on this request.

  1. However unless a significantly cheaper means of providing this service can be found (e.g. using a community minibus) the cost per passenger journey will remain significantly higher than the average amount for the majority of County Council supported bus services (or unless substantial extra usage can be generated).

    2. Section C

    New Rural Bus Grant Services

  2. At the last PTSC Meeting, Officers were instructed to pursue the introduction of a number of services listed on the "Waiting List " as a matter of urgency. Some of these will use the additional Rural Bus Subsidy Grant allocated by the Government in the Autumn of 2000, of which there is possibility of an under-spend in financial year 2001/2002.

  3. Tenders have therefore been sought for the following new services:

    4. Berinsfield – Didcot Parkway service via Burcot, Clifton Hampden and Long Wittenham (Contract Ref PT/S 177).

    Aston Tirrold/Aston Upthorpe/ North Moreton/ South Moreton – Didcot

    (Contract Ref: PT/S 178).

  4. The North Moreton taxibus was previously offered for tender in July 2001 but no bids were received. The operation has been further reviewed in conjunction with the co-ordinator acting on behalf of all Parish Councils who requested this service, and a revised pattern of operation (using an 8 seat vehicle) proposed in this new tender.

  5. Tenders are due to be returned by 3 December 2001, and the bids obtained together with my recommendations will be detailed in the exempt supplementary Annex submitted to the meeting.

  6. Officers are also negotiating with operators regarding a number of minor enhancements to services that are on the "Waiting List" and which could be accommodated under the ‘de minimis’ arrangements* . Despite expressing an interest in such negotiations however many operators are have been reluctant to take on any extensive further commitments in recent months, due to severe staffing difficulties. No such services have therefore commenced to date, but I will advise the Executive of any developments between completion of this report and the date of the meeting.

    7. Section D

    Rural Bus Challenge Services

    1. Bicester North Taxibus

  7. A Rural Bus Challenge (RBC) bid was made to provide a taxibus feeder from surrounding villages to trains at Bicester North station, in partnership with Chiltern Railways. The bid was successful and tenders have now been sought from bus and taxi operators for provision of the service, based on four routes, as follows:

    8. Route 1: Hethe, Fringford and Stratton Audley

    Route 2: Ardley and Bucknell

    Route 3: Middleton Stoney and Chesterton

    Route 4: Arncott and Ambrosden

  8. The RBC award provides for £30,000 revenue support for the service. Additionally Chiltern Railways have undertaken to provide up to £60,000. It is anticipated, however, that there could be a significant funding gap. Tenderers have therefore been asked to give prices based on a range of options, with frequencies varying from 3-7 journeys in the morning peak and 3-8 in the evening peak. Although conceived primarily as a commuter orientated service, there will also be an hourly inter-peak service and options have also been sought for the operation of a Saturday and Sunday service.

  9. Separately from this tendering exercise, but as part of their franchise requirement, Chiltern Railways have invited tenders for the operation of a Bicester town service linking with their trains. Decisions on the two projects will be dovetailed, as it is considered that a combined bid for both services could result in an overall lower price than the sum of two separate bids. Any benefit will be shared between the Company and the County Council.

  10. If the tenders indicate that there is a funding shortfall there will be a need to consider how the gap can be bridged. Options which will be examined are as follows:

    1. cost savings through reductions in the planned level of service. This outcome could, however, result in a reduction in RBC grant.

    2. an increase in Chiltern Railways’ financial support.

    3. top up funding from County Council budgets. In this regard it should be noted that it is anticipated that the service will be eligible for Rural Bus Subsidy Grant.

  11. An unusual feature of the Bicester North service is the intention that the routes and departure times should be partially determined in real time in accordance with the requirements of the passengers wishing to use the service. In order to seek economies of scale, operators have been given the opportunity of integrating the control function into their existing systems and specifying the additional costs that this incurs. However, the combination of the cost of providing the control function and the cost of providing the service, may be greater than the resources available. In these circumstances it may be necessary to limit the demand responsive element of the service to what the driver, liasing with Chiltern Railways in regard to train running information, is able to integrate into the service’s pre-planned set down pattern during the evening peak period.

  12. Details of the results of the tendering process (and of any implications for the service as planned) together with my recommendations will be contained in the exempt supplementary Annex submitted to the meeting.

    13. (b) Charlbury Taxibus service

  13. The Charlbury Taxibus service was introduced in March 2001 using Rural Bus Challenge funding plus additional financial support from the County Council’s Rural Bus Subsidy Grant. It provides a regular link from Charlbury Station to Charlbury Town as well as surrounding villages such as Leafield and Ascott under Wychwood. A County Council owned Mercedes low floor minibus was purchased for the service as part of the Challenge funding.

  14. The operation was amended in September 2001 following 5 months operation, to meet some of the requests from users. Despite this, growth in usage has been slow with an average of 30.4 passengers per day during the month of October 2001. A total of 4,311 passengers have been carried between March and the end of October 2001. Saturday usage is lower with an average of only 14.5 passengers per day.

  15. The contractor for this service, Worth’s Motor Services Ltd has given notice of premature surrender of this contract (Reference PT/W 240) on the grounds that revenue growth has been less than expected and recent wage increases to driving staff has made the operation uneconomic.

  16. I have therefore invited tenders on the basis of the existing timetable but have requested a separate price for the Saturday operation. Bids are not due in until Monday 3 December, and details of these, and my recommendations will be contained in the exempt supplementary Annex submitted to the meeting.

    17. Section E

    Changes to Arrangements to Subsidised Services

  17. This section deals with a number of existing contracts that have been surrendered prematurely by Arriva the Shires Ltd and Stagecoach Oxford with effect from 9 February 2002. They were originally awarded for various periods until 2003 and the presumption is therefore in favour of their continued operation. 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 on all services.

  18. Contracts surrendered, for which tenders have been issued are:

    19. PT/V 103 Oxford – Abingdon – Didcot (Mondays to Saturdays)

    PT/W 1 South Leigh – Standlake – Witney (Shoppers) (Thursdays)

    PT/W 105 Witney – Bampton – Carterton (Mondays to Saturdays)

    PT/W 10 Carterton – Swindon (Mondays to Saturdays)

    PT/W 36 Diversion of service 20 via Wootton and Glympton (Mon-Sat lunchtime jny)

    PT/S 2 Oxford – High Wycombe (Mondays to Saturdays)

    PT/S 105 Oxford – Little Milton – Chalgrove (Mondays to Saturdays)

    PT/S 120 Oxford – Watlington (Mondays to Saturdays)

    Full information on the services concerned is given Annex 1.

  19. Journeys on the same services as covered by contracts PT/W 105, PT/S 105 and PT/S 120 are presently operated without subsidy by Stagecoach South Midland (as described in Annex 1). The company have confirmed that it is their intention to withdraw the unsubsidised elements of these services from the same date. Officers have therefore put out to tender the whole of the current operation on these routes at this time.

  20. The Stagecoach South Midland company has indicated that the main reason for the surrender of these services is that the recent wage increases to operating and engineering staff (considered of necessity to stop loss of staff to other employment) has made a number of previously marginal services now uneconomic.

  21. I have therefore sought tenders for replacement contracts on the existing level of services incorporating, if and where possible, any options to include items of the "waiting list". In some instances I have also sought prices for a lower level of service on the grounds that the likely cost of replacing these services (together with further commercial withdrawals listed below in section 6) will place extra pressures on the public transport budget during the current financial year.

  22. Tender documents are not due to be returned until 3 December 2001. Details of the bids received for these services and my recommendations will be contained in a exempt supplementary Annex that will be available at the meeting.

    23. Section F

    Commercial Withdrawal of Bus Services

  23. This section deals with the commercial withdrawal of a number of previously unsubsidised services operated by Stagecoach South Midland in Banbury and Oxford from 13 August 2001. Negotiated short-term subsidy contracts were entered into (using Officers’ delegated authority) with various operators to maintain these services until 9 February 2002. They have now been the subject of a further tendering exercise to enable the award of longer term contracts (generally until the date of the next area review).

  24. Additionally Thames Travel de-registered the provision of two evening journeys in each direction on their commercial service between Oxford, Wallingford and Henley (route X39) over the section between Wallingford and Henley from 3 September 2001. I agreed with Thames Travel to continue these journeys with subsidy until February 2002. The company has now submitted a ‘de minimis’ bid to continue these journeys until October 2002.

  25. The Services concerned are:-

    26. PT/C 3 Banbury – Bretch Hill (Circular) (Fridays and Saturdays evenings)

    PT/C 5 Steeple Aston – Banbury (Mon – Sat early am Jny)

    PT/C 9 Banbury – Ruscote (Circular) (Mondays to Saturdays)

    PT/C 17 Banbury – Cherwell Heights (Circular) (Mondays to Saturdays)

    PT/O 1 Oxford (Rail Station) – J.R. Hospital – Cowley - City (Circle)

    (Mondays to Saturdays Evenings and Sundays)

    PT/S 80 Wallingford – Henley (Monday to Saturday, evenings)

    Full information on these services is given Annex 2. The current prices for these contracts is given in exempt Annex 3

  26. I have therefore sought tenders for replacement contracts based on the existing level of services in respect of PT/C 3, and PT/C 5. For the other Banbury town services (PT/C 9 and PT/C 17) prices for a higher level, the existing level and a lower level of service have been sought. The City Circle service in Oxford (PT/O 1) is also included in the next full area review, which is now under way, and is due to be introduced in July 2002. Consequently this contract will only be current for a five-month period and therefore no changes were envisaged at this stage.

  27. Details of the bids received and my recommendations will be contained in the exempt supplementary annex available at the meeting.

    28. RECOMMENDATIONS

  28. The Executive is RECOMMENDED to: -

          1. Section A: fund pre-existing rural services from Rural Bus Subsidy Grant in 2001/2002, on the basis that the total subsidy cost of the services concerned in 2001/2002 should be approximately equal to the amount of Rural Bus Subsidy Grant not required for new rural services in that year;

          2. Section B: in view of the high cost per passenger journey, not to re-introduce the late evening bus service between Thame and High Wycombe, nor to add it to the "Waiting List", but ask Oxfordshire Rural Community Council to investigate an alternative demand-responsive shared taxi or similar scheme to provide late-night transport in this area; and

          3. Sections C-F: make its decisions on subsidy for services described in this report on the basis of the tender prices contained in exempt Annex 4 to be reported subsequently.

DAVID YOUNG

Director of Environmental Services

Contact Officer: John Wood – Tel: Oxford 815802

3 December 2001