Bus Week: 25 Years of Bus Deregulation

Posted on 24 October 2011 in Politics and Government, Transport (2 comments)

100-01 The Ribble side of Preston Bus Station

Photo by Sou'wester. Creative Commons licensed.

Twenty five years ago, on 26 October 1986 a major change happened to Britain's public transport network. The buses were de-regulated.

Until the 1980s the vast majority of Britain's bus services were provided by companies and organisations owned, in one way or other, by the public. There were municipal operators owned by local councils. The Passenger Transport Executives ran services in the seven metropolitan counties. London Transport did its thing in the capital, and the National Bus Company and Scottish Bus Group covered the rest. A smattering of long-lasting independent operators such as Maynes of Manchester were dotted around but most bus operations were run by publicly owned organisations.

Most operators tended to have a monopoly over their area and competition on bus routes was not allowed - amongst other things, the Road Traffic Act of 1930 had established a system where bus services were regulated and controlled. New bus routes needed to be assesed. Criteria included how suitable was the route for a bus service; whether the current services in the area were already adequate; was the service in the public interest; and were services co-ordinated with all forms of public transport. Local authorities, railway companies and other bus operators were allowed to object to any proposed new service.

Of course that stifled competition, and if there was one thing the Thatcher Government of the 1980s believed in, it was competition. Plus of course, it left most bus operations being provided by public bodies. And if there was another thing the Thatcher Government of the 1980s believed in, it was that private companies could do things better.

Competition was good. Competition would allow new operators to see new opertunities, new ways, better ways of providing bus services. On busy routes, two or more operators would compete against each other, driving down fares and increasing frequencies. True, some services would need to be subsidised because they were uneconomic, but they'd cost less because they'd be put out to competative tender.

What a great idea, the government thought. And on 26 October 1986 it all began.

Bus town

Photo by Elsie esq. Creative Commons licensed.

Overnight a host of new bus operators appeared on the scene, most running buses deemed redundant by the publicly-owned operators who now had to run services commercially and as such, cut back on many unecconomical routes. Where once buses of a single colour dominated an area, now it was a rainbow.

A variety of companies got involved. Existing independents saw a chance to increase their services. Coach companies diversified. Large conglomerates and venture capitalists saw the chance to build new operations and make lots of cash at the same time.

Competition had arrived. And it arrived in style. The bus wars began. New operators in an area began targeting established routes, running their services five minutes before the incumbant operator. Buses would end up racing each other down the road, attempting to get to the busiest bus stops first.

Larger operators began to taget areas deemed ripe for the picking. In perhaps the most famous incident, Darlington's council operator was brought to its kees in a battle between itself, a Stagecoach subsidiary, a former National Bus Company and an independent. Darlington Transport had been due to be sold off, but in the end it collapsed after a saga that involved free buses, and a substantial number of Darlington's drivers defecting.

In the aftermath a competition inquiry found many of the actions to be "predatory, deplorable and against the public interest".

Darlington certainly wasn't the only bus war, and wasn't the last. In 2006 Manchester suffered another one on the lucrative 192 route when operator UK North decided to wade in by adding new services, thus increasing the already frequent service to 12 buses an hour. Stagecoach responded by increasing its own services and adding in its low cost Magic Bus to the route.

The result was so many buses that the local council waded, concerned about safety. Gridlock occurred after Piccadilly Garden bus station couldn't cope. Buses ended up queuing down the nearby streets, blocking other bus routes and the city's Metrolink tram system was repeatedly suspended as it simply couldn't get down the road. Buses that were too long for the relatively small bus station got stuck whilst trying to negotiate corners. The chaos only really ended when UK North's operating licence was suspended on safety concerns.

Stagecoach Manchester 22142 S142 TRJ, 22108 S108 TRJ & 19283 MX08 GSV

Photo by Ingy the Wingy. Creative Commons licensed.

Nowadays such bus wars are thankfully rare. But there's a reason for that.

The reason is that there are an ever decreasing number of independent operators and the UK's bus market is now controlled by a handful of large companies: First, Stagecoach, Arriva and Go-Ahead. In many areas the operators have a near-monopoly.

Even in areas where several subsiduaries of the large companies are based - such as Manchester where Stagecoach, Arriva and First all have operations - there's little incentive to compete against each other. First easily has the resources to muscle in on some of Stagecoach's tettirory if it wanted, but then Stagecoach could easily attack First. Both are so big that a retalitory bus war could spread across the whole UK. So why bother? Better to grow by taking over smaller rivals or (gasp) improving services than competing against a huge competitor.

As for the small companies? The new entrants? Well sometimes a new kid comes on the block and attempts to take on the big guys - cutting fares and running increased services. But really, what's the point? As has been seen in Manchester and Darlington, the big guys have the resources to pile on extra buses at the drop of a hat. Why bother? The small operator can only be the one to come off worst.

And so Deregulation - a system which was supposed to encourage and increase competition and reduce costs - ultimately became a different version of what was there before. A cosy setup where, in many areas, large groups run cosy monopolies or duopolies. Where competition doesn't really exist, and where it does, there's not much chance of someone new winning.

Still, as former members of the Thatcher Government may say, at least the state doesn't have to run buses any more.

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Martyn Lewis said:

As is so often the case you confuse deregulation with the privatisation of nationally and locally owned government transport operators - these were two distinct phases of Tory government legislation. Deregulation brought in competition which to be honest a complacent industry needed, whereas privatisation (which began at around the same time) simply served to make a number of former government employees quite wealthy men, buying publicly owned assests at knockdown prices and in a short space of time selling them on to shape the industry as we know it today.

Posted on 5 November 2011 at 6:11 PM

Andrew Bowden said:

I wouldn't say I confuse privatisation with deregulation. It's quite obvious they are two different things. However I simply do not think it's possible to view one without the other. Each were, as far as the Government of the day was concerned, a key part of their intent to change the system.

Indeed I'd argue that it would have been foolish to do deregulation without privatising the likes of the National Bus Company. Deregulation suddenly put a whole heap of commercial risk on the operations. Better to flog them off, take the money and transfer the risk to someone else. Given several municipal bus operators went under after deregulation, I'm sure some local councils wished they'd sold up sooner.

Posted on 6 November 2011 at 2:49 PM

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