Stagecoach exposes Nexus ‘flaws’
Stagecoach has submitted its full response to bus contract proposals by Tyne and Wear PTE (Nexus), which the company claims exposes how ‘massive flaws’ in the plans will impact on living standards for bus passengers and taxpayers. A detailed review by independent economic experts, Oxera, of the proposals by the transport authority has established that the plans are ‘fundamentally flawed, unaffordable and fail to meet key mandatory Government tests’. It concluded bus operators’ partnership proposals were the better way forward to improve bus services. The news comes just after over 7,000 passengers and bus employees across the region signed a petition opposing the Nexus proposals. The operator is concerned about the impact of the plans on bus fares, council tax bills, bus workers’ jobs and pensions. Around 90% of the bus network in Tyne and Wear is provided commercially by bus operators, with Nexus currently spending £10m a year on direct support for socially necessary but otherwise unviable services. The region currently has one of the best used bus networks in the country, with customer satisfaction at 85%.
Analysis by Oxera has now revealed that, despite attempts by Nexus to manipulate the business case for bus contracts, there is a funding shortfall of £157m over ten years. The deficit is even after accounting for use of £78m in contingencies set aside by Nexus. The researchers have calculated that, for the authority’s plans to be affordable, fares would have to rise by 5.3% above inflation every year. The only other options to close the gap would be huge council tax rises or cuts to services. Oxera has found that the level of fares increases needed to make the bus contracts scheme affordable would lead to 83m fewer bus trips being made in the region over a ten year period than if the current system were to remain in place. The analysis also shows that Nexus has overestimated the bus patronage forecast in its proposals by 149m passengers over a decade.
Stagecoach commissioned Oxera to provide an independent economic assessment of both the bus contracts scheme (QCS) from Nexus, and the alternative partnership proposals (VPA) put forward by the North East Bus Operators’ Association (NEBOA). Oxera concluded that the contracts scheme failed on virtually every measure. It also identified ‘a number of weaknesses’ in the modeling used by Nexus to underpin its proposals, highlighting inconsistencies, omissions and a lack of transparency. Nexus had also failed to use the mandatory Government tests in assessing the case for a contracts scheme. In an assessment of the financial basis of the bus contracts plan, Oxera said ‘there are a number of substantial deficiencies in the numerical modeling undertaken by Nexus, which means that it is not possible to have confidence in the results’. The organisation found that Nexus had understated costs, its economic forecasts were ‘not consistent with the historical pattern’ and it had also overstated the impact on school services and tendered bus services of not proceeding with a bus contracts scheme. It also states that Nexus has failed to appreciate the complex pensions and TUPE implications for bus workers, who could face cuts of up to a third in their future pension benefits.
MD of Stagecoach North East, Phil Medlicott, said, ‘The Oxera report is a damning independent analysis of a scheme that has already seen hundreds of thousands of pounds of public money squandered and not one single bus improvement put in place. It backs up 100% what customers, bus workers and operators have all said about the Nexus proposals. These misguided plans would hit living standards for ordinary people in Tyne and Wear and damage the bus network. I hope the transport authority will now fully understand the widespread objection to the contracts proposal and instead work in partnership with bus operators on improvements and investment that we want to start delivering for people right now.’
Bus operators in Tyne and Wear have proposed a similar comprehensive and updated package of improvements to services to the award winning scheme in South Yorkshire. NEBOA claims it would deliver all the benefits passengers want, without unnecessary costs and delay, as well as saving Nexus money. Oxera found the partnership proposals were affordable and were more likely to boost bus use, improve the quality of services through investment, save public money and meet the objectives of the transport authority’s bus strategy in an economic, efficient and effective way. It concluded, ‘The VPA is a preferred policy option to the QCS, as it results in higher patronage, lower costs to local taxpayers and lower fare rises.’
Members of Tyne and Wear Integrated Transport Authority are expected to decide on its preferred way forward in March 2014.