Archive | May, 2012

In a recent guest post, Peter Brown praised the Tyne and Wear (greater Newcastle) region in the UK for seeking to regain government powers of integrated planning.  The new paradigm is what the Brits call a "contract scheme" in which the government controls planning and operators provide service under contract with government.  This is pretty much how privatized operations work in North America.  The rider's is a customer of the government agency, the government agency is the customer of the bus operating company.  Each link has accountability; operating companies are accountable to their government purchasers, while government is democratically accountable to voters.

UK reader John Smith responds:

Bus operators in North East England have formed the North East Bus Operators' Association to vigorously oppose the imposition of a contract scheme in Tyne and Wear. They are working together with Nexus on a Voluntary Partnership Agreement (VPA), which will provide much of the benefits of a contract scheme without the 'unintended consequence' of transferring the financial responsibility to the public sector, particularly at a time when local authority finances are under increasing pressure. You can read about it here.

Commeter Peter Laws also responded enthusiastically to the fact that 90% of bus miles outside of London run without subsidy.  

Not so fast.  While it's obviously desirable to reduce subsidy/bus, is the purpose of this savings to be able to afford more buses?  Or is it just to avoid spending money on bus service?

The problem with aiming zero-subsidy service is it usually implies zero public control.  Government is shrivelled to the role of a "regulator," with the implication that, as in safety regulation, government can enforce laws but not direct the provision of service to serve larger public ends.

Government, especially local government, has entirely valid interests that are served by operating public transit services.  These include not just social service needs, but also a desire to support its urban development intent, or, as in Oxford, a need to organize service so that it uses scarce street space more effectively.  The old privatization paradigm made it almost impossible to address these needs.  For example, Oxford's effort to get the two bus operators to co-operate on using street space more efficiently would have been impossible, because any such co-operation was considered collusion. (Legislation under the last Labour government finally made it possible.)

Co-ordination of land use and transit, too, was impossible under the old regime, except insofar as an operating company considered it to be in their financial interest.  There was no way for government to mandate such co-operation.

Or consider the great problem of frequency.  One way you minimize subsidy or maximize profit is to run as little service as possible to serve as many riders as possible, just as the US airlines are doing, for example.  Thus, a private operator tends to be happy with a much lower level of service than a public transport authority or local government or local population want, and would pay for.  

This is especially important when a Frequent Network is at stake.  There may be large network effects, with long term importance to city form and sustainability outcomes, that arise from running a service more frequently than its break-even point, but it is fiendishly hard to do this even by subsidizing the operator to do it, because you are then declaring certain trips of a line to be "profitable" and others "subsidized." In fact, because people respond so much to frequency and span, ridership among trips on a route is thoroughly interdependent, so you cannot declare ridership on a trip to be solely the result of that trip's existence.  As a result, any separation between "profitable" vs "subsidized" trips on a route becomes an unmeasurable fiction.

So it's hard.  I think the American privatization model (transit agency controls planning, hires operators just for operations and maintenance) enables much clearer democratic conversations about the nexus between public transport and public goods.  But I understand why bus operating companies in the UK-influenced world often don't like that outcome, and why people whose main goal is to not spend money on transit don't like it either.