Culmination of bitter and protracted battle between Tyne and Wear and private operators could mean end of scheme to re-regulate buses

Plans to bring local buses back under public control are to be dealt a blow by a ruling that is expected to judge Tyne and Wear’s pioneering attempt to regulate its services as unworkable.

In the culmination of a bitter, drawn-out battle between the regional authority in Newcastle upon Tyne and private bus firms, an independent board could in effect dismiss a scheme to re-regulate buses, warning that the plans would potentially leave the authority liable for millions of pounds in compensation for operators such as Stagecoach.



After a series of hearings this year, the Quality Contract Scheme board chaired by the traffic commissioner for the north-east is expected to set out its conclusions as to whether Tyne and Wear’s proposals to franchise services and control routes, timetables and fares pass a range of public interest and economic tests.

The operators have argued that attempts to take control of routes would be in breach of their economic rights and be appropriation of goodwill. The panel is likely to decide that Nexus, the region’s transport executive, could face large liabilities to compensate Stagecoach, Go-Ahead and Arriva for loss of business.



The decision, which is expected on Tuesday, could have huge implications for city devolution plans at the heart of the chancellor’s vision of a “northern powerhouse”. Manchester and other cities have agreed to changes including elected mayors in return for control over local financing and transport, with buses a focal issue.



Deregulation of bus services outside London was brought in by the Thatcher government in the 1980s. Stagecoach and other transport firms have made the bulk of their UK profits from such bus services rather than the trains or regulated buses they also operate.

Nexus argued it was paying large subsidies to fund unprofitable routes for community benefit, while not being allowed to run public services on profitable routes under the legislation. Local authorities are also forced by law to provide concessionary bus travel to pensioners.

The transport executive claimed re-regulation would save money and result in better services. But operators led by Stagecoach, which runs about 40% of bus services in Tyne and Wear, claimed the move would mean higher fares, worse services and higher taxes.

Richard Collins, a transport specialist at the law firm Bond Dickinson, said: “Whatever the ruling, this drawn-out process has demonstrated that the current regulatory structure may not be fit for purpose.

“There is more regulation coming down the pipeline, the buses bill, due next year. It may be that, whatever the outcome of this process, new forms of partnership between operators and local authorities are likely.



“It’s going to create an interesting dynamic: part of the northern powerhouse is about devolving decision making to local authorities and it throws up challenges for bus operators.”

