To franchise or not to franchise? That is the question

14-04-2025

Oliver Williamson

There’s one word on everybody’s lips in our industry at the moment, franchising. As I wrote in January, franchising could bring significant benefits to transport networks and come at a time when local bus networks are struggling more than ever before.

Franchising is being discussed at the highest levels of government. As ITP’s (self-appointed) Westminster correspondent, I recently attended the Transport Select Committee inquiry into bus services in England. The inquiry’s focus is on the role of buses in connecting communities and the need to address England’s declining bus network and falling passenger numbers.

In one session of the inquiry, eight experts from authorities and operators were brought together to discuss franchising and enhanced partnerships. In this blog, I explore what was discussed and consider the benefits and challenges of both options.

Franchising

The road to franchising has been long, first entering national policy when the 2017 Bus Services Act enabled franchising for some authorities. The National Bus Strategy in 2021 and recently the Better Buses Bill have driven the process forward, opening the option to franchise for Local Authorities.

Over time, and especially since the pandemic, bus services have come under increasing financial pressure as costs increase and passenger numbers decline. In 2010, there were over 1,000 million bus journeys; in 2019, it was 904 million, and in 2024, it was 755 million. Buses increasingly fail to meet the vital role that they play in social well-being, decarbonization and mode shift.

To some, the current model is broken, and the question is, does franchising fix it? Well, our MPs, through the select committee, asked the experts the same question. Franchising can be an opportunity to:

Grow local bus networks by cross-subsidizing the profitable routes to support loss-making services.
Integrate bus services and other modes of transport e.g. tram, metro, rail.
Offer better value for money for the taxpayers.
Bring more democratic control and accountability over the network.
Deliver simpler, cheaper and cross-network fares.

Case Study - Greater Manchester

Greater Manchester was the first authority outside of London to pursue franchising, being fully implemented in January 2025. In the first stage, Manchester focused on day-to-day operational improvements to stabilize the network, increase reliability and integrate ticketing. Reliability of the first routes franchised has increased by over 13% and ridership has risen by 4-5%. Now that the entire network is franchised the authority is looking to undertake network reviews to increase service provision, develop new routes and better meet public needs.

Franchising risks:

Financial risk

Franchising, depending on the model followed, places significant financial risk on the authority, as any losses must be accounted for. A change in government funding, a reduction in fare box revenue, or tender prices above forecasts could disrupt financial sustainability.

Neighboring authorities and smaller operators

When going through the process of franchising, local authorities need to stimulate competition, ensure smaller operators can participate and allow cross-border services.

Public expectations

The public wishes to see improvements quickly. There needs to be tangible improvements to punctuality, fleet and information provision. Franchising alone does not achieve this but simply enables it.

Rural networks

franchising has only been applied in urban areas with large population centres and high passenger numbers. In rural areas with lower patronage and higher operating costs, the finances may not stack up.

Staffing and resourcing

Franchising takes time, and it needs staff to drive the process forward. This means local authorities need to increase their staffing levels and build up expertise after years of shrinking teams.

In Greater Manchester's case, the authority felt that these risks did not materialise, although the cost of avoiding them was steep, amounting to over £134 million to date.

To the leaders in Manchester, franchising mitigated a much larger risk: continued rising costs, a declining network and falling public satisfaction. For some authorities, the risks of franchising may be too high. Therefore, an alternative exists: Enhanced Partnerships.

Enhanced Partnerships

Enhanced Partnerships (EPs) aren’t new. The 2021 National Bus Strategy required all authorities not pursuing franchising to enter into an EP. EP’s bring together bus operators, authorities and other stakeholders to meet a set of shared goals. Those in the session highlighted two key strengths of EPs:

Communication – EPs have created a forum for different stakeholders to work together for the first time, build dialogues and achieve (in some cases) lasting improvements.
Less risk – Under an EP operators retain the financial risk of running the service.

Case Study - Cornwall

Cornwall’s EP builds upon almost a decade of partnership working between operators. It brings key stakeholders to the table, including Cornwall Council, Bus Operators, Transport Focus, Chamber of Commerce and Rail Operators, it has been able to achieve significant improvements to the bus network and users, including:

Inter-operable ticketing to allow tickets from one operator to be used on another and simplified fares with standardised discounts and eligibility for child fares
Tap-on Tap off and fare capping
Network improvements and efficiencies
Fare reduction through the Bus Fares Pilot and £2/£3 fare cap
Coordinated timetable change dates
Branding and information harmonisation under the ‘Transport for Cornwall’ brand, offering a single website, app, a network map and some on bus branding

The improvements have led to growing passenger satisfaction with bus patronage now at pre-COVID levels.

Most authorities have an active EP, and yet patronage has not returned to pre-COVID levels across much of the country. Increasingly, some authorities see EPs as failing to deliver the change the network needs. So, something must be going wrong? Well, the panel highlighted the problems.

Control mechanisms – EPs do not allow sufficient control for authorities to offer realistic accountability measures. For example, a local authority cannot prevent frequencies from being reduced for commercial services

Varying success – EPs are only as strong as each constituent member allows them to be. To achieve improvements, there needs to be political leadership, funding and consensus around a shared vision which isn’t always reachable.

Funding – To achieve improvements through an EP, there needs to be funding. A lack of a long-term funding settlement means that authorities cannot make long-term plans or investments. With an EP, there is no opportunity for cross-subsidisation.

Whether to stick with an EP or pursue franchising is a complex decision. ITP are supporting several authorities in their consideration of franchising and has worked with other authorities as they develop their business cases.

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