The Tyne and Wear Integrated Transport Authority today agreed to move forward with plans aimed at providing better bus services while reducing the cost to local taxpayers by £70m.

Key features of a proposal it is now opening to consultation include capping future price rises, making travel cheaper for young people and students, introducing simple fares and London-style smart travel and growing services.

The ITA would fund improvements by taking control of fare revenue from private companies and re-investing a greater proportion of the profit buses make in Tyne and Wear in local services.

This would allow it to reduce cost to the taxpayer by £7m a year, yet still avoid cuts that would see the withdrawal of child concessionary fares, schools buses and other socially-necessary services now provided by Nexus as a public body but under threat after 2015.

The ITA has instructed Nexus to launch formal consultation on a Quality Contracts Scheme proposal, which sets out how it would achieve the improvements.  It is also inviting bus operators to develop a revised partnership offer as an alternative.

Cllr David Wood, Chairman of the ITA, said: “Local people who make 140 million journeys every year would benefit from simple fares, cheaper tickets for young people, universal smartcard travel, a single source for customer information, a greater say in how routes are planned and improvements in journey quality.

“This is an important step by the ITA which has the potential to transform local bus services.  We estimate that to provide this level of service in today’s deregulated bus market would cost the taxpayer at least £70 million more over a decade than if a QCS is introduced.

“If we don’t take action now to re-invest more of the profit buses make widespread cuts are inevitable from 2015, hitting families, bus company staff and the vulnerable hardest.

“Having looked at the options in some detail, the ITA is clear the Quality Contracts proposal as it now stands represents a better opportunity to achieve our aims than the alternative voluntary partnership so far offered by bus companies.

“We have decided to launch a 14-week period of consultation, after which the ITA will look at the proposal again and decide on next steps.  At this point in time I want to make clear to bus companies the door remains open if they wish to present a revised partnership proposal.”

The ITA has asked Nexus to manage a consultation on the QCS proposal which will last from 30 July to 5 November 2013 and allow it to be developed further based on responses from bus companies, local authorities, trades unions, passenger groups and other stakeholders.

It is the first authority in the country to enter formal consultation on a detailed QCS proposal, and so explore using powers under the Transport Act 2000 that would allow it to take public control of bus services, replacing the deregulated market which has existed outside London since 1986.

A Quality Contracts Scheme would make the ITA responsible for all aspects of almost all bus services in Tyne and Wear for a ten-year period, intended to begin during 2015.

Bus services would still be operated by private companies, which would be paid a fee for providing a specified service to the public under contracts of 7 to 10 years let by Nexus on the ITA’s behalf, through a competitive process designed to get the best value for money.

Bernard Garner, Director General of Nexus, said:  “This is a proposal through which the local bus market in Tyne and Wear would be both secured for the future and improved to deliver services in a way familiar to people in London and many European cities.

“The detailed proposal shows how we believe we can make bus services better through a single publicly-accountable body planning and managing routes, setting and collecting all fares, and re-investing a greater proportion of the profit generated.

“This offers a way to maintain and improve bus services while providing significant savings for taxpayers.  Local people will have a greater say in reviewing performance and suggesting changes to routes in their communities, improving public accountability.

“The likely alternative is very unappealing – because of the reduction in public spending Nexus cannot afford to provide the range of services it now delivers using funds from local councils provided through the ITA levy.  To prevent a budget deficit from 2015 onwards, unless we act now, we will be forced to withdraw a whole range of vital public transport services.”

The ITA held a special meeting on 26 July to consider the respective merits of a detailed QCS proposal drawn up by Nexus and a voluntary partnership proposal developed through 18 months of meetings and negotiations with the North East Bus Operators Association (NEBOA), representing the major operators Arriva, Go North East, and Stagecoach as well as smaller companies.

It was told that the QCS proposal met statutory public interest tests set out in the Transport Act and offered the best outcomes for Tyne and Wear residents.  Specific benefits included:

• Cheaper fares for young people and students, from £7.50 a week for all public transport;
• Future fare rises capped to inflation, and 81% of adult passengers paying the same or less on day one of a Quality Contracts Scheme;
• Simple fares and London-style smart travel across Bus, Metro and Ferry;
• Modern low-emission, easy access buses with real time as standard;
• The current network of services being maintained for 7-10 years, with 2% growth;
• £70 million saving to the taxpayer from more cost-effective delivery.

By contrast the ITA was told that in the event that action was not taken, a so-called ‘Do Minimum’ scenario would see cuts from 2015 including:
• The end of child concessionary fares including the CAT ticket;
• All school buses and other socially-necessary bus services provided by Nexus being withdrawn;
• Withdrawal of the Shields Ferry;
• Reduced provision of timetables, bus shelters and other amenities.

If no action is taken Nexus also believes that commercial fares may continue the trend of rising by 3% above inflation on average, and overall bus ridership will continue to decline.

The ITA heard that the partnership proposal from NEBOA presented to the meeting offered savings of £360,000 a year to the taxpayer from commercial companies taking over loss-making routes funded by Nexus, new tickets for people changing between buses including cheaper deals for 16-18-year-olds, a commitment to maintain existing commercial services,  an ITA veto on changes, and increased marketing.

The ITA noted the offer and agreed it would be ready to consider a revised and improved partnership proposal if NEBOA wished to present one.

The ITA will meet again once the formal consultation has taken place and the QCS proposal developed further, to consider what further steps it would like to take.

Consultation information and documents will be available on the Nexus website from 30 July at