Bus Week: London – the deregulation that never was

Published on 25 October 2011 in Transport, bus deregulation, buses, London, London buses, politics

It’s been 25 years since bus deregulation came into force in Great Britain. Well most of the country anyway. Indeed it’s been 25 years since bus deregulation didn’t happen in London.

That’s not to say that there was anything particularly special about London in the eyes of the then Thatcher government. Deregulation was an idea that the government of the day passionately believed in, and wanted to implement in London too.

There was just one big problem. London’s transport infrastructure required too much public money to run.

When it comes to the history of London Transport in the 1980s, most of the focus is on the tube. Central Government began to reduce investment, the Greater London Authority was scrapped, the system began to creek at the seams and a fire at Kings Cross in 1987 killed 31 people. Many of the reasons why London Underground has been spending the last few years on a massive, costly upgrade programme can be traced back to government funding decisions in the 1980s.

Yet whilst the tube did badly out of the Thatcher government, in the long term London’s bus network didn’t suffer as greatly because its problems of the day meant that deregulation was temporarily ruled out. Costs had to be reduced first. The last thing the government wanted was to deregulate London’s buses only for most of the bus services to be uneconomical to operate, and thus requiring large subsidies to run.

The first thing to do was to “sort out the expensive mess” of London’s buses. And the way to do that would be competition.

The London Regional Transport Act of 1984 began the process of restructing London’s bus network. Fares and routes would continue to be regulated, but the right to run bus routes would be put out to competitive tender. New operators would be able to bid against London Buses Ltd, with the best bid winning. With different companies going head to head, subsidies would come down.

The first round of tenders began in 1985 and the 81 became the first privately operated route when new operator London Buslines won the contract.

As there was no requirement to paint buses red, London’s buses started becoming all colours of the rainbow – an inevitable consequence of privatisation, but one that led to some Conservative MPs becoming increasingly queezy. Eventually companies were mandated to paint their buses mostly red but even as late as 1999 when I arrived in London, bright yellow buses run by Capital Citybus were still plying their trade.

With tendering in full swing, the next phase of the plan was put in to operation. The huge, “hulking behemoth” of London Buses was split up in 1989, ready for privatisation. Twelve smaller operators were created, which eventually could compete against each other, or new operators. Several “low cost” units in a number of towns, including Kingston and Bexley were established. Using older buses and staff on lower wages, the idea was to drive down costs and provide new services, although each one proved to be a failure and all were later shut down. Even one of “normal cost” units failed, with London Forest being wound up.

Still the process was in motion. Costs were being driven down. The public sector was, on occassions, being thrashed by new entrants. And just because Mrs Thatcher had gone, didn’t mean the government had gone soft on deregulation. In 1993 the Major government began to make moves to begin full deregulation. And it hit an unlikely snag. The Travelcard.

Ever since it had been first introduced in the 1980s, the Travelcard had been popular with Londoners, allowing unlimited access on buses and tube trains. But in June 1993 a leaked report suggested that the Travelcard was unlikely to survive the double whammy of rail privatisation and bus deregulation. Whilst the railway franchises would be compelled to take part in the system, there would be no such requirement on bus operators. It was estimated that around 40 companies would be running services in London, and the chances of getting them all ti sign up were slim.

This would, naturally, not go down with Londoners and with local elections to be held in the capital the next spring, the Conservatives could easily suffer. The political consequences of full deregulation were just too high. In November 1993 the plan was postponed until a later date, before being quietly shelved, although the next year the remaining 11 chunks of London Buses were flogged off to the highest bidders.

Despite suggestions it would be looked at again, the idea of bus deregulation in London was firmly off the agenda, and a unique (to Britain) system of franchised bus operations continues to this day.

As a result, London never had the joy of the Bus Wars which would surely have resulted in gridlock on a scale unimaginable compared to places like Manchester.

London’s situation has meant other cities have watched with envious eyes. Out of the whole country, only London has the ability to organise and coordinate its public transport system. Fares in the capital have also remained lower than elsewhere and bus usage continues to grow. A single smartcard ticketing system, Oyster, was introduced across the London public transport network relatively easily (with the only trouble makers being the private rail companies) – something that surely would still be on the drawing board had deregulation occurred.

Every now and then deregulation is suggested by someone. In 2010 Richard Wellings, Deputy Editorial Director at free market think-tank, the Institude of Economic Affairs, suggested it on Ken Livingstone’s LBC radio show. But the question is on the lips of few politicians. London’s public transport system may continue to cost more public money than that of other cities, however it’s one that runs well and which most Londoners are happy with. And there are few politicains who would risk the wrath of the electorate to implement in the capital a system that could hardly be described as a huge success in the rest of the country.

Besides London, only one other part of the United Kingdom escaped bus deregulation. Services in Northern Ireland continue to be publicly run and the country also escaped rail privatisation in the 1990s.