Climate Change, Environment, and Infrastructure Committee

Croeso, bawb, yn ôl i gyfarfod Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith yma yn Senedd Cymru. Rŷn ni’n symud ymlaen at ein ail sesiwn dystiolaeth y prynhawn yma fel rhan o’r gwaith yn edrych ar Ffos-y-frân ac adfer safleoedd glo brig yn gyffredinol, ac yn ymuno â ni ar gyfer y sesiwn yma mae Hugh Towns, sy’n uwch-reolwr datblygu a gorfodi gyda Chyngor Sir Caerfyrddin. Croeso atom ni. Rŷn ni’n ddiolchgar i chi am wneud amser i fod gyda ni. Mae gyda ni rhyw 50 munud ar gyfer y sesiwn yma, felly awn ni’n syth i mewn i gwestiynau os ydy hynny’n iawn. Ac mi wnaf i ofyn ar y dechrau, os caf i: beth ŷch chi’n meddwl yw’r prif resymau neu’r rhesymau allweddol am y methiant yma, mae’n ymddangos beth bynnag, i adfer safleoedd glo brig yng Nghymru mewn modd priodol?

Diolch, Cadeirydd. Bore da. Dwi’n mynd i siarad yn Saesneg yn swyddogol. Dwi’n gallu siarad Cymraeg, ond Saesneg byddai’n well i fi.

Ie, dim problem o gwbl. Mae hwnna'n ddewis i chi. Dim problem.

The main issues go back to privatisation of the coal industry in 1994, in my experience. Prior to that, it was a nationalised industry, so all restoration was, essentially, funded by the Government as an underwriter, but that would have been the UK Government at the time. When the coal industry was privatised, the liabilities that would have fallen to the public purse at that time were shifted onto private companies. I think people will agree that was probably not a great idea in hindsight, because those private companies didn't really have the means to deal with the restoration liabilities, in my view. There's a lot of evidence for that in terms of the sites that were privatised; I think there were nine sites in total that went to Celtic Energy Limited, and none of those had any bonding arrangements in terms of financial guarantees that were given to the local authorities to ensure restoration should the private companies fail. That's the main issue in terms of where we are, and I think it was highlighted in the report that was done for Welsh Government in 2014 in terms of research into the failure to restore opencast coal sites in Wales. One of the things that was recognised in that report was, in order to ensure restoration of opencast coal sites, or any sites really, there's a need for performance bonds to cover all liabilities at all times. That was certainly not the case during privatisation, and it wasn't the case for Celtic Energy Limited for 10 years following privatisation. They were still exempt from bonding arrangements, as was the British Coal Corporation prior to 1994. So, that's the main issue in terms of why there was a problem.

There is an allied issue in terms of local government reorganisation in 1996. I think one of the unintended consequences of that was that mineral teams, specialist mineral teams, that were within the eight county councils at the time were teams of, I don't know, three or four people, or maybe five people. You had a succession plan in place, you had a knowledge transfer in place. Local government reorganisation essentially spread those teams amongst 22 authorities. Some had coal within those authority boundaries, some did not, and I think what's happened is everybody had one mineral planner, and that's great until that person leaves. There's no succession plan in place in terms of who does it next when that person leaves, and it was an ageing profile at the time anyway. So, we got a situation with limited skills or reducing skills and no funding within the local authority remit to be able to force operators to carry out their obligations. So, those are essentially the two things that I would say are the main things behind the problems in terms of restoration of opencast coal sites.

Okay, thank you. We'll pick up, I'm sure, on elements of that as we go into greater detail on some of these areas, so I'll ask now, Julie, maybe, to lead us on a few questions.

Yes. Bore da. Thank you very much. Just commenting on what you said now, obviously, if this dates back to privatisation and local government reorganisation, it's a number of years, a long period of time, then, when nothing has been fundamentally done to address those issues.

Yes, I would agree. There are things that have been done on a voluntary basis, and I'm sure we'll come on to our service level agreements with other authorities and the fact that Carmarthenshire seeks to provide services for other authorities in terms of minerals and waste expertise. That's something that we've done on a voluntary basis. There was in the 2014 report that I referenced earlier a suggestion or a recommendation that a centre of technical excellence be set up. We've actually tried to do that on a voluntary basis. It would, obviously, be beneficial, I would say, if there was more secure and consistent funding for that in the future, because, if you're looking at mineral planners with experience of coal applications in south Wales at the moment, there are, essentially, three, and they're all based in Carmarthenshire.

Right. Thank you. The questions that I wanted to ask were really: could you identify for us other opencast sites where restoration is a particular concern and the reasons for that? That's apart from Ffos-y-fran, which we'll be looking at later.

There are a number of sites where it has been a concern. There are not many sites left now other than Ffos-y-fran where there are significant concerns outstanding, because a lot of the concerns have been dealt with by other subsequent applications, either for extensions of sites that have given us additional bonding in place, or reductions in the requirements for restoration. Again, the 2014 report, a Welsh Government report, suggested that one of the main ways to achieve restoration of some of the more difficult sites was to instigate a major redesign of restoration and therefore reduce the costs involved. And a number of sites have had suitable restorations that are different to the original restoration, which has limited costs, or provided additional funding through additional bond calculations, or a hybrid of both in some cases. So, a lot of the sites that were the nine sites that were transferred to Celtic Energy have been remedied to a degree. Not everyone would agree that they've been done perfectly, but there has been a restoration in place, which has made sure that the sites are safe, going forward.

Sorry, Julie, Carolyn, I think, just wants to come in with a brief—

Yes, that's fine.

Can we ask for examples of those sites, because that's not what we heard earlier, which was that the restorations that have taken place haven't been adequate? So, can you give examples where you feel it might be working, doing it that way?

Yes. We've got a Celtic Energy site at Selar, which is just outside Glynneath, where there wasn't a sufficient bond in place. As part of an additional extension to the site, which granted more mineral working—I think an additional 800,000 tonnes of coaling—that had a revised restoration package that meant that not all of the overburden was returned back into the void, as was previously anticipated. And in the end, we got to a position on Selar where there was sufficient bond in place. The operator then completed the site and had the money back at the end, which is how it's intended to be. So, Selar was done correctly, albeit to a different profile.

Margam has been done, which is also called Parc Slip. This is my own view and a local authority view and not everybody would agree. Margam has been left with a huge void, which has filled with water, and some people would say that the initial restoration was to put the overburden back into that void and have an agricultural-type landform. Unfortunately, we didn't have any bond money to make that happen and the operator didn't have enough money to make that happen. So, in those circumstances, you have to look for compromises, and this is where the 2014 report suggested that you look at major redesigns of restoration. So, essentially, the void was allowed to fill with water. You've got overburden mounds, which are, in part, not able to be moved because of their ecological significance now, because they've taken on some ecological significance—some of the water bodies there have got great crested newts, for instance, so it's become a bit of an ecological paradise in some ways, and moving it would be, actually, detrimental to the ecological baseline.

The other one would be East Pit, where a substantial redesign was brought about, again leaving a void that has filled with water. Now, I believe that that water body is used by a diving school, so there's a commercial operation going on there. The tips have been restored; they haven't been put back into the void, as was originally anticipated. So, lots of things have gone on, following the 2014 suggestion and the recommendations in the Welsh Government report, where we've accepted different restoration proposals, certainly where we haven't had the money available as a local authority to go in and do the work ourselves should the restoration fail. We're not in a very strong position when we don't have the money available and neither does the operator, so we have to look at ways of making it safe in the longer term, but maybe not the optimum that everybody was expecting when planning permission was granted.

Julie, yes, go on.

My question was actually going to be to ask you about where there was best practice, and it seems to me that the examples you've given are all compromises. And you've also said that not everybody would agree with you that these were the ideal solutions. So, could you comment on that?

Yes. I think that, historically—and this goes back to British Coal Corporation days—planning permissions were granted from 1986 onwards by local authorities and, essentially, 'We'll put it back as it was before we started' was the standard procedure. That seems to have pervaded across the years. Now, we've recognised for many years—. I attended a coal summit in 2015, which was hosted by the then Minister, and we said, 'Well, putting it back exactly as it was is not very innovative, necessarily, you just get exactly what you had before, can't we be looking at things that are slightly better from 2015 onwards?' So, I think it's always been, from our point of view, that we can do better things rather than just be limited by putting it back exactly as it was before. Now, I would say, in a number of cases, we've gone further than we would ideally like, perhaps, but the reality of the situation is that you either get a restoration of a type which can be funded by the developer, or you don't get one at all. I think that's the situation we're in.

Thank you. Do you know of any examples in Wales or further afield that you would hold up as being shining examples of how you can do this?

Selar is a good one. Selar is in Neath Port Talbot, at the top end of the valley by Glynneath. What they've done there is, essentially, put back a landform that works. It's not as it was originally intended, but the landform works, it doesn't look out of place in its environment, the drainage systems work. There have been a few glitches, but they've managed to restore purple moor grass pasture, for instance. So, there are lots of positives that have come out, I believe, from the Selar site in particular.

Can I just ask one last question? One of the things that's come over very strongly today is the way that local people have not been involved in the decision making about how the restoration is going to take place. In the Selar site, were local people part of the planning?

I'm not entirely sure. I know the Selar site used to have a site liaison committee, which was attended by members of the county council, the community councils and residents, and they used to meet regularly and they were updated by site staff as to what was happening on site, what they were going to do, how the restoration was going to work. So, there was an involvement in terms of the site liaison committee. I do not recall whether, when the application came in for that change, it was widely consulted upon or publicised.

Thank you.

Thank you very much. Thank you. Joyce.

Good morning. I'm going to ask some questions around whether you're adequately resourced to do the job you do. We know that you have—I'm sure I've mixed up my questions here—an SLA with Merthyr Tydfil County Borough Council, a service level agreement, and you work to deliver their mineral works; you just said that now. Could you give more information on how it works and other local authorities that you might cover as well?

Yes. We've currently got 12 SLAs operating. So, including Carmarthenshire, we're working for 13 of the 18 local planning authorities in south Wales. We commit, as part of those SLAs, to provide minerals and waste planning advice or services to those local authorities. Now, the way it's structured is the local authorities, because they are responsible for their areas, they are not obliged to use our services, even though we've got a service level agreement; it is still their choice. All the decisions that are made are also their choice; we don't take any decision-making powers away from them. And they only pay us if they use us, which is a funding model that we have used, and we've done—. We've evolved our service level agreement since 2006. Back in 2006, it was just me; now we've got a team of eight, and we've built that up through additional funding by providing services to other local authorities. But that's not a model that is very easy to keep going when we're in the economic situation that we're in and the resources available to the public sector, because if local authorities stop using us because they can't afford to, for instance, that is entirely choice, but it does mean that our team potentially diminishes. So, some sort of funding structure going forward that provides greater certainty to the delivery of those services would be welcomed.

Okay. Yes, that sounds a bit complex. On balance—I don't know if you know the answer to this; you can write in if you don't—are you used more often than you're not used?

Yes, we are. Most local authorities use us. I said we've got 12 service level agreements—so, that's 13 authorities out of the 18. We've also done work for three of the others. So, there are only two local authorities in south Wales that we haven't worked for. But I think it's always—. When you've got a complex issue that we can help with, I think local authorities do rely on us to come and help them. The way we've set it up is that, because we're a local authority and we're not trying to make a profit, the way we've set it up is that we are substantially cheaper than if they used a consultant, for instance, from private industry. We're also a local government organisation at local government offices, so we know how local government works; we're not coming in from the outside not understanding how the systems work. So, most authorities use us. On occasions, some authorities will try and do things themselves, and that's entirely their right, under the service level agreement, but, so far, when it's been a complex mineral case, we usually come in and assist.

So, obviously, you've built up a particular set of skills, and you said earlier that there aren't sufficient skills right across all local authorities. So, you're servicing 13; I'm assuming that includes yourself, as a local authority. So, 22, that leaves nine with no skill whatsoever. Having said that, and set it out in that way, how do you think that might have contributed to some of the site restoration issues, that lack of expertise, that we've heard about this morning and probably will hear about later?

Sorry, Hugh, very briefly, if possible, because I think time is against us somewhat.

Okay. It's contributed in part. I think local authorities, irrespective of whether they had the technical expertise or not, once faced with a situation where they have no bonds, no financial guarantees, the operator is, essentially, in the box seat, because you can't force anything. Essentially, you've got to try and get them to do it voluntarily by cajoling, trying to get some restoration upfront, progressive restoration, where possible, but that's not always possible. So, the only deterrent really to operators walking away is for local authorities to hold enough money at any point in time that they can go in and do it themselves, should the need arise.

Okay. You've talked about the recommendations of the Welsh Government 2014 report on the failure to restore opencast sites and to adapt their approach, so unless there's anything further that you want to add on that, I'll assume you've said everything you wanted to say.

I have got nothing to add, no.

Okay, thank you, Joyce. Right, we'll move on to Janet, then.

Good morning.

Good morning.

What role should the Welsh Government, the Coal Authority and Natural Resources Wales play in restoring these sites in Wales?

It's very difficult to say, really. Because we don’t have the resources in terms of bonds—and I’ve elaborated on this point a number of times—Welsh Government wouldn’t have the financial guarantees to do it either. When you’re looking at private companies—. One of the suggestions in the 2014 report was that operators couldn’t sell on sites to unsuspecting people who didn’t have the means to actually put them back themselves. Because that happened in a few cases, where sites were fragmented in terms of ownership and then the people who bought it thought they were getting cheap agricultural land when in fact they were getting a liability, and then they didn’t have the means to actually finish the aftercare period. So, there’s an issue there. So, Welsh Government wouldn’t have had the funding either to come in and do that work.

The Coal Authority look at health and safety and the safety of the mine, essentially, rather than the full restoration. So, their remit, as far as I understand it, doesn’t go to full restoration; it just goes to making it safe.

Natural Resources Wales are a consultee in the process. So, if we had a design for a restoration that included water bodies or drainage arrangements, then we would go to Natural Resources Wales for their comments on how those drainage arrangements would work. But they wouldn’t actually be involved in the restoration process. The Coal Authority wouldn’t be involved in the restoration process. It’s essentially down to local authorities to ensure the restoration process is carried out. When companies haven’t got the money to do it and we haven’t got the money to do it, it becomes a very difficult situation.

But it's very difficult for anyone who's worried about an opencast mine. It used to be in my portfolio this, and we've been talking about this now for quite some time, and I'm getting rather frustrated that it is becoming a bit like a political football. Welsh Government blame UK Government, and UK Government are saying, 'Well, it has been devolved for 26 years', and there seems to be this—. To me, now, should there not be somehow something put together by means of someone with authority within UK Government, someone with authority within Welsh Government, NRW, the coal board—? I mean, why don't people just get round a table? Because at the moment lots and lots of people in Wales are being affected by this, and it sits difficult with me when everyone's passing the buck, but nothing's actually happening. We're not getting anywhere. So, how do you feel that could be resolved?

A lot of it's being resolved, in my view. Of the nine sites that were passed over to Celtic Energy on privatisation, which were the ones with the significant liabilities that people were concerned about, Margam is complete, Selar is more or less complete—I think there are aftercare periods still there—Nant Helen is complete, Bryn Henllys is complete, East Pit is pretty much complete. So, really, out of those sites that transferred over, a lot of those have been completed. As I said earlier, not to the standard—. I don't mean 'standard'; not to the profiles that people were anticipating, but they nevertheless have gone back to acceptable profiles, and, where we can, some of that reprofiling has allowed some ecological benefits to be included within schemes that weren't necessarily there before. The old restorations pre 1986 were pretty much prairie landscapes, and people would be able to spot them from miles around: so, you've just got grassed areas with very, very straight hedges, rectangular fields, not much interest. We've changed that now to try and integrate these things better into the ecosystems, so that we've got more ecosystem resilience as part of it. So, it's different, but not necessarily worse.

Thank you for that. Given MTAN 2, and the emphasis on the importance of consultation, how can those who are concerned, shall we say, be more involved? We heard from an earlier group of residents who just feel that their concerns are not being listened to. How can that part of it be addressed?

It's a difficult one. I think—

Sorry to interrupt. Also, as a local authority, we know that lots of legislation that's come through recently from the Welsh Government has lots of implications for stretching your resources. Do you have the resources to actually do what you need to do in the main, and also how do you work with the community around that?

Do we have the resources we need? We're very stretched in terms of the resources we need. I've got a bigger team than just the minerals team—it just falls within my remit—but my background is minerals and waste planning. We've got a vacancy sitting in that team and that vacancy's been sitting there for a while because we don't have the resources to fill it. So, we're going with what we've got. We're providing services to local authorities as best we can. It is very stretched in terms of the resources that we have. We do have an eye on the well-being of staff, but we can't continue as we are indefinitely.

Just coming back to the first part of Janet's question, then, why is it that communities never feel listened to? Because we've had very compelling this morning about communities literally not receiving replies. And I'm not pointing the finger at any particular organisation, but the system is clearly not delivering for them, is it?

There are some issues. I think one of the issues potentially—and I can't go into specifics here—is restoration is quite often a strategy when the planning application is submitted. So, it's a restoration strategy, it's an idea about how it will work at the end, and there's usually a planning condition within the planning permission that says, 'When we get closer to the end game, you'll provide us with a more detailed restoration proposal'. That more detailed restoration proposal then comes in as a discharge of condition application, where there is no requirement on planning authorities to publicise discharge of condition applications. And that's possibly why it becomes a technical conversation between the local authority and the operator about how technically do we achieve the restoration that we want. And, potentially, it does miss out the local people, because there's no requirement to publicise that type of application.

That's an interesting point, actually, and that's maybe something that we can do a bit more work on as a committee. Thank you for that. We'll move on to Delyth now, if we may.

Diolch, Cadeirydd. Bore da, Hugh. Looking specifically at the Ffos-y-fran site, I'm aware that you've been working with Merthyr council looking at restoration. Could I ask, with your expertise on minerals planning, what your views are on the plans that are on the table that the restoration may now be adapted or downgraded to include a void of water because of pumps having been turned off and the degradation of the site?

I don't have any authorisation from Merthyr council to speak about Ffos-y-fran in specifics. What I can say is that at East Pit and Margam, revised restoration schemes have been put forward and approved with water bodies. So, it's not unknown for that type of proposal to come forward. What that does is it reduces the liability in terms of moving of material, because the greatest cost on any restoration in an opencast coal site is the movement of the overburden material, which is the stuff that's dug out to get at the coal, and putting it back from the tips into the hole. That is the greatest cost. So, if you limit the amount of material you move around, then you limit the liability. But it has to be designed in such a way that you ensure that what's left in terms of the void filling with water is safe—geotechnically and hydrogeologically, make sure that it is safe. So, that's the key component in leaving a water body.

Thank you very much. I appreciate that you said that you don't have authorisation to speak specifically about the site at Ffos-y-fran. Can I ask, then, with your expertise, what risks you could see in an opencast site that fills with water, where this hadn't been the original intention? We've heard this morning that there are concerns locally in a particular site, but, presumably, they would be replicated elsewhere if the same thing were to occur. How concerned do you think residents should be about the quality of the water that could be in an opencast site—again, not specifically about Ffos-y-fran, but generally—and the danger that that could pose to the public?

There are a number of things that could happen. Essentially, the water would have returned to that level anyway, albeit that it would have been in the ground rather on the surface, because the water table would have recharged to that level. But what we don't know at the moment, or I don't know, in this case, is what underground workings have been encountered. If you encounter old workings underground, then that provides potential hydrological linkages to somewhere else. If there's been no water in those workings previously, water that flushes through those systems is going to be highly oxidised in terms of the iron content that's going to come out at the other end.

I don't know enough about the system as it operates there, but I know that, in the Margam situation and the East Pit situation, the operator put forward technical information, geotechnical information, and hydrogeological information, which satisfied us that these issues wouldn't arise in those circumstances. We're not in exactly the same situation in Ffos-y-fran, because we don't have those geotechnical and hydrogeological reports, as far as I'm aware. So, the water body is filling up. And, again, I haven't been to the site for some considerable time, so I don't know how high the water body is.

It's quite high. Thank you very much for that. Before I ask my final question, presumably you'd be unable answer on specifics about the escrow account that's involved at Ffos-y-fran. If so, I'll ask a different question.

I know the amount—that they have a £15 million escrow account.

Thank you for that. I was going to ask you how you understand that the company intends to use that money. If you're not able to answer that, could you instead tell us, please, whether you think that the system that we have for the use of escrow accounts that are then used for restoration is the best way of using this money? What should change in order to make sure that there is more money set aside that can be used to restore sites if a company either abandons that site or declares themselves bankrupt?

I think the important thing—this goes back to the 2014 report, and it's front and centre in that report—is there is an absolute need for the performance bonds to cover liabilities at all times. At no time, when you've got a privatised industry, can you have local authorities who are taking on risks in terms of gaps between what you've got in the bond and what it would cost you as a local authority to put it back, if you had to do it. The problem at a number of sites, not just Ffos-y-fran, is that the amount of money put down at the outset and the amount of money that's built up over time is nowhere near enough. And once you're in that situation, you lose control as a local authority of what you can achieve. I think, to answer the initial part of your question, that money, if it's given to a local authority for restoration, should be used for restoration. That company should not be able to get it back if they've defaulted.

Thank you very much.

Thank you. Before I come to Carolyn for the last couple of questions, because I understand we've got about five minutes left, can I just ask very briefly—? The committee's had a letter from the site operator this week, saying that they've reached a formal agreement with Merthyr Tydfil County Borough Council to commence an interim restoration programme of works on the site, which is due to commence in early May 2024. Have you had any involvement in assessing and agreeing the interim restoration works?

No, we haven't. We haven't been asked.

Thank you. That's interesting, because, obviously, I'd imagine that, as an expert in minerals planning, what you had to say might've been important and significant in that process, but that's something we can pursue with Merthyr separately. Carolyn.

Thank you. Are any changes needed to legislation or policy to ensure successful restoration of the site?

I think the legislation is there, to an extent, and the reason I say it's there 'to an extent' is some of it's a bit dated. Minerals technical advice note 2 is 2009, for instance, which is significantly outdated. It may not be a priority at the moment, given there is a moratorium anyway on coal development within Wales.

Is that MTAN 2 on community involvement?

Yes, MTAN 2 on coal. It's out of date, really. It's a 2009 document, so it's 15 years old. I think it could be updated. Certainly, it could be updated to reflect the changes in our policy and legislation background. We've got the Environment (Wales) Act 2016, the Well-being of Future Generations (Wales) Act 2015—those sorts of Acts are not reflected within MTAN 2 at the moment. But again, it's a priority thing. If coal sites are not coming forward in Wales because there's a moratorium on coal sites for energy generation—. It's something that the Welsh Government have to put in their priority system, like all public bodies at the moment.

If consent is given for sites, though, to continue mining for restoration, that might apply then, mightn't it, do you think?

If somebody wanted to mine additional coal, MTAN 2 would apply, yes. We would have to apply it, even though it's slightly outdated. But we would, within any committee report that was required, have to reflect the environment Act, we'd have to reflect our duty on biodiversity, we'd have to reflect the well-being of future generations Act. But we'd also have to reflect the 2014 report from the Welsh Government, which says maybe the only way to do some of this restoration is to compromise.

And we could then reflect the need for communities to be involved in the restoration. Sorry, am I going over time?

I'm just mindful that we're over time, so if you want to just ask your final question.

I'm sorry. The final question is this: do you think legacy coal mines and opencast mines should be dealt with together? If so, can you explain your reasoning? Thank you.

There's an argument for that, yes. The issues with legacy coal tips are related to the fact that they were put there some time ago. The Coal Authority has an input into that. A lot of the issues around opencast coal sites are voids and tips, because the tips have not been put back into the voids. So, I think there's an argument for saying they could be dealt with together, yes.

Thank you.

Diolch yn fawr. Mae'n ddrwg gyda fi, ond rŷn ni wedi dod i ddiwedd ein hamser. Roeddwn i'n meddwl bod bach mwy o amser gyda ni na beth sydd mewn gwirionedd. Gaf i ddiolch ichi am ymuno â ni? Rŷn ni'n gwerthfawrogi'n fawr y dystiolaeth dŷch chi wedi'i rhoi, a'r arbenigedd sydd gyda chi, wrth gwrs, yn y maes yma. A bod rhywbeth pellach gyda ni i'w holi, efallai y gwnawn ni ysgrifennu atoch chi, os ydy hynny'n ocê.

Dim problem. Diolch yn fawr ichi.

Diolch. Fe gewch chi gopi o'r cofnod hefyd i'w tsiecio i wneud yn siŵr ei fod e'n adlewyrchiad teg o'r hyn rŷn ni wedi'i drafod. Diolch yn fawr ichi am ymuno â ni. Gwnaiff y pwyllgor nawr dorri jest am bum munud, a wedyn mi fyddwn ni'n barod i gychwyn y sesiwn nesaf. Diolch o galon i bawb.

Bore da. Croeso’n ôl i'r Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith. Dŷn ni'n symud ymlaen at yr eitem nesaf, ac y bore yma rŷn ni yn mynd i fod yn edrych ar y map ffordd i ddiwygio bysiau yng Nghymru, ac yn derbyn briff technegol gan y swyddogion sydd o’n blaenau ni fan hyn. Mae hyn, wrth gwrs, yn rhywbeth rŷn ni'n awyddus i ddod i'w ddeall yn well, yn enwedig yng ngoleuni’r ffaith, wrth gwrs, fod yna ddeddfwriaeth arfaethedig ar y ffordd yn y cyd-destun yma, a dwi'n siŵr bydd y sesiwn yma a'r gwaith pellach rŷn ni'n gobeithio ei wneud yn y maes yma yn cyfoethogi ein gallu ni i graffu ar y ddeddfwriaeth pan ddaw hwnnw. Felly, i'n cynorthwyo ni yn y sesiwn nesaf yma, dwi'n croesawu tri thyst: Lee Robinson, wrth gwrs, sy'n gyfarwyddwr gweithredol trafnidiaeth ranbarthol ac integreiddio gyda Trafnidiaeth Cymru—croeso—Robbie Thomas, sy’n bennaeth deddfwriaeth bysiau gyda Llywodraeth Cymru, a Joseph Dooher, sy’n bennaeth trafnidiaeth gymunedol a bysiau gyda Llywodraeth Cymru. Croeso cynnes i'r tri ohonoch chi. Mae bron iawn i awr gyda ni, felly mi awn ni'n syth at gwestiynau, ac mi wnaf i gychwyn gyda Janet.

Thank you, and welcome. Can you provide an overview of the planning process for the introduction of franchising in Wales, specifically, the timeline and how you will develop the franchise packages to be tendered, including the data sources, planning principles and phases of delivery?

TfW are taking a five-stage approach to the planning and delivery of franchising. The first being discovery and design, moving on to tender, transition, mobilise, and manage. Those are the five principles that TfW are taking. And we're at that design and discovery stage at the moment. I wonder if it's best if I hand over to Lee to give a bit more information and evidence around the process we're going through at the moment and where we're going.

Yes, of course. Bore da. So, yes, as Joe says, we've got five stages. We're now at discovery and design. As part of that, we're taking the opportunity to test out some principles, and we've had some successes with that with TrawsCymu and T1 and with the Sherpa service. And as the road map points out, in that planning phase, we've separated Wales into zones. Those zones are fluid, so we're discussing how those zones will work with local authority partners. So, by way of example, with the south-west, which was in two zones, we've agreed with them that that will work best as one zone. And then I think the most important part is we are currently co-creating, if you like, how we will co-create the franchise plans. So, we are developing a methodology or blueprint that goes right through from network design through to how we'll deal with fleet, how we'll deal with depots. And we're in discussions, at this point in time, with the four local authorities in south-west Wales and developing that together with them. And for each zone, and over each corporate joint committee footprint, we will eventually have a detailed roll-out plan that will take us right through into detailed delivery, using that methodology that we're currently in the process of developing.

I think, Janet, as well, you also mentioned data, and I think the key part about the data is how we develop the network, so, also using local experience, local expertise, the data that we've got from some of our systems, and also things like health data, data from community transport, so that we are, basically, trying to construct an evidence base that helps us to construct the network that's right for passengers in each of those zones and local authority areas.

Thank you. And then also—

Sorry, you mentioned timelines as well, Janet. I don't know if there's anything in particular around—

Yes, timelines.

We're constrained by the legislative timeline, to some extent, and when the Bill will be introduced to the Senedd, and I think the First Minister is going to be making a statement in the coming weeks around the legislative programme—I can never say that word—so that will dictate. But I'm not sure whether there's, Robbie, anything you can actually say about what happens from that point onwards.

Yes, just on that, and, obviously, I don't want you to preempt what the First Minister has to say, but we were expecting the legislation imminently, I think—at the latest, maybe, after the summer. I asked the new Cabinet Secretary last week in the Chamber, and he suggested maybe next spring now, although aiming, maybe, to get it out sooner. So, there seems to have been some sort of delay in timing.

Yes, I think it's quite difficult for us to comment. We have to wait for the First Minister to—

But I just felt I had to try. That's fine. [Laughter.]

But Robbie can talk about the steps following the instruction, what we think that process will look like.

Yes, thank you.

I guess it is maybe worth touching on that the current legislative framework has been in place for 40 years, and it's been built on through various enactments over that period. So, it's a fairly complex process to go through and unpick some of that, and I guess the timeline doesn't necessarily indicate anything more than legislation being a fairly complex process, and the legislative programme as a whole being a fairly complex undertaking.

In terms of specific timelines, we try to give a general sense in the road map of how the process as a whole would look. Obviously, the new powers around franchising won't be in place until the Senedd has decided whether or not to pass new legislation. At that point, you're at a stage where any kind of process that is attached to that in the legislation can begin, so any kind of consultation that's required by the legislation, or the process of making any secondary legislation that might need to be made can start at that point, and, from there, you can start procurement.

I think we've seen, with other examples of franchising, that these things can take a little bit of time. There's a balance to be struck between wanting to improve services as quickly as we possibly can and giving proper time to let the market respond to procurement, and, actually, once you've got an award in place, having the right period for mobilisation and transition to get all of the right buses and staff in place to actually take over a new franchise on day one and be able to run it to the kind of level that passengers are expecting.

There we are. Okay, thank you. Janet.

Has anything changed in the planned approach following the appointment of the new Cabinet Secretary for North Wales and Transport?

Has anything changed given the change of ministerial roles?

So, I think the question there was: has anything changed in approach since the appointment of the new Cabinet Secretary?

Yes.

I think, probably, that is a question for the Cabinet Secretary, rather than for us, in kind of substance of policy decisions.

Yes, and I get that, and I respect that, of course. Can I just ask, Lee? You mentioned working with the corporate joint committees. I see the map in the document. Obviously, the potential franchise areas aren't coterminous as such, or don't seem to be, with the CJCs. Does that introduce additional complexity, then, because, obviously, you may be working across CJCs?

So, I think, actually, in the road map, it does suggest that that was a starting point—

So, 'potential' is doing a lot of heavy lifting here.

Absolutely. So, having had conversations with the mid Wales authorities, we will work with them on the CJC footprint, and the same with the south-west authorities. We've not had that conversation with the north Wales authorities or the south-east authorities yet, but early indications are that they would want to work on that CJC footprint. It just creates a greater volume of work in terms of contracts, obviously, and we will have to deal with that.

And mindful of the fact that maybe CJC boundaries aren't necessarily reflective of people's lives.

Absolutely. Absolutely. So, being cognisant of travel patterns, cross-border movements and all that sort of stuff is going to be really important. And I think being able to then link some of that thinking into the regional transport plans that are currently being developed is going to be key as well.

Yes. Okay, thank you very much. Carolyn.

Good morning. Can you give an overview of the organisations and stakeholders that will be involved in the franchising process, including their roles in the development, governance and delivery of franchising? So, which organisations are involved, okay.

Yes. We're engaging with a very broad sector of organisations, the people you'd expect us to be engaging with, essentially. So, thinking about local authorities and CJCs, engaging through the Welsh Local Government Association structures and the Association of Transport Coordinating Officers structures, to be speaking to both the officers and chief officers and leaders at the right level on franchising. We're also taking wide engagement with the industry, so, particularly through their representative bodies, the Confederation of Passenger Transport, CPT, and the Coach and Bus Association Cymru, CBAC, as well as third sector organisations such as the Community Transport Association, as well as individual bus operators, who we engage with on a daily basis through just the very nature of our work. And trade union colleagues as well—just making sure we're capturing the trade union side as well. We're also speaking passenger representatives quite a lot. The list goes on. So, I'll stop there, because it includes people like Transport Focus and Bus Users Cymru, but I wonder whether Robbie can talk about some of the engagement that he did on the lead up to the White Paper stage, and then, perhaps, Lee, some of the engagement we're doing on the road map and implementation stage as well.

So, as part of the White Paper, we did a lot of focused engagement with some of those groups and worked with partners across Wales. I'll probably also just draw particular attention to that we've worked with a range of stakeholders representing people sharing protected characteristics to try and make sure that we take into account the particular impacts on groups of people who maybe disproportionately rely on buses as part of the legislative process, and are pretty actively discussing with Transport for Wales how we can take advantage of the advisory architecture that they've got in place to make sure that we've got a systematic way of engaging with bus users, and particularly those bus users who are disproportionately affected by decisions over bus services under franchising.

Okay. And how has Transport for Wales developed their own skills now and capacity to deliver the change? Because I understand there was an issue there regarding knowledge of public bus transport in Transport for Wales for a while, so—.

Yes. So, over the last 12 or 18 months, we've built our skill base, so I guess it would come down to three categories now. We have people who have worked in the bus industry and have had a lot of experience of working directly with or in operator organisations. We've also got people who have worked in local authorities and have been responsible for public transport in local authorities. And then we've got a whole raft of people behind that, people like transport planners, geographic information systems experts, data analysts who are helping us to provide the foundation for some of that information as well. So, certainly, over the last 12 or 18 months, that skillset has expanded significantly within Transport for Wales and, to some extent, continues to do so.

Can I ask a supplementary question? So, why was the decision made to exclude school transport from this? Because it's very much tied up as well with public bus transport; I know it is in north Wales. So, for example, in Flintshire, when I was there, there were 450 transport contracts, bus and taxi, and 350 of those were school ones as well. Will that make it difficult? I think I might understand why you've separated it, but then it also needs to be included as well in decision making. So, just your thoughts on that, please.

So, on learner travel, I think what we're saying is that, where it's possible and it makes sense, we will look to integrate the learner travel network with the public service bus network, and the work that Monmouthshire County Council are doing at the moment on that is a really good example of where that's being done. So, Monmouthshire are going through a process of redesigning some of their public bus networks to maximise getting as many learners on there as possible. And that happens already in other parts of Wales, particularly in the larger city areas down in the south, where you see a lot of learners travelling. I think what we're saying is that we're really keen to explore opportunities where we can do that. It's not the fact that we will not be carrying learners on the public bus network, but learners and general passengers have very different needs in their transport, and where we can marry those two up, we'll absolutely be looking to do that.

Yes, because they use the same infrastructure and they exist within the same ecosystem, don't they? They're just different types of users.

Yes.

I know that, in Anglesey, they rely on using public bus transport to deliver school transport, with budgets and things like that, so—.

I think there's a distinction to be drawn there between where the statutory duty sits and how the practical process works as well. We've kind of said throughout this process, 'We want to work as closely as we can with local authorities to make sure that the kind of interface between the local bus network and school services works as well as it can.' What we are quite keen to be saying in the road map, and it's said in the White Paper, is that we're not talking about taking statutory duties off local authorities for leaner transport—we think that is in the right place. It's then incumbent on us and local authorities to work together to make the whole system work as effectively as it can.

So, are you taking duties off local authorities then to deliver the rest of the network, for the public bus authorities? Because I know I've pointed to the concern that they've got that relationship with local authorities and they've got the bulk of expertise now, and I know that Transport for Wales is building up expertise, but you're not quite there yet. So, just regarding that relationship.

So, I guess the detail of the system will be set out in the Bill and there'll be an opportunity to discuss that as part of that scrutiny process.

Okay. Thank you.

What we set out in the road map and the White Paper, ultimately, is a system where everybody needs to work together to make it work. There is a real need for input on local knowledge, understanding of local markets and local needs. There is also a need for join-up between local authority areas and across regions and nationally, so all parts of the Government system and industry need to work together to make the system work.

And there is the accountability if a person or child gets left behind as well. Okay, thank you. I've probably said enough.

The phrase that we've tended to use in relation to public transport is to optimise it in relation to—. So, working with partners to optimise it, so that we've got that balance of cost and service where we're looking at different users—public transport, school users, health even—so that we're trying to bring all of that together.

Okay, thank you.

Okay, thank you. Delyth.

Diolch. Good morning. When you were answering one of Carolyn's questions earlier about how you've engaged with passengers, you had spoken about how you're particularly focused on those passengers who are reliant on bus services, and that's absolutely essential—I'm glad that you're doing that. I'm also interested in how we can do the reverse. And to what extent do you think—? Or to what extent are you incorporating into your plans an attempt at behavioural change, so that those people who don't see buses as an attractive way of getting about have those perceptions changed and shifted? How are you working with, I don't know, looking at the experiences in London, to see what we can do to shift how people think of buses in this really stubborn way here?

I think, when you look at some of the growth we've seen on some of the services we've taken in-house already, so, for example, some of the TrawsCymru network—. It's in a stage of transition at the moment, and that is contracted by local authorities, and we're moving some of those routes into Transport for Wales as being the contracting party. I think, Lee, you've seen about 64 per cent growth on Traws, haven't you? And I wonder if you could give an explanation about what we think the secret sauce is really in Traws growth. [Laughter.]

In many ways, the T1, as Joe says, has seen a 64 per cent increase, and it's been—and the road map mentions it—I believe, around this total product approach. So, it's really around a whole combination of factors, including the network, timings, frequencies, hours of operation, fares and promotion, so that, when taken altogether—. So, I couldn't point to one single silver bullet that has done all of that, but all of those things together have seen that growth, so making the service more accessible, more available, easier to understand—all that sort of stuff.

I think the second thing I would mention as well is that TfW has got a much wider behaviour change programme aimed at the totality of public transport. I don't have all the details, but I'm happy to provide those to the committee, because that's focused across rail, bus and other modes as well.

That would be wonderful, please. And with that, if you're aware of it, do you know what the particular other models are that TfW is hoping to learn from? I know I've spoken about London, but are there other international examples, where you think, 'Either this country, or this city'—I know there's a difference between a city and a nation, but—'this place, then, has got it right, whatever "right" is, and we need to learn lessons from them'?

I'm afraid I don't, but other colleagues in TfW will, so I will come back to you, definitely, with the places that we've looked at.

Great, thank you so much. Diolch.

Thank you, there we are. Joyce.

I want to talk about risk, and the transition process could present some risk, and some of those of course would be the deregistration of commercial services, or bus market instability. So, I'm sure you've thought of those. So, how concerned are you and what processes are in place to make sure that that is limited?

So, first and foremost, we're working with partners, including operators, to identify and understand what those risks are, and some of them you've mentioned. There are others around having to run dual systems, around making sure passengers are aware of what system they're a part of, because of course, at points in time, there will be deregulated and regulated systems. So, first and foremost is just trying to get all of those risks out on the table and understand what they are.

Secondly, I think we haven't got all the answers at this point in time, but we are learning from partners across the border and you'll hear from colleagues from Transport for Greater Manchester later about how they've managed those risks. But as we kind of work that through and pin down the risks, then it will be working with all of the partners to mitigate them, and that's the way that we're approaching it, so that we're getting as wide a view as possible of what those risks are and making sure that we understand them, and are able to mitigate them as best as possible.

In terms of operator businesses, I guess I would point to the work that has been done jointly across the piece with Welsh Government during the pandemic, to make sure that operators were sustained and that their businesses were sustained. So, I think we demonstrated the ability to be able to do that. I know this is a different set of circumstances, but I guess the same principle applies.

The one thing people don't like is change. It doesn't matter what the change is. So, in terms of selling that change, if you like—not only to the bus operators, but to the people who will be using a new franchise system—what systems have you got in place, so that we don't end up in a situation where people become fearful, whether they're bus operators or the customers?

Yes, so, I'll start with that. I think, first and foremost from our perspective, as Joe alluded to earlier, there are a lot of two-way communications going on, a lot of conversations happening. We're currently in the middle of developing a full engagement strategy that has four underlying principles. One is around raising awareness; the other is around crystallising responsibilities; explaining how we want to do all of this in a collaborative way; and then most importantly, how we want to maintain that two-way channel of communication, to make sure that there are places where those concerns could be raised, places where we can explain the approach, places where we can basically start to allay some of those fears, whether it is operators or passengers, or indeed non-passengers.

There's also something about the purpose of the road map in this document. So, the road map is setting out our working assumptions of how franchising is going to work. It's not a set of policy principles set in stone; they're there to be discussed and debated and challenged. And that is very much what Lee was talking about: giving operators the opportunity to do that with us, to make sure that they can inform what we're doing, to make sure it's a real joint approach to franchising and not something that is being done to the industry; it's something about collaborating with the industry.

It's worth reflecting on the feedback we had from the White Paper as well, where I think it was over 90 per cent of respondents said that we need to change the way that we plan and deliver our bus services. So, I think that probably shows that there is an acceptance of the need for change in this space, and it's a question of how we navigate and communicate that and what the changes will be.

Good. Indeed. Thank you. Julie.

Thank you. Prynhawn da. Could you provide further detail on the incentive-based gross-cost model that's been chosen for Wales, including the rationale for this approach and current thinking on the planned approach to incentivisation and performance management of operators?

The choice we're making around contracting is one that's garnered significant interest from the bus industry, and I'm sure you've read reports from the bus industry on their preferred model ultimately. What we're trying to achieve with the contracting approach is something that delivers the advantages we want to see from franchising, and, to an extent, it doesn't really matter what contractual method you choose, net cost or gross cost, as they both enable you to put certain stipulations in contracts about quality of service, passenger growth and those sorts of things. But, having said that, there are some distinct advantages, we think, of pursuing a gross-cost contract model, and Robbie, I'm sure, will be able to set out some of those.

The big thing that makes life easier from a public sector perspective under a gross-cost model is that if all of the revenue is at public sector risk and opportunity, then the ability to specify fares and to look at how you create an integrated overall system is all within the public gift. You aren't in a position where, say, you want to look at how you design your bus network to integrate with your rail network, and your bus operator is concerned that that will extract patronage from bus to rail and that that will result in less revenue for them, you then don't get into complex contract renegotiations as to whether a bus operator needs reimbursement for any network change to that end. You can look at the system and say, 'Well, actually, we think this is what passengers want, and we are publicly subsidising the bus services and we are publicly subsidising the rail services and the right answer is to have a better integrated network.' Under a gross-cost model, that is an easier conversation to have and an easier plan to make and implement.

To a lesser extent, the same is true for multi-operator ticketing arrangements if you have a system where, whatever bus somebody gets on, whoever the operator is, the ticket price they pay goes to Transport for Wales to support the subsidy of the bus service as a whole. Then it doesn't matter that they get on a different bus that's run by a different operator, and you don't need to have a mechanism to look at whose buses they've used and how you reconcile that and who gets paid what.

If you've read CPT's report, you'll see they're concerned about the potential for operator incentives to grow patronage. I think that's why were quite clear in the road map about making sure we do envisage an option with incentives for operators in there. The fundamental contractual question is: what do you specify, what do you require of the operators, and then, what incentives are there, be they directly revenue driven or be they contractual payment incentives for the operator to be involved in the process of growing patronage on their services? We definitely wanted to have a system that incentivises operators to work with us to grow patronage, to have an attractive network, to get it to a place where it's financially sustainable and growing, and we can reinvest that growth into providing more services and better services.

The judgment we made in the road map is that we think that a gross-cost model provides a better balance of that from our perspective, but we're certainly open to continuing to discuss that with the industry and making sure that the right balance is in place.

It's also about being more attractive to different types of operators as well, because the benefit of a gross-cost contract model is that an operator can predict, for as long as that contract is in place, this is what their payment's going to be. Under a net-cost model, they carry the risks. When we think about the diversity of the bus market we have in Wales, the majority of which is small and medium-sized enterprise operators, actually, for an SME operator, having that ability to see into the future of what the profit margin level is going to be has significant advantages, and they can focus on the things they tell us they want to focus on, which is running excellent bus services on the ground, not worrying about complicated bid systems and having to try and make forecasting about patronage seven years into the future. A gross-cost contract is much simpler.

And there's also something about the bus network grant, which has been rolled out from 1 April this year—that's gone out to local authorities to tender. The vast majority of those contracts will be on a gross costs basis. That is the way in which contracts are being tendered, it's the way we've done things on TrawsCymru. So, it's that on the date that franchising is implemented the whole world is going to be turned upside down; this is a progressive journey towards that, and it's a model that is well understood and well used in Wales already.

The only other thing I'd add is that, obviously, totally recognising that this is a Welsh model for the people of Wales, there are other people in the UK and elsewhere who have travelled this journey before us, so we're also taking the opportunity to learn from their experiences of different models and what works well and what hasn't worked so well, and how they've moved through different models, in some cases.

So, your conclusion, from looking elsewhere as well, is that it does encourage SMEs. Has that been shown?

I don't think we looked specifically at whether it encourages different sectors of the market or not, but we can certainly speak to colleagues about that.

We've certainly had feedback from some SME operators that are running services. There's an operator in north Wales that runs Fflecsi services that has specifically fed back that they have actually quite valued the gross cost model for the reasons that Joe set out around actually having the certainty of what they're going to be paid to run the services. They're paid to run the services and we agree what they'll run and they can focus on running that service. It may be a bit more difficult, under a gross cost model, to get into a situation where you've got a very complex process of patronage and revenue forecasting that makes it harder for SMEs to bid against bigger operators. Which isn't to say that you can't overcomplicate a gross cost model. We certainly want to work with the industry to make sure that we have got a contractual model that is attractive to SME operators and is easy for them to work with.

With the attractiveness of contract in mind, clearly, whilst they don't carry the revenue risk, they will still carry a cost risk in relation to increasing fuel prices or wages, or whatever. Maybe it's a bit too far down the line for us to answer today, but would there be some sort of dynamic recognition that, in certain circumstances, obviously, maybe some of those costs would need to be reflected in the franchising, in amending rates and that kind of thing?

Yes. It's in nobody's interest to get to a point where the operator isn't being paid enough to run the contract; they walk away and you need to find somebody else. You have to work within the confines of procurement rules and make sure that you don't end up in a place where you're paying over the odds for something or that you've increased costs and you ought to have gone out to retender it. But it's certainly fairly normal to include some kind of indexation process or a mechanism by which those kinds of cost issues can be raised.

Can I come in on that?

Yes, Carolyn, and then we'll come to Janet afterwards.

Would you agree that, over the last few years, with the increase in costs of running as an operator, they are now persuaded more to go to this gross cost contract model, rather than the competitive model, which is what I've been hearing? It gives them some stability now, because they are concerned about funding their services and ongoing operations.

It will vary by operator. I think, probably, the point Joe was reflecting on around the increasing use of gross cost models in the last few years does reflect the conditions of the market at the moment, and I think there is a lot of value in having that kind of certainty for everybody involved. But that isn't to say that things couldn't change again in the future. It'll be something that needs to be talked about.

And then there could be concerns of affordability, I guess, with this model as well, going forwards. As long as the Welsh Government have got the funds to do this, how many services can we keep going? I just wanted to get that in—sorry.

That's fine. We'll move on to Janet.

In terms of the gross cost approach, do you believe that there's a financial risk for TfW and the Welsh Government if passenger numbers fall, and how are you going to manage this?

I think the evidence of the last few years shows us that whatever contractual model we have, whether it's a regulated or deregulated market, whether those are gross-cost or net-cost contracts that are held on tendered services by local authorities, the risk ultimately lies with the Welsh Government. The various emergency schemes, hardship funds and other acronyms that we've had to use over the last few years to keep the industry going show that.

The problem we have at the moment with the deregulated market is the number of levers we have open to us. If you are having cost challenges, you've got several things you can do. You can either increase the money going into the system, whether that be through patronage growth or increased subsidy, or you cut your cloth accordingly. At the moment, we don't have all those levers available to us. We have only one or two in terms of increasing subsidy into the industry.

We can't control network size at a national scale, nor can we control fares that operators might like to charge. But a gross-cost contract model in a franchise environment allows us to do that. So, I don't think it necessarily changes the risk that we're exposed to. I think it allows us to be more dynamic in our response and gives us the full gamut of levers that we could pull to try and manage these things. I'm not sure whether Robbie or Lee have anything to add to that.

I think it's an opportunity for greater transparency, but also an opportunity to manage and understand costs and revenue in a way that means we can manage the system in totality in a more efficient and effective way.

Diolch yn fawr. Thank you. Janet.

How will contracts be structured in terms of contract length, asset ownership and specification, fares and ticketing, and transfer of assets and staff at the contract end?

At the moment, we're about to start a process of market engagement—or it has started, potentially, Lee, or will be starting shortly—to open up dialogue with the industry on those particular points, finding out what operators want from their contracts and what's going to be most attractive for operators to be bidding for. For franchise contractors, we're looking at the example of TfGM, for example—who you'll be hearing evidence from shortly—to understand their approach. What we need, essentially, is to get to a point with a contractual model that delivers what we want, that balances that against encouraging something that allows as many people to bid, to help us ensure value for money in the provision of bus services. I think what we're particularly mindful of as well is the SME sector, making sure that we're putting in place a way of capturing the social value they provide as well, because they are operators that many communities rely on. I'm not sure, Lee, whether there's anything else you can say. We're at an early stage of this.

Just briefly, on that social value, how do you capture that?

I think that's part of the engagement we're going through at the moment. Obviously, whatever we do, we need to be acting within procurement law and procurement rules. We're at quite an early stage at the moment of thinking about the commercial model and contractual model we'll use, and we'll be able to flesh that out. We might be able to write to you with some more information on that, if that would help.

If and when you have it, that would be useful, yes. Thank you.

I'll just add that, as a base point, we've got the contracts that we have with TrawsCymru, which pick up some of the things that Janet talked about. Within those, we've got a mix of asset ownership, we're able to set fares, and obviously we're focused on things like driver training, safety standards, all that sort of stuff. So, we have, I guess, the early forerunners of some of the things that might be included in those contracts. But, as Joe says, those are still to evolve and we're starting that process of engagement now to build that.

Just reflecting on asset ownership, of course, there's a question about capital investment as well, isn't there? Can you tell us a little bit about what plans there may be in relation to that, thinking particularly maybe of improving the fleet that we have out there in terms of carbon reduction and all that kind of thing?

In the road map, we've set out our intentions to have public ownership of fleet and then a mixed economy of depots as well, some in public ownership and some in private ownership, depending on what's right for the particular geography of that patch. Lee, I'm not sure if there's any more you'd like to add.

But that's going to cost money, isn't it? A lot of money, presumably.

Yes. The fact is there's a trade-off. In a trade-off where you purchase fleet, you own it and there's a lease back to an operator, actually there's a revenue benefit that arises from that, because you're not paying the operator to do that and you're not paying for their cost of capital either. So, working through that and understanding what that profile looks like is a piece of work that's ongoing at the moment.

Because I'd imagine that would require quite a lump of money upfront to deliver some of that, in challenging economic times.

It's a question of how quickly you do things, I suppose. So, if you wanted to buy an entire bus fleet and depots across the country all in one go, it would require a lot of capital upfront. The question, depending on how much capital you have available, is at what rate do you replace the fleets and how do you deploy that capital to try and improve services, to try and reduce your revenue spend, or make that revenue go further, and to try and decarbonise the fleet, and how do you balance that against other capital pressures and priorities.

There are a lot of balls in the air there at the same time, aren't there? But I guess it's about managing all of that, which is exactly what this is about, I suppose, isn't it? Thank you. Carolyn.

Operators have said that the biggest outlay, especially for the small operators, is the buses. To actually buy a new bus can cost £350,000 to £750,000. So, if there was bulk purchasing by Transport by Wales, or whoever, that might help. Then they could run them, which is what we did in Flintshire when we tried to set up a municipal company. And if you can share MOT garages, or whatever, for your fleet, that saves cost as well, doesn't it? And engineers, because there's such a shortage of those as well. So, I see how that can help, which is part of my question, I suppose. How would delivery of bus franchising ensure that there are opportunities for the small and medium enterprise businesses, community transport and third sector? As well as the franchising model, I guess helping them with fleet, MOTing and servicing of vehicles might help. Sorry, I'm telling you, instead of asking you questions.

Well, you've done a great job of saying what I was about to say. [Laughter.] Yes, just that. We've talked about the contractual model that we'd like to use, because we think that has benefits to the SME sector and smaller operators. We mentioned the approach to depot and fleet ownership as well—that mixed economy. We think all those things will help smaller operators and de-risk entering into a franchised agreement for them.

And I think the other thing is about the procurement process that we go into and, actually, making sure it's not onerous, making sure that it's as simple as possible—that you don't need a bid team to be able to bid for a franchise contract, that it's not a barrier to enter into the market.

And that we don't end up with one regional contract that's up for tender and that there are bite-sized chunks that all and sundry can apply for, if they wish.

Or if you do end up in that situation, making sure you've got a mechanism to create a secondary market.

And would you be working with the local authorities regarding that provision? Because some local authorities do have fleet services that they offer.

It would all be part of the mix—as Joe says, making sure that that procurement process is simple and that it avoids barriers to SMEs. We're starting to engage with the operators now in the development of that process. That has two advantages: first, they get to feed into it, and, secondly, they get an understanding of our approach, which I think is really important, so that we don't create any of those barriers that people are concerned around. And, of course, the Procurement Act 2023, which comes into force in October, also absolutely requires us—as well as being the right thing to do, it legally requires us—to make sure we don't create barriers for SMEs.

You talked about social value earlier. When Flintshire went out to procurement of school transport, when they went out for auction for those contracts, there'd be an element of social value to them, and that element would be then used for medical transport costs going forward, to give people transport to hospital appointments, which was quite a good way forward. But then, again, that's mixing the school transport with the public transport, so I'm not sure how you'd be able to do that.

I think it comes down the network and using the data to support where people travel from and to, and making sure that health settings, social service settings, school settings are part of that network, and making sure we're cognisant of that.

And health is an untapped resource, I think, because to assist with the ambulance service, or where there isn't public bus transport to take people, but it's essential, you could use your taxi contracts and your school—. When school buses and minibuses aren't in operation, then they can be used for the rest of the day as part of it. But it's how you can align it all together.

Well, encouragingly, I was part of a visioning session that colleagues from non-emergency—I can't get my words out—non-emergency patient transport had a couple of weeks ago. We were involved in that and how they can take that forward.

That's good. Okay.

And my other question is specific challenges for rural areas, really. So, later we're talking to organisations from urban areas, and where I've seen franchising work—well, London kept it, didn't they, and Manchester and Liverpool are looking at it—you've got the density of the population there, haven't you, for the ticket revenue. So, if you're looking at rural areas, and ensuring that you can get people to bid for contracts, and ensure there are enough operators that want to work in those rural areas as well, I suppose the franchising model will help with that, but are you concerned that there will be sufficient bidders as well to do those rural contracts going forwards? And if not, how could you support local authorities to step in, then, and become a municipal bus service? Because I know some of them, because of austerity over the last few years—. They would have to have an operator's licence themselves, wouldn't they, to be able to step in, so how could you encourage them to step in in rural areas where you aren't getting people to do that?

So, the first thing to mention on the provision of bus services in rural areas is it happens on the ground already. Particularly in rural parts of Wales, Powys being an obvious one, they have a tendered bus network already, and so we see operators in that area willing to operate and bidding for and winning contracts at the moment. So, we don't expect the franchising regime to change that; that's already—. And that applies to other rural authorities in Wales as well. In terms of the ability to support local authorities with establishing municipals, I wonder whether there’s anything that Lee can say about TfW’s approach to this.

Yes, that's fine.

It's emerging, I know.

Yes. So, I think—. I agree with Joe, I think, first and foremost, franchising presents an opportunity to treat the urban and rural equally to really enhance that kind of one network, which is part of where all of this is geared to. I also think there is an opportunity, working with partners and local authorities, to be creative around community-led solutions in rural areas. So, yes, bus, but also looking at things like demand-responsive transport, car groups, active travel, all of the full range of services that are available, and community transport. I see all of those things as being part of the one network solution.

In terms of where we don't have operators, we are in conversation with operators regularly in rural areas to understand their concerns, and I think you're absolutely right—early thinking on that is what is the most effective way for the public sector to step in and support those communities where there needs to be some transport service, whether it’s a bus service or other service. As Joe says, that’s early work in progress, that we’re looking to understand, if and how we need to, where we fill those gaps.

And linked to that, town and community councils, some of them have funding in their precept and could help support, but they don't have—. Some of them are so small, so they don't have the expertise, so they might have to buy into a service, if that was the case. So, I'm just a little bit concerned, because we tried to do that—expecting a small town or community council to be able to have a minibus or operate a service, to see who actually wants to use that service and routing it et cetera. So, that's something I would want you to look at.

And I think that's where working closely with the Community Transport Association of Wales is really important, because they bring with them that whole range of expertise about how to support that across the piece.

So, to what extent are you proactively supporting that sector to grow, or using that sector to plug gaps?

Well, 'proactively' in the sense that it already exists, and then continuing conversations about the one network, trying to understand, as we build that network—. So, I've talked about the regional approach of working in zones. They're part of that conversation as we build that network and look at the network across those zones. Where are the gaps? How do we fill those? What are they understanding? And it's all part of the trade-offs with affordability and things like that.

I'm just wondering whether there's a conscious policy decision to use some of these changes as a way to grow and strengthen proactively the community transport sector as something that many of us feel is good, because we want to see more community-owned assets being used and utilised.

So, we've set this aspect to the CTA, about that and what's involved, and it's trying to find the right balance of giving community transport operators the space to do the things they're doing well, and to not tread on their toes in doing that, whilst also looking at those community transport operators who are doing a good job and looking at where we can provide them with opportunities to grow. And I think it brings a few of the things that we've been discussing together, because, actually, where you're able to provide depot infrastructure and fleet and a gross cost contract model—. So, you're not asking an operator to take a big financial risk on running the services, you're, effectively, saying, 'You're doing a good job running bus services in this community, and we can provide you with the fleet and we can give you a guaranteed return to run them—are you willing to expand and take on a bit more to bring those benefits to other communities where you can?' So, there's obviously a balance to be struck. There's a definite role for us in making sure that we have an attractive, thriving bus market. Obviously, we can't and wouldn't want to get into the territory of market distortion, but the question is incumbent upon us to look at how we can look at the good practice out there and create opportunities for those operators to demonstrate what they could do with a bit more support and the right contractual model.

Sure. Joyce.

Was one of those opportunities, particularly here in Cardiff and other areas, the expansion of housing? So, I'm assuming that, within your modelling, you're looking at the local development plans, what's coming on stream, where it's coming on stream and where you can encourage people to use buses right from the beginning, because we all know it's reliability, it's dependability, it's cleanliness. So, if somebody moves into these very large housing developments that are happening, and, right from the beginning there's a reliable bus service, it will help. So, what sort of engagement are you having with local planners and developers?

I'll pick that up. I think I mentioned it before, but I think that's where the overlap comes with regional transport plans. So, working with local authorities, that's also part of the role I do, and so I think it's where those two things come together; it's making sure that, as we construct the network, there's an overlap with understanding land use planning, places that aren't served, but also talking with local authorities about some of the innovative ways that are coming forward around encouraging people to use public transport—so, even when people are moving into houses, offering them tickets available for bus travel, making sure that network is there and established and well used. I think there are lots of things that we can do.

And planning 6 funding.

Sorry, Julie wanted to come in.

Yes, I was just thinking Joyce has made a very important point here; I'm particularly aware of it because a lot of this development is in my constituency in Cardiff North. And people have moved in often before the buses are actually running, and then a pattern is set that they're using the car to get into the centre of Cardiff. So, I do think it's really important that you do take on board that, but I know there are some examples as well, which you've mentioned, about giving some funding to individuals for using the bus, but it's no good if the buses haven't started.

Yes, and, as Carolyn says, it's a different way to use section 106 funding.

That's it—106. Yes, in Chester, they've just done it. So, using 106 planning gain, they give them a bus pass for one year to use public transport. So, that was something that was good.

There we are. I'm glad to see that's being written down. Excellent. [Laughter.] That's always a good sign. Okay, we're coming to the end of our slot. Just one question from me maybe about how cross-border services might operate, whether you envisage any change there. There will be services provided in England serving Welsh communities and probably vice versa that may or may not be franchised. Do you see that evolving in any way, or do they just carry on?

Do you want to take that one?

Yes. So, I guess, in some ways, currently cross-border services are either run commercially or contracted by the local authorities. Franchising, in some ways, doesn't change the fundamentals of that. You have a permitting system, whereby if an operator wants to run a service commercially then you're able to award them a permit to cross into Wales, to try and strike that balance between making sure that there are opportunities for services to cross into Wales and connect as our cross-border communities need them to, whilst making sure that you can stipulate some conditions to make sure that it connects with the rest of the Welsh network. Similarly, there will remain opportunities to contract cross-border services.

So, I think the crucial thing, really, is working very closely with bordering local authority areas in England to make sure that, as they seek to manage their bus markets on their side of the border, and we seek to do it on ours, we can do that jointly to meet the needs of communities on both sides of the border. I think franchising makes it easier in lots of ways for us to do that proactively and look at what we contract and how that integrates with the network on the English side of the border, but recognise that, wherever you've got that interface between different systems, you're going to need to work together to manage it pretty proactively.

Indeed. Excellent. Okay. Can I thank you for attending this morning? It's really valuable stuff, and we really appreciate the fact that you've come before us today. We will of course be pursuing this further with others later on today, and in coming weeks and months as well. So, with that, diolch yn fawr iawn—thank you very much.

The committee will now break until 1.20 p.m., and then we'll reconvene in order to take our next and final session for today. Diolch yn fawr. Thank you.

Prynhawn da. Croeso nôl i'r Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith. Rydyn ni'n parhau â'r gwaith o graffu a phwyso a mesur y diwygiadau sydd o'n blaenau ni yng nghyd-destun gwasanaethau bysiau yng Nghymru. Ac am y sesiwn nesaf yma, rydyn ni'n mynd i glywed am brofiadau dros y ffin, ac felly mae'n bleser gen i groesawu'r ddau dyst sydd gyda ni ar gyfer yr awr nesaf yma, sef Stephen Rhodes, sy'n gyfarwyddwr bysys Trafnidiaeth ar gyfer Manceinion Fwyaf, a Jason Prince, sy'n gyfarwyddwr Urban Transport Group. Croeso i'r ddau ohonoch chi. Mi awn ni'n syth i gwestiynau, a mi wnaf i wahodd Janet Finch-Saunders i ofyn y cwestiwn cyntaf.

Good afternoon. Can you briefly outline the background to franchising in England, how the approach differs to what is proposed in Wales, and do you have a view on which approach is the best?

Who wants to go first? Jason, you go first then.

Thank you, and prynhawn da. Hopefully, I've said that correctly.

Prynhawn da.

So, first, I thank you for inviting us, and, yes, just for a bit of background, to answer the question, Janet, at Urban Transport Group, we represent 14 authorities across the United Kingdom, with members—Transport for Wales is a member, just to let you know that—in Scotland, Ireland, and the big metropolitan devolved areas across England.

I think it's fair to say that it's been quite a journey, getting to franchising. One of the first things I did when I started to work in transport was work on the Bus Services Act 2017, which was the piece of legislation that permits combined authority mayors—of which now there are about 10 across England—to go ahead, without Secretary of State approval, with franchising. Before that—I'm sure the committee will be aware—in 1986, bus services across England were deregulated, with only London having a regulated market. Since 2017—and I'm sure Stephen will talk more about this—it was then quite a long period of about six years, once the legislation became an Act, and once all the appropriate guidance was published, for greater Manchester to start the journey to implementing the first franchises, and it's implemented two of the three franchises at the moment.

So, yes, it's been quite a long journey, but it was something that I know, at the time when devolution was discussed for parts of English regions, that bus franchising was a specific ask from the elected members, that they were able or where they would be given the power to regulate bus services, and that's where you could argue the journey back to franchising from deregulation started. So, hopefully, that answers the question.

Yes—

Stephen, would you like to—? Sorry, Janet. Stephen, would you like to add your perspective?

So, clearly, from a greater Manchester perspective, we're the first authority that's now well and truly into this. As Jason said, we're rolling that out. In the role I'm in, I'm accountable for the delivery and the ongoing management of those franchises, so it's a very interesting place to be. The key point, I think, from Jason there, is just how long it took us to get to this point, and the amount of work that had to be undertaken. I suppose one thing that that did do was make sure that we—and that was people who came and were working on this before I was as well, including Jason and others—were very rigorous in looking at the different options and putting forward the information that had to be in place, looking at all of those different ideas and options.

But, I think, from your perspective here—although there are, obviously, very big differences between the Welsh nation and greater Manchester—some of the similarities are, in a sense, looking at, 'Well, this is our situation: declining usage, increasing air pollution, congestion, a whole series of different measures, and what do we need to do to make a difference?' And perhaps we'll come back to this, because franchising is, in a sense, the enabler. It gives us the ability to do things. It isn't necessarily just about franchising. This is part, for us, of a much wider—we call it the Bee Network—story about joined-up, integrated transport, including active travel. Again, some similarities with, I know, what you're wishing to pursue here, but we're well down that road and we can happily talk about some of our achievements, but we're quite pleased, so far, in terms of some of what we've been able to do.

Feet firmly on the ground, and not least in the role I'm in, because we're very much accountable for, and very transparent about, the service that's being delivered, but we're proud of the fact that punctuality and patronage are improving on a fairly consistent basis. But it's a challenging road to go down, one that needs thinking through properly, and working through the various risks and so on. As I say, we're happy we can pick some of those up. We're still finding some of those out ourselves. We're only a matter of months and weeks into the second tranche of franchising, and preparing for our third main phase, which is half of greater Manchester. The third tranche, which is the south side around Stockport and so on, commences in January. So, we've awarded contracts there but not yet commenced. But there are some really encouraging signs coming out of those franchises, which we have now got up and running.

To some extent, it was a little bit of a bumpy start, because there are so many changes to effect, and I think one of my messages and thoughts is to be careful and think about what you really need to change upfront, as opposed to those things that you'd like to change and change overnight, because there's a lot of change, anyway, that comes through franchising.

Sure. Before I come back to Janet, do you mind if I ask, did you start work immediately after the Act in 2017? Because I'm just trying to get an idea of the—

I think Jason and others would probably say 'before'—

Before, because you knew it was coming.

So, greater Manchester proudly took a role in shaping that legislation, and indeed it was very evident at the time that an elected mayor would be needed as part of the legislation that was then put in place. So, it's been a journey. He's now retired, but we had somebody who worked for 10 years or more around bus reform, because we did look at other options. We did look at what are now enhanced partnerships, and ultimately needed to do that as part of our formal assessment, but we did look seriously at those different alternatives, and franchising was absolutely not the only or indeed the easy route. It wasn't.

Jason.

I think that's a really important point. And it comes back to what I said earlier on, that the premise of franchising now becoming part of how you deliver bus services in England was very much something that was led by elected political leaders. It was something that they wanted in greater Manchester. So, I was working on the Bill before it became an Act, within greater Manchester, to help support that legislation to pass.

I think, picking up on something—. I think Janet asked, as well, a specific question about which is best. I'm not quite sure if that is correct, Janet, about your phrasing—which is best. It's important to remember that, at the moment, there are only franchised bus services through the 2017 Act in greater Manchester. What you do have predominantly, excluding London, in England, is deregulated bus services. However, probably the only other comparator of a similar size of region in one of our members is the west midlands, and they have gone firmly down the enhanced partnership route. I'm not here to say which one is better or not, but you could argue that it's been useful to see two models working within one nation. I think out of that, particularly for our members, some innovation and some learning can be done, which is quite important, because ultimately at the end of the day, all we want is to make sure that we're delivering the best we can do for public transport. Buses are the biggest part of that mix. They're the most used form of public transport, which I think is sometimes forgotten. It's sometimes a bit of a cinderella service. But having those different contrasts of how it can be delivered, I think, has actually been helpful, and it's helpful, you could argue, for elected members across England and in the devolved regions to think about what method they may wish to pursue. So, hopefully, that answers your supplementary question, Janet.

Yes. And also, the approach here in Wales will see Transport for Wales take full responsibility—lead responsibility, I should say—for franchising, rather than local transport authorities. Do you foresee any opportunities or risks arising from this approach? The reason for asking this question is that, certainly over the past 12 months, there has been a lot of pressure on Transport for Wales regarding the running of the trains. And ultimately, we've kept being told about resourcing and all sorts. Do you think that they're going to be able to manage this? And also, implementing franchising in Britain outside London involves moving from a commercial deregulated market to a regulated market. There are not many examples of this internationally, so how confident are you that the benefits of franchising identified in your paper will be fully realised?

Shall I do a quick macro and then Stephen may go—?

Yes.

I think, honestly, it's something that needs to be considered, as you rightly identified Janet. You are going from one market to another, and that's a challenge. Let's not butter it up, you are literally changing the structure of a market, and whether that be in transport or anything, when you're changing the structure, there is going to be change. And when I was listening to the evidence session earlier on, and I think it was Julie—I think you asked about how do you bring customers with you. Change is a really significant thing and that needs to be front and centre of how you manage that process. So, it will be difficult. I imagine it will be a change. Do I—

Is it doable?

Is it doable? I can't see why not. In many ways, I think it all comes down to working back from what is the outcome. I think one thing—and I raised this when I appeared at the Transport Committee in Westminster—that Wales does have and should be congratulated for is, No. 1, you have a national transport strategy, which is very clear as a nation of what you want and what you want to achieve. And you've got the funnel, the hierarchy of how you want people to interface with transport. So, that's the overall strategic guiding mind. I think, under that, you've now got Transport for Wales, which under the premise of franchising, it's one network, one timetable, one ticket. And I think you could argue that, by having a guiding mind that is integrating and wants to bring it in and has that pool of skills—because people who work on buses, as Stephen will know, will also have skills across other modes—I think that may actually stand in TfW's benefit. So, I think it is new, but I think in the strategic context, because you have a very clear strategy of what you want to achieve in Wales, and I would suggest, as I said at the Transport Committee in Westminster, that there's the absence of a national transport strategy. I think that sense of purpose of what the outcome looks like probably gives a good sense for Transport for Wales to work towards.

And so what specific risk can you identify—thank you, by the way—during the transition process to franchising that, in Wales, we need to be fully aware of upfront? How might commercial bus operators respond during this transition process?

So, what has been your experience in Manchester, for example?

Okay. So, in terms of being doable, first of all, we are doing it. We are well through that process, but obviously that continues. So, I think I ought to be, quite rightly, positive. There's a tremendous amount of resource and commitment to that politically and amongst operators as well as our organisation.

So, on that point about transition, well, there are risks and we are managing those. We have managed some of those and we will be doing so, I'm sure, in our last part of the network. So, just to give you a feel for a couple of those, we made it absolutely fundamental that we stabilise the network ahead of franchising. We set out a specification, if you like, for what services would be franchised. Going back to the problems with the slowness of the legislation, that was broadly the 2021 network. And we hold that dear. That's not to say that—if there are some changes that should happen, we look to see what can be done, but generally we absolutely think stability is the start of this, before we go anywhere near—and I can comment about that—amending services.

So, we did have to step in, because when the first tranche of franchises, which are crudely, broadly, in Wigan and Bolton, so the north-west of the conurbation, when they were announced, an operator almost immediately deregistered a whole number of services. Now that, I have to say to you, hasn't been replicated since, to date. And we put a tremendous—and I emphasise the 'tremendous', because part of that is also what I do in that mix with my team—amount of effort on ongoing relationships with operators. So, for example, at the moment, Stagecoach operate many of the services in this third tranche that hasn't happened yet. In the east of the conurbation, in a town like Stockport, for example, we put in a lot of effort, and I have a transition management team that look after that, separate from franchising. Obviously, people talk to each other, but we say, ‘Look, this is really important', because if the network fragments, all manner of different issues and concerns will happen, where we start almost trying to recover the situation.

We put a lot of focus and time and effort, not only on incoming operators, or the incoming franchisees, but also on the demobilising ones. I don’t think we got that right in our first tranche and we’re quite open about that. The amount of effort—. If an operator—. In our case, it was a nine-month transitional period, which is, I think, longer, possibly, than you’re wanting to have here. But actually an operator is then going to move out; in the meantime, we have bought the depot and there are whole arrangements to put in place. So, we manage and work very closely around the risks with an operator that, as we put it, is demobilising and will be moving out, and we did that differently in the second tranche and we will do going forward. And a lot of that is about relationship management and you almost can’t do enough of talking to people about that.

I mean, obviously, you're a much larger entity than some of the local authorities that we'll be dealing with here, but also, on the other side of the scale, I'm very concerned about the smaller bus operators, because some of the big operators here, for instance, have been a little bit naughty during the 20 mph transition—they've cut buses and blamed it on it. And I'm thinking to myself, gosh, that's not a very good way—. And some have done it without notice—some of the bigger ones. And I was thinking to myself, I would hope that, if you are going forward with franchising, you're going to give a clearer commitment and actually stick to it and that you're not just going to suddenly withdraw bus services so that people couldn't get to work, couldn't get children to school and what have you. And yet, in the valley—and Llyr will know this, because he represents here as well—we've got a bus operator, called Llew Jones, who is just absolutely amazing and tries to pick up and work with and do whatever. And I just wonder, will small bus operators feel, 'This project is much too big for me', and go running?

Briefly on that, then, and then we'll move on.

I think that this is a really, really important point to raise. I've seen significantly, over the past 18 months, with the implementation of franchising in greater Manchester, that large operators and small operators are now much more open to what franchising can do for them, what they can do. I think one thing that everyone is happy about is that bus is back in the spotlight and I think that's something that we should all celebrate, whether an operator, whether a passenger. And I have seen large operators and small operators, and I'm quite passionate about SMEs particularly, who can bring real innovation, and I used to live in the sticks, not necessarily in greater Manchester. So, in summary, I think there's a general move in the market to understanding and accepting that franchising can provide some greater long-term stability of services and income, and I think that's something that can be built upon, and hopefully has the potential to protect and then take forward a mixed market of operators.

And I know we want to pursue SMEs particularly in a moment. Julie.

Yes, just quickly. I know you said stability was all-important, and you wouldn't be changing routes or numbers and that sort of thing. What about situations where there are glaringly gaps in provision, and where, for example, services may already have been withdrawn, and you have an outcry from a certain area because they can't get a bus to the hospital? How did you deal with that?

So, we've generally, I suppose, been fortunate that that network that we've been able to franchise has, in some cases, been—it's that 2021 network, so we've been able to restore some links that had been lost in the meantime. We've been able to put those back. But we're also just being careful, as you can probably tell from the way I'm explaining it, to make those changes in a co-ordinated way. So, the network review process that I've mentioned—and we've started one in Bolton; we're well under way with one in Bolton and the Wigan one comes next—actually looks at and has a great deal of engagement and consultation within it, upfront, about expectations, but we're saying at the moment that we need to do that in a considered way. If there are services that we, for example, can up the frequency on, existing services, then that's probably more in our gift, but we're not at the moment, I suppose partly also because of cost management as well. We want to be able to look at possible efficiencies as well as improvements to look at the area properly in a considered way. That will all be very transparent and accountable as a key theme of what we do, so we have a Bee Network committee, which is the 10 boroughs chaired by the GM mayor, and they will get to see and authorise those changes, ultimately, so it is all a very clear process. But I think otherwise, going back to managing expeditions, while we're still rolling franchising out—and as I've explained, we're still very much doing that—we are not just trying to go around plugging holes as fast as we can, and that's part of what's been made clear, and the district leaders and the GM mayor understand that as well.

Clearly, we've got a whole series of things I could—I'm not going to, but I could—name that we know about that we need to get on and improve, so we're planning quietly in the background to see what we can do. The network review process will help us to take that forward, but we're not just immediately trying to go around almost the compass and say, 'Right, we need to put another service in there.' Because in some cases, that will also mean that we need to change in other services as well. That will come; we are working on that, but it's the emphasis on the initial franchise roll-out, and that is ambitious itself; there's a whole series of aspects around new buses, electrification, for example, that go with the roll-out of franchising. So, there are lots of changes and improvements that people are seeing, but we're not, if you like, almost dabbling with the network straight away; we're going to do that in a careful, considered manner, and a very transparent publicly accountable way.

I'll bring Carolyn in in a moment and then we'll move on to Joyce. I just want to ask, because as you've said, it's quite an intensive process, rolling out the franchise, particularly first time. Now, that demands, I imagine, quite a bit of central resource and labour. One fear or one concern that we have, clearly, moving into that space in Wales is there's a lot of pressure on Transport for Wales as an organisation; they're responsible for rail, they've been given taxis, they've been given sustainable travel, and buses obviously are now being ramped up. How critical would you say having that sufficient resource in the centre is to get it right? And no need to operate the mics, by the way; they're done remotely. That's fine. That's great, yes.

I think it is pretty crucial. Within Transport for Greater Manchester, to draw some form of comparison there, we have utilised consultancy support to help build the case over this period of time that Jason referred to. But it's crucial that there is in-house support. We have boosted, particularly within my own team, the commercial expertise, so that's about contract management, it's also about profit and loss in simple terms, because, instead of just filling the gaps, which you have to do in a deregulated market, we need to understand some of the commercial aspects of that as well. We've brought in expertise around fleet management, for example, that wasn't there before, and about depots, so facilities management. I'm just giving you a few examples of what we've done there.

We've, interestingly, also, in terms of the account management of the franchises themselves, brought in a number of people, and the successful applicants for a number them happen to have come from the operators. That's interesting, because I think that's a really good career route, because people really need to be able to move around the wider transport industry, and not just transport for that matter, but beyond that. But, obviously, expertise is also needed in the franchises themselves. But I think it's good that we've been able to bring people in from two or three of the different commercial operators who have seen things from a different perspective, if you like, and we'll probably, at some stage, lose some people from our own organisation too. That hasn't happened yet, but I think it's quite possible that people will move around in that industry. I used to be a train operator, for my sins, so it's important.

But I suppose building that capacity and capability in-house has been really important, and another aspect I mentioned was having people that can also look after the unfranchised parts of the network. One of the things I think we've done that, ultimately, is of a temporary, transitional nature is to have a transitional management team, which I think has been really important. So, we thought quite long and hard about the expertise that we need.

Interestingly, perhaps, for you as well, we found it really difficult to recruit a little while ago. I wonder whether that was almost a bit of disbelief that it would ever happen. I'm talking about after COVID, but fairly recently: 'Why do people not apply for these roles? They're groundbreaking, innovative new ideas.' That's not happening now; we're getting lots and lots of competition. It's an area people want to be involved in. I don't necessarily mean greater Manchester particularly, I just mean in a different type of sector that is a bit more dynamic in that sense than it's been before. And that should be good. I think other areas doing franchising should benefit from that, and people moving around, probably, between areas as well.

Jason on this, and then we'll come to Carolyn.

We're a membership organisation, as you know, and I think the one thing that we've found is now that one area is moving forward and other areas are moving forward, it's an industry and an area that people want to get into. I think that can only stand positively for Wales and Transport for Wales, because there are people with skills within the sector now who understand franchising, more so than what there was in 2017, for example. So, institutionally, the capacity and capability of understanding the subject matter is improving. I think there are risks in the broader sense for the sector as a whole, but in terms of deliverability, it's something that Transport for Wales should consider, and we'll support them as a member organisation in helping develop those skills as an organisation ahead of what they're looking to do.

We'll come back to that in a minute, I know. Carolyn.

How long are your franchising contracts in place for? Are they for one year or three years or—?

We have large franchises that are limited in number. They are significant, several hundred vehicles, and they are five years, extendable to seven. Linked a bit to the conversation that started around SMEs, we also have a larger number of small franchises. They vary between six vehicles and—I can't remember individually—20 to 30 vehicles. They are small franchises, and that was also partly—I'm happy to talk a bit further about this—to do what we felt was needed to do to encourage small operators to be part of this. They are, by contrast, three years, extendable to five. Interestingly, that gives us a conundrum, which I'd only realised myself recently, which is we're going to have to start to think about what we do with the first batch of small franchises ahead of expiry—

It soon comes around, yes.

I hadn't realised this until last week, actually. I was mulling it over and thinking, 'Well, that's another activity.' So, we're looking at our own issues and what we would do differently. So, there is that difference. But a lot of the focus is on the large franchises that are operated by Go-Ahead, as it is at the moment, and also by Stagecoach in tranches 1 and 2 respectively, and then also by, when it starts, Metroline, which is a group called ComfortDelGro, as a new entrant to greater Manchester, which will be running at scale in the third tranche from January. But there is a smaller operator part of this in small contracts that I've just mentioned as well, and a difference in contract length.

And if an operator wants to change a route that's not part of your franchise, then they have to register that with the transport commission, as they do in Wales.

In our case, most of the powers of the transport commissioner are ones that have transferred to be part of—. They don't register services in the same way. Some of the safety provisions, for example, of the transport commissioner in England have been retained in the Act, but in many ways, the whole Act, otherwise, is something that—. We set the routes, we set the fares, the branding, a whole number of factors, and the whole premise there, under a cost contract model that you talked about earlier, is that the operator is then able to focus on the things that it does best in terms of running a service to a very clear specification. Although I would say that it's really important—and we're realising this already, only a matter of months into this—that we view this as a win-win arrangement with operators. If we look at it just as cost contracts and, 'Your job is only to get the bus out and do exactly what we, Transport for Greater Manchester, say', we're going to end up with some probably pretty suboptimum outputs. So, we're working, I think increasingly, in a partnering type of way with franchise operators and what they can bring in terms of ideas and innovation, for example. We don't want them sitting back and just running services because that's what's been specified; we want them to challenge us and to look at how they can also devise efficiencies.

And just lastly, on school transport and learner travel, is that different? Are you involved with that? Is that separate?

I can answer for greater Manchester. In essence, within greater Manchester, we have separate school franchises. Of the original round of franchises, the only ones we haven't awarded are the school franchises in this third tranche, although, confusingly, perhaps, some school services are also run within the main franchises, but that's just a bit of horses for courses. But we do have separate ones.

And then they can procure bus passes to operate on your franchised routes, then. I was just wondering how it works.

We set the fares—. Did you say 'passes'?

Yes, bus passes for schools.

Effectively, yes, we're setting the fares, the ticketing and the customer information around that. So, that whole interface—indeed, the customer service, the contact centre, the answering social media, for example—is done by us rather than the operator. So, we have, in a sense, quite a narrow but really, really important focus of the operator role. And all of that part around revenue, ticketing, is something that we've done. To some extent, that had happened before franchising in quite a few of the metropolitan areas, but it's much more doable—. And I think a key message from some of this is that things become simpler and easier than they would be, and hopefully, ultimately, quicker than they would be otherwise to implement in terms of change than they would be under a deregulated system.

That's great. We'll move on to Joyce. Thank you.

This all hinges on being able to have the skills to enter the franchising market. What level of importance do you place on franchising skills? What advice do you have on how to develop them in terms of the skills of the public sector franchising authority, but also the operators tendering under that scheme?

I'll start on that one. You do need a good baseline of skills to work in transport, per se, and I think franchising is no different, definitely not. And it covers all aspects. It's some of the comments that colleagues gave earlier on—it's right through from understanding procurement, right through to understanding what the customer wants, and that, sometimes, can be forgotten when you're talking about very technical matters like this. So, I do think you need skills within the transport authority, but you also need to have the tier of government, I think. There also needs to be an understanding of the journey and the skills requirement that, for authorities that are going through, needs to be there. I think having that baseline of skills is really important. It has been a learning journey not just for our members but also for operators.

I know the market's very mixed in Wales and it's something that needs to be considered in that context, because you have a much higher proportion of small and medium-sized operators than, you could argue, within England, where you have some very big multinational organisations. So, some of the large organisations were able to come in and use their skills from overseas and stuff to understand how to bid for contracts. I think, from what I understand from the proposition in the road map for Wales, it's not as onerous as the five case model et cetera, so there's clearly a level that will be supporting and helping some of the more SMEs to actually be able to have the skills to look to enter the market. So, yes, as with anything, it's something new, there are skills in the sector developing, but it needs skills across, from operators, from LTAs, and an understanding from Government.

I think the final thing I would say is that, on the journey to franchising in greater Manchester, the national Government has also been on a journey and has been supporting the process. I think that's been very helpful. They've recently issued up-to-date guidance, listening and learning from the journey, and that can only be a positive thing. So, hopefully, that answers the question there, Joyce.

I'd only add that most of the larger companies have by necessity now set themselves up to be active bidders. If they hadn't done before, then they have done now. I think in that sense you and others will benefit from the fact that they're all almost more mature, as probably the rest of us are, through some experience of this. I knew you were very interested in SMEs and SME bidders; I'd picked that up quite clearly. So, I've made doubly sure I've looked at that from a GM perspective in advance, and I'm happy to pick that up when you wish to.

Yes, and we will in a moment. Thank you. Julie next.

Thank you. The gross cost model that's being applied in Wales will see Transport for Wales and the Welsh Government carry the revenue risk. How is this being managed within the English franchising arrangements and do you have any views on how Wales might approach this?

I'll probably just kick off at a more macro level. I think it's something that was remarked on earlier by colleagues giving evidence—that there is this prevailing evidence that the gross cost model is the one that has been chosen. Greater Manchester is following that method. In London, initially, it was net cost, but they've moved to a more gross cost model. I think the advantage that gross cost has is, as remarked by Stephen, it provides long-term stability. You could argue, from one particular point of view, that that longer-term stability, which is incumbent with the contract when you are changing to a new market, might be well received, rather than going to a, you could argue, more granular net cost model. But I think it's also something to consider. And I noticed in the road map that has been published for Wales that they're very keen to also look at innovation. I think colleagues mentioned that this morning. But given that we're on this early journey again, when you're pointing to what's out there—which is GM and London, effectively—it seems to suggest it's probably a good starting point to work from, if that makes sense.

From our perspective, it's to be clear what you're buying, and probably even more so under a gross cost contract. When you then want to vary something, to change something, you've obviously got to have really clear change procedures, but it would be unreasonable then to expect the operator to fund something that you derive the benefit from in revenue terms. So, I think it's being really clear about that. For example, you'll find that things only really come about and become clear perhaps after the event. I think this will probably happen more widely. The real performance of services before franchising—and, in some cases, in our area, poor performance—only really comes to light after you franchise. Under either model, but particularly a gross cost contract, well, actually, you've got to find of way of actually getting that better. You've got to work together on that, but you've probably, as the public authority, also got to find the funding.

I was saying about how we're really pleased with some of our early performance. We've found that there are some routes that really don't perform very well at all—they get nowhere near our targets. We publish those targets; the mayor publishes them every week. So, we've got to be able to do something about that, and that would be true under a gross cost contract, or any other alternative, but, I think, because that will typically have a very tight specification, you've got to be clear how you'd amend that and probably be willing to at least part fund things to put that right. We've just funded—or part funded, sorry—20 additional vehicles to go into the first tranche of operation, to up the performance level. There are some really encouraging signs from that in terms of getting us much closer to the target levels of performance, which are, in themselves, really demanding, and we monitor that daily and we produce those results and publish them weekly. So, there's a lot of scrutiny of that. You've got to think about the funding of that, really under any model, but, arguably, under the gross cost contract, the incentive to change a lot of that—not all of it, but a lot of it—is then with the franchising authority. So, you've got to think about some of those issues in the way that you specify them upfront.

That's very interesting that you monitor the performance levels and publish them so frequently—

Very publicly.

—and that's, obviously, done to help encourage confidence from the public.

And that, actually, if you were to look at that—. It's the Bee Network website; we produce them every Thursday, and the mayor tweets them out. We don't hide the bad news. So, very soon—very quickly, almost immediately, really—after the first and second tranches of franchises started, we had some problems, and we acknowledged that—more so in tranche 1 than in tranche 2, thankfully; it was that way around. But the extent of the changeover, going back to what you do or don't change—. I could reel off all those factors that change without even changing a bus route or a bus service: a lot of change for drivers—new vehicles, branding, uniforms, systems, onboard equipment—. I haven't got them all written down, but all of that changes, and some of that changes like that—overnight—because it's from one operator to another. So, we have to do that, and that didn't go perfectly, and we're very open about it. It's pretty painful, because we're looking at it daily and we're publishing it and we're getting a lot of feedback. We're encouraging feedback through our Bee Network app, and we get feedback, which, inevitably, quite a bit of it isn't positive. That is declining in number. We got a lot fewer complaints from tranche 2 than we have from tranche 1, and performance, as I've said, is better than it was in the equivalent period last year. So, there's a lot to be positive about, but the buck stops with us now. It's no good saying that X or Y operator's not doing this; we're accountable for it, and the elected mayor is accountable for it, with the relevant districts. So, the stakes are quite high with that, but we're very clear at Bee that one of our really key customer principles is to be accountable, and that is also when things are not quite right; we try to say so and we're very honest about that.

Thank you.

Okay. Thank you. Well, we've got about 15 minutes left, and there are a few more questions to come, so I'll invite Janet to ask next.

How should the need to integrate bus services fully with other modes of transport be reflected in planning and the delivery of bus franchising?

It's essential, in a nutshell. Fundamentally, if we want people to get out of their cars, or use cars less—and evidence shows, when you look at London and other cities—building an integrated network is a real motivator to get people to both change behaviour and also have—. I mean social value outcomes. So, I think it's really important. What you've seen in GM, as an example on franchising, and also in west midlands as well, and other areas, is that, as I said earlier, bus is only part of a jigsaw of public transport. If you have a guiding mind that can then plan and use all of those different levers, whether it be active travel or rail or buses, and understand and use your data to understand how people move, then that helps you design a network that is accessible and move people to it. So, I think it’s really important. For me, that’s the most passionate thing about Urban Transport Group—our aim is to support fully multimodal, integrated public transport networks. So, it has to be at the heart of what the customer offer is, and something that I’m sure the committee will consider, and I believe that Transport for Wales have considered in their road map, is what does good look like. Ultimately, it’s laid out in their transport strategy and in their hierarchy—the funnel, as I call it; it's just easier—the funnel. They’ve made it very clear how they want people to move, and bringing in bus franchising they see has the potential to probably help do that. So, really essential, Janet.

Thank you.

Thank you. Okay. Shall we move on, then, to Carolyn?

Do you include walking in that as well? Because I think, when we look at integrated transport, we're looking at cycling to train stations or getting a bus to rail, but I think walking is really important to be taken as part of the consideration as well, and we've not really been thinking about that.

No. And when I said sustainable travel is a responsibility of TfW, what I meant was active travel, actually.

I think you are—. So, we released a report earlier this year—. People often forget walking. Walking is the most—

And walking safely, and feeling safe walking at night or wherever.

Exactly. I think there's something around that, when we design public transport and public realm, it's important to include walking as well as cycling. Many people think active travel is literally just jumping on a bike. It isn't. It's about what is the last-mile journey, or that journey to the railway station or the bus stop, and things like that. So, walking is a really important part, and I think everything from walking-to-school clubs and things like that, anything that can be done to help—. And this is where transport authorities and, I think, where the Bee Network is actually really pushing that narrative. Active travel isn't just about getting on a bike and going through a cycle lane; it's about all modes, and we're very big in pushing that. I think safety is one really important point as well. We're going to be doing some work on trust and safety, and that's something that—. Overall, in terms of public transport, we need people to feel that they—. What all people want is to know that they can get on transport when they need to, broadly, travel in some level of comfort, be affordable, and feel safe.

So, you cover an urban area. Wales has huge rural areas. Passengers often say the biggest thing for them is a friendly bus driver, who will help them with bags on and off, who they know they can trust to get them where they need to go to, or maybe link to the next bus, and it's that reliability and that, you know—. We've also—. We were just mentioning we've got a lot of SMEs as well, and those SMEs—. I'm worried about school not being part of this. Every single one is needed to be able to deliver our Learner Travel (Wales) Measure. I know from the Local Government and Housing Committee that the leader of the WLGA was saying that the cost of school transport has gone up by 40 per cent, but, on a weekly basis, trying to ensure there are enough contractors to deliver school transport is really difficult. With the cost of delivering that—it keeps increasing—then their viability is really suffering as well. So, it's a bit of a—. It's very difficult sometimes to make sure that we keep them in the market. And they don't always have that expertise, either, so they need that from local authorities. I know of a couple that nearly left the market, but they had the help from the local authority to do that. So, how do we ensure, then, that—? Well, your views on how Wales could approach this to make sure that they're involved in franchising.

I'll come on to the culture and let Steve—

And school transport.

I was going to say that Stephen has already suggested that he's got plenty to say on this.

Just on the culture, I think you are right. I think one thing that franchising or being part of an overall like the Bee Network has shown is that, when you saw operators who were part of the Bee Network and successful, and then launching on day one, there was an energy and pride that they were part of something that you could argue was quite revolutionary since 1986, and that's something that I think Transport for Wales, I'm sure, will look at, because to have everyone focused on the customer and the outcome is really important.

You can probably talk more about it, particularly on SMEs as well, as you said.

Shall I do that now?

Yes, please.

So, the first thing to say is that the small operators, although we have far fewer of them than you have here—I've heard 60 and 80 mentioned I think in a Welsh situation. Our numbers have declined over the years. As has happened in most busy metropolitan areas, there's been consolidation with the larger operators. However, in all three of those tranches I've talked about, geographical areas, there are smaller operators. So, it was a really key part of our thinking from the beginning. It was also required, because this assessment that we had to do—this comprehensive five case business case and assessment—required us, bluntly, to make sure we took small operations into account.

We did this in a very detailed way. So, we assessed within each tranche which small operators we had, what their sizes were, what they already operated—because some of them operated a small number of contracted services, probably not dissimilar to in large parts of Wales, and did it perfectly well. So, we mapped that across, and therefore replicated, in particularly those small franchises that I referred to, a range of size of contracts in terms of numbers of vehicles that were very similar to some of the existing operations that a small operator ran in a particular part of the conurbation. So, that wasn't just for the whole of greater Manchester; it was each of the three parts, and mapping that across.

We also actively engaged both before and, interestingly, during the procurement with operators. Now, we had to do the part that was during the procurement for everybody, because you get all the rules of a procurement process. So, we gave the opportunity for feedback on interim bids, which very, very few operators took up, but we were able, even with the very tight procurement rules that we'd got, to do that. We held a number of live Teams events that were themed around things like the performance regimes or fleet. They were very difficult to be interactive because of the rules of the procurement process and who's watching and who's not, if you think about a Teams meeting. So, they were restricted. We tried really hard, and I've got a particular member of staff who was the person I spoke to, knowing about your interest, and she's hugely passionate about trying to get, even in a GM context, the SME market to be interested.

I think our view is that the assumption generally is that some of those smaller operators thought it was going to be little more than what's happened previously in tendered contracts, whereas, in reality, whether we like it or not, and particularly within the rules of a procurement exercise, it was a single procurement exercise. We weren't trying to have different rules of engagement for smaller operators; we weren't allowed to. They felt—. Well, we felt the differentials between them were more fundamental than they realised.

No, no. We were hoping you did, but there we are. [Laughter.]

But perhaps think about how you're procuring it in the first place, because, clearly, in our case, we had to do that as a single procurement. And that also made us—. We had to have approaches, and the legal advice that we took was to make sure that that was consistent. And as I say, there were other good reasons about consistency of the service and the product that we deliver that had to apply no matter who was operating those services.

I'm just conscious that we have about three minutes left; there are a few more questions I'd like us to cover. But just on the SME element, both of you have referenced social value a couple of times in your contributions. Surely, SMEs contribute in that respect in a way that other companies don't, or not as much at least. Do you quantify or capture that? How is that contribution acknowledged in a system that very often is quite dependent on algorithms and all sorts of things that maybe aren't compatible with social value?

So, the compliance with the good employment charter, in our case, is a pass/fail. So, those are crucial factors, and it's also a scored part of the overall, what we call, the delivery plan. So, there is one around social value. So, there are ways in which that is formally taken into account in the procurement process. And I would agree, I think, with your comment there that smaller companies have an awful lot to bring to that, but I think that, together, we've got to find a way of ensuring how they tell that story, how they can actually get that across. And that, I suppose, does require effort on their part as well.

Sure. Okay. I'm afraid time is against us, so just one last question from me then, if I may. I asked earlier about cross-border arrangements, and your paper urges, and I quote:

'early cooperation and engagement with neighbouring English authorities and the operators providing the cross-boundary services.'

What would you perceive to be the risks if that isn't done early enough and well enough, and, indeed, is there evidence that it's already happening in terms of those early discussions?

Ultimately, people don't move necessarily within local authority boundaries. People move almost separate to how we have our arbitrary government map, arbitrary borders. And it's essential; ultimately, it has to happen, it's fundamental. If you're thinking about the customer, you're thinking about the outcome, early engagement as soon as possible in the process, because it is a journey, it's a long journey, and, at times, it would be challenging and will be challenging. So, the sooner you engage and agree how to work together, I think that's better for the customer at the end of the day.

Okay. That's not dissimilar to the message we heard earlier from—

We have a working service permits system up and running—

Yes, which was referenced earlier.

—relatively trouble-free in tranches 1 and 2.

Yes. So, there's no reason to think that that won't be an issue, really. Okay. Well, can I thank you both very much for the great deal of evidence that you've given us? It's going to be really, really useful as we pursue this issue and scrutinise, eventually, the bus Bill when we see it. So, thank you very much. As I say, there may be other things we might wish to write to you on. There have been suggestions of notes on other things as well.

Thank you for the invitation.

There we are. Well, this may be the first of many opportunities to speak to you again, as we travel this journey of bus deregulation, or regulation, I should say. [Laughter.] Diolch yn fawr iawn.

We will continue with our meeting now. We move on to the next agenda item, which are papers to note. There are a number of papers, 6.1 through to 6.3. Are Members happy to note them together? Yes. There we are. Okay. Diolch yn fawr iawn.

We'll therefore move into private session.

Dwi'n cynnig, yn unol â Rheol Sefydlog 17.42(vi) a (ix), fod y pwyllgor yn penderfynu cwrdd yn breifat am weddill y cyfarfod yma. Ydy Aelodau'n hapus?

Are you happy with that?