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Urban Bus Challenge 2003: Guidance on Criteria and Arrangements

Introduction

1. This note is about this year's Urban Bus Challenge (UBC) competition. The note sets out the criteria which the Secretary of State for Transport will apply in allocating grant in response to applications, and the arrangements for the competition. As this will be the last year of the Urban and Rural Bus Challenge in their current form, successor arrangements will be announced later this year.

2. This year's Challenge competitions will be used to provide for a number of pilot "Kickstart" projects for which bids are invited (see paras 8-12 below).

Who is eligible to apply?

3. Outside London, English county councils, unitary authorities, and Passenger Transport Authorities. In London, Transport for London (TfL) is the eligible body.

The sum available

4. We expect that the sum allocated will be in line with the £18million allocated following UBC 2002 and that the major part of Challenge funding will be awarded to projects following the existing criteria. However, a final decision on the total of the sum to be awarded in this year's UBC, and the proportion of urban Kickstart project bids within that total, will be taken in the light of assessment of the bids received.

What can Urban Bus Challenge Funds be used for?

5. The Urban Bus Challenge Fund is intended for innovative and/or unconventional solutions to the problems of public passenger transport provision in deprived urban areas. While encouraging cost-effective innovation, UBC also exists to assist schemes which, whilst not in themselves innovative, offer value for money in the improvement of urban transport by means other than the support of conventional scheduled bus services. The UBC funding will again be available for capital as well as revenue expenditure and successful applicants can spread their award over more than one year.

6. Assessment of the bids will take particular account of the following aspects:

  • Flexibility
    Challenge funding can only be used to support a public passenger transport service (as defined in the Transport Act 2000) and / or any service or facility associated with such a service. UBC is particularly aimed at projects that involve the greater availability and use of demand responsive services, or flexible and innovative working arrangements and use of vehicles. Local authorities will wish to bear in mind Section 6 of the 1985 Act on the registration of local bus services and to note that regulations will be brought forward this summer to implement the changes to current registration rules foreshadowed last August in the Department's consultation paper The Flexible Future.
  • Solutions tailored to specific local circumstances
    Bids involving flexible or innovative solutions, tailored to fit a particular set of circumstances, people or places or problem. These may involve new thinking from local authorities, bus operators and other partners in proposed schemes, such as community transport groups and social and healthcare bodies, and jointly funded projects with transport providers.
  • Provision of bus services where there are none already
    Local authorities should pay particular attention to opportunities (which may be suggested by bus operators and bus users) to provide bus services to places which have no such service at present. Authorities should also consider enhancing public transport networks: connections between public transport modes and/or new feeder services, for example by community transport providers, connecting to existing conventional services, may help to improve links between poorly served urban areas and transport networks.
  • Widening access to employment and other facilities
    Local authorities should consider the role new bus services can play in widening access to employment opportunities for people in urban areas, including linking disadvantaged communities to areas of employment growth. Improving access to other essential services and facilities such as health and education should also be considered.
  • An "exit strategy"
    Bids should indicate whether the project is intended to become financially self-supporting after the period of a challenge award and, if not, what alternative sources of funding will be available after that period.
  •  Capital Infrastructure
    In developing bids, local authorities should consider the scope for improving bus use by, for example, provision of better waiting facilities and improved passenger information. Local authorities may further want to bid for capital funds for traffic management schemes to help urban buses. For all except the smallest bids where capital expenditure is the sole, or major, element the Secretary of State would expect some investment appraisal to have been undertaken and the outcome shown in the bid.

But Urban Bus Challenge funds will not be available for:

  •  replacing withdrawn commercial services
    The Urban Challenge is not designed as a substitute for existing revenue funding for buses by local authorities, nor as a mechanism for replacing withdrawn commercial services.
  • rail, light rail
    Bus transport in the context of the Urban Bus Challenge competition is intended to have a rather broader interpretation than a conventional bus service (and to encourage the use of different types of vehicle) and to cover expenditure on provision of bus-related facilities. However, the Fund will not be available for spending on rail services, light rail, trams or other non-road transport. Nor will it be available for research projects or feasibility studies.
  •   fare subsidies, unless part of a bigger innovative package
    Although the intention is not to give blanket fares subsidy, lower fares might be part of a bigger innovative package. Bids should make clear the extent to which fares subsidies are proposed, and how they are to be targeted. These should take account of any potential impact on commercial fares in the area. Challenge funds are not available for meeting local authority expenditure on concessionary fares.

Where can Urban Bus Challenge be used?

7. To be eligible the project must serve a town of at least 25,000 population (or an area within it). If a service crosses areas that are both urban and rural, it must be predominantly designed to meet the needs of the urban area if it is to qualify for Urban Bus Challenge funding. We would not expect a scheme to qualify for funding under both Urban and Rural Bus Challenge schemes. However, authorities may wish to consider whether projects which might be separately funded using the Rural Bus Subsidy Grant (RBSG) or Rural Bus Challenge funding can be co-ordinated with an UBC scheme.

Bids for Kickstart projects

8. We wish in this years Bus Challenge competitions to support a number of Kickstart pilot projects which pump-prime new services, or service improvements, outside London with the overall objective of increasing bus patronage and developing bus services as an alternative to car use. The aim is to develop networks and/or increased frequencies which have a clear prospect of becoming commercially viable, or otherwise fully self-sustaining, with guaranteed of local authority subsidy or other sources of funding, after Challenge funding has ended. This strand of funding responds to requests from operators for help with investment in expanded services and to the concern expressed by local authorities that LTP funding does not offer a revenue element to pump-prime services which make use of new infrastructure.

9. Kickstart services must be identified in conjunction with operators. Challenge funding for a Kickstart project will be for a maximum of 3 years and might in some cases be for a shorter period. Pilot projects will be used as a trial for a much wider application of the Kickstart approach in future years.

10. In considering bids for Kickstart pilots this year, the emphasis will be on:

n        working with operators on the development and delivery of a proposal which will become self-supporting after the Challenge award has ended; bids must be accompanied by a letter from an operator confirming their participation, agreeing to provide the service if the bid is successful, and to meeting any other obligations described in the bid; before submitting the bid, a clear understanding should be reached between the partners on the obligations involved (including the obligations after the period of challenge funding); partners will wish to consider the need for a formal written agreement to be concluded between them if the bid is successful

n        having a clear and robust strategy to reach viability with credible financial forecasts, supported by estimates of patronage performance

n        a declining requirement for Challenge support over the life of the award as progress towards viability is achieved

n        a commitment in the bid by the authority, operator and/or other partners to continuation of the service after the period of Challenge funding; if continuing local authority subsidy is envisaged the authority should confirm this will definitely be available

n        commitments by the partners involved to encourage patronage, for example, from the operator to market and promote the service or provide enhanced customer care; from the local authority to provide upgraded infrastructure. These commitments should also be identified and quantified in the bid. The presumption will be that generally any capital costs falling to the authority will be met from LTP allocations, though exceptionally a pump priming bid may include capital items. Bids however may include the revenue costs associated with the new infrastructure provided under the proposal.

11. In considering Kickstart bids under the UBC scheme, attention will still be paid to whether the area to be served is one of urban deprivation and to the project's contribution to encouraging urban regeneration and reducing social exclusion. We would not however expect to attach as much weight to these aspects as for other UBC bids. More weight is likely to be given to the project's contribution to growing bus patronage and to delivery of the bus strategy for the area. Similarly, whilst a Kickstart project may involve a flexibly routed, or demand responsive, service we recognise that Kickstart projects will be likely to involve scheduled services running to a timetable and fixed route.

12. As with other Challenge awards, contracts for securing the provision of a Kickstart service will be between the local authority and the operator. However, the authority should use their freedom under the de minimis rules to award the contract to the operator with whom they have worked in developing the proposal. New regulations will be introduced this summer which will provide for up to 25% of an authority's budget on bus subsidy to be outside the requirement to competitively tender.

Other points which should be taken into account for all bids including Kickstart bids

Accessibility for Disabled People

13. The Department requires that for both capital and current expenditure, the needs of people with impaired mobility should be taken fully into account by local authorities, in UBC applications as in all public transport decisions.

Consistency with Local Transport Plans and Bus Strategies

14.  Bids should be consistent with local transport plans and local bus strategies, and take account of the development of accessibility planning by authorities.

Relationship with community-based transport schemes

15. Bids should take account of existing community-based transport schemes and the possibility of complementing and enhancing them.

Consultation

16. In preparing bids authorities should ensure they consult as widely as possible with relevant bodies in their area such as community transport groups, transport operators and bodies promoting initiatives to combat social exclusion.

London

17.  Responsibility for submitting UBC bids for projects in London rests with Transport for London (TfL). Bids should be consistent with the Mayors transport strategy. The Urban Bus Challenge is not intended to provide funding for adding conventional scheduled bus services to the London Bus Network. TfL will develop bids in partnership with the London Boroughs and should also consult with other key bodies, such as sub-regional partnerships, who have an interest in the role of transport in combating social exclusion in the capital.

Applications

18.  Applications should be made using the electronic pro forma. This has been designed to enable applicants to give all the essential information which we will need in considering bids given the criteria set out above. We hope that use of the pro forma will save time and effort in preparing bids. It will also assist consideration of bids by the Department.

19. Submission of the pro forma electronically is welcomed, but paper applications (5 copies please) are also acceptable and should be sent to Darwin Gunewardena, DfT, Zone 3/13 Great Minster House, 76 Marsham Street, London, SW1P 4DR. The e-mail address for returned applications is darwin.gunewardena@dft.gsi.gov.uk. The closing date for applications is Friday 26 September. The aim will be to announce decisions by early December.