Rural bus challenge 2003 guidance
Guidance on criteria and arrangements
This note is about Rural Bus Challenge (RBC) 2003. It sets out the criteria which the Secretary of State for Transport will apply in allocating grant in response to applications from eligible local authorities in this year's competition. The note also outlines the bidding requirements. 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.
This year's Challenge competitions will be used to provide for a number of pilot "Kickstart" projects for which bids are invited (see paras 22-26 below).
Who is eligible to apply?
The local authorities eligible for grant are, as in previous years, English county councils, unitary authorities, and Passenger Transport Authorities.
The sum available
The sum allocated for distribution in this year's Challenge is £20m. Bids may be for capital or revenue expenditure or a mixture of both and we expect 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 RBC, and the proportion of rural Kickstart project bids within that total, will be taken in the light of assessment of the bids received.
Encouraging cost-effective innovation in the provision or promotion by local authorities of rural bus transport remains the most important objective of the Rural Bus Challenge. However the Secretary of State also wishes Challenge 2003 to be used to build on success by giving greater scope for bids that, whilst not in themselves innovative, offer value for money in the improvement of rural bus transport by means other than the support of "conventional" scheduled bus services (for which substantial sums are of course available to local authorities in the form of Rural Bus Subsidy Grant).
In broad terms it is expected that Challenge 2003 bids will fall into one, or more, of the following categories :
- new approaches and projects which are distinctive in that they bring fresh thinking to the solution of rural transport problems including demonstration projects, from which lessons of wider application might be learned;
- projects which bring new transport provision to rural areas currently poorly served by applying solutions which have proved successful elsewhere;
- enhancement of existing schemes, particularly those previously supported by an earlier Rural Bus Challenge award, where the bid can demonstrate value for money from the use of Challenge 2003 funds for this purpose.
Within these broad descriptions, the Secretary of State wishes to give local authorities considerable latitude in determining their bids for challenge funding in order to encourage new thinking. As discussed below, "bus transport" in this context is intended to have a broader interpretation than a "conventional" bus service and it also covers expenditure on provision of bus-related facilities. However, the Fund will not be available for spending on rail services, or on other non-road transport, or on concessionary fares.
In the light of previous experience, the Secretary of State wishes to draw attention to four further general points:
- bids should indicate whether the project involved 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 the period;
- in assessing which bids to accept, particular attention will be paid to identifying those projects which appear to have been most thoroughly thought through, thus suggesting that there can be reasonable confidence in the project's viability, and that practical difficulties have been considered and can be solved. (For example, projects that envisage collaboration with a commercial or community partner should confirm that potential partners have been identified and have indicated commitment to the project);
- bids involving projects which appear to bring a specific benefit to a commercial operator are most likely to be successful if that operator is shown to be contributing to the project on a scale which is commensurate with that benefit;
- it is not envisaged that challenge funds will be used for "paper" studies of rural transport needs or of the feasibility of particular projects.
There is no prohibition on local authorities' resubmitting projects which were unsuccessful in previous years. However, local authorities will wish to take account of the points noted above, especially as there is no reason to believe that competition for challenge funds will be less strong than previously. Bids which are re-submissions of earlier ones should indicate clearly any respects in which they have been changed.
The first five Challenge competitions were significantly over-subscribed. However, in considering the size of their overall bids (and of the individual projects within bids) local authorities should note that no prior decision has been taken on a minimum or maximum size of award from the Fund. Whether to award a fairly small number of authorities a relatively high proportion of the Fund (so as to achieve a significant "demonstration" effect from larger schemes), or whether to spread funds more thinly to a larger number of authorities, will be decided in the light of the bids received. Authorities submitting bids for large amounts may wish to consider including costs for not only the preferred bid but also for a scaled down option for achieving all or significant parts of the bids objectives. Such options may be particularly relevant in guiding decisions if demand for funding is particularly high.
What can RBC funds be used for?
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. As noted in 5 above, authorities will wish to note the Secretary of State's presumption against using the Challenge solely for the support of "conventional" scheduled services. The Secretary of State is particularly keen to see projects coming forward that involve solutions other than such services, for example those which involve the greater availability and use of "demand responsive" services, and which entail flexible and innovative working arrangements and use of vehicles. Taxi-sharing schemes, taxi-buses, or schemes using a vehicle which has a permit under sections 19 or 22 of the 1985 Act might be examples. 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.
Furthermore, it is hoped that local authorities will look particularly at the scope for increasing rural opportunities by using different kinds of vehicle from the conventional bus, and that the opportunity for making wider use of vehicles which may already be running in rural areas but which are not available to the general public. Even if wholly new services are envisaged, the Secretary of State hopes that local authorities might consider the scope for the vehicles being used for more than one purpose.
The definition of 'rural' will be the same as that adopted for RBSG as set out in the RBSG grant conditions. This means that RBC projects may be put forward for projects in towns with a population of up to 25,000.
It is also the Secretary of State's hope that local authorities will 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. He similarly hopes that local authorities will have regard to the scope for enhancing public transport networks, including connections between public transport modes and for provision of new feeder services connecting to existing "conventional" services as a way of improving links between remoter rural areas and transport networks.
In addition, the Secretary of State draws particular attention to, and hopes local authorities will give thought to, the policy objective of improving public transport information and the need for passengers to have easy access to information on services.
The Secretary of State hopes that in developing capital bids, local authorities will consider particularly carefully the scope for improving the full range of factors that may affect bus use - particular examples might be the provision of better waiting facilities, and of passenger information, to ensure that the public have ready access to up-to-date information on the availability of rural buses. This may be especially important in rural areas, where services will often be infrequent compared with busy urban routes. (Improved information may also, of course, be provided through revenue expenditure schemes.) Local authorities may further want to bid for capital funds for traffic management schemes to help rural buses. For all except the smallest bids where capital expenditure is the sole, or a major, element of the proposal the Secretary of State would expect some investment appraisal to have been undertaken and the outcome to be summarised in the bid. He also wishes to remind local authorities that all authorities have received substantial increases in their block capital allocation for transport since 2001/2, and that Challenge funding should not be sought to substitute for this capital funding now it is allocated through the Single Capital Pot.
The Secretary of State would expect to give a relatively low priority to bids which involved the proposed provision of grant to commercial bus operators for the purchase of vehicles, though he does not wish to rule out entirely such bids at this stage. Authorities will also wish to bear in mind that where it is intended to provide funds for the purchase of vehicles to run on routes which will also require revenue subsidy, such revenue subsidy would be subject to the normal rules on tendering.
The Secretary of State 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 considering Rural Bus Challenge applications as in all public transport decisions. The 10-year Transport Plan gave the commitment that "building in accessibility for disabled people in all new investment is a condition of public money being spent". The Secretary of State also draws attention to the fact that bus services are often particularly important to women. He therefore hopes that the needs of women will be carefully taken into account in matters such as the routing and timing of new services, and more generally in bids for challenge finance.
The Secretary of State would welcome the inclusion in bids of joint proposals from adjacent local authorities which were the result of a co-ordinated strategy for rural transport.
Relationship with other community-based rural transport schemes
The Secretary of State expects that in developing bids, local authorities will pay attention to working closely with the Countryside Agency and community transport groups and to the relationship with any other community-based schemes in the area concerned. The Secretary of State hopes local authorities will take full account of community transport schemes, complementing and enhancing them rather than conflicting with them. It occurs to the Secretary of State, to take one example, that a local authority might want to provide capital finance for a new vehicle which would then be operated by a community group; or a local authority might finance maintenance expenditure on a vehicle otherwise operated by a community group. Where bids involve the community transport sector, authorities should aim to demonstrate good practice and innovative thinking. Experience from previous competitions and the Urban Bus Challenge suggests that the following factors are important:
- how schemes fit within overall community transport provision;
- that attention has been given to maximising vehicle use;
- whether attempts have been made to seek efficiency savings with shared booking with other providers;
- an integrated approach to marketing.
Content of Bids
The Secretary of State is concerned not to impose too great a burden on bidding authorities in terms of requiring very detailed bids, particularly if the sums being requested are relatively small. Accordingly, bids - of whatever size - should cover the main points set out below, using the attached proforma, whilst authorities have discretion in deciding the extent of supporting information included, taking account of the size of the bid.
Bids for rural Kickstart projects
The Secretary of State wishes in this year's 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 guarantee 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.
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.
In considering bids for Kickstart pilots this year, the emphasis will be on:
- 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
- having a clear and robust strategy to reach viability with credible financial forecasts, supported by estimates of patronage performance
- a declining requirement for Challenge support over the life of the award as progress towards viability is achieved
- 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
- 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.
In considering Kickstart bids under the RBC scheme, attention will still be paid to the project's contribution to meeting rural transport needs and improving social inclusion in rural areas. However weight will also 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.
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 autumn which will provide for up to 25% of an authority's budget on bus subsidy to be outside the requirement to competitively tender.
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.
Submission of the pro forma electronically is welcomed, but paper applications (5 copies please) are also acceptable and should be sent to Jens Reinke, DfT, Zone 3/13 Great Minster House, 76 Marsham Street, London, SW1P 4DR. The e-mail address for returned applications is Jens.Reinke@dft.gsi.gov.uk. The closing date for applications is Friday 31 October. The aim will be to announce decisions by mid January
Department for Transport