Two bus operators have lost a High Court challenge to the decision by Andy Burnham, elected mayor of Greater Manchester, to proceed with bus franchising.
Mr Burnham has urged them to drop any further action but one firm wants to take the dispute to the Court of Appeal.
Stagecoach and Rotala had objected to validity of Mr Burnham’s decision but in Greater Manchester Buses South Ltd v Greater Manchester Combined Authority & Anor  EWHC 506 (Admin) Mr Justice Julian Knowles said this had been reasonable despite the disruption caused to the process involved by the pandemic.
Franchising is similar to the system used in Greater London, under which Transport for London (TfL) sets routes, fares, frequencies and vehicle standards and invites operators to tender to run these.
Elsewhere, since bus deregulation in 1985, operators have been free to run whatever services they choose although transport authorities can subsidise unviable routes judged socially desirable.
Transport authorities outside the capital have now been granted powers to opt for franchising, or for formal partnerships with operators that stop short of this, and Greater Manchester Combined Authority (GMCA) is the first to seek franchising.
These powers derive from the Transport Act 2000 but the Bus Services Act 2017 made them easier to use.
Julian Knowles J said that franchising would see Transport for Greater Manchester (TfGM) take on a role similar to that of TfL and “in very general terms, bus companies view franchising as less financially advantageous” than the status quo.
He said: “The claimants' position is not that [the GMCA] could not in principle choose franchising over a partnership model. Their complaint is that the way in which the GMCA came to recommend to the mayor that he make the proposed franchising scheme was unlawful and irrational, and hence that his decision was unlawful.”
The two companies said that, but for the pandemic, it was unlikely their challenge would have been brought. But it was “harder to imagine an event which could have more affected the transport market than Covid-19”, given the dramatic fall in bus ridership that this caused.
Julian Knowles J said: “Their submissions impugning the mayor's decision to make the franchising scheme fall broadly into two groups: (a) arguments that the decision was unlawful, in other words, the way it was taken did not comply with the mandatory requirements of the Transport Act 2000; and (b) arguments that the GMCA's recommendation to make the scheme, and the mayor's decision, were irrational because of alleged flaws in methodology by TfGM and the GMCA, in particular, how the process was conducted from the point of the Covid impact report onwards, as well as in other ways.”
GMCA and Mr Burnham argued their decision-making process was lawful and their conclusions “on complicated matters of socio-economic and transport policy” were ones reasonably open to them, especially in light of the unprecedented uncertainties for the bus transport market caused by the pandemic, which has caused them to commission the Covid impact report.
Stagecoach and Rotala said the decision on franchising was irrational because the effects of Covid-19 on the objectives of the bus network were not properly considered, and it had been irrational to rely on the later Covid impact report as part of the decision.
GMCA countered that it acted lawfully and rationally in obtaining the Covid impact report and then carrying out a second consultation and that it was not required to start the statutory process again from the beginning.
The Covid impact report was a non-statutory report and did not need to comply with the Transport Act 2000, and nor did an associated assurance review have to comply with the Act’s s123D.
Julian Knowles J said: “It was plainly a reasonable decision to proceed to recommend, and then make, the franchising scheme in March 2021 despite the pandemic.
“As the mayor noted in his decision notice…'the overwhelming response of the consultation was that the scheme should now be made'.
“Given there were over 4,000 responses to the consultation, that fact alone shows the decision to proceed was not irrational. But in any event, the question of delay was carefully considered in various places in the second consultation report.”
He also dismissed the argument that Mr Burnham should have waited to see what the content of a bus partnership might be.
“GMCA's response to the National Bus Strategy considered question of delaying a decision in light of it in order to ascertain, in particular, whether operators would commit to an enhanced partnership (which they had previously refused to do) and, if so, on what terms,” he said.
“[The strategy] did not create any new legal options that GMCA needed to consider, as the options presented were those already provided for in the existing legislation. GMCA…concluded that, on balance, further delay was not justified in the circumstances. That was a decision which was reasonably open to it.”
Commenting on the ruling, Mr Burnham said: “This is truly fantastic news for everyone outside London who wishes to see a return to a bus service that puts people ahead of profit.
“We were always confident that GMCA had followed all correct legal processes and that the decision to franchise buses and bring them under public control was lawful and right. We’re delighted that this strong legal decision, where we won on every point, validates and endorses everything we have done to date.”
He urged bus operators to accept the ruling and work with him to deliver franchising.
Although Stagecoach said it would accept the decision, Rotala plans an appeal.
A Rotala statement said: “Although of course fully respecting the court's decision, nevertheless it is extremely disappointing to announce that Mr Justice Julian Knowles has dismissed the claim.
"The board still believes these decisions to be irrational and/or unlawful and is in the process of applying for permission to appeal the decision to the Court of Appeal."
It said it acted “to attempt to protect its business from a decision that is not only detrimental to Rotala's future prospects, but also potentially detrimental to the citizens of Greater Manchester in imposing upon them the financial burden of a franchising scheme that the board believes has not been properly assessed in line with the relevant legislation”.
A Stagecoach spokesperson said: “We are disappointed at the decision of the court. This case was never about the principle of mayoral combined authorities being able to decide to introduce bus franchising. We absolutely respect that democratic right.
“However, the Bus Services Act 2017 makes very clear that authorities must meet specified standards on proper evidence and analysis in pursuing this process. It was our view that the process followed by GMCA in assessing the impact of the Covid-19 pandemic on its bus franchising plans did not meet those legal requirements.”
Stagecoach said though it accepted the High Court’s decision and would “work constructively with GMCA to help deliver the mayor's ambitions for the region's bus network, as well as the Government's wider objectives in the National Bus Strategy”.