The Queen (on the application of Rotala Plc) v Greater Manchester Combined Authority

Hearing date: 12 July 2022

Approved Judgment

This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10.30am on 25th July 2022.

INTRODUCTION

The power to make bus franchising schemes was conferred on certain local authorities, including mayoral combined authorities, by amendments made to Part 2 of the Transport Act 2000 (“the 2000 Act”) by the Bus Services Act 2017. Where such a scheme is introduced for a particular area then, unless excepted from regulation, local bus services can only be provided in that area under a local service contract awarded by the authority, or under a service permit granted by it.

The First Respondent, the Greater Manchester Combined Authority (“the GMCA”) is the mayoral combined authority in Greater Manchester, comprising the Mayor (the Second Respondent) and an elected member from each of the ten constituent Metropolitan Borough Councils. This appeal concerns the decision of the Mayor, on behalf of the GMCA, on 25 March 2021, to introduce the Greater Manchester Franchising Scheme for Buses 2021 (“the Franchising Scheme”). If implemented, the Franchising Scheme will radically alter how bus services in Greater Manchester are delivered.

The GMCA is the first authority outside London to seek to implement a bus franchising scheme, although the Court was informed that other authorities have announced an intention to follow suit.

There were originally two parallel claims for judicial review of the decision, one brought by the largest bus operator in the Greater Manchester area, Greater Manchester Buses South Ltd (“Stagecoach Manchester”) and the other, this claim, brought by the Appellant (“Rotala”), the second largest bus operator in that area. In a reserved judgment handed down on 9 March 2022, [2022] EWHC 506 (Admin), Julian Knowles J. (“the Judge”) dismissed both claims. Only Rotala sought permission to appeal, and on 5 May 2022 Popplewell LJ granted permission on two related grounds.

Although Stagecoach Manchester is not a party to this appeal, its ultimate parent, Stagecoach Group Plc, is an interested party. It has made no submissions on this appeal. The other interested party, (“OneBus”) is a partnership of commercial bus operators in Greater Manchester which promotes the improvement of public transport in that area. It has taken no part in the judicial review proceedings.

Rotala was represented on this appeal by Mr Andrew Singer QC and Mr Piers Riley-Smith; the GMCA and the Mayor were represented by Mr John Howell QC and Ms Amy Rogers. We are grateful to all counsel for their written and oral submissions.

THE STATUTORY SCHEME

The 2000 Act provides in s.123A(2) that a franchising scheme may not be made unless the franchising authority has complied with the requirements of ss. 123B to 123G of the Act. These requirements are described in more detail in the judgment below at [20]–[30]. Put simply, there is a sequence of mandatory steps which the franchising authority must take, comprising (1) assessment of the proposed scheme under s.123B; (2) obtaining any necessary consent of the Secretary of State under s.123C (it was unnecessary for the GMCA to do so, because it is a mayoral authority); (3) obtaining an independent audit of the assessment under s.123D; (4) public consultation under s.123E on a consultation paper prepared in accordance with s.123F; and (5) publication of a response to the consultation, together with the authority's decision, under s.123G. In the case of a mayoral combined authority, the decision to make a bus franchising scheme can only be made by the mayor, acting on behalf of the combined authority (s.123G(4)). Importantly, the decision taken under s.123G is whether to make a franchising scheme, not whether to make the originally proposed franchising scheme. The statute expressly envisages that the scheme may be modified by the authority after the consultation: see s.123E(6).

If it is decided to go ahead with a franchising scheme, the scheme must be made and published at the same time as the report on the consultation under s.123G (s.123H(1)).

The initial assessment under s.123B must describe the effects that the scheme is likely to produce, and compare making the proposed scheme with one or more other courses of action (s.123B(2)). It must also comply with the specific requirements of s.123B(3). Those which are relevant to this appeal are consideration of whether the authority would be able to afford to make and operate the scheme, and whether the proposed scheme would represent value for money (s.123B(3)(d) and (e)).

The franchising authority must also have regard to any guidance issued by the Secretary of State for Transport concerning the preparation of the assessment (s.123B (5) and (6)). This, and all other relevant statutory guidance, is to be found in the Bus Services Act 2017 Franchising Scheme Guidance issued by the Secretary of State (“the Franchising Guidance”). That document also contains non-statutory guidance; the statutory guidance, which must be followed, is underlined.

If, following the s.123B assessment, the authority wishes to proceed with the proposed scheme, it must obtain a report from an auditor on that assessment (s.123D)(1)). The audit report must state whether, in the opinion of the auditor:

a) the information relied on by the authority in considering whether it would be able to afford to make and operate the scheme and whether the proposed scheme would represent value for money is of sufficient quality;

b) the analysis of that information in the assessment is of sufficient quality;

c) the authority had due regard to the statutory guidance in preparing the assessment (s.123D(2)).

The auditor must have regard to any guidance issued by the Secretary of State on the matters to be taken into account when forming their opinion as to whether the information relied on, and the analysis of that information, is of sufficient quality — s.123D(6). Again, that guidance is to be found in the Franchising Guidance.Paragraph 1.85 of the Franchising Guidance requires the auditor to take into account the quality and timeliness of any information received from bus operators and to consider, in particular:

• Whether the information used comes from recognised sources;

• Whether the information used is comprehensive or selectively supports the arguments in favour or against any particular option;

• Whether the information used is relevant and up to date;

• Whether the assumptions recorded as part of the assessment are supported by recognised sources; and

• The mathematical and modelling accuracy of the analytical methods used to calculate the impacts of the options.

The Franchising Guidance requires the auditor to advise the authority if they consider that one or more of these criteria have not been satisfied (para 1.86).

If, after obtaining and considering an auditor's report under s.123D, the authority wishes to proceed with the proposed franchising scheme, it must publish a consultation document relating to the proposed scheme (s.123F). At the same time it must also publish the s.123B assessment and the s.123D auditor's report, and give notice of the scheme in such manner as the authority considers appropriate for bringing it to the attention of persons in the area to which it relates. S.123E(3) prescribes the ingredients of the notice, and s.123E(4) lists the persons that the authority must consult after giving such a notice.

S.123G(1) provides that a franchising authority that conducts a consultation under s.123E must publish a report setting out its response to the consultation and its decision on whether to make a franchising scheme covering the whole or any part of their area.

FACTUAL BACKGROUND

Transport for Greater Manchester (“TfGM”) is an executive body of the GMCA which is responsible for running Greater Manchester's transport services. It also has certain statutory powers and functions which are more fully described at [9] of the judgment.

As long ago as 30 June 2017 the GMCA decided that an assessment of a proposed franchising scheme should be prepared pursuant to s.123B of the 2000 Act. The Judge found at [10] that TfGM effectively acted as an officer of the GMCA in carrying out work relating to the proposed franchising scheme. The work was presented to the GMCA, which then voted on whatever recommendations had been made by TfGM in relation to that work.

The assessment pursuant to s.123B was carried out by TfGM and completed in June 2019. On 28 June 2019, the GMCA instructed Grant Thornton to provide an independent audit report on that assessment pursuant to s.123D of the 2000 Act. That report was provided on 26 September 2019. The public consultation under s.123E of the 2000 Act was carried out between 14 October 2019 and 8 January 2020. It therefore concluded before the global Covid-19 pandemic began.

In June 2020, TfGM...