A Joint Venture

 

Your ticket to ride on public transport in West Yorkshire is under-girded by a tripartite Joint Venture Agreement (JVA) between:

  • transport operators;
  • a ticketing company;
  • the West Yorkshire Combined Authority (WYCA).

Bus and rail operators hold shares in the ticketing company, the size of each operator’s holding being set in rough proportion to their standing as a major, medium-sized, or minor undertaking within the geographical area of West Yorkshire.

Minor parties hold one share each (out of over two hundred), whereas major parties may hold as many as 63 (First West Yorkshire Limited) or 54 (Northern Trains Limited).

The JVA enables the ticketing company (West Yorkshire Ticketing Company Limited, 'TICCO’ for short) to act as a clearing house. It acts as fare-setter and revenue-distributor, operating at arm’s length from, yet owned and controlled by, the Combined Authority (in its capacity as legal successor to the West Yorkshire Passenger Transport Executive).

The JVA recognises that West Yorkshire has a ‘statutory’ (as opposed to a ‘voluntary’) multi-operator, multi-modal ticketing scheme, as enacted by the local transport authority (WYCA) in exercise of its powers under sections 135 to 138 of the Transport Act 2000 (as amended). The scheme is legally known as the WYCA Multi Operator, Multi Modal Ticketing Scheme 2016.

Bus operator participation in the scheme is a legal requirement. Rail operator participation may arise from (a) a franchise obligation, and/or (b) a government directive, and/or (c) a voluntary commitment as witnessed by signing the JVA.

WYCA does not set, nor does it subsidise, the range of adult ticket prices. It does, however, prescribe (through the JVA) the revenue apportionment methodology (though some of this is left hanging in the air on account of its being a ‘work in progress’).

The JVA authorises TICCO to procure back office products, either directly or through an arrangement with Yorcard, a private company limited by guarantee with two members: South Yorkshire Passenger Transport Executive (SYPTE) and WYCA (in the event of liquidation, each member being liable for not more than £1, i.e. there is no share capital).

The revenue risk for the majority of products sold by virtue of the JVA is borne by the bus and rail operators and not by WYCA. If WYCA were to assume a greater stake in financial responsibility for these products, the balance of risk would shift as the authority became more exposed to potential financial hazard. This factor should be borne in mind when considering such benefits as might flow from municipal ownership of local public transport undertakings or an increase in local powers and responsibilities on account of devolution.

 

Governance

The activities regulated by the JVA are understandably complex. Legal vehicles such as this are relatively new to local authorities, and will no doubt be subject to further refinement in response to Government guidance and such judgments as may be handed down by the Commercial Court.

Until quite recently, West Yorkshire Ticketing Company regularly maintained (in its returns to Companies House) that it operated with no person or persons exercising significant control. This declaration was amended, with retrospective effect, in June 2020, to acknowledge that WYCA plus a number of key shareholders exercise significant control. Given that there does not appear to have been any significant variation in governance that could have triggered such an adjustment, it would appear that the original declaration was made in error.

Local authorities are required to exercise absolute control of any company they favour with a non-competitive award of business under what is known as the ‘Teckal’ exemption. The Crown Commercial Service recommends that in such circumstances there should be no private shareholders, a test that is clearly satisfied by Yorcard, but which would seemingly not be met by TICCO.

It would appear that this raft of interlocking legal agreements has been established primarily to comply with a statutory ‘block exemption’ from anti-competition legislation. The relevant terms are set out in the Competition Act 1998 (Public Transport Ticketing Scheme Block Exemption) Order 2001 as amended by The Competition Act 1998 (Public Transport Ticketing Schemes Block Exemption) (Amendment) Order 2016. It is not immediately clear what additional benefits (if any) can be said to flow from out-sourcing to TICCO - could this workload otherwise have been discharged quite adequately by local government officers within WYCA?

 

Rail products - some considerations

The WYCA Multi Operator, Multi Modal Ticketing Scheme 2016 applies to West Yorkshire Combined Area, comprising five Metropolitan District Councils. (Appx 1 to the Scheme refers). However, the diagram of Rail Zones (at Appx 3) shows two zones (6 and 7) in North Yorkshire, and one station (Darton) in South Yorkshire.

Rail commuters from Harrogate or Skipton may purchase season tickets with bolt-on roving capacity across West Yorkshire, but these products do not fall within the WYCA portfolio. Presumably North Yorkshire County Council has given its blessing to two sections of its rail network being pictured as WYCA zones, but is it appropriate for such a notion to feature as a definitive representation within a multi-operator, multi-modal ticketing scheme that is restricted to West Yorkshire?

The overlap at Darton is matched by a number of ticketing incursions in the reverse direction, at Moorthorpe, South Elmsall, and Denby Dale. This seems to imply that Local Transport Authorities have discretion to set cross-boundary fares where they see a potential benefit for their populace, e.g. West Yorkshire residents travelling to work in South Yorkshire (although the case for Darton may now be a matter of history). Which gives rise to a final observation: if such an over-step is permissible, the way could be clear for Greater Manchester to dismantle some of the tariff barriers that disadvantage Manchester-facing residents of Todmorden, whose links with the rest of Calderdale are somewhat tenuous (also for reasons of history).

 

 

 

return to last index