SEND transport and why the free market isn't working
When I was a teenager I would witness my dad and my brother arguing quite forcibly about economics. My brother was doing economics A level and my dad, despite having been at the pointy end of a command economy and with the bruises to prove it (he was imprisoned under the communist regime in East Germany), was not a complete free market advocate. At least not to the extent of a 1980s A level syllabus. He argued for state intervention and the government ownership of assets within a thriving economy as my brother poo-pooed his dinosaur tendencies and quoted Adam Smith. Teenage rebellion takes many forms.
Decades later I have finally found a ‘dad was right’ counter example - unfortunately one that is costing the UK government countless millions.
Every few weeks an email will drop into my inbox from one or other government procurement service. A local authority is seeking a ‘Dynamic Purchasing Platform’ for transport. Hurray, I hear you say, these local authorities are optimising purchasing, embracing competition efficiently and simply and their officers will be able to access the joys of the free market from their desktops.
Except. It doesn’t work like that. Sure officers will send out invitations to tender to every transport business registered on their platforms. But the reality of transport - particularly in rural areas - is that there is only enough business to support one or two companies. And with not a huge amount of supply, the competition is not exactly razor sharp. This means that, in many cases, companies name their prices and local authorities are obliged to pay them. There’s an illusion of competition, the platform looks super and adds the gloss of efficiency but the reality is that the responses are sought from effective monopolies. Tiny monopolies constrained by demographics and landscape, but monopolies nevertheless.
So what? Let’s just look at huge enormous astronomical costs of SEND transport. We’re going to have to. The national government deadline after which local authorities can no longer push it off the edge of their balance sheets is fast approaching. And it’s been pointed out more than once that, without change, that moment will mean that many are effectively bankrupt.
But these enormous costs are generally composed of hundreds of thousands of micro contracts. One by one procurements in which local transport providers - generally private hire companies - can name their price for taking children to school. The numbers are stunning - sometimes hundreds of pounds per day for a few miles. Repeat this across school catchments, boroughs and authorities up and down the country and it adds up to billions of pounds.
There is a convergence of problems - trip per trip procurement will not facilitate booking groups of children going in the same direction, and where there is little supply there’s little competition. It’s a similar problem to peak and off peak busses but with even less state intervention.
If you live in a rural area or small town and you try requesting a cab before 9am, the chances are that they are booked up weeks in advance for SEND school transport. It may seem lucrative but it’s not completely free cash for private hire companies. Intense peaks don’t mean steady jobs with normal hours or necessarily support full time pay - making driver recruitment tricky.
The invisible hand of the market isn’t all that effective in these cases. The realities of local companies and demograpics combine creating massive expense for local government and limited transport options for other people in the before school hours.
My dad would have said that this was inevitable. Government needs to ensure that there’s competition. Perhaps counter-intuitively, state intervention could make the market more efficient. Backstop competition from - for instance - local authorities’ own fleets would mean that if outside suppliers’ bids were too high, the local authority could invest in its own services to lower costs. It needn’t mean that there would be no tendering. But it would always mean a benchmark - but leaving it entirely to a free market - and particularly to one with limited supply - is costing a fortune.
And that’s before the other benefit of local authority fleets. With a defined fleet, local authority officers can group trips and share costs. I’ve spoken to a few over the years because it seems an obvious way to save money. However their ability to do this from within the current system is limited. Whilst some trips are outliers and some children need more tailored help, opportunities to share journeys are still being lost. Grouping trips and routes might seem obvious from the outside, but, because we are where we are, it’s not necessarily simple from within the system.
Then there’s the issue that local authorities are understaffed and underfunded. There are too few people with time to look at how best to reorganise - particularly in an area where parents are continually worried that services that help them are under threat and any change needs to be careful and sympathetic. So we maintain the fiction that dynamic purchasing systems bring down costs. Sounds good. But it’s a sticking plaster on a failing model.
