Greater Manchester Buses South Ltd v Greater Manchester Combined Authority

These two applications for permission to seek judicial review challenge the decision of the Mayor of Greater Manchester to reform bus services in the region. They are brought by two bus operating companies: Greater Manchester Buses South Limited (Stagecoach Manchester/Stagecoach) and Rotala plc (Rotala). Specifically, the companies challenge the Mayor’s decision on 25 March 2021 to make the Greater Manchester Franchising Scheme for Buses 2021 (the Franchising Scheme). I will refer to this as ‘the Decision’. If implemented, the Franchising Scheme will radically alter how bus services in Greater Manchester are delivered.

I held a remote ‘rolled-up’ permission hearing by Microsoft Teams between 26 and 28 May 2021. The material before the Court runs to thousands of pages, a lot of it being dense and technical material, such as economic modelling and forecasting. As I will explain, the decision-making process began in 2017 and was seriously impacted by the COVID pandemic in 2020/21. It is the potential effects of the pandemic on the transport market in Greater Manchester which lies at the heart of the Claimants’ cases.

I grant permission to both Claimants. Their claims raise arguable grounds, and the subject matter is of considerable importance to the region and its people.

Stagecoach Manchester is a major commercial bus operator whose business is largely focused on South Manchester. It is the largest bus operator in Greater Manchester, with almost 100 million passenger journeys in 2019/20. Stagecoach Manchester is a wholly owned subsidiary of Stagecoach Bus Holdings Limited and is ultimately owned by Stagecoach Group plc.

Rotala also operates bus and coach services in the North-West, and is the second largest bus operator in the Greater Manchester area.

The Interested Party, OneBus, is a partnership of commercial bus operators in Greater Manchester which was formed in 2018 to enable bus companies to speak with one voice and drive a shared commitment to improve public transport across the Greater Manchester region. Whilst it was served as an Interested Party, it did not take part in the hearing.

The First Defendant, the Greater Manchester Combined Authority (the GMCA), is the mayoral combined authority in Greater Manchester. It is made up of the Mayor, who is the Second Defendant to these claims, and an elected member from each of the ten constituent Metropolitan Borough Councils in Greater Manchester (Bolton, Bury, Manchester, Oldham, Rochdale, Salford, Stockport, Tameside, Trafford, and Wigan).

The GMCA was created by the Greater Manchester Combined Authority Order 2011 (SI 2011/908) (the GMCA Order), which was made under the Local Transport Act 2008 and the Local Democracy, Economic Development and Construction Act 2009. The GMCA has the functions set out in the GMCA Order (and other legislation), including in relation to transport, economic redevelopment, and regeneration.

Transport for Greater Manchester (TfGM) is an executive body of the GMCA responsible for running Greater Manchester’s transport services. TfGM has its own functions as the transport executive for the GMCA’s area under Part II of the Transport Act 1968 (TA 1968). It also acts as the GMCA’s executive body for the purposes of Part 5 of the Local Transport Act 2008 and Part 6 of the Local Democracy, Economic Development and Construction Act 2009. It has powers to assist the GMCA in the discharge of that authority’s functions: see s 9 of the TA 1968 and Article 9 of the GMCA Order.

In summary, as Mr Howell QC explained, TfGM effectively acted as an officer of the GMCA in conducting work relating to the Proposed Franchising Scheme. Its work was then presented to the GMCA, which voted on whatever recommendations had been made in relation to the work in question.

This judgment uses the following terms and abbreviations:

Since 1986, bus services outside of Greater London, including in Greater Manchester, have been deregulated. This means that bus services are provided by commercial operators who, in competition with one another, decide their own routes, timetables, fares, ticket types and customer service provision and, accordingly, retain control over their revenue and profits.

Certain local types of local authority, known as franchising authorities, were given powers to make bus franchising schemes under Part II of the TA 2000 as amended by the BSA 2017. In simple terms, under a franchising scheme, bus operators provide services under contract to the local transport authority (a term defined in s 108(4)). As a mayoral combined authority, the GMCA is a franchising authority under the TA 2000: s 123A(4)(a).

Under the TA 2000, some decisions relating to franchising are for the GMCA to take. But others, including the decision whether or not to make a franchising scheme, are ones for the Mayor personally to take on behalf of the combined authority: s123G(1)(b) and s123G(4), TA 2000; Article 4 of, and Sch 1, [3(i)], to the GMCA Functions Order 2019.

A franchising scheme is defined in s 123A(3) of the TA 2000 as one:

under which the franchising authority (or authorities) identifies the local services (as defined in s 2 of the TA 1985, by virtue of s 162(3), TA 2000) that it considers appropriate to be provided in an area under local service contracts. These are contracts that comply with TA 2000, s 123K(1)–(2), under which (i) the authority grants to another person the exclusive right to operate the local services to which the contract relates; and (ii) the person undertakes to provide the local services on such terms as may be specified: s123A(5)–(10). A franchising authority or authorities may only enter into a local service contract with a person who is the holder of either a PSV operator’s licence, or a community bus permit: TA 2000, s123K(2);

by virtue of which those services may only be so provided in accordance with such contracts (subject to TA 2000, s123O); or by virtue of which service permits for other local services which have a stopping place in that area granted by the authority (subject to s123H(5)); and

under which it identifies additional facilities that it considers appropriate to provide in that area (s123A(3)).

In Greater Manchester, franchising would involve a move away from the current deregulated model to one in which TfGM, on behalf of the GMCA, would set routes, timetables and fares for a number of different franchises. Bus operators would then bid on a competitive basis for fixed term contracts to operate services under those franchises. In very general terms, bus companies view franchising as less financially advantageous.

As Ms Demetriou QC made clear, the choice is not a binary one between franchising on the one hand, and the current deregulated bus market on the other. Another option is for there to be partnerships between local authorities and bus companies. There are different forms of possible partnerships but, in simple terms, as Ms Demetriou explained it, the premise is that bus companies cooperate together in partnership to produce a cohesive service, rather than one operator being appointed to run a particular franchise.

The Claimants’ position is not that the Defendants 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 TA 2000 provides that a franchising scheme may not be made unless the franchising authority has complied with the requirements in ss 123B to 123G of the Act: see s123A(2). The principal provisions for the purposes of these claims are ss 123B and 123D-H.

To begin with, under s 123B, a franchising authority that proposes to make a franchising scheme must prepare an assessment of the proposed scheme. Section 123B(2) and (3) provide that:

those authorities' policies under section 108(1)(a), and

other policies affecting local services that those authorities have adopted and published,

Ms Demetriou emphasised sub-paragraphs (d) and (e) in particular, and said they showed that there had to be a business case in support of franchising.

In preparing such an assessment, the franchising authority must have regard to, but is not obliged to follow, the guidance issued by the Secretary of State under s 123B(5): see s123B(6), namely the Franchising Guidance. This notes at [1.39]-[1.40]:

The five cases are the strategic, economic, financial, commercial and management cases. Each case is designed to assess the following points:

strategic case: whether, and the extent to which, the proposed franchising scheme would contribute to the implementation of their local transport plan policies and any other of their published and adopted policies that affect local bus services, for example an environmental policy;

economic case: whether the proposed scheme would represent value for money;

financial case: whether the authority would be able to afford to make and operate the proposed franchising scheme:

commercial case: the extent to which the authority is likely to be able to secure that local services are operated under local service contracts;

management case: how the authority would make and operate the proposed franchising scheme.

The Franchising Guidance explains how the franchising authority should approach the five-case business model. It says at [1.24] that the analysis in the assessment should, as far as possible, be carried out in line with guidance provided by central Government, specifically in the Green and Aqua Books (these are publications issued by the Government addressing best practice for various assessment methodologies).

I was taken through the Franchising Guidance in some detail. A particular point which was emphasised in relation to the economic case (at [1.44] et seq of the Guidance) is the requirement that franchising authorities test proposed options against the counterfactual of a ‘do nothing’ option. In fact, that is something of a misnomer, because what is required is for the authority to test options against a baseline position but also to take into account changes which might happen in the ordinary course of the current position:

The appraisal period is, in effect, the ‘life span’ of the option under consideration. In relation to the Defendants’ choice of appraisal period of 30 years for the Proposed Franchising Scheme, and decision to maintain this period after the pandemic (criticised by the Claimants and addressed later), one point made by Ms Demetriou is that there are substantial upfront costs in relation to franchising, and therefore a shorter appraisal period has the potential to significantly alter the cost-benefit analysis of that option.

If, after preparing an assessment under s123B, the authority wishes to proceed with the proposed scheme, it must obtain a report from an independent auditor on that assessment under s 123D. Section 123D(2) provides that:

The Franchising Guidance also addresses the role of the auditor in carrying out its audit of a franchising authority’s assessment of a franchising scheme under the TA 2000.

Paragraphs [1.77]-[1.87] of the Guidance (which the auditor must also have regard to, by virtue of s 123D(5) and(6)) provide that:

the audit report must state whether, in the auditor’s opinion (i) the information relied on by the authority in the assessment in relation to affordability and value for money is of sufficient quality (s123D(2)(a)); (ii) the analysis of the information in the assessment in relation to affordability and value for money is of sufficient quality (s123D(2)(b)); and (iii) the authority has had due regard to the Guidance in preparing the assessment (s123D(2)(c)).

the auditor must consider the following criteria when assessing whether the information and analysis is of sufficient quality: (i) whether the information used comes from recognised sources; (ii) whether the information used is comprehensive or selectively supports the arguments in favour, or against, any particular option; (iii) whether the information used is relevant and up-to-date; (iv) whether the assumptions recorded as part of the assessment are supported by recognised sources; and (v) the mathematical and modelling accuracy of the analytical methods used to calculate the impacts of the options (Franchising Guidance, [1.85]).

In addition, [1.74] of the Franchise Guidance provides that a franchising authority will need to gather robust information and data to inform the preparation of the above assessments.

As Stagecoach put it in its Skeleton Argument at [3], these requirements are designed to ensure that a decision to introduce a bus franchising scheme is robust, firmly based on detailed evidence and can be demonstrated to provide value for money.

If, after obtaining an auditor’s report under s 123D, the franchising authority wishes to proceed with the proposed franchising scheme, it must consult on the proposed scheme in accordance with ss 123E and 123F.

Section 123E(4) contains a list of persons and organisations which the authority must consult, eg, persons operating local services in the area to which the proposed scheme relates (s 123E(4)(a)), and persons representing their employees (s 123E(4)(c)).

Section 123F(1) specifies the matters that a consultation document under s 123E(2)(a) relating to a proposed franchising scheme must include, such as: a description of the area to which the proposed scheme relates; a description of the local services that are proposed to be provided under local service contracts; and the date on which the scheme is proposed to be made.

The franchising authority has a statutory duty to respond to the consultation. Section 123G(1) provides that:

Section 123H(1) provides:

A Chronology is annexed to this judgment.

The factual background on which Stagecoach relies is set out in the first and second witness statements of Neil Micklethwaite, the Business Development Director of Stagecoach Group plc. Among his other roles, he was responsible for developing Stagecoach’s response to GMCA’s consultations on the Proposed Franchising Scheme.

Rotala’s evidence is contained in the witness statements of Simon Dunn, a director, and Elizabeth Pritchard of Backhouse Jones, its solicitors.

On 30 June 2017, GMCA decided to use the powers given to it under the TA 2000 to prepare an assessment of a Proposed Franchising Scheme, and also agreed to delegate authority to the Chief Executive of TfGM (who is also the Chief Executive of the GMCA) to prepare the assessment on its behalf.

Work was then carried out on the Assessment over the next two years. For the most part, this work was carried out by TfGM. Ernst & Young also contributed.

On 28 June 2019, TfGM confirmed that it had completed the Assessment, entitled ‘Bus Franchising in Greater Manchester Assessment’ (the Assessment). This set out a strategic, economic, commercial, financial and management case, as well as a review and conclusion, in respect of the Proposed Franchising Scheme, and compared it with other alternative options, including the matters prescribed in s123B. It was accompanied by an Economic Case Supporting Paper. As I remarked during the hearing, the Assessment is extremely detailed. It runs to some 524 pages (excluding appendices and the like). It was presented to the GMCA in June 2019 and it recommended that the Proposed Franchising Scheme be adopted.

That month the GMCA decided to instruct Grant Thornton as independent auditor to provide the statutory audit required by s 123D of the TA 2000.

On 27 September 2019, TfGM confirmed that Grant Thornton had audited the Assessment and had reported on 26 September 2019.

Grant Thornton provided two documents in particular: ‘Independent Reasonable Assurance Report on Transport for Greater Manchester’s (TfGM) assessment of a proposed franchising scheme’ and ‘Observations on Transport for Greater Manchester’s (TfGM) assessment of a proposed franchising scheme’. Both documents were fairly short, of just a few pages. The first of these concluded:

In broad terms, the second document set out observations by the auditor on the Assessment where it felt that improvements could be made, but which were not sufficient to cause it not to certify the Assessment as complying with the TA 2000.

Grant Thornton’s documents were prepared according to an ‘Implementation Plan’ which it drew up in August 2019. This set out an organised and comprehensive approach to how it was going to review the Assessment.

TfGM provided a response to some of Grant Thornton’s observations in the second document.

At a meeting on 7 October 2019, the GMCA agreed to proceed to a public consultation in accordance with the TA 2000. The consultation window for the First Consultation (in the event, as I shall explain, there were two consultations) ran from 14 October 2019 to 8 January 2020. There were over 8000 responses to the consultation: First Consultation Report, [2.1.5].

In the early months of 2020, the world was hit by the COVID pandemic. In the UK the first lockdown effectively began around 16 March 2020, when the then Secretary of State for Health told the House of Commons that the Government was ‘advising people against all unnecessary social contact with others and all unnecessary travel. We need people to start working from home if they possibly can.’ (Hansard, 16 March 2020, col 697). A week later the Prime Minister made a televised broadcast telling people that they ‘must stay at home’. Emergency primary and secondary legislation was enacted by Parliament to give effect to the lockdown and the associated restrictions on travel.

In June 2020, TfGM published the First Consultation Report. This noted at [2.1.6] that the pandemic had resulted in:

On 26 June 2020 a report entitled ‘Bus Reform: Consultation Update’ (to which the First Consultation Report was appended) was presented to the GMCA by its Chief Executive. Paragraph 2.2 reported:

Section 3 of this Report said:

This report therefore proposed (inter alia) that the GMCA note that a further report would be submitted to members in due course which would consider the potential impact and effects of COVID-19 on the bus market and make recommendations about appropriate next steps. A resolution to that effect was duly passed by the GMCA.

In other words, following the consultation, the GMCA did not take a decision either in favour of, or against, recommending the Proposed Franchising Scheme to the Mayor. Instead, it resolved to obtain a further report on the question in light of the pandemic.

In her submissions Ms Demetriou accepted that, but for the pandemic, it is unlikely her client’s challenge to the Decision (at least) would have been brought. But she said that it was harder to imagine an event which could have more affected the transport market than COVID. Mr Micklethwaite expanded on these concerns in his evidence.

Pursuant to this resolution, the GMCA asked TfGM to prepare a report to consider how the pandemic had affected the analysis and the key conclusions in the Assessment, as well as its recommendation that franchising was the best option for reforming the bus market in Greater Manchester.

The report prepared by TfGM pursuant to this request, ‘COVID-19 Impact on Bus Franchising Report’ (the COVID Impact Report) was presented to the GMCA in November 2020. This stated at [1.1.4] that:

The COVID Impact Report set out four different potential scenarios for travel in Greater Manchester in the light of the pandemic, expressed in terms of the pre-COVID levels of typical weekly numbers of bus trips, in the period to 2026. The Report said at [1.4.1.] that the purpose of the scenarios was to enable:

The scenarios were illustrated in Figure 1 of the COVID Impact Report at [1.4.2]. This showed an x-axis (ie, horizontal), with the right-hand end labelled ‘Extent of changes in social and environmental attitudes’. There was also a y-axis (ie, vertical) labelled, ‘Stronger COVID/ economic recovery’ at the top. The four scenarios were then set out in the four quadrants formed by the axes, with Scenario 1 in the top left quadrant; Scenario 2 at top right; Scenario 3 at bottom left; and Scenario 4 at bottom right.

The four scenarios and their labels/captions were as follows:

Scenario 1 ‘Back towards normality’:

Scenario 2 ‘New travel demand’:

Scenario 3 ‘Car travel dominant’:

Scenario 4 ‘Poorer and more local’:

The Report then considered how COVID-19 and each of the scenarios might affect the conclusions reached on the strategic, economic, commercial, financial and management cases in the Assessment regarding the Proposed Franchising Scheme. It concluded that ([9.11.4]-[9.11.8]):

The GMCA asked Grant Thornton to prepare a review of the COVID Impact Report (the Assurance Review). This was sent to TfGM on 19 November 2020. As stated on the first page, its purpose was to provide the GMCA with independent assurance on the approach taken by TfGM in preparing the COVID Impact Report.

In summary, Grant Thornton concluded that:

The Assurance Review did not purport to be a statutory audit pursuant to s 123D of the TA 2000. Grant Thornton stated:

A key issue in the Claimants’ challenge is the legal question whether it was necessary for the COVID Impact Report to be audited per the provisions of the TA 2000, as the Assessment was.

The COVID Impact Report and the Assurance Review were presented to the GMCA on 27 November 2020 as appendices to a report from the Chief Executive, ‘COVID-19 Impact on Bus Franchising Report and Consultation’. This stated:

The GMCA was asked to approve the publication of both appendices and to proceed with the Proposed Franchising Scheme by undertaking a second public consultation (the Second Consultation). This recommendation was approved, and a second consultation document was published, ‘Doing buses differently - Have your say on the impact of COVID-19 on our proposals for the future of your buses’. This consultation document stated at p9 that:

The document summarised the contents of the COVID Impact Report and provided details of documents that were available containing further information. It also set out the reasons why the GMCA was asking for views given the uncertainties associated with COVID-19, and it addressed the question whether or not to proceed with the Proposed Franchising Scheme ‘now’, or whether it should be delayed (at [2.1.46]-[2.1.51]).

It specifically asked consultees to respond to the question:

The Second Consultation ran from 2 December 2020 to 29 January 2021 (Stagecoach was given a short extension to submit its response).

On 21 January 2021 Rotala filed its Claim Form and Grounds of Challenge.

On 15 February 2021, Stagecoach provided its response to the GMCA. This constituted a response paper and accompanying documents, namely: a business response to the 12 questions posed in the second consultation document; a separate legal paper prepared by Stagecoach’s solicitors; an economic paper prepared by NERA Economic Consulting, advisers to Stagecoach; and other material.

The flavour of Stagecoach’s response is given by the following paragraphs of its response paper:

On 16 February 2021, the Defendants filed their Summary Grounds of Resistance in response to Rotala’s claim.

On 26 February 2021 Stagecoach filed its claim.

On 15 March 2021 the Department for Transport published its National Bus Strategy for England, ‘Bus Back Better’ (the National Bus Strategy). Mr Micklethwaite said in his second witness statement that this favoured enhanced partnerships (established under the Bus Services Act 2017, and the key alternative considered in the Assessment). In simple terms, an enhanced partnership is an agreement between a local transport authority and local bus operators to work together to improve local bus services. They generally give bus operators a greater role in determining how such services are delivered than franchising does.

Also on 15 March 2021, the Defendants filed their Summary Grounds of Defence in response to Stagecoach’s claim.

Following the end of the Second Consultation, TfGM produced its Second Consultation Report. This was presented to the GMCA at a meeting on 23 March 2021 with other material, including GMCA’s response to ‘Bus Back Better’. The Second Consultation Report indicated that there had been over 4000 responses to the Second Consultation: [1.1.12].

In accordance with the requirements of s 123G of the TA 2000, the GMCA had to prepare and publish a report setting out its response to the consultation it had conducted, and making recommendations. The Report from the GMCA/TfGM Chief Executive, ‘Bus Reform: Consultation and the GMCA Response’ (the March 2021 Report), was also presented to the GMCA on 23 March 2021. This Report considered both consultation, and the responses to them, and made recommendations for the consideration of the GMCA’s members.

Paragraph 6.53 of this Report noted that Stagecoach continued to oppose franchising and that it had argued there were flaws with the process undertaken by GMCA in considering the impact of COVID-19. Stagecoach considered that it would be a mistake for the GMCA to press ahead with its Proposed Franchising Scheme at that time. The report also noted Stagecoach’s argument that:

So far as Rotala’s position was concerned, the Report noted at [6.53] that:

On the legality of the proposed scheme, the Report said in Section 18:

Overall, the March 2021 Report concluded at [19.1] and [19.2]:

At its meeting the GMCA voted to recommend to the Mayor that he make the Franchising Scheme set out in an appendix to the Report.

The Mayor accepted this recommendation and made the Franchising Scheme on 25 March 2021. His reasons in his Decision Notice were as follows:

On 24 March 2021 His Honour Judge Davies (as he then was) sitting as a High Court judge refused Rotala’s application for interim relief and gave directions for the service of Amended Grounds of Claim and Detailed Grounds of Resistance, and for the filing of evidence, and he also ordered this rolled-up hearing.

On 30 March 2021 the GMCA published its report in accordance with s 123G(1) of the TA 2000, and the Mayor made and published the Greater Manchester Franchising Scheme for Buses 2021.

The Scheme was due to come into force in different areas of Greater Manchester between 2023 and 2025, however following the May 2021 local elections the Mayor announced that he was going to engage in talks with the Government about bringing forward the implementation of the Scheme.

Although Stagecoach and Rotala put their cases in different ways, there was a significant degree of overlap. In essence, they both challenge as unlawful the process by which the GMCA came to recommend to the Mayor that he make the Proposed Franchising Scheme, and hence that his decision of 25 March 2021 in accordance with that recommendation was also unlawful. They each adopted points in the other Claimant’s case so far as relevant to their own case.

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 TA 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.

Both of the Claimants accepted that some of their arguments on unlawfulness blended into their arguments into irrationality and that there was not always a hard-edged distinction between the two heads of challenge. For example, they argued that the way some issues had been approached were both irrational, and also rendered the decision-making process incompatible with the mandatory statutory scheme. I think that acceptance was right.

They seek by way of relief orders quashing the GMCA’s recommendation to the Mayor, and his subsequent decision to make the Franchising Scheme.

The Defendants resist the claims. They argue, in summary, that the decision-making process was lawful. The statutory requirements were fulfilled. The conclusions which they reached on complicated matters of socio-economic and transport policy during the decision-making process were ones which were reasonably open to them, and especially so in light of the unprecedented uncertainties for the bus transport market caused by the pandemic.

As formulated in its Amended Grounds of Challenge and Skeleton Argument, and as presented by Ms Demetriou orally, Stagecoach’s case can be summarised as follows:

The TA 2000 requires that a decision to approve a franchising scheme be based on a robust evidence base, and that compliance with this requirement must be supported by an independent audit to the standard prescribed by the TA 2000 before being put to public consultation for informed comment from stakeholders (including affected local authorities, operators, residents and commuters). It is clear from the scheme of the TA 2000 that this is not intended to be a formalistic, box-ticking, exercise.

Stagecoach does not argue that the pandemic meant that the GMCA could not proceed with the Proposed Franchising Scheme. Rather, its case is that, if the GMCA considered it appropriate to proceed with the scheme amidst the uncertainty created by the pandemic, the TA 2000 required it to produce an assessment and audit that were based on up-to-date data and forecasts which met the prescribed standards set out in the Act, and to consult on those reports. The GMCA acted unlawfully by failing to do so, and the steps which the GMCA did take did not provide a lawful basis for making a final decision. In particular, Stagecoach asserts that:

Rather than updating the Assessment in light of the changed developments, TfGM prepared an ad hoc report to ‘consider the potential impact and effects of COVID-19 on the bus market and the Assessment and … make recommendations about appropriate next steps’ (Defendants’ DGR, [3]). The product of this exercise was the COVID Impact Report. It is common ground that the COVID Impact Report was not a statutory assessment pursuant to the TA 2000; the Defendants case is that it did not have to as it ‘was not an updated assessment’ (DGR, [47]). (In fact, Mr Howell said this was not common ground: see Defendants’ Skeleton Argument at [68]: ‘Stagecoach’s assertions (in Sskel [5(2)] that “it is common ground that the Covid Impact Report did not meet the standards prescribed by the TA 2000", and (in Sskel [33]) that the Defendants have admitted that, are not correct.)

It is also common ground that the COVID Impact Report was not the subject of an independent audit to the standard prescribed by the TA 2000. Again, the Defendants’ case is that it did not have to be, because it could continue to rely on the statutory Grant Thornton report it had obtained pre-pandemic in respect of the Original Assessment This rests on the ‘formalistic’ assertion that, once ticked, the audit requirement box ‘is ticked for all time’, no matter what the change of circumstances unless the local authority as ‘a matter of judgement’ considers that this should be revisited. Stagecoach argues that this approach was flawed.

Instead, Grant Thornton received limited instructions from TfGM to ‘review’ the COVID Impact Report, but was explicitly told not to ‘audit the COVID Impact Report on the same terms as its original audit or the Assessment’. The outcome was a five-page letter from Grant Thornton dated 19 November 2020 (the Assurance Review), which stated on the first page that ‘[f]or the avoidance of doubt, this Report has not been prepared in accordance with section 123D of the Act’, a point which is repeated on the following page, along with an explanation that it was also not ‘an evaluation of the COVID Impact Report conducted in accordance with auditing standards issued by the Financial Reporting Council” or “based on any other formal guidance’. The Assurance Review also explains that the auditors had not undertaken any review or audit of the models relied upon in the COVID Impact Report, as ‘[t]he purpose of our review was not to undertake an audit of any financial or other supporting models since the audit of the Assessment’.

The COVID Impact Report concluded that the Proposed Franchising Scheme ought to proceed, and the GMCA decided on 27 November 2020 to proceed with the Second Consultation on this basis. After the conclusion of the Second Consultation, the GMCA recommended on 23 March 2021 that the Proposed Franchising Scheme be approved. The Mayor did so on 25 March 2021.

Stagecoach says that the consequence is that the Defendants failed to carry out an updated assessment to the prescribed standard (including failing to obtain an independent auditor’s report on that updated assessment) before consulting on (and ultimately approving) the proposal to proceed with the Proposed Franchising Scheme.

Stagecoach therefore crystallises its case into the following three grounds of challenge:

Ground 1: The Defendants committed an error of law by proceeding with (and ultimately approving) the Proposed Franchising Scheme in circumstances where they failed to comply with the statutory requirements of the TA 2000.

Ground 2: Alternatively, the Defendants acted irrationally in proceeding with (and ultimately approving) the Proposed Franchising Scheme on the basis of the COVID Impact Report and Grant Thornton’s Assurance Review. In conducting an analysis of its irrationality challenge, Stagecoach argues that the Franchising Scheme will interfere with its rights under Article 1 of Protocol 1 to the European Convention on Human Rights and the Court should therefore apply a heightened standard of scrutiny: Skeleton Argument, [68].

Ground 3: The Second Consultation was not conducted lawfully as neither Stagecoach, nor any other consultee, was provided with sufficient information so as to permit them to consider and respond intelligently to the questions raised by that consultation.

Orally, Ms Demetrious encapsulated Stagecoach’s case as follows. She said the failure to audit the COVID Impact Report as she contended it should have was ‘front and centre’ of Stagecoach’s case and that the effect of the error could be framed in three ways:

One of the exhibits to Mr Micklethwaite’s second witness statement is a letter dated 7 May 2021 from Daniel Hanson of NERA Economic Consulting, who assisted Stagecoach with its representations during the Second Consultation. The letter contained Mr Hanson’s opinion about why the Second Consultation Report did not resolve points which NERA had made during the consultation. There was also a further letter and enclosures dated 25 May 2021 served shortly before the hearing.

The Defendants objected to this material being relied upon by way of expert evidence, and said that in any event it did not take Stagecoach’s case any further. At the hearing, Ms Demetriou said that she was not relying upon the letters as expert evidence but was making the points contained within them by way of submission, which she was entitled to do. She said they were there and could be used by the Court to aid its understanding of technical issues and evidence. This approach was further explained in a post-hearing written submission from Stagecoach, to which the Defendants replied. I have approached this material on the basis explained by Ms Demetriou.

The general background to Stagecoach’s submissions, set out above, also forms the background to Rotala’s submissions and I do not need to repeat it.

Rotala’s case as formulated in its Amended Grounds of Challenge and Skeleton Argument, and as presented orally by Mr Singer QC, is:

Ground 1: the GMCA’s decision to continue the existing bus reform consultation process on or after 27 November 2020 was unlawful. It is clear from Section 123A of the TA 2000 that the stages in ss 123B-G must be followed if a franchising scheme is to be made/not made. These requirements are linear, in the sense that they are a process that must be carried out in the order they appear in the statutory scheme. It is Rotala’s primary position that the June 2020 reports were, or ought to have been, ‘s 123G reports’ marking the end of the statutory process, so that the decision to hold the Second Consultation in November 2020 was unlawful. Neither the GMCA nor the Mayor has identified any section of the TA 2000, nor any authority, which permitted a second consultation in the circumstances which arose in this case.

Ground 2: the decision to undertake the Second Consultation during the COVID-19 pandemic was irrational or manifestly unreasonable. In June 2020 GMCA decided to pause the statutory process, as confirmed by its solicitors in August 2020. For the reasons given in relation to Ground 1, Rotala submits that the only lawful decision open to the GMCA to take in late November 2020 was for it to recommence the statutory process. In the alternative, and by this ground, Rotala’s position is that the decision on 27^th November 2020 to recommence/reconsult was irrational. The COVID crisis had not abated as at late November 2020, so its potential impact on the Greater Manchester bus market could not be said to be clearer or settled between June and November 2020.

Ground 3: the decisions to recommend the making of a franchising scheme and the making of the same were unlawful/irrational. Rotala’s response to the COVID-19 Impact Report in the Second Consultation (and the supporting reports prepared by their expert accountants BDO and economic consultants Oxera) identified a number of issues with the analysis in that Report. In summary, their effect was to inform GMCA/TfGM that the scenarios were not based on accurate, up-to-date data; that the calculations had not been worked through in such a way as to take account of all matters relevant to the scenarios; that the methodology used by TfGM was defective in a number of ways, and that the Grant Thornton non-statutory assurance report, in reality, provided no assurance, and that the use of the terms ‘appropriate’ and ‘of sufficient quality’ was of little value without those terms being defined and without Grant Thornton having been given any criteria to which to work. Having been put on notice of all those shortcomings, it was not lawful or rational for GMCA to recommend to the Mayor that he go ahead with the franchising scheme, nor for the Mayor to do so, without either: (i) all these shortcomings being addressed and the COVID-19 Impact Report being re-considered and audited in such a way as to comply with s 123D of the TA 2000; or (ii) waiting until the COVID-19 pandemic had ended; or (c) being satisfied that each of those criticisms was invalid. Neither GMCA, nor the Mayor, could be rationally satisfied that the criticisms made were invalid. The only further document which the GMCA and the Mayor received thereafter in relation to the impact of COVID-19 and the matters raised by Rotala in the consultation, was the Second Consultation Report in March 2021, which was not capable of answering the points made by Rotala during the consultation.

Mr Singer helpfully orally encapsulated his case as follows:

There was, at one stage, an application by Rotala to rely on expert evidence in the form of two reports, one from Steven Law of accountants BDO and one from Andrew Meaney of Oxera Consulting (Rotala’s economic consultants), but in the event Mr Singer did not pursue the application. He was content to make his case on the basis of the material that was submitted by Rotala and its consultants during the consultation process (and especially the Second Consultation), which he considered were sufficient to make his client’s case.

The Claimants’ grounds of challenge as set out in their Amended Grounds and Skeleton Arguments have a degree of overlap, but can be broken down as follows. I have taken this analysis (with some small amendments) from the Defendants’ Skeleton Argument, which I consider fairly breaks down the Claimants’ areas of challenge, and I propose to deal with these points in order in the ‘Discussion’ section of this judgment.

In the following, ‘S’ and numbers in square brackets refers to Stagecoach’s Amended Grounds of Challenge, and ‘R’ refers to Rotala’s Amended Grounds of Challenge. I also refer to their Skeleton Arguments where necessary.

The Claimants’ submissions on unlawfulness are:

the TfGM First Consultation Report ‘was a report in accordance with s 123G(1)(a)’ and thus marked the end of the statutory process (R, [31]);

once a consultation period under s 123E had ended, no further consultation was possible and therefore the franchising authority GMCA had to publish its report under s 123G(1)(a) without further consultation (R, [33]);

consultees were not provided with sufficient information to permit them to respond intelligently to the scenarios that had been used ‘for the purposes of modelling the impact of COVID-19’ and ‘the mechanism by which these ‘scenarios’ had been translated into projections of the expected impact’ (S, [56]);

the Defendants failed to comply with the statutory requirements of the TA 2000 and the Franchising Guidance (S, Ground 1);

the Grant Thornton Assurance Review did not meet the requirements for an audit under s 123D (S [27], [31], [32] and [40]) and the Defendants could not be satisfied that they had received an auditor’s report that complied with s 123D given the COVID Impact Report (R, [51]);

The Claimants’ submissions on irrationality are:

the effects of COVID-19 on the objectives of the bus network were not properly considered (S, [37]);

it was irrational for the GMCA to ‘update’ the Assessment using an analysis which fell short of the standards of that Assessment (which were required by statute) (S, [49]);

it was irrational to rely on the COVID Impact Report as part of the decision along with the Second Consultation Report to recommend the Franchising Scheme to the Mayor (S, [50] and S, Ground 1);

an irrational model was used (S, [51]);

the Second Consultation during the COVID-19 pandemic was irrational/manifestly unreasonable (R, Ground 2);

TfGM’s response in the Second Consultation Report to comments in a report by Oxera was inadequate or failed to take them properly into account (R, [60]-[65]);

the Defendants were not entitled to place any weight on Grant Thornton’s Assurance Review and accordingly could not satisfy themselves that the statutory criteria set out in s 123B were met or properly assessed in the Original Assessment when read in conjunction with the COVID Impact Report (R, [51]-[54]);

the timing of the decision was flawed in that (i) the timing of the decision making was not sensible given the uncertainties (R, [65]-[66]); (ii) the Defendants have disabled themselves from considering the matters in s 123B(2)(b) of the TA 2000; (iii) the Defendants failed to take into account Rotala’s answers to Q2 and Q10 in the Second Consultation (R, [67]-[68]);

it was irrational not to delay the decision for further discussions with operators in light of the National Bus Strategy (S, [52]).

In response, Mr Howell submitted in summary that:

There was no unlawfulness in the way the Decision was taken. The statutory process in the TA 2000 was followed. A statutory assessment was obtained which was audited in accordance with the statutory provisions. A lawful consultation (the First Consultation) was then carried out, and responded to, as required by the TA 2000. The GMCA was not required, in June 2020, to report or take a decision under s 123G, and it did not do so. The GMCA acted lawfully (and rationally) in obtaining the COVID Impact Report and then carrying out a Second Consultation. 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 TA 2000, nor did the Assurance Review have to comply with s 123D (as it avowedly did not).

The Defendants did not act irrationally during any stage of the decision-making process. The methodology it adopted and the conclusions it reached were ones which were reasonably open to it. The criticisms made by the Claimants are largely repeats of argument they made during the consultations which were properly considered and responded to by TfGM and accepted by the GMCA. No proper basis has been advanced for the contention that any of the conclusions reached by TfGM and the GMCA were ones which were not reasonably open to them. The GMCA and the Mayor were reasonably entitled to recommend, and then make, the Franchising Scheme rather than delay it, despite the uncertainties caused by the pandemic. The robustness of the recommendations which had been reached following the (pre-pandemic) Assessment in 2019 had been appropriately tested in the COVID Impact Report; Grant Thornton had approved it; and there had then been a full Second Consultation. Consultees had been given full information as part of that consultation and had been able to make informed representations about ( inter alia ) whether a franchising scheme was the right option and whether the decision ought to be delayed in light of uncertainties for the bus market caused by the pandemic. Criticisms made by (in particular) the Claimants and their economic consultants had been fully considered by the GMCA and reasonable conclusions reached in relation to them.

The parties’ lengthy written pleadings and oral submissions over three days contained a great many points on a very complex area. Long gobbets of the evidence were read out to me and minutely picked over. At one point we found ourselves discussing the cleanliness of Manchester’s buses. I do not say that by way of criticism, but merely to illustrate the level of detail which was gone into.

In the discussion which follows I propose to deal with that which I think is necessary to fairly address the parties’ cases. The fact that a particular point or document is not addressed does not mean that it has been overlooked. I have had the advantage of full transcripts of the hearing, and I have consulted them in the course of writing this judgment.

Stagecoach in particular submitted that in considering the Claimants’ arguments on irrationality, I should apply a standard of ‘heightened scrutiny’ (Skeleton Argument, [68]). It cited Lord Sumption’s judgment in Bank Mellat v HM Treasury [2014] AC 700, [20], where he said a court considering the question of proportionality in relation to a Convention right should conduct:

Stagecoach argued that heightened scrutiny is required because the Defendants’ decision to introduce the Franchising Scheme will interfere with the Claimants’ right under Article 1 Protocol 1 of the European Convention on Human Rights (A1P1) to peaceful enjoyment of their possessions. In particular, the Franchising Scheme would deprive operators, other than the franchisee, of the goodwill they have generated in their businesses in Greater Manchester and would also interfere with their physical assets, such as depots and fleets: cf R (United Trade Action Group Limited and others) v Transport for London [2021] EWHC 72 (Admin), at [202] – [205]. Goodwill is a ‘possession’ within the meaning of A1P1: Breyer (and others) v Department for Energy and Climate Change [2015] EWCA Civ 408; Van Marle and others v The Netherlands (1986) 8 EHRR 483. Stagecoach said it understood this last point to be common ground, as TfGM acknowledged in the First Consultation Report at [13.6.61], where it said that the Proposed Franchising Scheme would, ‘effectively deprive any operator of any goodwill it has built up in respect of such services in Greater Manchester if it is unable to provide them under its brand.’

In response, the Defendants argued (Skeleton Argument, [77]-[79]) that there was no claim that the Franchising Scheme involves any breach of either Claimant’s rights under A1P1 and that, accordingly, the relevant question is not one about its proportionality. It is whether the decision, or some part of the reasoning in support of it, was not something any reasonable decision-maker could have adopted in the circumstances.

The Defendants said that the level of scrutiny to be applied to a decision depends on the nature of the interference and the subject matter impugned. Here:

The Franchising Scheme is a regulatory intervention which does not affect the ownership or control of the Claimants’ physical assets. They remain free to use their depots and fleet; they may compete for, and be awarded, a local service contract or contracts when the Scheme comes into operation in which they may be used (although their use for their current business will then be curtailed); they may sell their strategic depots at market price to the franchising authority and receive an agreed upon price for their suitable existing fleet (which would be put into a residual value mechanism controlled by the authority); or they may put their depots and fleet to other uses or otherwise dispose of them. There is no evidence of the amount of any goodwill that either Claimant might or will lose.

The Franchising Scheme is a regulatory change affecting the bus market in Greater Manchester. This is the type of general measure in the public interest in respect of which a State has a wide margin of appreciation. The decision to make the Franchising Scheme involved a multi-faceted evaluative judgment about the future regulation of the bus market in Greater Manchester, and required assessments of social, environmental, economic, organisational and financial matters, in circumstances of greater uncertainty than normal (because of the pandemic). Both the Decision, and the reasons for it, involve matters in relation to which the Court has no particular institutional competence, and they do not involve questions in respect of which there is normally only one ‘right’ answer. Even had the legal question been one of proportionality in respect of such a regulatory measure, the Court should accord a wide margin of appreciation both with regard to the existence of a problem of public concern warranting measures of control and as to the choice of the detailed rules for the implementation of such measures’ and will respect the legislator’s judgment on what is in the general interest unless it is ‘manifestly without reasonable foundation’: Mellacher v Austria (1990) 12 EHRR 391, [45].

In those circumstances, the Defendants say there is no requirement for ‘heightened scrutiny’ of the Decision or the decision-making process which led to it. On the contrary, they say that they should be afforded a wide margin of appreciation in relation to the conclusions that were reached.

I broadly agree with the Defendants’ approach, for the following reasons.

Bank Mellat authoritatively sets out the test for proportionality. The issue of how that test is to be applied in different contexts, and in particular how it relates to the Strasbourg concept of an impugned measure being ‘manifestly without reasonable foundation’, is a difficult question about which much has been written in recent years. If I may be allowed to say (diffidently), I referred to some of the case law and the contrasting approaches in R (Harvey) v London Borough of Haringey [2019] ICR 1059, [110]-[125]. More recently, Lord Reed discussed this topic with far greater authority and clarity in R (SC) v Works and Pensions Secretary [2021] 3 WLR 428, [143]-[162].

To begin with a preliminary point, the concept of a margin of appreciation arises because of the need for an international court, charged with the task of determining whether a domestic measure has infringed an individual's Convention rights in a particular case, to have appropriate respect for the choice which a democratic State has made with respect to the measure in question, having regard to its own national conditions, and which it, rather than the European Court of Human Rights, is best placed to assess. Where the context is social or economic policy then States have a wide margin of appreciation: see eg, Stec v United Kingdom (2006) 43 EHRR 47, [52].

That said, at the national level, there is a broadly analogous principle that in some circumstances it is appropriate for the courts to recognise that there are areas of judgement within which the judiciary will defer, on democratic grounds, to the considered opinion of the elected body or person whose act or decision is said to be incompatible with the Convention: R v Director of Public Prosecutions ex parte Kebilene [2000] 2 AC 326, 381. In the domestic context, the term ‘margin of discretion’ rather than ‘margin of appreciation’ is to be preferred. In In Re Medical Costs for Asbestos Diseases (Wales) Bill [2015] AC 1016, [44], Lord Mance said the latter term does not apply at the national level. Lord Reed made a similar point in SC, [143]. Nevertheless, he went on to point out, as I have said, that domestic courts have generally endeavoured to apply an analogous approach to that of the European court.

In Bank Mellat Lord Sumption was not referring to the intensity of review when he referred to ‘an exacting analysis of the factual case advanced’, as the Claimants suggested. He was expounding a general test for determining whether an impugned measure disproportionately interferes with a Convention right. That is a test which always requires a close scrutiny of the facts, and that is what Lord Sumption was referring to. The mere fact that a Convention right may be engaged by a decision or legislative measure does not mean that ‘heightened scrutiny’ (in the sense of affording reduced, or little, weight or deference to the decision maker’s judgment) has to be applied. The level of the intensity of review in applying the proportionality test will vary according to the subject matter, as the discussion in SC shows. In that case, Lord Reed said at [161]:

I am prepared to assume that the Claimants’ A1P1 rights are potentially engaged by the Decision. That said, it is right to note that their arguments about loss of goodwill are largely speculative. I agree with the Defendants’ characterisation of the Decision as involving a ‘broad multi-factorial, policy-laden, evaluative judgment about the future regulation of the bus market’ in Greater Manchester (Skeleton Argument, [78(2)]). As the discussion in this judgment shows, the decision whether to recommend and then make the Franchising Scheme was a complex socio-economic question in relation to which many different views were expressed. That decision therefore falls within one of those areas in relation to which the Court should give substantial weight – in other words, afford a wide margin of discretion - on democratic grounds, and the grounds of institutional competence - to the judgements of the democratically accountable bodies responsible for the Decision (whilst obviously retaining the ultimate responsibility for deciding whether that judgment was lawful).

Hence, no heightened standard of scrutiny is required. I note that Lang J in United Trade Action Group Limited – where A1P1 was explicitly engaged – did not apply a standard of heightened scrutiny. I also note that apart from their general submission on this point, the Claimants cast their detailed arguments in terms of conventional Wednesbury irrationality and did not emphasise any particular issue where they said a special heightened standard of review was called for, and nor did they advance their arguments by reference to the Convention or proportionality.

I begin with a preliminary submission by Rotala (at least in writing; it was not really pursued orally by Mr Singer) that the GMCA and TfGM are in reality one and the same. In its Skeleton Argument it refers in a number of places to reports by ‘GMCA/TfGM’ and it argues (eg at [21]) that ‘any suggestion that the two bodies are separate in a real sense is wholly misconceived’. I do not agree. Ms Demetriou also did not join with Rotala on this point.

Whilst the Chief Executive of GMCA was (and, as far as I know, still is) also the Chief Executive of TfGM, and as Ms Pritchard said in her witness statement there are other shared staff, the two are legally distinct entities, with different functions. It is important to recognise this distinction so that the relevant decision-making roles are properly understood.

TfGM was established by Article 9 of the GMCA Order:

The GMCA is the franchising authority for the purposes of the TA 2000. It had the duty to assess and audit the Proposed Franchising Scheme under ss 123B-D. The requirements of Part II of the TA 2000 in connection with franchising obviously required a large quantity of specialist technical work, and GMCA delegated certain functions to TfGM, which then carried out that work under the direction of GMCA.

However, that does not and did not make TfGM and the GMCA the same entity. As I explained earlier, the work carried out by TfGM was presented to the GMCA (generally as appendices to reports prepared by its Chief Executive), along with recommendations. The matter was then voted upon by the members of the GMCA as the democratically elected body.

In the same way, it is important to distinguish the Mayor from the GMCA. Whilst he is a member of the GMCA, he is a legally distinct entity and, by s 123G(4), he was responsible personally for taking the ultimate decision whether to make the Franchising Scheme which the GMCA had recommended.

I turn now to the status of the First Consultation Report and the other reports from June 2020.

In its Amended Statement of Facts and Grounds, Rotala focussed on the First Consultation Report, which it said ‘clearly’ marked the end of the statutory process and thus that it was a report in accordance with s 123G(1)(a) of the Act [at 31]. It relied on a statement to that effect in [3.5] of ‘Bus Reform: Consultation Update’, to which the First Consultation Report was annexed (emphasis added):

In its Skeleton Argument at [24] Rotala also suggested that the other reports produced in June 2020, namely ‘Bus Reform: Consultation Update’ and the report of the Scrutiny Committee (that is, Greater Manchester Housing Planning and Environment Overview and Scrutiny) entitled ‘GM Bus Reform Consultation’ of 11 June 2020 also fell under this heading. Its primary position was that:

Rotala argued that the statutory process under the TA 2000 is clear and linear, and that it had to be complied with in accordance with the process set out in the Act and in order. The consequence, said Rotala, is that the statutory process came to an end (or should have come to an end) in June 2020, and thus that all further steps taken by the Defendants thereafter were unlawful. But, equally, Rotala said that if these were not such reports then the GMCA failed to comply with the statutory scheme because they should have been, so that, again, all further steps thereafter were unlawful.

I reject the submission that the First Consultation Report and/or the other reports from June 2020 were, as a matter of fact, reports in accordance with s 123G(1)(a). Mr Howell rightly said this was a question of fact. I also reject the allied submission that, as a matter of law, they needed to be. It follows that I also reject the submission that any further consultation was prohibited in the absence of the whole process starting again, with a fresh assessment carried out in accordance with s 123B and audited under s 123D.

Section 123G(1) requires a report published in accordance with it to contain both the franchising authority’s response to the consultation, and (in the case of a mayoral combined authority like the GMCA) the Mayor’s decision on behalf of the combined authority under s 123G(4) on whether to make a franchising scheme.

None of the June 2020 reports purported to do either of these things. Indeed, as the Defendants point out, they could not have done so because in June 2020 the Mayor had not taken any decision on franchising. Also, the First Consultation Report itself made clear that, as at that time, the GMCA did not know what its response to that Consultation would be in terms of recommending, or not, a move to franchising, because of the impact of COVID. This Report said at [2.1.6] – [2.1.7]:

That the First Consultation Report was not of itself GMCA’s response to the consultation pursuant to s 123G(1)(a) is clear from the following paragraphs (emphasis added):

Further, the report of 27 November 2020, ‘COVID-19 Impact on Bus Franchising Report and Consultation’, proposed the GMCA carry out a further consultation and said at [81]-[8.2]:

So far as [3.5] of ‘Bus Reform: Consultation Update’ is concerned, a preliminary point is to emphasise (as I did during the hearing) that it referred to drawing the ‘original consultation’ to a conclusion (my emphasis) – not, it is to be noted - drawing the consultation process as a whole to a conclusion. Paragraph [3.5] therefore clearly left open the possibility that there would be a further round of consultation in the future.

It is important to read [3.5] in context and note what that Update did not say. As the Defendants point out, it did not propose or recommend that the First Consultation Report be adopted as (or as part of) the GMCA's response to the consultation that had been conducted (whether for the purpose of s123G(1)(a) or otherwise); nor did it suggest that the consultation would not be re-opened, or that no further consultation would be undertaken, as part of the next steps that might be appropriate having considered the potential impact and effects of COVID-19 on the bus market. On the contrary, [3.6] made clear that a further report would be submitted to members of the GMCA in due course which would ‘make recommendations about appropriate next steps in the circumstances’.

Rotala’s next contention in [33] of its Amended Grounds and in its Skeleton Argument at [25] et seq, is that, once the First Consultation under s123E had ended, no further consultation was permissible, and the franchising authority was then required to publish its report under s 123G(1)(a) without further consultation. Thus, if the First Consultation Report or other reports from June 2020 were not reports under s 123G(1)(a) (which I have held they were not), Rotala argues there was no power to hold a further consultation, and so what flowed from that including the Mayor’s decision was unlawful.

The way it is put in [26] of Rotala’s Skeleton Argument is this:

I reject the contention that having carried out the First Consultation and obtained the First Consultation Report, the GMCA was therefore debarred from carrying out a further consultation exercise. There is nothing in the wording of Part II of the TA 2000, nor in authority, logic or principle, which leads to such a conclusion. I agree with Mr Howell that there is nothing in the Act which suggests that a consultation may not be reopened nor is there any reason why Parliament can or should be taken to have intended to prohibit any further consultation.

I begin with the general observation that this submission is unusual. Normally, consultations are challenged on the grounds that they were not wide enough or detailed enough. Challenges to decisions on the basis they were preceded by too much consultation are not common.

In R (Moseley) v Haringey LBC [2014] 1 WLR 3947, [23]-[24], Lord Wilson said (internal citations omitted):

It seems to me that Rotala’s argument must fail for a number of reasons. Firstly, there is the context. As Lord Steyn said in R (Daly) v Secretary of State for the Home Department [2001] 2 AC 532, 548, ‘In law context is everything’. The context here, as I remarked during the hearing, is the fundamental reform of bus services in one of the most populous regions of the country. This has the potential to affect many hundreds of thousands, if not millions, of people in the years to come. It will have a significant social and economic impact. The issues involved are complex and multi-faceted. All of this strongly suggests that a broad and deep measure of consultation was required in as flexible a way as possible. The number of stakeholders who were consulted by TfGM and Ipsos MORI pursuant to GMCA’s direction under s 123E(4) bears this out, as does: (a) the number of responses received to the two Consultations (over 8000 and 4000, respectively); and (b) the length of the two Consultation Reports (a combined total of well over 1000 pages).

Second, there is nothing in s 123E to suggest that the required consultation has to be a one-time event. The Act does not provide that a consultation under s123E may not be reopened once an initial consultation period has ended. Given the complexity of the subject-matter this is unsurprising. It is to be readily apprehended that such a consultation could produce something which required a second round of consultation. It seems to me that clear words would be required before the conclusion could properly be reached that Parliament intended that franchising authorities had to ignore post-consultation events, and that any further consultation was prohibited.

Rotala’s argument in [30] of its Skeleton Argument that a contrary intention appears in the TA 2000 because ‘it sets out all stages including a statutory consultation stage and the next stage to be followed in clear terms’ begs the question whether that consultation can take place in stages. Absent clear statutory language to the contrary, there is nothing wrong in there being phased consultation: see R (Parents for Legal Action Ltd) v Northumberland County Council [2006] EWHC 1081 (Admin), [34]. Mr Howell made this precise submission during the hearing, and I agree with it.

Mr Howell made an allied submission which I also agree with. He postulated that a consultation produced the result that the franchising authority wanted to change the proposed scheme in a minor way, eg, altering a few routes in a way which affected only a small number of people. Mr Howell said that if the Claimants were right, the whole statutory process, beginning with an assessment, would have to start again, which would be an absurd and disproportionate result.

Third, fairness may require a consultation to be re-opened in some circumstances, and in particular where something has arisen which consultees have not had the opportunity to comment upon: R (Robin Murray & Co) v Lord Chancellor [2011] EWHC 1528 (Admin), [47]. In this case the pandemic took hold after the First Consultation had closed in January 2020. I consider that there would have been a strong case of unlawfulness if the GMCA had not held a second consultation before deciding to recommend franchising, so profound were the pandemic’s effects on the transport market. This conclusion is supported by Marriott v Secretary of State for the Environment, Transport and the Regions , Unreported, 10 October 2000, [87]-[88], on which Mr Howell particularly relied. There, Sullivan J held (in the context of a detailed statutory planning scheme) that a consultation may be re-opened where fairness requires it, and also as a consequence of s 12 of the Interpretation Act 1978.

Fourth, s 123E(1) imposes a duty to consult. Section 12(1) of the Interpretation Act 1978 provides that where an Act confers a power or imposes a duty it is implied, unless the contrary intention appears, that the power may be exercised, or the duty is to be performed, from time to time as the occasion requires. In my judgment, no such intention appears in s 123E, and I reject the Claimants’ submissions to the contrary.

Fifth, the Franchising Guidance provides at [1.95] under the heading ‘Response to Consultation’ (emphasis added):

Whilst the Franchising Guidance is not an aid to statutory interpretation, this paragraph does envisage that a franchising authority might wish to consult again following its response to an original consultation. I reject Rotala’s submission (Skeleton Argument, [30]) that this paragraph is referring to ‘a further consultation after the section 123G report has been produced’. That is because s 123H(1) requires that such a report must be published at the same time as any scheme is made, and it would make no sense to consult thereafter because the decision would already have been made. I do accept that this paragraph on its face contemplates further consultation in relation to changes to the proposed consultation (as Mr Howell acknowledged), but it does nonetheless more support the Defendants’ position than the Claimants’ position. I think Mr Howell was right to submit that the authority either has the power to consult again, or it does not.

Sixth, and lastly, Mr Howell submitted that even if a statutory consultation conducted under s123E of the TA 2000 Act cannot be reopened after the consultation period initially set has ended (whether under that section or an implied common law power), there was no legal reason why a franchising authority may not consult further on a voluntary basis to help it to determine, for example, what its response to the representations made in the initial consultation period about the proposed scheme and its assessment should be in the light of subsequent events, or what recommendation it may wish to make about whether any (and, if so, what) franchising scheme should be made. He said that if s123E provided no such power of itself, it unarguably did so in conjunction with s102B of the Local Transport Act 2008 read with Articles 6 and 7 of the GMCA Order. Section 102B provides, in general terms, that an integrated transport authority (ITA)may do anything the ITA considers appropriate for the purposes of carrying-out its functions. By virtue of Articles 6 and 7 the GMCA had the functions of the Greater Manchester ITA transferred to it. Mr Howell said the effect of these provisions was that the GMCA had a general power to consult whenever it considered it needed to. I agree.

This is Stagecoach’s third Ground of Challenge (Amended Grounds, [55] et seq; Skeleton Argument, [75] et seq). In particular, Stagecoach argues that the Defendants failed to provide sufficient information to permit it to carry out a meaningful analysis of (a) the scenarios which the GMCA had decided to use for the purposes of modelling the impact of COVID-19 in the COVID Impact Report; and (b) the mechanism by which those scenarios had been translated into projections of the expected impact. It is said that this rendered the Second Consultation unlawful (and hence also the Mayor’s ultimate decision) because it failed to satisfy one of the requirements for a lawful consultation, ie, that there be ‘sufficient reasons for particular proposals to allow those consulted to give intelligent consideration and an intelligent response’: R v Brent London Borough Council ex parte Gunning (1985) 84 LGR 168.

It seems to me that this submission must fail. That is because, in summary, the GMCA provided a large quantity of material and responded to requests from Stagecoach during the consultation for further information. Stagecoach was granted an extension of time in which to respond, and it provided lengthy and detailed responses. Had Stagecoach required further information on specific issues during the consultation process then I have no doubt the GMCA would have provided it. I have read Stagecoach’s response to the Second Consultation, and it was able to make its case fully. I agree with this oral submission from Mr Howell:

Firstly, I note that the GMCA made considerable material available for the purpose of the Second Consultation. Under the heading, ‘Where do I get more information ?’, p5 of the Second Consultation Document listed the following as being available to consultees:

Next, in his first witness statement at [36]-[39], Mr Micklethwaite described the dialogue which took place between Stagecoach and the GMCA during the Second Consultation. Stagecoach asked at several points to be supplied with further information, and the GMCA complied with those requests. Mr Micklethwaite makes no complaint about non-responsiveness from the GMCA. Stagecoach also sought an extension of time to respond to the consultation which, after some negotiation, the GMCA agreed to.

In the event, Stagecoach provided a detailed response to the consultation. It supplied: a business response paper to the 12 questions posed in the Second Consultation Document; a separate legal paper prepared by Stagecoach’s solicitors; and an economic paper prepared by NERA Economic Consulting, among other documents.

Stagecoach nonetheless contends, as I have said, that consultees were not provided with sufficient information to permit them to respond intelligently to the scenarios that had been used ‘for the purpose of modelling the impact of COVID-19’ and ‘the mechanism by which these scenarios had been translated into projections of the expected impact (Amended Grounds, [56]).

I do not regard these specific criticisms as having substance. As I will explain in a moment, the COVID Impact Report explained the GMCA’s approach to both of these matters. Whilst Stagecoach might take issue with the GMCA’s methodology (and NERA on its behalf certainly did so at Section 4.1 of its paper (‘Scenarios have not been developed robustly and clearly … Forecasts have been generated subjectively … forecasts are effectively just assumptions’)), Stagecoach was able to respond fully and intelligently to the COVID Impact Report in order to make its case. The real issue, which I address later, is whether TfGM’s conclusions were reasonably open to it.

The primary object of the scenarios used in the COVID Impact Report, and the projections of bus use in each, was to enable the key conclusions of the Assessment to be tested by reference to potential outcomes to see whether the uncertainty associated with the pandemic might make a material difference to those conclusions. I set out [1.4.1]-[1.4.2] of the COVID Impact Report earlier, where this approach was explained.

The potential impacts on the bus market in each scenario were then described in [1.4.3]-[1.4.20], with the projections for each of them compared to the ‘Do Minimum’ option in the Assessment illustrated in Chart 6, to which I referred earlier. Paragraph [1.4.21] explained that the numbers in Chart 6 were not modelled from a set of quantified inputs, but were devised to fit the Scenarios and to help to understand what a range of outcomes could look like. They were expressed as a percentage of pre-COVID-19 demand that would be reached at 18 months and 78 months from March 2020.

It is therefore clear that the patronage percentages in Chart 6 were based on TfGM’s expert judgment, rather than on the basis of some quantified inputs and modelling, or some other mechanism, because TfGM considered that it was not reasonably practicable to have done so given the uncertainties caused by the pandemic. Further explanation for this choice of methodology was given at [3.2.3]-[3.2.8] (‘Why the existing Analytical Framework has not been used’) and in [3.3.1], [3.3.8] and [3.3.10].

Both Claimants were supplied with the TfGM paper ‘COVID recovery scenario planning in Greater Manchester’ from June 2020. This set out the four scenarios, and explained the thinking behind them:

However, the COVID Impact Report made clear in due course that after the scenarios had been formulated, assumptions that had been made in each about how circumstances might initially evolve had in some cases been shown not to be the case:

In [1.4.25], [1.4.27]-[1.4.28] TfGM said:

It seems to me, as the Defendants contend, that all consultees (including the Claimants) were able to comment fully and intelligently on whether the use of scenarios was appropriate; whether the patronage figures in each of the scenarios should have been modelled from a set of inputs, notwithstanding the reasons why they had not been; if not, how any such patronage figures should have been derived or what other figures should have been used; whether other scenarios should have been considered; whether the judgment that the potential outcomes would be highly unlikely to fall outside the range of projected outcomes was correct; and whether there was any other plausible outcome that was worse or better than those projected in the scenarios.

I can illustrate this conclusion by reference to the robust criticism which NERA were able to level at TfGM’s methodology. In their paper, NERA argued that they had identified ‘a number of potentially important flaws’ in TfGM’s work, namely:

It is not for me to assess the merits of the competing arguments. That was a point which Ms Demetriou expressly accepted (‘… and we're not asking you, nor could we ask you, to find that either the GMCA was right or we were right …’). What this response does show, however, is that the Claimants were able to, and did, respond in an informed way to the issues. It was then for the relevant decision makers to assess those responses and to accept or reject them or decide otherwise how to proceed.

In its first ground of challenge, Stagecoach maintains that the GMCA unlawfully failed to follow the statutory process in the TA 2000 and thus that the Decision was unlawful.

In its Amended Grounds at [27] it puts the argument as follows (citations omitted):

The nub of Stagecoach’s argument is that the effect of the pandemic was so severe that the Assessment, Grant Thornton’s statutory audit, and the First Consultation responses, could no longer be relied upon in any way, and so the statutory process had to start all over again with a fresh statutory assessment, etc. Further, and in any event, it argues that the TA 2000 requires any decision to make a franchising scheme to be made on the basis of an analysis that meets the standards set by the Act and the Franchising Guidance. Hence, it submits that any further information, data or analysis not canvassed in the original Assessment (in this case, in particular, the COVID Impact Report and Grant Thornton’s Assurance Review), if they were to be lawfully taken into account, had to be of the statutorily prescribed standard, and that because, in particular, the Assurance Review was avowedly not so, the Decision was unlawful (Amended Grounds, [29]-[31] and [36]-[39]).

I do not consider that the GMCA breached any of the mandatory statutory requirements of the TA 2000. It prepared an Assessment as required by s 123B and in doing so took into account, as it was required to do, the Franchising Guidance; it obtained Grant Thornton’s statutory audit (as required by s 123D); and it then carried out the First Consultation as required by s 123E. In short, it did what it was required to do by the TA 2000, which prescribes a minimum floor but not a ceiling.

The first part of my analysis is that whilst the TA 2000 sets out the steps that must be taken and prescribes, for example, what the assessment must contain (s 123B(2) and (3)), and what the auditor’s report must contain (123D(2)), I do not read the TA 2000 as imposing any restriction on the information which may be taken into account besides those statutorily required documents, in the decision making process. I think that must be so. Consider the statutory requirement for consultation. Although the TA 2000 prescribes what a consultation document must contain (s 123F), and who must be consulted (s 123E(4)), it does not say anything about what consultees responses’ must contain. Consultees are therefore entitled to put forward any arguments or information they wish, and the Act does not limit them or require their responses to be in a particular form or to meet a particular standard. I will return to this point in a moment. It is left to the decision maker to decide what to make of consultees’ responses, what weight to attach to them, and how it will respond to them. In fact, as I read its position, Stagecoach accepts this (Amended Grounds, [34], ‘… the Claimant’s case is not … that it is in all circumstances unlawful for a decision maker to take into account material which falls outside the four corners of the Original Assessment’).

As I have said, it is part of Stagecoach’s argument under this head that the GMCA recognised that the pandemic meant that the Assessment (and what had flowed from it) could no longer be relied on. It argues, in particular, that by commissioning the COVID Impact Report, the GMCA was acknowledging that it did not have sufficient information, and that further evidence and analysis would be required in order to make a recommendation as to the implementation of the Proposed Franchising Scheme.

I think this reads too much into what the GMCA did when it commissioned the COVID Impact Report. Earlier, I quoted paragraphs from the June 2020 report, ‘Bus Reform: Consultation Update’. Paragraph 3.3 made clear that before any final decision on franchising could be undertaken, consideration needed to be given to the impact the pandemic might have on the bus market in Greater Manchester and the options that had been considered in the Assessment. Thus, one of the primary purposes of carrying out further work was not because the Assessment was somehow being abandoned, but to test the analysis in the Assessment in light of the pandemic to see if the recommendations made on the back of it following the First Consultation should stand. This was also made clear in [1.1.4]-[1.1.5] of the COVID Impact Report:

I next consider the important – and in many ways, the central – question whether the GMCA was obliged as a matter of law to prepare a new statutory assessment under s 123B and obtain a new statutory audit opinion under s 123D because the impact of the pandemic had been to undermine the Assessment and First Consultation to such an extent that a new statutory process was required. This is the submission which Stagecoach makes in its Amended Grounds at [34]:

In considering this submission, the starting point is to recognise that beginning again was certainly one option which was open to the GMCA. Indeed, this option was expressly recognised in ‘Bus Reform: Consultation Update’ at [3.3] (emphasis added):

However, before exercising that option, given the complexity of the issues, it was lawfully open to the GMCA to test the impact of the pandemic on the Assessment’s conclusions, which it did by commissioning the COVID Impact Report. What it did then was a matter for its judgment. It chose to proceed to a Second Consultation. The potential effects of the pandemic were then considered in the Second Consultation Report (see, in particular, Section 17) and in the March 2021 Report (see, in particular, Section 15). Later, I will consider Rotala’s submission that it was irrational for the GMCA to have moved to a Second Consultation.

Stagecoach argues in its Skeleton Argument at [33]-[34] and [37]-[38] that there could only be one answer as to whether the key conclusions in the Assessment could be relied on by the Defendants. It notes Grant Thornton’s opinion in its Assurance Review that ‘in choosing to proceed now the risk has increased that the outturn position may be materially different from the central case previously set out in the Assessment’ and argues ([37]-[38]):

I do not accept that such a conclusion was ‘inescapable’, as Stagecoach contends. Grant Thornton only said that the outturn position may be materially different – not that it would definitely be so. The existence of such a risk did not necessarily mean that the key conclusions in the Assessment could no longer be relied on. The GMCA was therefore not bound, in my judgment, to conclude that it had to start the whole process again. It was entitled test the position through the Second Consultation and, in particular, by asking the Claimants and other key stakeholders for their views. As the Second Consultation document said in the ‘Overview’ section:

Finally, the COVID Impact Report itself had not concluded that the key conclusions in the Assessment could no longer be relied on:

A further argument advanced by Stagecoach is that it was unlawful to take a decision based upon information, data and analysis which it submits did not meet the standards set out in the TA 2000 and the Franchising Guidance. It contends that the COVID Impact Report did not analyse ‘by reference to the criteria defined by statute and to the standard prescribed by statute’ whether, in the light of the pandemic, the strategic, economic, commercial, management and financial cases support the introduction of the Proposed Franchising Scheme (Amended Grounds, [29] and [37]). It argues in particular at [29(c)] that:

In considering these submissions, it is necessary to consider what the TA 2000 and the Franchising Guidance do, and do not, prescribe.

Beginning with the Act, s 123B(2) and (3) specify broad based topics which the statutory assessment must address. These include: the effects that the proposed scheme would be likely to produce, a comparison between making the proposed scheme and one or more other courses of action) how the authority or authorities would make and operate the proposed scheme; and value for money. Hence, whilst the Act prescribes the content of an assessment it does not prescribe any particular quality assurance standard, or other standard, that it must meet.

So far as the Franchising Guidance is concerned, the Secretary of State must issue such guidance by virtue of s 123B(5):

By s 123B(6), the franchising authority must ‘have regard to’ such guidance when preparing its assessment. However, it is not obliged to follow it, and may depart from it if it considers that it is right to do so. Thus, I agree with the Defendants that even when the statutory guidance specifies how the analysis should be conducted, it does not set a standard from which it would necessarily be unlawful to depart when preparing an assessment. That said, the Franchising Guidance does provide at [1.22] that an assessment must contain sufficient detail for an informed decision to be made. The risk a franchising authority runs if it strays too far from the Guidance is that its assessment would not be passed by the auditor when it came to report pursuant to s 123D. Section 123D(2)(c) provides that one of the things the auditor must report upon is whether in its opinion the franchising authority has had due regard to the statutory guidance.

But, in a sense, all of this is beside the point. I am here dealing with Stagecoach’s submission that the statutory approach in the TA 2000 relating to assessments and auditors applied to work commissioned by GMCA outside of the statutory scheme. But there is no statutory requirement that any further analysis that a franchising authority may undertake after a statutory assessment has been prepared and audited, including, for example, any further analysis prepared after any consultation, must be, or be the equivalent of, a new statutory assessment under s 123B of the Act, or be audited under s 123D, or comply with the statutory guidance relating to statutory assessments. The Franchising Guidance merely provides at [1.95] that in responding to a consultation the franchising authority ‘should address the issues raised by respondents as part of their response’.

Nor can such an obligation be implied into the statutory scheme. Once it is accepted (as, I have said, Stagecoach does accept) that the GMCA was entitled to take non-statutory material into account, then it seems to me that the submission is defeated. I come back to the point I have already made about the statutory consultation. No-one has suggested that consultees’ responses have to be prepared to the same sort of statutory ‘standard’ as the assessment and the audit, nor could that sensibly be suggested. And equally, no-one suggests that it would be unlawful for the GMCA to place weight, even very considerable weight, upon those responses in its response to the consultation and its overall recommendation to the Mayor. I agree with the way Mr Howell put it orally for the Defendants on this point:

If that is the case, therefore, it must be a matter for the GMCA’s judgment (challengeable only on a rationality basis) as to what weight it places on work it has commissioned outside of the statutory scheme in the overall exercise of its function of deciding whether or not to recommend a franchising scheme. That is so whether the further work is prompted by some sort of supervening event occurring after the statutory assessment and consultation was completed (as in this case), or because responses to the consultation revealed particular areas where further work was required, or for any other reason.

Plainly, the pandemic required very considerable further work in order to test the Assessment’s conclusions in light of its impact on work and travel. But the pandemic’s unprecedented effects did not impose a different obligation on the GMCA of the hard-edged variety contended for by Stagecoach. It was still required to make an exercise of judgment about: what further work was required; and how to proceed in light of that further work, whether (for example) by moving to consultation (as it chose to); or by re-starting the statutory process again (which it did not); or by abandoning the idea of franchising altogether (again, which it did not).

It follows that the COVID Impact Report did not need to contain the matters specified in s 123B, or be prepared in light of the Franchising Guidance, or be audited in line with s 123D and I reject Stagecoach’s submissions to the contrary. But as a matter of fact, the Report did analyse in broad terms each of the five cases in the Guidance (see Sections 2 – 6), and referred to at least some the matters referred to in s123B(2) and (3) (eg by comparing franchising with other options). Also, in its Assurance Review, Grant Thornton reported on those instances where, in preparing the COVID Impact Report, TfGM departed from the Franchising Guidance, and it commented on whether any such departures are appropriate or not given the circumstances.

the Grant Thornton Assurance Review did not meet the requirements for an audit under s 123D (S [27], [31], [32] and [40]) and the Defendants could not be satisfied that they had received an auditor’s report that complied with s 123D given the COVID Impact Report (R, 51)

Both Claimants criticise the Grant Thornton Assurance Review as failing to comply with s 123D. Rotala contends that the Defendants could not be satisfied that they had received an auditor’s report that complied with s123D of the Act given the COVID Impact Report (Rotala, [51]). Stagecoach contends that the Assurance Review did not meet the requirements for an audit under section 123D (Stagecoach, [27], [31], [32] and [40]).

In light of what I have already said, it is plain that this submission must fail. The GMCA received a statutory audit of the Assessment in September 2019, and it thereby fulfilled its statutory obligation. Although this audit was criticised during the consultation process (see eg, Second Consultation Report, Section 9), no-one contended that it did not comply with s 123D.

I agree with what Mr Howell said orally on this issue:

Having complied with the statutory requirements, there was no requirement for the further work to test the Assessment in light of the pandemic to comply with the TA 2000. The COVID Impact Report was not, and did not purport to be, a statutory assessment under s 123B. Therefore, there was no requirement for it to be audited under s 123D.

Rotala argues in [56] of its Skeleton Argument that the statutory purpose of s 123E would be defeated if the conclusions on which a decision could be based have not been the subject of that statutory audit:

I do not accept this argument. As I have already said, the statutory process requires a consultation exercise, to which the franchising authority must respond. The TA 2000 therefore envisages a decision being taken in part on information that has not been subject to any sort of auditing process.

I now get into the highly detailed parts of the Claimants’ challenges. The core of them, as Ms Demetriou put it pithily, is that the TfGM and the Defendants ‘did not do a good enough job’ in how they responded to the pandemic, and in particular how its effects were analysed in the Covid Impact Report and in response to the Second Consultation.

Ms Demetriou’s and Mr Singer’s position was that it was all the points taken together which made the Decision irrational, rather than just one aspect. Mr Howell emphasised that the focus of this challenge was on the rationality of the ultimate Decision in March 2021 and not on, for example, the decision to carry out the Second Consultation.

In analysing the Claimants’ cases, I remind myself: (a) that I am not concerned with the merits or otherwise of franchising: the task for me is whether the decisions in question are flawed in public law terms. The Claimants accept this. As Ms Demetriou again put it, ‘we’re not the experts’; and (b) for the reasons I have given, I have to afford a wide margin of discretion to the judgements made by the decision makers in the course of making those decisions.

Stagecoach argues in its Amended Grounds at [37] that:

It submits that the COVID Impact Report attempted to shortcut the statutory requirements for an assessment by conducting a ‘light touch’ ad hoc analysis. It says that [1.34]-[1.35] of the Franchising Guidance requires franchising authorities to set out their objectives for local bus services and other relevant policies. Pursuant to s 123B(3) the statutory assessment must consider the extent to which each of the options will help achieve these policy objectives. However, Stagecoach argues that instead of setting new objectives in accordance with the situation caused by the pandemic, the COVID Impact Report merely considered whether the objectives set out in the Original Assessment remained valid.

I do not accept this criticism. The GMCA’s principal objectives were set out in Section 7 of the Assessment, which referred to the objectives under the headings: network (eg, reliability and punctuality); fares; customer experience; and value for money. These were formulated to contribute to the implementation of, the ‘Vision for Bus’ contained in the Local Transport Plan, the Greater Manchester Transport Strategy 2040, and what was then its draft Delivery Plan, as the Assessment explained at [2.1.2] and [7.1.2 - 7.1.4]. The ‘Vision for Bus’ was retained in the 2040 Strategy when that plan was reviewed and then re-adopted in January 2021 as part of the Local Transport Plan (when the Delivery Plan was also adopted as part of that plan): see Bus Reform: Consultation and the GMCA Response, at [2.8-2.17]. Whether a franchising scheme would contribute to the implementation of the Local Transport Plan is a matter to which the statutory assessment must give consideration: see s123B(3)(a).

Whether these objectives needed to change in light of the pandemic was a matter for the GMCA’s judgment. It was expressly considered in detail and was addressed by consultees as part of the Second Consultation. I do not see any basis on which its conclusions can be held to be irrational.

Section 2.3 of the COVID Impact Report was headed ‘GMCA’s Objectives for the Bus Network’ and specifically considered those objectives in light of the pandemic. Paragraphs 2.3.1 and 2.3.2 stated:

Each of the objectives was then considered in light of the pandemic. As an example, in relation to the ‘Network’ objective, the Report said this:

The Second Consultation Report also considered the impact of the pandemic on the Assessment objectives and whether they remained valid. It addressed responses to the Second Consultation dealing with the identified challenges for the bus market and the GMCA’s objectives. Paragraph [4.15.6] stated:

Again, overall, I do not consider that there is any basis for impugning the rationality of these conclusions

Paragraph 49 of Stagecoach’s Amended Grounds argues:

This argument was repeated in [70] of its Skeleton Argument.

Paragraph 30 of its Amended Grounds asserted, ‘… the GMCA has recognised that the Original Assessment [Tab 5] and Auditor’s Report could no longer provide the basis for taking a decision in respect of the Proposed Franchising Scheme.’

I do not accept this argument, which I consider to be unsound in its premise. It is not accurate to say that the GMCA recognised that the Assessment needed ‘updating’ in light of the pandemic, or that it updated it.

I set out the relevant parts of the June 2020 reports earlier. They clearly set out GMCA’s position. That was that what was required was not some sort of ‘update’ of the Assessment, but further work to assess whether and, if so, to what extent, the pandemic had impacted on the Assessment and the recommendations that had been made in light of it. Paragraph [1.1.4] of the COVID Impact Report stated:

Paragraph 16.4.51 and 16.4.53 of the Second Consultation Report explained (emphasis added):

The exercise in which TfGM and the GMCA were engaged was shot through with the need to exercise judgment on complex economic and policy questions, a process which had been made all the more difficult by a public health emergency which was unprecedented in modern times. Whether it was appropriate in the circumstances not to construct a further model to determine the outcome in each scenario in the manner in which the reference case for the Assessment had been modelled was, in my view, one of those matters of judgment, as was whether the COVID Impact Report had suitably addressed the sensitivity of the conclusions in the Assessment in light of the pandemic. The Second Consultation Report stated:

Section 5.10 of the Second Consultation Report, headed ‘The use of the ‘What if?’ analysis’, summarised the themes in the criticisms made of that approach in consultees’ responses, namely: the Assessment does not represent a credible starting point for the analysis; ‘What if?’ analysis is not consistent with guidance (namely, one paragraph in a section on Scenario Analysis in the Treasury’s Guide to Developing the Project Business Case (see [5.10.11]); the basis for the ‘What if?’ analysis and the general approach to its treatment of benefits; comments on the conclusions drawn from the ‘What if?’ analysis in the COVID Impact Report; other impacts included in the Assessment. Section 5.10 was a lengthy section which considered and responded to these criticisms in very considerable detail. I do not accept it discloses any irrationality of approach. The COVID Impact Report used a different method of analysis from the Assessment, as the Defendants recognise in their Skeleton Argument at [95], but that did not make TfGM’s approach irrational.

Stagecoach argues that the analysis in the COVID Impact Report contains ‘numerous deficiencies’, as developed in its Amended Grounds at [38]. It further argues at [50] that these deficiencies mean the COVID Impact Report could not provide an adequate basis for either an informed consultation, or a decision as to whether to implement the Proposed Franchising Scheme, and thus that it was irrational for the Defendants to rely upon it as a basis for either consultation or decision making. These errors could not be cured by the Second Consultation, and the Second Consultation Report in any event failed to disclose a sufficient evidential basis for making such an important decision.

The starting point when considering these arguments is to recognise, as the Defendants point out, that the material available to them (and TfGM) went beyond these two reports, but also included the Assessment and the GMCA report, ‘Bus Reform: Bus Back Better’, which responded to the DfT’s National Bus Strategy, ‘Bus Back Better’. In addition, there were the very many responses to the Second Consultation including those from the Claimants and their economic consultants. The Defendants therefore had a wide range of evidence to analyse.

Whether the COVID Impact Report was sufficiently robust to be relied upon was specifically considered in the Second Consultation Report. One of the central arguments advanced by the Claimants and other consultees was that it was not. Some of these criticisms were set out in the Second Consultation Report at [17.2.22] under the heading ‘Responses to challenges to any decision being taken now on the Proposed Franchising Scheme’:

At [17.2.41]-[17.2.44] this section of the Report concluded:

The ‘numerous deficiencies’ alleged by Stagecoach in [38] of its Grounds relate principally to the four scenarios; the What If? Tests used; the appraisal period in the economic case; and possible partnerships considered.

The first criticism was whether the scenarios were outdated ([38(a)(i)]). As the Defendants point out, this was not in the end pursued in Stagecoach’s Skeleton Argument. Criticisms that the scenarios are outdated because they were developed at an early stage of the pandemic, and that what had already occurred was not what had been anticipated were, in any event, referred to in [3.5.2] and [3.5.3] of the Second Consultation Report. The Report addressed them at [3.5.7] and [3.5.8] (eg, ‘Such developments, even if they were unanticipated, do not invalidate the Scenarios, nor do they suggest a different patronage for the main period for which the Proposed Franchising Scheme and other interventions are appraised’). This conclusion was reasonable.

The next criticism in Stagecoach’s Grounds at [38(a)(ii)] is that the COVID Impact Report did not provide ‘a meaningful description of the scenarios, indicate the evidence the scenarios are based on or describe how the scenarios were developed’ and that ‘there is an insufficient evidential basis for the demand projections used’. Reference is made to the Franchising Guidance, [1.54]: ‘all significant assumptions used in the economic and financial cases should be documented as the assessment is developed – identifying the evidence on which they are based if possible.’

I do not accept that there is real substance in these criticisms. Firstly, [1.54] refers to the preparation of a statutory assessment, as is clear from [1.44]: ‘Section 123B requires authorities to consider, as part of their assessment, whether the proposed scheme would represent value for money.’ It does not apply to further analysis outside of the statutory scheme, such as the COVID Impact Report.

But in any event, the COVID Impact Report did explain the assumptions about bus patronage used in the scenarios, in Chart 6 (referred to earlier) and paragraph [1.4.24]. As [1.4.21] made clear, the numbers were not modelled from a set of quantified inputs but were devised to fit the scenarios and to help to understand what a range of outcomes could look like. There was an explanation about why this approach was adopted. The Claimants criticise this methodology, but it is incorrect to say the basis of the scenarios was not explained. Further, the scenarios were tested for internal consistency. Paragraph 3.3.3 of the Second Consultation Report explained:

Stagecoach further argues in its Amended Grounds – and I think this is the heart of the criticism on this aspect of the case - that, without ‘a clear or evidence-based description of how the four ... scenarios were converted into forecasts … the forecasts are ‘essentially just subjective assumptions’ ([38(b)(i)]). Paragraph 41(1) and [47(1)] of its Skeleton Argument argues:

Paragraph 44 of Stagecoach’s Amended Grounds contain a number of detailed criticisms of the scenarios, eg, that home working might depress the demand for bus transport more than had been allowed for in the scenarios; and that the expected growth in the use of autonomous vehicles over the next 30 years had not been taken into account.

It seems to me that the answer to these criticisms (and the others made by Stagecoach) is to be found in various places, including the Defendants’ Skeleton Argument at [95] and in Section 3 of the Second Consultation Report. For example, [3.3.1]-[3.3.2] stated:

The Report went on to explain at [3.4.10]-[3.4.13], [3.4.19]:

The fundamental point underlying Stagecoach’s complaint on this aspect of the case is that possible outcomes such as those shown in Chart 6 could only be determined by a process of modelling from a set of quantified inputs, and that the use of judgement was wrong and impermissibly subjective. This was a point Ms Demetriou emphasised in her oral submissions and it was, at least initially, something which concerned me. In what had been a very significantly data-driven exercise, this approach did appear incongruous. If the GMCA had simply ignored this argument then it would, I think, have been open to criticism. On further reflection, however, I am satisfied that the GMCA’s approach was one which was reasonably open it. That is for the following reasons.

TfGM made the judgement that modelling was neither preferable nor desirable: see, eg, the COVID Impact Report at [3.2.5] – [3.2.8], [3.3.1], [3.3.8] and [3.3.10]. Mr Howell made the point in submissions, I think reasonably, that ‘one person's subjective assumption is another person's judgment …’ Mr Howell acknowledged that whether modelling would have been a better approach is something which one could ‘have an argument about’, but said the approach taken was not one which no reasonable authority could have adopted. I agree.

The arguments in favour of the use of such modelling which had been made by consultees during the Second Consultation were set out in the Second Consultation Report at [3.4.3]-[3.4.5]. The response to these points, explaining why such an approach was not practicable in the circumstances, nor desirable (in summary terms, because it might create a false impression of the robustness of the analysis), were explained at [3.4.7]-[3.4.8] and [3.4.14]-[3.4.15], [5.10.15] and [5.10.27] of that Report. This last paragraph said:

Thus, TfGM considered the detailed critiques of its methodology that had been advanced by the Claimants and other consultees, but decided for the reasons it gave that its methodology was sound. It expressly recognised there was uncertainty. In my judgment these were conclusions which were reasonably open to it. It is one of those difficult and technical areas where I should, in accordance with the reasons I gave earlier, defer to the expertise of those involved.

I turn to the criticisms of the ‘What If?’ tests. The COVID Impact Report, as part of its consideration of the Economic Case in Section 3.4, used a ‘What If? method of analysis to explore the impact that the four scenarios might have on the economic metrics NPV and BCR, in relation to the Proposed Franchising Scheme and the Operator Proposed Partnership, taking the results from the Assessment as the starting point.

Under the heading ‘Use of COVID-19 Scenarios to consider COVID-19 Impacts’, [3.2.8]-[3.2.9] of the Report explained:

Paragraph 3.4.3 of that Report further explained:

The four steps in the ‘What If?’ analysis were explained in [3.4.4}:

Stagecoach contends at [38(b)(ii)] and [45(b)] of its Amended Grounds that the scaling of benefits in Step 1 of the What If? approach was not justified; that it failed to consider factors that affect the benefits of an option (such as service quality benefits, network benefits, interoperability benefits); that it implicitly assumed that induced demand is uniformly distributed across all trips; and that it contravened [1.53] of the Franchising Guidance. Ms Demetriou amplified these in her submissions. For example, she said:

One of the basic criticisms made of the approach adopted in the Covid Impact Report was that it was ‘simplistic’.

This point about the scaling of benefits refers to NERA’s criticism (in section [4.4] of its Report) that Step 1 in the What If? Test was overly simplistic and ignored, for example, spatial and temporal demand factors. NERA argued under the heading ‘Benefits have been scaled simplistically’ that:

Paragraph 60 of Stagecoach’s Skeleton Argument argues that:

I consider the answer to this criticism is that Steps 1 to 2 were intentionally simplified, and the GMCA designed them with its ‘eyes open’ to what it was doing. Paragraph 3.4.5 of the COVID Impact Report explained that:

Further, as pointed out in [5.10.42] of the Second Consultation Report, the majority of benefits in the Assessment (fares, interoperability and service quality) apply across all geographies and time periods and are therefore not directly affected by spatial or temporal factors.

In my judgment, therefore, it would not be right to view Step 1 in isolation. The step-wise What If? approach has to be viewed as a whole. As the Defendants explained in [88] of their Skeleton Argument, Step 3 involved consideration of what the effect on those benefits which were not dependent on overall bus patronage would be required in order to show that the Proposed Franchising Scheme would not offer value for money (recognising that in fact the benefits in such cases could in fact increase with a reduced market). The analysis was purposefully simplified to aid interpretation: see [3.4.3] –[3.4.6]; [3.4.18]-[3.4.23] of the COVID Impact Report; and [5.10.7] – [5.10.8] and [5.10.42] of the Second Consultation Report. Paragraph [5.10.46] of this Report concluded:

This conclusion lay within the range of reasonable conclusions open to TfGM.

In [45(b)(i)] of its Amended Grounds, Stagecoach argues that in the Second Consultation Report, the approach TfGM adopted in relation to the scaling of the benefits and costs relative to the anticipated change in bus patronage at [5.10.41] – [5.10.46] of the Second Consultation Report (which it says results in the logic that a reduction in total trips by x% would also lead to a reduction in net benefits due to franchising of x%, because the franchising benefits per trip remain constant before and after the reduction in demand) was flawed and ‘simplistic and incorrect’. It then goes on to make a number of specific criticisms in [45(b)(ii)] including because, for example, it is unlikely that service quality benefits per trip are likely to remain the same after the pandemic, as they are likely to be altered by the way bus users think about quality: [45(b)(ii)(1)].

It is unnecessary to lengthen this judgment by dealing in detail with each of the points made, which descend into granular matters of detail, such as cleanliness. I remind myself I am not concerned with a merits review of the analysis carried out by TfGM and the GMCA in the various reports. The fundamental question is whether their conclusions were reasonable. It suffices to say that for the reasons set out in the Defendants’ Skeleton Argument at [110] et seq, the conclusions which they and TfGM reached on these issues were reasonably open to them. The short point is that, in this highly complex area (as with, I would imagine, a lot of modelling or forecasting), more than one method of analysis is possible. But as I have made clear, the What If? Tests which were adopted were expressly stated to be simplified to enable a judgment to be made about the robustness of the key conclusions in the economic case. The fact that a more complex method analysis might have been possible does not mean that the analysis in fact conducted could not rationally support the conclusions which were reached.

Stagecoach also contends that the What If? Tests somehow contravene [1.53] of the Franchising Guidance relating to the preparation of a statutory assessment ([38(b)(ii)]). I dealt with this point earlier. The COVID Impact Report was not such an assessment.

Stagecoach next contends (at [38(c)] and [45(c)] of its Amended Grounds and [41(3)], [47(3)] and [62]-[65] of its Skeleton Argument that no consideration was given to the most suitable appraisal period in the COVID Impact Report; that this was contrary to the statutory guidance relating to the preparation of an assessment under s 123B; and that a period of 15 (rather than 30 years) may have been more suitable and, if so, the benefit cost ratio of the proposed franchising scheme is likely to be overstated and that, in the Second Consultation Report, there was no explanation why it remained possible to make meaningful assessments over a 30 year period given the added uncertainty of the pandemic. On this point Ms Demetriou said:

It seems to me that the length of the appraisal period was, par excellence, a matter of judgment on which views could reasonably differ. The approach in the Assessment was set out at [14.3.6]:

The Assessment also said that franchising schemes had been shown to deliver durable benefits in excess of that period; and that, by contrast, there was no industry precedent for a durable partnership that had lasted more than 10 years and delivered significant passenger benefits over that time: [13.1.5] and [13.3.10].

It seems to me that the key point is that whether a 30-year period had been used or, say, a 15-year period, did not, in the end, especially matter to the analysis. The scenarios used in the COVID Impact Report to test the robustness of the Assessment looked forward to 2026, when it might be assumed that any longer-term effects of the pandemic would have run their course. Paragraph [3.5.9] of the Second Consultation Report stated:

As I have said, the selection of 2026 was a matter of judgement which cannot easily be impugned given the unprecedented nature of the pandemic. The assumption in the COVID Impact Report was that, from 2026 to the end of the appraisal period, the trend in bus travel demand was assumed in each scenario to follow the trend in the Assessment. This was considered very conservative for Scenario 2, conservative for Scenarios 1 and 4 and not unreasonable for Scenario 3: see [3.4.7(ii)] and [3.4.8]. It was therefore irrelevant to this approach whether a 15-year or 30-year appraisal period was chosen.

In her oral submissions Ms Demetriou, I think, accepted that there could be a range of reasonable views on this issue. The nub of her complaint was that the issue was not considered. I do not think this is right. TfGM did engage with NERA’s criticisms of the appraisal period in the Second Consultation Report. It was pointed out that: franchising is a regulatory change to the bus market that is intended to be long term with no fixed end date. Guidance would indicate a 60-year period would be appropriate in such a case: [5.2.31]; uncertainty (which is always part of investment appraisal) is dealt with by the application of discounting and, most importantly, via sensitivity/scenario testing (rather than reducing the appraisal period): [5.2.33]; the choice of a 30 year period was conservative in any event, given (a) it was already reduced from the 60-year norm, which would have favoured the Proposed Franchising Scheme even more; (b) the combination of the use of the discount rate applied to future benefits when the majority of the investment costs of franchising are front-loaded and (c) the need to take into account the residual value of the depots (which would offset some of the costs of the Franchising Scheme) when considering its BCR if the appraisal period was shorter; [5.2.33] – [5.2.36].

It is clear, therefore, that the question of the appraisal period was one of the matters raised by consultees during the Second Consultation, and the responses then evaluated by TfGM which, for the reasons it gave, determined that the 30-year period in the COVID Impact Report was a valid period. There was no ‘failure’ to grapple with the issue, as Stagecoach alleges. I have therefore concluded was not irrational to choose a 30-year appraisal period in the Covid Impact Report.

Stagecoach next contends in [38(d)] of its Amended Grounds and [47(4)] of its Skeleton Argument that, contrary to [1.36]-[1.40] of the Franchising Guidance, the COVID Impact Report did not conduct a detailed assessment of the likely partnership options which might have promised better value for money than franchising; and that, in any event, the performance of partnership options under the different scenarios should have been considered.

The Defendants respond with a point I have already made elsewhere, namely, that these paragraphs refer to the process of preparing a statutory assessment under s 123B, which the COVID Impact Report was not. But they also say, in any event, that that Report did consider partnership proposals. At [2.4.24]-[2.4.26] the COVID Impact Report said:

The Report considered, therefore, what realistic partnership options there were and considered how franchising would compare with the operator proposed partnership, even though operators were then unwilling to commit to it.

Stagecoach further contend (a) that a ‘recovery partnership’, should have been considered and (b) that a more rigorous analysis might have revealed that the likely partnership options promised better value for money than franchising having regard to the National Bus Strategy which it it said heavily favoured enhanced partnerships (Amended Grounds, [38(d)) and Skeleton Argument, [27] and [47(4)]).

In fact, ‘recovery partnerships’ were considered in section 13 of the Second Consultation Report, which is entitled ‘Recovery partnerships’.

Overall, I am satisfied partnerships as an option were fully considered during the decision making process, and were considered in particular in a report prepared in response to the Government’s National Bus Strategy ‘Bus Back Better’, namely ‘Bus Reform: Bus Back Better’ (23 March 2021). That report considered whether delay would be justified in the light of the National Bus Strategy in order to ascertain whether operators would commit to an enhanced partnership (which they had previously refused to do) and, if so, on what terms, concluding that it would not be justified in the circumstances: [5.2]-[5.12]. That was a rational conclusion.

Stagecoach contends that it was irrational to adopt ‘an insufficiently rigorous approach, resulting in the production of a model which could not form the basis for rational decision making on a project of this magnitude’ particularly when it was anticipated that the DfT would produce guidance about addressing the uncertainty produced by the pandemic (Amended Grounds, [51]). It also contends that the decision should have been delayed in light of the publication of the National Bus Strategy (Ibid, [52]).

This is essentially a repetition of arguments which I have already rejected. It was not irrational to use the scenarios to consider the potential effects of the pandemic and whether they may affect materially the key conclusions in the Assessment. The Defendants also considered whether any decision should be delayed for a number of reasons including the production of further guidance from the DfT (see further below) and the National Bus Strategy. They were entitled to reach the conclusions which they did.

Rotala’s primary position, as set out above, is that the only lawful course open to GMCA in November 2020 was to recommence the statutory process from scratch, with a new statutory assessment and a new statutory audit. In the alternative, in its second ground of challenge, Rotala’s position is that the decision on 27 November 2020 to recommence the consultation process was irrational. Mr Singer said:

Rotala advances essentially three reasons in support of this submission: (a) the GMCA paused the franchising process in June 2020 because it realised that reaching a final decision then was impossible because of the effects of the pandemic, and that the situation had not changed in November 2020 because the pandemic had not ended and was of indeterminate length and further effect; and that it was irrational to seek consultees’ view in those circumstances (see Amended Grounds of Challenge, [38], [40] and [41]); (b) Question 10 in the GMCA’s Second Consultation document (which I set out earlier) indicated that the decision to consult further was taken without deciding if the time to launch the process was appropriate (Ibid, [40] and [41]); and (c) the GMCA was not able to comply with the statutory requirement to consider one or more courses of action other than franchising, as Rotala could not confirm that a partnership option was available, and it was ‘self-evidently irrational’ to ask whether or not a franchising scheme was likely to perform better than a partnership in achieving the GMCA’s objectives (Ibid, [39]).

I do not accept these submissions. It was not irrational for GMCA to decide in November 2020 to conduct a Second Consultation exercise. My reasons for so concluding are as follows.

Firstly, I reject the premise of the initial part of Rotala’s submission that there had been no relevant change in circumstance between June and November 2020, and that the Defendants have not identified any good reason for deciding to carry out the Second Consultation.

The starting point is that in June 2020 the impact of the pandemic was noted in the report, ‘Bus Reform: Consultation Update’, and the need for a further report was identified. I set out the relevant portions of this report earlier. It is clear that the reason why the GMCA took no decision in June 2020 following the First Consultation was because of the pandemic. It recognised that it would need to consider the potential implications of the pandemic – which then had only existed for about three months - for the bus market, and that further work would be necessary in order to do so. Contrary to Rotala’s argument in [38] of its Amended Grounds, the GMCA did not decide to ‘pause’ the franchising process until the pandemic had ended, nor did it decide that, until that time, any final decision on the franchising scheme would be ‘impossible’.

The COVID Impact Report was presented to the GMCA in November 2020. It was nearly 150 pages long and was extremely detailed. Among other things, as I have said it set out four different potential scenarios for travel in Greater Manchester in light of the pandemic, expressed in terms of the pre-pandemic levels of typical weekly numbers of bus trips, in the period to 2026. Paragraphs 1.4.1-1.4.2 explained:

The Report considered how COVID-19 and each of the scenarios might affect the conclusions reached in the strategic, economic, commercial, financial and management cases in the Assessment regarding the Proposed Franchising Scheme.

The graph set out as Chart 6 at [1.4.24] showed the level of recovery to 31 October 2020 and set out the projections of the typical weekly number of bus trips for the four different scenarios, when they were developed in May and June 2020:

Paragraph 1.2.25 stated:

In its ‘Overall Conclusion’ at [9.11.4]-[9.11.5], the COVID Impact Report stated:

In Section 5 of his report ‘COVID-19 Impact on Bus Franchising Report and Consultation’, the GMCA and TfGM’s Chief Executive specifically considered the option of deferring the decision on whether to proceed with franchising. He said at [5.3]:

He then set out at [5.4] the reasons why it was important to take any decision about franchising sooner rather than later. He concluded at [5.5]:

The Chief Executive therefore proposed a further consultation. He said at [6.1]-[6.3]:

It is clear, therefore, that between June and November 2020 the GMCA was supplied with a substantial report which considered the potential effects of the pandemic in Greater Manchester and how it might affect the key conclusions in the Assessment. The decision whether or not to defer a decision was carefully considered, with the arguments for and against deferral fully set out. The GMCA decided that it had enough information to proceed with the Second Consultation.

In its Skeleton Argument at [35] Rotala argues that the impact of the pandemic could not be said to have been clearer in November 2020 than in June 2020; that the COVID Impact Report ‘did not supply any new data on the impact of COVID’; and that the relevant data in the Assessment was from 2017. It is asserted that the Report ‘did not have any data other than that which was used in the June 2019 Assessment.’

I do not accept these points. On any view, the COVID Impact Report contained substantial new analysis of the potential impacts of the pandemic on the key conclusions in the Assessment. Section 1.2 and 1.3 included data up to November 2020 about transport use and reported on what had happened to the bus market in Greater Manchester, as well as on many other matters. The purpose of the consultation was to allow consultees to provide their views on the Assessment in the light of that data and the conclusions in the COVID Impact Report more generally.

In my judgment it was not irrational for the GMCA to conclude in November 2020 that it had enough information about future bus travel trends in the COVID Impact Report to move to a further consultation. This was a matter for GMCA’s judgement weighing a number of factors on a matter of policy with which the Court should not lightly interfere. It is not right that ‘nothing had changed’, as Rotala argues.

I turn to Rotala’s second criticism, namely that Question 10 in the Second Consultation (which asked consultees whether they had any comments to make on whether then was the right time to decide whether to proceed with the Proposed Franchising Scheme), shows the decision to hold a consultation was irrational because, ‘… it cannot be part of that process to decide if it is the right time to do so.’ (Amended Grounds of Challenge, [40]).

This is a bad point. GMCA was not asking consultees whether it was the right time to hold a consultation. It was asking whether or not then was the right time to make a franchising scheme. As I have said, that was a matter which had been considered and a provisional conclusion reached by the GMCA. It was perfectly proper for it then to seek consultees’ views on the issue. Asking the question was a recognition by the GMCA that views could differ, which it ought to take into account before reaching a final conclusion. That is the whole point of holding a consultation.

Rotala’s final criticism under this head is that the GMCA was not able to comply with the statutory requirement to consider one or more courses of action other than franchising, as Rotala could not confirm that a partnership option was available, and it was ‘self-evidently irrational’ to ask whether or not a franchising scheme was likely to perform better than a partnership in achieving the GMCA’s objectives.

I also reject this criticism. The statutory requirement to compare making the Proposed Franchising Scheme with one or more alternative courses of action is one that relates to the assessment prepared under s 123B. Section 123B(2)(b) provides that ‘the assessment must … (b) compare making the proposed scheme to one or more other courses of action.’

The Assessment published in September 2019 met that statutory requirement. It compared the proposed franchising scheme with other courses of action including ‘do minimum’, and different forms of partnership. Section 59 of the Assessment was headed ‘The Options Considered’, and many other sections of the Assessment considered the different options in detail.

But the matter did not end there. The Second Consultation addressed the potential effects of the pandemic on the ‘do minimum’ option and various forms of partnership, in a number of different potential scenarios. It sought consultees’ views not only on the conclusion that the Proposed Franchising Scheme was likely to perform better than the partnership option in achieving the GMCA’s objectives, notwithstanding the pandemic, but also on whether they supported or opposed the introduction of the proposed franchising scheme. Question 2 was:

Question 7 was:

I therefore do not regard it as an accurate criticism that no other course of action was compared with franchising in the Second Consultation. Rotala’s assertion in [37] of its Skeleton Argument that ‘GMCA is not now acting rationally/lawfully in only considering one of the notional courses of action in its second consultation’ was factually wrong. Consultees were readily able to comment upon other options, including doing the minimum and leaving the bus market essentially unreformed (which the Franchising Guidance makes clear is a possible course of action which needs to be considered against proposals for reform: [1.46]).

Consultees had a full opportunity to set out their case why they considered that a partnership might be a better option. As the Defendants point out, if Rotala thought that it could not at the time give an answer, or considered that a more helpful response to these questions would be forthcoming from it or other consultees at a later stage, and hence that it would be better to postpone taking a decision until that time, then it and other consultees were free to make that case in response to Question 10.

In its Amended Grounds at [60]-[65], Rotala advanced arguments concerning how TfGM had responded to matters raised by Oxera during the Second Consultation including about the scenario-based analysis, the economic case for franchising and the timing of the process. It argued, for example, that the evidence presented did not justify the Defendants’ conclusion that proceeding with franchising would deliver benefits in excess of costs, that it represents the best value for money compared with alternative forms of intervention or a ‘do nothing’ scenario, or that it will have the expected impacts on GMCA’s budget. It also argued that to introduce franchising at this time was not the right model to help bus patronage to recover from the pandemic and that this had not been properly taken into account.

The Defendants deny that, in considering the representations made by by or on behalf of Rotala, TfGM failed to have any regard to any material comment contained in the Oxera report. Moreover, they submit whether TfGM gave sufficient weight or consideration to Oxera’s comments, or did not have proper regard to them, does not raise a question of law that might invalidate the Decision: see eg ELS Wholesale (Wolverhampton) Ltd v Secretary of State for the Environment (1988) 56 P & CR 69 per May LJ at p72-73, 81.

Further, they submit that matters were properly considered. For example, the speed at which the network can adapt to change with franchising was considered in [6.9.212]-[6.9.213] and elsewhere in the Commercial Case in the Second Consultation Report; how the immediate recovery of the bus market should be facilitated was considered in [13.2.4]-[13.2.7] and [17.2.49]-[17.2.50] of that Report and further, in the light of the National Bus Strategy, in section 4 of the NBS Report. Also, the second bullet point in [17.2.45] of the Second Consultation Report considered the framework for the longer term recovery of the bus market in Greater Manchester.

It seems to me, as the Defendants point out in their Skeleton Argument at [127] et seq, that this part of Rotala’s Amended Grounds fails to identify any specific material comment in the Oxera report that was not addressed in the Second Consultation Report or, more significantly perhaps, any specific conclusion reached in that Consultation Report which was alleged to be irrational and the reasons for any such contention. That is sufficient to dispose of these grounds of criticism. But I also agree with the other points made by the Defendant in their response. There is nothing in these grounds of criticism by Rotala.

In their Skeleton Argument at [126] et seq the Defendants address some additional points which Rotala made in its Skeleton Argument at [40]-[51]. Having carefully considered these, I remain unpersuaded there is any substance to them.

Rotala’s first point (at [44]) was that, ‘The scenarios [were] designed on the basis of the first lockdown and its relaxation and took no account of the second/third lockdown or its duration’. Similar issues were considered at [3.5.7] and [3.5.8] of the Second Consultation Report:

I do not consider there is any basis on which these conclusions can be said to be irrational or unreasonable.

Rotala next contends (at [45]) that the scenarios unjustifiably assume that any longer-term effects of the pandemic will have run their course by 2026. I dealt with the same point in a different context earlier. The selection of 2026 was an exercise of judgment which cannot easily be impugned, and was reasonable. The issue was addressed in the Second Consultation Report at [3.5.8] to [3.5.11]. Thus, the Report said at [3.5.9]-[3.5.10]:

Rotala next argues (at [46]) that the combination of factors in the scenarios were ‘randomly selected’ and do not ‘contain any quantification of the extent of the demand changes’. I do not accept these criticisms. The scenarios were based on a exercise of judgment and not on ‘randomness’. The factors in Figure 1 in the COVID Impact Report (with the scenarios set out in the axes’ four quadrants, as I explained earlier) reflect the factors in [1.4.2] of the Report, which I set out earlier. There was also a quantification of the changes in the demand in terms of bus patronage in each scenario (eg, in Scenario 3, car travel dominant).

In [47] of its Skeleton Argument Rotala argues that the Second Consultation Report confirms that it is not possible for operators to gauge partnership schemes when the COVID-19 outcome is unknown. It is said that the Report is ‘riddled’ with references to the impossibility of predicting the bus market during the COVID-19 pandemic, especially in relation to the Economic case, and it cites [3.2], especially at [3.2.5]-[3.2.7], [3.2.8], [3.2.12], and also [3.3.10] and [9.1.3]. I am satisfied that this uncertainty was properly addressed in the way in which the analysis in the COVID Impact Report was carried out. The approach was not irrational.

Rotala then makes a series of comments on the Financial Case at [49]-[50]. It is contended, for example, ‘the affordability of the proposed franchising scheme is, in reality, an unknown quantity for GMCA’ and the conclusions reached by TfGM were irrational . For the reasons set out in the Defendants’ Skeleton Argument at [126(6)], and the following reasons, I am satisfied there is nothing in these points and that the conclusions reached by TfGM were reasonably open to it. As would be expected, the affordability of a Franchising Scheme was carefully considered in the COVID Impact Report and in the Second Consultation Report, in light of responses on that issue

Paragraphs [5.1.5]-[5.1.6] of the COVID Impact Report said:

Section 5.5 set out TfGM’s conclusions. Paragraph [5.5.5] acknowledged the possibility of a funding gap due to the pandemic, especially if bus use did not recover well (as in Scenario 3):

However, the Report went on to conclude:

The Second Consultation Report considered and responded to operators’ concerns about the impact of the pandemic in particular in Section 7. In summary, TfGM acknowledged: the uncertainty caused by the pandemic; that the pandemic had given rise to affordability concerns, including in particular from operators; that there was the risk of a funding gap which the GMCA would have to meet; that all bus reform options (including doing the minimum) were impacted by pandemic uncertainty; that under franchising, the financial risk would impact more directly on the GMCA rather than operators, and that mitigation options had been approved; but that it was satisfied that franchising was affordable. In my judgment, its conclusion cannot be described as irrational:

At [53] et seq of its Skeleton Argument, Rotala contends that in light of the criticisms made in its response to the Second Consultation and those of its consultants BDO and Oxera, including, in summary, that the scenarios in the COVID Impact Report were not based on accurate, up to date data; that the calculations had not been worked through in such a way as to take account of all matters relevant to the scenarios; that the methodology used by TfGM was defective in a number of ways outlined; and that the Grant Thornton Assurance Review report, in reality, provided no assurance and was flawed, it was not rational for GMCA to recommend to the Mayor that he go ahead with the Franchising Scheme, nor for the Mayor to do so without either all those shortcomings being addressed and the COVID Impact Report being re-considered and audited in such a way as to comply with s 123D of the TA 2000; or waiting until the pandemic had ended; or being satisfied that each of those criticisms was invalid. These submissions are then expanded upon in subsequent paragraphs. Grant Thornton’s work comes in for particular criticism.

Dealing first with the criticisms of the Assurance Review, for the reasons I have already set out this was not, nor did it need to be as a matter of law, a statutory audit under s 123D. There had already been a statutory Assessment which had been audited as required by statute, and as I have said the question whether the whole statutory process had to start again in light of the pandemic, or whether (as the GMCA decided to do) further non-statutory work should be commissioned in order to test the conclusions reached in the Assessment in light of the uncertainties caused by pandemic, was a matter for the GMCA’s judgment. It was not irrational for the GMCA to take the second course.

Rotala’s submissions under this head seem to me, in substance, merely to be a repeat of the submissions they (and Stagecoach) made to TfGM during the Second Consultation. Section 9.3 of the Second Consultation Report (headed, ‘ Flaws in the assurance work done on the COVID-19 Impact Report’) met those criticisms head-on. For example, [9.3.3] noted that both Claimants had raised challenges to the work Grant Thornton had performed, which were then outlined in more detail, and TfGM’s responses to these challenges were then set out.

That discussion and analysis was set out over ten pages of the Second Consultation Report as a number of ‘Challenges’, from p430-p439. For example, Challenge 2 was, ‘Whether an assurance framework should have been used to perform the work’:

In relation to all the challenges, at [9.4.1] TfGM concluded:

I have considered the Claimants’ criticisms of this part of the Second Consultation Report. They are addressed separately in detail in Annex 2 to the Defendants’ Skeleton Argument. It seems to me that they are really just arguments about the merits, about which views could differ, and do not begin to provide an argument that it was irrational for TfGM to rely upon the Assurance Review.

I do not propose to lengthen this already lengthy judgment by setting out each of the Claimant’s criticisms and the Defendants’ response to them. A single example will suffice. Paragraph [54(c)] of Rotala’s Amended Grounds argues:

Similar points are made in [58] of Rotala’s Skeleton Argument.

In Annex 2, the Defendants respond:

I agree.

It is convenient here to deal also with Rotala’s submissions at [59]-[61] of its Skeleton Argument, which are to the effect that Oxera’s criticisms were not dealt with properly or at all in the Second Consultation Report. The specific criticisms related to the use of the scenarios in the COVID Impact Report: it was said to be irrational to use the four scenarios when the DfT was still developing and had not yet promulgated the result of a promised document on the use of scenarios to take account of uncertain times; the projection of demand from the scenarios was overly vague; the relative likelihood of Scenario 3 (the most pessimistic scenario) happening was irrationally discounted; and the ‘What If?’ methodology was simplistic and led to errors.

The Defendants set out the relevant references in the Second Consultation Report where TfGM responded to Oxera’s points at [130] et seq of their Skeleton Argument. I am satisfied that all of Oxera’s criticisms were properly considered and addressed in the Second Consultation Report. What weight was to be attached to them was for TfGM to determine. The fact that more weight might have been attached so some or all of them does not undermine TfGM’s overall conclusions. Nor does the fact that Rotala disagrees with the TfGM’s conclusions.

Again, a single example will suffice to demonstrate that there is no substance to Rotala’s criticisms. In relation to modelling, and the failure to wait for the DfT’s guidance, this issue was addressed in [3.6] and [17.2.31] of the Second Consultation Report. Rotala and Oxera’s argument was summarised in [3.6.2] and in [17.2.18]. At [3.6.1]-[3.6.2] TfGM said:

TfGM’s response is at [17.2.55]-[17.2.59]:

The question of whether to take a decision ‘now’, or to delay it, was an issue which the GMCA and the Mayor were alive to. I have already touched upon this issue earlier. The arguments for and against were considered in Section 5 of the November 2020 report ‘Bus Reform’ (which recommended there be a Second Consultation). They recognised there were arguments for and against, and so that question was one of those which consultees were invited to address. The consultation document said at p22:

The arguments for and against deferring were then set out. The question of delay was also addressed later at [2.146]-[2.151]. Question 10 was:

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 in section 2, the ‘the overwhelming response of the consultation was that the Scheme should now be made’. Given there were over 4000 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 (see eg sections [3.6], [16.5/2] and [17.2]), and also in section 5 of the GMCA’s response to the National Bus Strategy, and in section 15 of the GMCA’s response to the Second Consultation, ‘Bus Reform: Consultation and the GMCA Response’.

The Claimants seek to rely on matters that might argue for the decision being postponed, without regard to the matters supporting making the decision when it was, when the issue is one of balance.

Rotala next contends that the Defendants disabled themselves from considering the matters set out in s123B(2)(b) of the TA 2000 (the statutory assessment must describe the effects that the proposed scheme is likely to produce, and compare making the proposed scheme to one or more other courses of action). I do not accept that. The Assessment published in September 2019 met that statutory requirement. It compared the proposed franchising scheme with alternative courses of action: two possible partnership options (an operator proposed partnership and a more ‘ambitious partnership’ based on an enhanced partnership that operators were not prepared to agree), as well as the ‘do minimum’ option. The contents pages of the Assessment are replete with references to these alternatives, and how they were analysed. The further work done in the COVID Impact Report did not invalidate that comparative process. That Report itself also considered the alternatives: see eg at [2.4.2], [4.2], [4.3], [5.6], [6.2], [6.3].

Rotala further contends [67] and [68] that the Defendants failed to take into account the Claimant’s answer to Q2 and Q10 in the Second Consultation I set out Question 10 earlier. Question 2 was: ‘

Rotala's answer to Question 2 was principally that it would be irrational to make a decision without any knowledge of the partnership proposal that will be possible once the pandemic is over and the long-term effects of the pandemic are known. Its answer to Question 10 was that it would be irrational to decide to proceed with the Franchising Scheme until the long-term impact of the pandemic was known.

Again, I do not accept that Rotala’s contention is correct. Its arguments for deferring a decision, including its contention that the GMCA should wait until the long-term effects of the pandemic on the bus market are established, were summarised in [17.2.18] of the Second Consultation Report and were addressed later in that section, as I have already explained. The argument about waiting until the longer term-effects of the pandemic were known and a new partnership might be available, were addressed at [17.2.52], [17.2.53], [17.2.54], [17.2.58] and [17.2.59] of the Report. At [17.2.52]-[17.2.53] TfGM concluded:

Lastly, I deal with Stagecoach’s contention that the GMCA should have delayed the decision to allow discussions with operators to take place in light of the publication of the DfT’s National Bus Strategy, ‘Bus Back Better’.

As I have already said, the 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. At [5.10] the response noted that the NBS 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. For the reasons the GMCA gave in section 5, in particular at [5.2]-[5.12] and [5.17]-[5.19], it concluded that, on balance, further delay was not justified in the circumstances. That was a decision which was reasonably open to it.

I am not persuaded the impugned decisions were either unlawful or irrational. It follows that these applications for judicial review are dismissed.