Wheels come off Bus Éireann school run

Whatever the arguments that have gone before, the European Commission was clear yesterday that the arrangement under which Bus Éireann exclusively operates the school transport scheme for the Department of Education and Skills is contrary to EU rules on state aid.

The bottom line of is that the deal gives the State-owned company an advantage over its privately owned rivals. The most obvious way of dealing with this is to give those competitors an opportunity to bid for the service, which daily transports thousands of students to and from school, something a number of them already argue EU law requires the Government to do.

One group, Student Transport Scheme (STS), made this argument to the High Court two years ago but was shot down. The court agreed with the department's contention that this was not a commercial arrangement but one arm of the State performing an administrative function at the behest of another.

The deciding factors included a claim that the department could unilaterally alter the agreement’s terms at any stage, which is not generally a feature of commercial contracts, and that Bus Éireann receives only its costs for providing the service and thus does not make a profit.

STS, which is appealing the ruling, says there are substantial grounds for challenging this point. But that appears not to matter as the EU says the scheme is not compatible with state aid rules and it does not appear too concerned with whether Bus Éireann makes a profit.

The company and department might disagree but the decision appears to vindicate STS’s claim, at least partly, and indicates the administrative arrangement argument holds no water.

The next stage in what has been a long-running row will be the Government, commission and company “engaging” in order to find a way of bringing the scheme into line with the rules. Bus Éireann says it is looking forward to this. No doubt a few of its rivals do so as well.