Clauses 55 to 57: Extinguishment of liabilities

51. Clause 55 enables the Secretary of State, with the Treasury's consent, to extinguish the debts to the CAA of a company wholly owned by the CAA. The Secretary of State may direct the CAA to release such a company from its debt to the CAA. He may also, by order, extinguish the CAA's corresponding liability to him in respect of this debt, and the assets of the National Loan Fund would be reduced accordingly by a corresponding amount.

52. Clause 56 provides for the issue, at the direction of the Secretary of State of new equity or debt securities by the specified companies to the persons set out in subsection (4). The purpose of this clause is to enable the Government to alter the ratio of equity capital to debt of companies in the air traffic service provider group as part of the reorganisation. Clause 57 provides for certain accounting and valuation principles to be applied to securities and debentures issued under clause 56.

Clauses 58 to 62: Miscellaneous

53. Clause 58 provides that where a transferor or transferee is required by a transfer scheme to execute an instrument or enter into an agreement a person in whose favour such an instrument or agreement is made can ensure that obligations created by it are enforceable in the courts. Clause 59 provides that certain specified rights affecting land are not to operate or become exercisable as a result of a transfer of land under a transfer scheme and provides for compensation to be paid (determined, if necessary, by arbitration) to a person whose rights are, as a result, made ineffective. Clause 60 permits the Treasury, or the Secretary of State with the Treasury's consent, to appoint a person to act as its nominee for the purposes of clauses 47, 48 or 56. A person holding any securities as a nominee of the Treasury or the Secretary of State must hold and deal with them as directed by the Treasury or the Secretary of State.

54. Clause 61 introduces Schedule 6 which contains detailed provisions about transfer schemes, including the identification and allocation of property, rights and liabilities to be transferred, the discharge of functions by parties, transfers by agreement. It also includes provision as to documents of title, foreign properties, rights and liabilities, certificates, restrictions on dealings with land, the construction of agreements, proceedings and third parties.

55. Clause 62 introduces Schedule 7 which contains provisions regulating the tax treatment of transfers which take place under transfer schemes. The main purpose of the Schedule is to ensure that the reorganisation of business operations and capital structure which takes place prior to the establishment of the public-private partnership will be largely tax neutral.

CHAPTER III: AIR NAVIGATION

Clauses 64 and 65: Air navigation directions

56. Clause 64 allows the Secretary of State to give responsibility for air navigation functions to the CAA. The CAA may be given functions now exercised by the Director of Airspace Policy ("DAP"). The DAP is appointed by the Secretary of State for Defence and is subject to the direction of that Secretary and the Secretary of State for the Environment, Transport and the Regions. This clause also permits the Secretary of State to nominate a member of the CAA to perform, on behalf of the CAA, specified air navigation functions. Clause 65 deals with supplementary provisions relating to directions.

CHAPTER IV: CHARGES FOR AIR TRAFFIC SERVICES

Clauses 66 to 70: Charges

57. Charges are currently levied in the UK for the provision of en route air navigation services pursuant to the Multilateral Agreement relating to route charges signed at Brussels on 12th February 1981 (Cm 8662) for services provided in the Shanwick Oceanic Control Area; and for certain services provided by the governments of Canada, Denmark and Ireland. The 1982 Act authorises the Secretary of State to make regulations requiring the payment to him, to the CAA, or to Eurocontrol of charges for air navigation services provided by them or any other person. The 1982 Act also provides a statutory basis for the CAA to detail and sell aircraft owned or operated by any person in default in respect of such charges, in order to effect payment of the debt. A similar basis of charging and charge recovery exists in relation to airport air traffic control services at a limited number of airports, and for North Sea helicopters.

58. The system in this Bill retains a broadly similar system of charging and charge recovery. The costs of providing the air traffic services mentioned above will continue to be met the owners and operators of aircraft. However, the duty to pay such charges will no longer be set out in regulations made by the Secretary of State, but rather the CAA will specify the charges which will be set out in a published notice. Clause 66(3) imposes a duty to pay the specified charges. The CAA will continue to have statutory powers to detain and sell aircraft in respect of unpaid charges.

59. Clause 66 allows the CAA to specify the charges to be paid for the provision of chargeable air traffic services, who must pay them, the amounts they must pay, to whom they must pay them, and in what currency they must be paid. The CAA may dispense with the charges in specified cases and may require that interest be paid in respect of charges at a rate specified by the CAA. Clause 67 requires the CAA to publish notices containing the specified charges.

60. Clause 68 provides that the CAA must, when specifying the amounts of charges under clause 66, take into account tariffs approved, or likely to be approved, under international agreements. Clause 69 provides that liability to pay a charge by virtue of clause 66 arises (and is recoverable in the UK) regardless of whether or not the aircraft is registered in the UK, whether or not it is in the UK when the services are provided, or whether or not the services are provided from a place in the UK.

61. Clause 70 defines, for the purposes of this part, what chargeable air traffic services are. Subsection (2) provides a power for the Secretary of State to amend the meaning of chargeable air traffic services by order.

Clauses 71 to 74: Miscellaneous

62. Clause 71 provides a power for the Secretary of State to make regulations in order to facilitate the assessment and collection of air traffic service charges payable under clause 66. The regulations may require records of aircraft movements to be kept by operators or owners of aircraft and aerodromes and to be produced on request. These requirements may be imposed regardless of whether or not an aircraft is registered in the UK, is in the UK when the relevant service is provided, or whether or not the relevant services are provided from a place in the UK.

63. Clause 72 provides that a person commits an offence if he fails to comply with regulations made under clause 71, including where he gives false information. A person also commits an offence if he is in possession of information obtained under the regulations and he discloses it other than in the ways described in subsection (2). Penalties for these offences are set out in clause 72(5) and (6). Clause 73 provides that the Secretary of State may make regulations containing provisions which authorise the detention of, or the sale of detained, aircraft owned by aircraft operators who are in default in either paying a charge or in complying with a requirement imposed by regulations made under clause 71. Clause 74 contains a definition of Eurocontrol for the purposes of this Chapter. The penalties for committing an offence under this clause range from a fine not exceeding the statutory maximum on summary conviction, to up to two years imprisonment on conviction on indictment.

CHAPTER V: COMPETITION

Clauses 75 to 77: Competition

64. These clauses give the CAA, as economic regulator, concurrent powers with the Director General of Fair Trading ("the DGFT") under competition legislation in relation to the supply of air traffic services. This is consistent with the powers granted to other utility regulators (telecoms, gas, electricity, water and railway services). Clause 75 contains definitions. Clause 76 transfers to the CAA the listed functions exercised by the DGFT under the Fair Trading Act 1973 (so far as they relate to monopoly situations in relation to the supply of air traffic services) and the Competition Act 1998 (so far as they relate to agreements or conduct relating to the supply of air traffic services). These functions are to be exercisable concurrently with the DGFT.

65. Clause 77 creates procedures for the exercise of concurrent powers by the CAA and DGFT. This is to avoid duplication of regulatory activity. These procedures are also designed to ensure that any action is taken by the most appropriate authority. If the CAA makes a reference to the Competition Commission it must help the Commission with its investigations by providing any relevant information that it has in its possession.

CHAPTER IV: MISCELLANEOUS AND GENERAL

Clauses 78 to 83: Miscellaneous

66. Clauses 78 to 83 deal with the collection and publication of information by the CAA under these provisions, the Secretary of State's general powers to issue directions to the CAA, and control in time of hostilities.

67. Clause 78 provides for the CAA to publish information which it thinks could be useful or appropriate to users or potential users of air traffic services in the UK. Clause 79 requires the CAA to keep the provision of all air traffic services (in the UK and elsewhere) under review, and collect information about them. And in reviewing the provision of services it is to take account of the Secretary of State's directions as to what considerations are to affect priorities under this duty.

68. Clause 80 gives the Secretary of State a general power to direct the CAA as to whether and how it should exercise its various functions under Part I of this Bill.

69. Clause 81 gives the Secretary of State the power to give directions to a wide range of persons engaged in aviation and related activities (including the holder of a licence under Chapter I) in times of severe international tension, great national emergency or actual or imminent hostilities (whether or not there has been a formal declaration of war). These powers are broadly similar to those in the 1982 Act which this Bill repeals. It is an offence to contravene or fail to comply with a direction. Compensation is payable by the Secretary of State for direct injury or loss arising from compliance with a direction. The penalties for committing an offence under this clause range from a fine not exceeding the statutory maximum on summary conviction, to up to two years imprisonment on conviction on indictment.

70. Clause 82 defines expressions used in clause 81.

71. Clause 83 introduces Schedule 8 which makes consequential amendments to various Acts.

Clauses 86 to 91: Other general provisions

72. Clause 86 details the rules regarding the service of a document under this Part of the Bill.

73. Clause 87 makes it an offence for a person to knowingly give false information or make a false statement in connection with this Part of the Bill. A person may be subject to a fine not exceeding the statutory maximum or summary conviction, or a fine on indictment for committing an offence under this clause.

74. Clause 88 introduces Schedule 9 which prohibits the disclosure of information gained under this Part of the Bill save with the consent of the person to whom it relates or where otherwise permitted. Disclosure in contravention of the schedule is an offence. A person who discloses information in contravention of the schedule is liable, on summary conviction, or a fine on indictment for committing an offence under this clause.

75. Clause 89 enables the Secretary of State to exercise a power to make an order or regulation-making power under the Act differently in relation to different cases.

76. Clause 90 requires a person given a direction under this Part of the Bill to comply with it. Directions may be varied or revoked.

77. Clause 91 provides the extension of specified provisions to the Channel Islands, the Isle of Man or any colony.

PART II: LOCAL TRANSPORT

Clauses 92 to 95: Local Transport Plans and Bus Strategies

78. Clauses 92 to 95 provide a statutory basis for local transport plans and bus strategies in England and Wales outside London. London has its own system under the Greater London Authority Act 1999. Local transport plans already exist in a non-statutory form as the basis for the Department's allocation of capital funds for local transport expenditure,but the Bill puts them on a statutory basis for the first time.

79. Clause 92 and 93 impose a duty on each "local transport authority" (defined in clause 92(4)) as councils of counties and unitary authorities in England, principal councils in Wales and passenger transport authorities ("PTAs"), to formulate transport policies and publish them as a local transport plan. The policies must promote 'safe, integrated, efficient and economic transport' and will provide a framework for, inter alia, the promotion of improvements to bus services under the powers of Part II and the introduction of charging regimes under Part III.

80. Clause 94 requires local transport authorities to develop as part of their local transport plans and after consultation in accordance with clause 95, policies as to how best to carry out their various functions in order to secure the provision of appropriate bus services in their area. In formulating those policies they must have regard in particular to the needs of the elderly and people with mobility problems. The functions in question are largely contained either in the Bill or in the Transport Acts of 1968 ("the 1968 Act") and 1985 ("the 1985 Act") as amended by the Bill.

81. Clause 93 provides that plans must be kept under review and altered if necessary and must in any event last no longer than 5 years. Changes may only be incorporated on 1st April in each year. This and clause 95 impose requirements as to the publication of plans (including bus strategies) and require authorities to make copies available at no more than cost.

Clauses 96 to 103: Bus Services: Quality Partnership schemes

82. Clauses 96 to 103 empower local transport authorities, either alone or jointly, to set up Quality Partnership (QP) schemes as part of the process of implementation of their current bus strategy. A QP scheme entails the authority providing special facilities, and setting standards to be observed by bus operators as a condition of using the facilities. A scheme must implement the bus strategy and be aimed at improving local bus services for the benefit of bus users or at improving the environment. "Local services" are defined in clause 138 by reference to the 1985 Act. In essence they are bus services with stopping places less than 15 miles apart (section 2 of the 1985 Act).

83. Similar schemes currently exist as voluntary arrangements in over 100 towns and cities in England and Wales, where local authorities have agreed to exercise their functions (especially as regards traffic management) in particular ways and operators in return have agreed to provide improved bus services with the aim of promoting bus use. The principal difference between these and schemes created under the Bill is that the latter will be enforceable at law.

84. Clause 96 specifies the nature of a QP scheme. The facilities to be provided under a scheme must include facilities (such as bus lanes and shelters) at specific locations along bus routes (or where appropriate prospective bus routes) which bus operators can use; they may include other ancillary facilities also. Information facilities may not be included if the authority has determined that these must be provided throughout their area under clause 119 (which is mentioned at paragraph 99 below). Standards which may be imposed on operators under a statutory QP scheme do not extend to service frequency or timing, since separate provision is made for this by section 9A of the 1968 Act and section 63 of the 1985 Act and a comprehensive local authority approach to determining timetables is provided for in the separate Quality Contracts clauses (paragraphs 88 to 95 below). The Bill does not prevent authorities and operators from making voluntary arrangements as at present.

85. A scheme may not be made without prior consultation with bodies specified in clause 97, including bus operators and representatives of bus users and, if the scheme affects a trunk road, the Secretary of State or NAW. Clauses 98, 99 and 101 provide for the making (with or without modification), postponement, variation and revocation of schemes. In particular there is provision for excluding certain services from schemes where this is considered appropriate (for example a community bus service acting as a feeder to a main bus route). The Secretary of State or the NAW may issue guidance on QPs and make regulations about detailed matters under clauses 103 and 102.

86. Once a scheme is in operation, it must remain so for at least 5 years (clause 98(2)) and duties are placed:

• on the authority to provide the necessary facilities (clause 100(1));

• on the bus operators to meet the necessary standards if they use the facilities (clause 100(4)).

87. Compliance by the operators will be secured under the existing bus registration system. Paragraphs 7 and 17 of Schedule 10 amend sections 26 and 111 of the 1985 Act to empower traffic commissioners to take enforcement action if an operator is in breach of his duty under clause 100(4) or clause 132(1).

Clauses 104 to 114: Bus Services: Quality Contracts schemes

88. Clauses 104 to 114 enable local transport authorities, either alone or jointly, to make a Quality Contract (QC) scheme, provided that they are satisfied that it is the only way to implement their bus strategy (or strategies) and also that the scheme will implement it (or them) in a way which will deliver best value, ie be economic, efficient and effective (clause 104(1)). Under a QC scheme, the authority will determine what local services should be provided in the area concerned (and to what standard) and will let contracts with bus operators granting them exclusive rights to provide services to the authority's specification.

89. Clause 104 defines what a QC scheme is and what a "Quality Contract" itself is. It imposes an obligation on the authority to keep under review operators' compliance with the obligations imposed on them by Quality Contracts.

90. Clauses 105 and 106 require an authority to publicise and consult upon a proposed scheme before submitting it to the Secretary of State or NAW ("the appropriate national authority") for approval, stating the reasons why they want to make the scheme. There is a requirement in particular to consult operators and users' representatives. There is provision, when a scheme has been submitted for approval, for operators affected by it to put objections to the appropriate national authority. That authority may approve the scheme only if satisfied that it is in the public interest (clause 106(4)(b)) and may approve it with modifications after interested persons have been consulted (clause 106(5) and (6)).

91. Clause 107 describes what a scheme must contain and in particular provides that certain services may be excluded from it (subsection (3)). It may not come into operation for at least 21 months after it is made. This is in recognition of the fact that some bus operators currently operating in the area may lose the right to do so, and must be allowed due time to adjust and redeploy assets. A scheme may not last for more than 10 years. Clause 108 provides that the operation of a scheme may be postponed.

92. Clause 109 provides that once a QC scheme is in operation sections 6 to 9 of the 1985 Act cease to have effect in the relevant area and no local service may be provided in that area except in accordance with a QC. Section 6(2) provides that:-

"no [local] service shall be provided in any traffic area in which there is a stopping place for the service unless -

(a) the prescribed particulars of the service have been registered with the traffic commissioner for that area by the operator ... "

and sections 7 to 9 make supplementary provision. The normal role of the traffic commissioners in monitoring services is therefore excluded and enforcement becomes a matter for the local transport authority in accordance with the terms of their QC - see clause 104(6). (A "traffic area" is an area designated under the provisions of section 3 of the Public Passenger Vehicles Act 1981 and a traffic commissioner is appointed for each area by virtue of section 4 of that Act.)

93. Where a service is excluded from a QC scheme, however, sections 6 to 9 continue to apply to it and the traffic commissioner may take action for breach of any conditions under which the service is excluded (clause 109(2) and (3)).

94. Clause 110 provides for the letting of individual contracts. Tenders must be sought by general invitation no later than 3 months after the making of the scheme and contracts when let may last no more than 5 years. Tenders may only be accepted from licensed operators of public service vehicles or persons holding a community bus permit under section 22 of the 1985 Act (subsection (6)). Clause 111 provides for cases where the normal tender procedure does not apply. Express provision is made for emergencies but the clause may be extended by regulation to cover other cases. Regulations may limit the duration of these emergency contracts so as to ensure that the provisions of clause 110 are not improperly circumvented.

95. Clause 112 makes provision for the variation or revocation of a scheme. There is also a power for the appropriate national authority to make regulations, allowing it to revoke the scheme before it comes into operation in circumstances set out in the regulations (for example, an unexpected collapse of the tender process).

Clauses 115 to 118: Bus Services: Ticketing Schemes

96. Clauses 115 to 118 empower local transport authorities, alone or jointly, to set up ticketing schemes, whereby operators of local bus services are required to make and implement arrangements to accept each other's tickets or provide integrated ticketing in ways specified in the scheme. "Ticketing scheme" is defined in clause 115(3). In doing so the local transport authorities must be satisfied that this is in the public interest and implements their bus strategy.

97. Many bus operators are already involved in area-wide ticketing. But they cannot at present be compelled to do so by law.

98. Clause 116 imposes a consultation requirement upon an authority intending to introduce such a scheme. Clause 117 imposes requirements as to publicity when a decision is taken to make a scheme. Clause 118 imposes a duty on operators to implement the scheme from the date it comes into force (not less than 3 months after making: clause 117(2)). Failure to do so may attract enforcement action by the traffic commissioner under section 26 or 111 of the 1985 Act, by virtue of amendments made to those provisions by paragraphs 7 and 17 of Schedule 10 to the Bill. (See also clause 132(1).)

Clauses 119 to 121: Bus Services: Provision of information

99. Clauses 119 to 121 require local transport authorities, alone or jointly (see clause 121(3)), to determine in accordance with their local transport plan what local bus information (as defined in clause 119(6)) should be made available, and how, and to seek to arrange with operators for its provision. If arrangements cannot be made by agreement, the authority must make the information available or secure that it is made available, and in such a case it is given power to recover reasonable costs from the operators concerned (clause 120).

100. Clause 121 provides that, in exercising their powers, the authority must have regard to economy, efficiency and effectiveness, and must not discriminate against operators.

101. A duty is imposed on operators by clause 120(3) to furnish information to the authority or a third party in such circumstances, to enable the authority to meet its obligations. Failure to do so may attract enforcement action by the traffic commissioner under section 26 or 111 of the 1985 Act, by virtue of amendments made to those provisions by paragraphs 7 and 17 of Schedule 10 to the Bill. (See also clause 132(1).)

Clause 122: Bus Services: Environmental Protection

102. Clause 122 extends the powers of the traffic commissioners to impose traffic regulation conditions on local bus services under section 7 of the 1985 Act. These powers currently allow the commissioners, at the request of local authorities, to impose restrictions on routes and stopping places in the interests of preventing danger to road users or reducing severe traffic congestion. Under clause 122, a commissioner will also be able to do so for the purpose of reducing or limiting noise or air pollution.

Clauses 123 to 128: Mandatory Travel Concessions outside Greater London

103. Clauses 123 to 128 give elderly people (as defined in clause 124(1)) the entitlement to a half-fare concession on local bus travel within the area of a "travel concession authority" and during the "relevant time" (expressions also defined in clause 124(1)). Eligibility may be made conditional on the holding of a bus pass for which a charge of no more than £5 a year may be made by the authority issuing it.

104. Clause 125 empowers the Secretary of State or the NAW:

• to extend the eligible categories to other persons eligible to participate in discretionary schemes made under section 93 of the 1985 Act (subsection (7) specifies who they are - principally young, blind or disabled people);

• to extend the qualifying journeys to those on other public passenger transport services (as defined in section 63(10) of the 1985 Act, a definition applied to this Bill by clause 138);

• to vary the relevant times;

• to improve the concession to better than half the fare.

105. Clause 123(3) makes provision whereby an elderly person can opt for an alternative to the statutory minimum concession. If an authority has a discretionary scheme under section 93 of the 1985 Act which is more attractive to a particular elderly person, that person may agree not to be entitled to the mandatory concession in order to take up the discretionary concession. For example, a discretionary scheme might offer a reduction of less than half on bus and rail travel. That would be more attractive to an elderly person who uses rail only. He or she could agree not to receive the mandatory concession in order to benefit from the discretionary scheme (if the scheme required this). The period during which such agreements are binding may, along with other matters, be prescribed in regulations.

106. Clause 126 provides that systematic failure by operators to provide the mandatory concession is an offence, attracting a fine not exceeding level 3 on the standard scale (currently £1,000).

107. Clauses 127 and 128 make provision for the reimbursement of operators by local authorities, this being based broadly speaking on the present system under the 1985 Act.