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Mr. Hill: I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker (Mr. Michael J. Martin): With this it will be convenient to discuss the following: Government amendment No. 301.
Amendment No. 143, in clause 110, page 66, line 23, at end insert--
'(5) Local services provided under a quality contract scheme made in accordance with section 108 shall be exempt from the provisions of the Competition Act 1998.'.
Government amendments Nos. 303 to 306 and Government new schedule 1.
Mr. Hill: New clause 14 brings us to a topic that has excited many commentators in connection with our bus policy proposals, and occupied the Standing Committee more than once: competition.
We undertook to table amendments on Report to deal with competition issues as they affect the three key local authority functions introduced or enhanced by the Bill: quality partnerships, ticketing schemes and bus subsidy contracts, including frequency enhancements. The new clause and amendments were prepared in full consultation with the competition authorities, the Office of Fair Trading and the Department of Trade and Industry. I am sorry not to have been able to give the House a little more time to consider them, but they do what we said they would do.
The new clause and amendments achieve three things. First, they provide a special tailor-made regime for the exercise of such powers--rather than the Competition Act 1998, in case that Act might be thought to apply. I think that that concerned Members at an earlier stage. Secondly, they allow a bus operator, for example, to go to the Director General of Fair Trading if that operator thinks that the local authority's powers have been used unfairly. Thirdly--this is, perhaps, the most important point--
they require the Office of Fair Trading to consider not just any effect that there might be on competition but the wider public interest, including not only bus users but the community in general. For that purpose, we have included special public interest provisions tailored to the circumstances of bus operations, and the sort of benefits that local authorities will legitimately want to achieve through their use of bus powers. Those include better vehicles or facilities, service improvements and reducing or limiting traffic congestion, noise or air pollution. I hope that hon. Members will agree that those special provisions are much more appropriate and helpful to local authorities and to the public than anything in the Competition Act.
Valerie Davey (Bristol, West): Does my hon. Friend agree that the specific new amendments and the way in which the Government are now handling the matter are of particular value in a situation such as that in Bristol, where the bus company has a virtual monopoly, where the public good, as he has indicated, is of special concern to the local authority and the strengthening of local authority's power is to the benefit of the passenger?
Mr. Hill: I understand my hon. Friend's broad point, but the thrust of the new provisions is not precisely in the direction that she has described. They are designed to deal with possible allegations or suspicions of anti-competitive practices--for example, when ticketing arrangements are introduced--and to create some protection for the public interest where those measures are introduced, so I do not think that they quite attain the objectives that she may hope they do.
The provisions that I have outlined are in paragraph 2 of the new schedule. That paragraph is the most important part of the provision; otherwise, the schedule is essentially procedural. It provides for local authorities or bus operators to apply to the OFT for a decision--the OFT is, of course, the Office of Fair Trading, but I think that that is a reasonably familiar acronym, which I propose to persist with--or the OFT can look at a case itself if it sees fit.
The OFT must publish any decisions, with reasons, so that people know where they stand. Properly, the OFT is required to consult interested parties before finalising a decision if it thinks that the competition test is not met. The OFT has powers of direction once a decision has been made, although I am sure that in the vast majority of cases any necessary solutions will be worked out voluntarily.
The schedule contains provisions for the OFT to obtain information. It merely echoes provisions in other such legislation and contains confidentiality safeguards. Again, I would be surprised if those were much needed in practice, but I hope that the House will agree that it would not be right if bus operators were able to get together at the expense of the public and to frustrate OFT inquiries.
In addition to the schedule, there are some other amendments. They are mostly technical, but also helpful. For example, amendments Nos. 301 and 304 provide that reducing traffic congestion can be a valid reason for a local authority to bring forward a quality partnership scheme, or to subsidise a bus service. That ensures consistency with the wording of the competition test in paragraph 3 of the new schedule.
Amendment No. 303 provides that a local authority can vary a ticketing scheme, rather than simply revoke it, as in the Bill at present. Amendments Nos. 305 and 306 are
consequential drafting changes to provisions in the Transport Act 1985 to make "economy, efficiency and effectiveness"--the best value criteria--the factors that local authorities must take into account in promoting the use of public transport generally in their areas, thus ensuring consistency with their obligations in reaction to bus subsidies in clause 131.Opposition amendment No. 143 seeks to make bus services provided under quality contract schemes exempt from the Competition Act. It is substantially the same as an amendment that was debated in Committee. As we made clear on that occasion, the amendment seems to be wholly unnecessary.
Once a quality contract scheme has been introduced, there is by definition no longer a competitive situation for bus operations. All local services within the quality contract area, unless exempted, will be operated under contract to the local authority. The Competition Act will therefore not apply.
We further made the point that, if a quality contract were otherwise caught by section 2 of the Competition Act, it would be excluded by virtue of paragraph 5 of schedule 3 to the Act, which states that conduct engaged in to comply with a legal requirement is exempted from the Competition Act. Either way, therefore, we see no need to make further provision.
I hope that my explanation of the Government amendments is helpful to the House. I hope, too, that hon. Members will feel that these promised amendments will help all concerned by providing a special competition regime that also takes proper account of the public interest objectives that local authorities can--indeed, should--have in the use of their powers.
I know that competition legislation has been of concern to many hon. Members. It may therefore also help the House if I add that, yesterday, the OFT sent out consultation drafts of the block exemption. The covering letter was sent to the rail industry as well as to the bus industry trade association and local government and underlined the point that the proposed block exemption will apply to multi-modal schemes, not only to the bus industry.
We believe that that is good news, and I am sure that it will be welcomed by many hon. Members, including my hon. Friend the Member for Wythenshawe and Sale, East (Mr. Goggins), who has already made representations on behalf of the Manchester passenger transport executive. As I predicted in Committee, the OFT is taking forward a block exemption for bus and train ticketing schemes under the 1998 Act. The OFT has listened to representations. I hope that the House will find that reassuring.
Mr. Syms: In Committee, we spent considerable time discussing competition law. We did so because, if we do not get that matter right, the Bill's entire section on buses will not work. Representations on the Bill have been made by the bus companies, which are concerned that they will have to contend with both a competition regime--particularly under the Competition Act 1998, which came into force on 1 March and made things difficult for them--and the Transport Bill. The companies essentially felt that they were being caught between the Department of Trade and Industry and the Department of the Environment, Transport and the Regions.
The situation in Committee was not a happy one, primarily because we felt that the legislation would not work. I believe that the proposed regime will be helpful, and therefore welcome the Government's new clause, new schedule and amendments in this group. Nevertheless, the previous muddle was of the Government's own making, with two Departments going in two slightly different directions. The Local Government Association was very concerned about that muddle and made representations on it to the DETR.
The Opposition would like to see the quality partnership schemes work. For most people in the United Kingdom, buses are their only public transport alternative. The new regime will improve their chance of having such an alternative.
New clause 14 has been tabled at a relatively late stage in our consideration of the Bill. Have the bus companies been consulted on it? If so, did they have any comments? I am not an expert on buses--although I am a transport spokesman--but I am sure that the bus companies, particularly many of the major ones, have lawyers. As the 1998 Act provides for quite draconian ways in which company directors can be fined if they are anti- competitive, I am perfectly sure that those companies will wish to be consulted on the provision and have their views considered. If they have not been consulted, I hope that the Minister will reassure us that they will be before the Bill is sent to the other place. They should be consulted.
Have local authorities who have raised the competition issue directly with the Government been consulted on the proposed regime? Local authorities and bus companies are vital to operation of the Government's proposed regime. If they are happy with it, we would be happy.
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