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11.15 pm

New clause 14 is sensible, and I am sure that the comprehensive new schedule 1 will meet the task. However, because of the conflict between two Departments, we have--as the Minister said--a tailor-made regime which I hope is robust.

The Minister said that the Office of Fair Trading has issued guidance on block exemptions. He said also that bus operators could go to the Director General of Fair Trading for directions, but there was no mention of the cost of doing so. Will there be such a cost on a company? If so, the House ought to be told today.

We welcome the Government's proposals and hope that there is the widest possible consultation. Bus operators must feel that they can move forward with quality partnerships and quality contracts in the knowledge that the regime will work and is robust. We wish the Government well on this because the travelling public want better services. The industry and local government want a degree of certainty that the new regime will work.

Mr. Don Foster: Like the hon. Member for Poole (Mr. Syms), I welcome the Government's proposals. The House will be aware that our amendment No. 143 would have much the same effect as the one proposed by the Government, but it is considerably less comprehensive.

I am disappointed that it has taken such a long time for the Government to come forward with proposals. In Committee on 29 February, the Minister told us that

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parliamentary counsel was busily drafting amendments in this regard. It has taken two and a half months for parliamentary counsel to bring this forward. I hope that time will show that it was worth the wait.

I am delighted that, at long last, we will begin to have a solution to a problem that was raised by many members of the Committee. The Minister was unwilling to accept a Liberal Democrat proposal that fares and frequency should be included in quality partnerships and quality contracts. The Minister agreed that it would be possible for a local authority working with transport companies in its area to produce an agreement on fares and frequencies, but that that would have to lie outside, but alongside, the statutory quality partnership or quality contract.

I understand that these amendments refer specifically to new quality partnerships and quality contracts, and do not refer to the non-statutory arrangements that may be made by local authorities with their various transport providers in the area. The Minister was asked about those non-statutory arrangements between a local authority and the transport providers in an area, and whether or not they could fall foul of the Competition Act. He said:

I cannot give . . . that assurance. Such timetable agreements may or may not be in breach of the competition rules, but it is for the OFT to make inquiries into that and to come to its own decisions. Since such agreements do not form part of the Bill, it is hardly for me to make a judgment on them.--[Official Report, Standing Committee E, 29 February 2000; c. 794.]

I am sure that the House will recognise that a large number of the measures that a local authority may wish to take with transport providers in its area will refer specifically to fares and frequency. Indeed, on many occasions in Committee reference was made to the competition in some parts of the country whereby one bus company operates a particular timetable and another bus company introduces a service just a few minutes earlier to try to grab the passengers from the first company. Yet we know from experience that when two bus companies have agreed a timetable--one going on the hour and the other going on the half hour, for example--they have fallen foul of the Competition Act and the current work of the OFT. We hoped that the Minister would table an amendment that brought some comfort to local authorities and bus companies that any such arrangements that they sought to introduce to the benefit of passengers in a particular area would not fall foul of the Competition Act.

I seek some reassurance from the Minister that the provisions in the amendment, the new clause and the new schedule will ensure that arrangements in respect of fares and frequency will be treated in the same way as the other matters covered by the proposed provisions. I am delighted that we are making progress, but I am not convinced that all the issues have yet been covered.

Finally, in some parts of the country, including my constituency, local authorities wish to develop voluntary agreements with bus companies without introducing a quality partnership agreement. In some circumstances, particularly when fares and frequency are central issues, it is better to have a voluntary agreement that covers fares and frequency among other issues, rather than making them part of the statutory quality partnership. Again, I would be grateful if the Minister could give some comfort to local authorities such as Bath and North East Somerset council, which is trying to develop a partnership in respect of that dreadful subject that we discussed in

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Committee--tour buses--that there will be some exemptions from the draconian approach adopted by the Office of Fair Trading.

Mr. Stephen O'Brien: I join my hon. Friend the Member for Poole (Mr. Syms) and other hon. Members in welcoming the Government's proposals. It might be helpful if I put in context my own experience of the operation of competition. Before being elected to the House I was, for my sins--I have many sins--the compliance officer in a large public company in the construction industry. I am conscious of the presence of the Minister for Housing and Planning, who is equally familiar with the construction industry, which is an important example of where the statutory competition provisions bite and are effective or not effective and which shows their effect on businesses and the directors of companies.

It is well known that in respect of a commodity product where one competitor is indistinguishable from another, there is every incentive--and good commercial reasons--to try to create a monopoly, albeit a small one in terms of the commercial market. That is the only way to secure the proper reward by price against the investment that has been put in. Of course, the market and consumers are always anxious for that not to happen. A prime example is the ready-mixed concrete industry, with which I am very familiar. There might be three ready-mixed concrete plants in towns in England, Wales, Scotland or Northern Ireland, each desperately trying to occupy the five-mile radius--much further, and the stuff would set in the back of lorry--and create some form of commanding market presence to justify itself. I am talking about radial monopolies. There was an incentive, at times--wholly to be condemned--to carve up the market. There have been court cases demonstrating that.

This proposal is a way of derogating from the application of the recently introduced statutory requirements on competition, which I fully support--we shall wait to see how they work out in practice, having so recently been implemented. This is lineal monopoly behaviour. If we combine radial and lineal monopolies, this is a first in terms of the way in which competition and marketplace domination are defined.

As I said, I welcome the Government's approach to quality partnerships, contracts and the need to address through routes and ticketing so that we can provide for all our constituents a proper public service recognition, while at the same time encouraging the investment that follows a proper commercial base for bus services. I was concerned, however, when the Minister referred to a special competition regime that can be used by local authorities. Would that one day extend to taxi services? Given the way in which the Post Office has harnessed some of the quasi-bus services, to what extent does that potential derogation apply? It is important to have that clarified.

There is an element of wanting to have it both ways. The Government talk about joined-up government, but they are conscious that what the Department of Trade and Industry is producing is not quite so joined-up, as far as the Bill is concerned, as they might like.

Directors face enormous difficulties and anxieties if they are accused of anti-competitive behaviour under increasingly rigorous statutory requirements. I fully

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understand the derogation that is sought, and the way in which the Government want to test it through the new schedule. However, I am not reassured, given where such provisions might lead in other areas of commercial activity, and I look to the Minister for reassurance. There is a special public interest provision in the new schedule. Many areas, as well as buses and trains, might be considered a special public interest. For instance, if the Ministry of Defence commissioned a new structure for its service, that would clearly be in the public interest. When it comes to the ready-mixed concrete to be supplied, under this potential precedent, would the Competition Act 1998, implemented on 1 March this year, be prayed in aid in order to seek a derogation?

Of course, I am postulating. This is hypothetical. It is none the less important, not least because I do not claim to be an expert in this field, other than through experience. However, we all know that an army of lawyers is out there, ready to charge horrendous fees for giving advice. That is a major cost on businesses, which feeds through to the consumer. Therefore, we have an interest in seeking to bring forward relevant and appropriate legislation.

My concern is that this provision--even though it is well intentioned--could be prayed in aid and used as a precedent in relation to unforeseen activities in other commercial marketplaces. I worry that it would undermine the 1998 Act and measures introduced by another Department.

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