Clause 19: Quality contracts schemes

82.     This clause amends section 124 of the TA 2000, which has already been amended by section 39 of the Railways Act 2005 (quality contracts schemes in connection with modification of rail services). Those amendments have not been materially affected by the further amendments in this clause.

83.     The new section 124(1)(a) to (e) (substituted by subsection (2)) set out the revised criteria which the local authority must be satisfied are met before making a quality contracts scheme:

• The scheme must increase the use of local bus services, and bring benefits to people using them through the provision of services of a higher quality. ⁷

⁷ Increase, in this context, is defined in the new section 124(9B), inserted by subsection (5), to include a reference to reducing, arresting or reversing decline in the use of bus services.

• The scheme must contribute to the implementation of the authority's local transport policies, rather than just those policies set out in their bus strategy (as now). ⁸ By virtue of clause 10, local transport authorities in England and Wales will no longer be required to prepare bus strategies; moreover, not all local transport authorities in England are currently required to prepare local transport plans (or bus strategies), by virtue of the Local Authorities' Plans and Strategies (Disapplication) (England) Order 2005 (SI 2005/157). However, all local transport authorities (including ITAs) will be required to "develop policies for the promotion and encouragement of safe, integrated, efficient and economic transport to, from and within their area" (section 108(1)(a) of the TA 2000 as amended by clause 8). The requirement that a quality contracts scheme must contribute to the implementation of "local transport policies" is therefore applicable in every case. The effect would be to enable a scheme to be made for purposes not limited to matters currently included in the authority's bus strategy. For example, such purposes might relate to the introduction of a demand management scheme (such as a local charging scheme made under Part 3 of the TA 2000), or to the provision of better integration with rail or light rail services.

⁸ Local transport policies are defined in the new section 108(5) of the TA 2000, inserted by clause 7.

• The scheme must also (as now) implement the policies in a way that is economic, efficient and effective.

• Any adverse effects of the scheme on operators will be proportionate generally to the well-being of persons living or working in the area.

Clause 20: Notice and consultation requirements

84.     This clause amends section 125 of the TA 2000 (notice and consultation requirements). Subsection (1) of section 125 is amended so as to require an authority which is proposing to make a quality contracts scheme to issue a consultation document. The document must include a statement by the authority of the reasons why they are satisfied that the criteria set out in the new section 124(1) will be met, and a statement on funding.

Clause 21: Approval of proposed scheme

85.     This clause amends section 126 of the TA 2000 (approval of proposed scheme) to provide for quality contracts schemes in England to be approved by a new approvals board for England, rather than the Secretary of State. In Wales such schemes will continue to be approved by the Welsh Ministers. The amendments made by this clause, and clauses 22 to 25, have no effect in respect of the procedure in Wales.

Clause 22: Approvals boards for England

86.     This clause inserts a new section 126A into the TA 2000, which sets out the constitution of each of the approvals boards for England. Any such board will be chaired by a traffic commissioner (designated by the senior traffic commissioner), with two other members drawn from a panel of persons appointed by the Secretary of State. ⁹ Each board is to be supervised by the Council on Tribunals. ¹⁰ Where possible, the commissioner designated to chair the board will be the one with best knowledge of the area in question.

⁹ The post of senior traffic commissioner is established by clause 3, described above.

¹⁰ The Council on Tribunals is a permanent standing advisory body operating under the Tribunals and Inquiries Act 1992. There are some 80 or so tribunals under its oversight, and it must be consulted on the procedural rules for those tribunals.

Clause 23: Practice and procedure of approvals boards for England

87.     This clause inserts a new section 126B into the TA 2000 empowering the Secretary of State to make procedural rules governing the approvals board for England. Such rules may include the procedure for making applications to the board and for the acknowledgement of such applications, the procedure for notifying the relevant parties that an application has been lodged, and the timescales within which such parties may make representations to the board. Regulations may also prescribe the period within which the board should normally take its decision. The board is placed under a duty to take reasonable steps to reach its decision within that time and, if it is unable to do so, it must prepare and publish a statement of its reasons.

88.     The new section 126B also provides for the Secretary of State to issue guidance to the board on the carrying out of its functions, to which the board must have regard.

Clause 24: Inquiries by approvals boards for England

89.     This clause inserts a new section 126C into the TA 2000 to empower the approvals board for England to hold inquiries. The provisions are similar to those in section 54 of the PPVA 1981 which empower a traffic commissioner to hold inquiries. All such inquiries must be held in public, but the clause provides that information relating to a business may be supplied in confidence, with a penalty for improper disclosure of that information.

Clause 25: Appeals relating to applications for approval: areas in England

90.     This clause inserts two new sections, 126D and 126E, into the TA 2000 providing for appeals against decisions of any approvals board for England to be determined by the Transport Tribunal. ¹¹ A further right of appeal (on points of law) is provided from the Tribunal to the Court of Appeal.

¹¹ The constitution, powers and proceedings of the Transport Tribunal are set out in Schedule 4 to the TA 1985. These include general powers to award costs and to charge fees.

Clause 26: Making of scheme

91.     This clause contains amendments to section 127 of the TA 2000, many of which are consequential on preceding provisions of the Bill. The amendments provide that the date on which a scheme can be made (in England) must be deferred until any appeal under the sections inserted by clauses 22 to 25 has been disposed of. The effect of the amendment in subsection (5) is to enable different parts of a quality contracts scheme to come into effect on different dates (see also clauses 27 and 28). Under the existing provisions in the TA 2000, all parts of the scheme must come into operation on the same date.

Clause 28: Effect of scheme: different operational dates and excepted services

92.     This clause amends section 129 of the TA 2000 in two respects. First, it makes changes consequential on the amendment in subsection (5) of clause 26. Secondly, subsection (3) amends section 129(2) so as to add further cases in which section 129(1) (which disapplies provisions on the registration of local services) does not apply. The circumstances in which such a registration may be accepted by the traffic commissioner are set out in new section 6B of the TA 1985 (as inserted by clause 44 below).

Clause 29: Extension of maximum period of quality contracts

93.     This clause amends section 130 of the TA 2000 so as to extend the maximum duration of a quality contract from five years to ten (which, subject to clause 30, is also the maximum duration of the scheme itself). ¹² Ten years is also the limit of duration specified for public service contracts for coach and bus services prescribed by article 4.3 of the Regulation of the European Parliament and of the Council on public passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos 1191/69 and 1107/70 (O.J. L315 3.12.2007 p.1).

¹² A quality contracts scheme may include one or more individual quality contracts.

Clause 30: Continuation of scheme for further period

94.     This clause inserts a new section 131A into the TA 2000 setting out the procedure that must be followed if an authority wants a quality contracts scheme to continue, with or without modification, beyond the initial period of not more than ten years. Under the existing legislation, it is not possible to continue a scheme, and a new scheme must be made instead.

95.     The provisions require the authority to publish a consultation document, including a statement as to the effectiveness of the scheme to date as well as the case for continuing it in operation for a further period of up to ten years. A proposal to continue a scheme is made subject to the same consultation procedure and approvals and appeals process as a new scheme, with appropriate modifications (see clauses 31 and 33) though in some circumstances the approval process would not apply (see the notes on those clauses below).

96.     The amendments also provide that, if a consultation document is published not less than twelve months before the scheme is due to expire, an existing scheme will continue, without modification, if it would otherwise have expired before the continuation has been finally approved (and any appeal disposed of).

Clause 31: Approval of continuation of scheme

97.     This clause inserts a new section 131B into the TA 2000. It provides for the approvals process described in section 126 of the TA to apply to any application to continue a scheme once it has come to an end, with the modifications set out in this clause, except in certain circumstances. The clause sets out in detail the conditions that need to be satisfied if the scheme is to be exempt from the approval procedure, and imposes a requirement on the local authority to publicise that they propose to proceed on the basis that it is an exempt proposal. In particular, a continuation scheme which does not extend to any additional services that were previously deregulated will not need to be submitted to the approvals board or the Welsh Ministers.

Clause 32: Appeals relating to exempt proposals for continuation of a scheme

98.      This clause inserts a new section 131C into the TA 2000. It provides a right of appeal to the Transport Tribunal against a decision by a local transport authority to continue in force a quality contracts scheme in a case which, by virtue of section 131B (see clause 31), is exempt from the requirement to obtain approval from the approvals board (in England) or the Welsh Ministers (in Wales) (an "exempt proposal"). All those who were consulted on the proposal have the right to appeal, either against the decision that it is an exempt proposal or against the decision to continue the scheme. It also specifies what actions the Tribunal may take following such an appeal.

Clause 33: Appeals relating to continuation of scheme

99.     This clause inserts a new section 131D into the TA 2000. It provides for appeals against a decision by the approvals board (in England) regarding the continuation of a quality contracts scheme under section 131B (see clause 31 above). This clause has application in England only.

Clause 34: Variation or revocation of scheme

100.     This clause amends section 132 of the TA 2000, which sets out a procedure for varying or revoking a quality contracts scheme. Most significantly, certain minor variations which would not increase the scope of a scheme will not require the approval of the approvals board in England or the Welsh Ministers.

Clause 35: Appeals relating to exempt variations of scheme

101.     This clause inserts a new section 132A into the TA 2000 to provide a procedure to appeal to the Transport Tribunal against a scheme variation that is (or is claimed to be) exempt from the requirement for approval by the approvals board (in England) or the Welsh Ministers (in Wales) (an "exempt variation" - see clause 34). Any person who was consulted on the variation may appeal either against the decision itself or against the decision that it is an exempt variation. The clause also sets out what action the Transport Tribunal may take following such an appeal.

Clause 36: Regulations about schemes

102.     This clause amends section 133 of the TA 2000, which is a provision enabling regulations to be made on various matters relating to quality contracts schemes. The additional provisions will enable regulations to be made about the continuation of schemes, and about the procedure for determining applications for approval of schemes.

103.     No regulations have been made to date under section 133 of the TA 2000.

Clause 37: Power to make transitional provision about schemes

104.     This clause amends section 134 of the TA 2000, which enables regulations to be made concerning transitional provision in connection with the coming into operation of quality contracts schemes, or the variation or ending of such schemes. The most significant amendment is that which will enable transitional provisions to modify the effect of sections 89 to 92 of the TA 1985 (obligation to invite tenders for subsidised services other than quality contracts). The amendments also clarify that any transitional provision concerning the coming into effect of a scheme can only have effect from the date on which a scheme has been made.

Clause 38: Guidance about quality contracts schemes

105.     This clause inserts a new section 134A into the TA 2000 making provision for the appropriate national authority in England and Wales to issue guidance about the performance by local transport authorities of their functions in respect of quality contracts schemes. ¹³ Local authorities are required to have regard to any such guidance in the exercise of those functions.

¹³ The appropriate national authority is the Secretary of State (in England) or the Welsh Ministers (in Wales).

Clause 39: Quality contracts: application of TUPE

106.     This clause inserts a new section 134B into the TA 2000 to provide that the cessation of provision of services by an operator because a quality contract has come into force, and the commencement of services being provided under that contract by a different operator, shall be regarded as a "relevant transfer" for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 2006. Inserted section 134B provides that the Secretary of State may make provision in regulations about how such transfers are to operate and the procedures to be followed, including provision requiring existing operators who will be affected by the scheme to supply the necessary information about relevant employees. There are provisions for administrative sanctions against operators who fail to supply that information. A new criminal offence of knowingly or recklessly supplying false or misleading information in response to a requirement imposed on an existing operator by virtue of this section is also created.

Clause 40: Power to make traffic regulation orders

107.     This clause inserts a new subsection (3B) into section 1 of the Road Traffic Regulation Act 1984. Subsection (3A) of that section enables a local traffic authority in England and Wales to make a traffic regulation order (under that section) in respect of a road for which the Secretary of State is, or the Welsh Ministers are, the traffic authority, with their consent, if that order is required to provide facilities under a quality partnership scheme. ¹⁴ The effect of the amendment is to extend this power to traffic regulation orders providing facilities pursuant to a quality contracts scheme.

¹⁴ A traffic regulation order is an order made by a traffic authority to regulate use of a road. It may be made to avoid danger to road users, to prevent damage to the road, to prevent or facilitate the use of the road by certain classes of road user, to preserve amenities, or for environmental reasons.

Clause 41: Competition scrutiny of functions and agreements relating to buses

108.     This clause substitutes a new section for section 153 of the TA 2000. Section 153 introduces Schedule 10 to that Act, which applies a competition test to the exercise of functions by a local transport authority relating to quality partnership schemes, ticketing schemes and subsidised local services. The effect of the amendment is to apply a separate competition test and enforcement regime to voluntary partnership agreements (as defined in the substituted section 153) and certain other bus-related agreements, in place of provisions in Chapter 1 of the Competition Act 1998. Subsection (3) provides for the amendment of Schedule 10 to the TA 2000 by Schedule 2 to the Bill.

109.     Schedule 2 amends existing provisions in Schedule 10 to the TA 2000, and also inserts additional paragraphs which will form a new Part 2 of that Schedule. The amendments to what is now Part 1 of Schedule 10 include a repeal of the provisions under which an application may be made to the Office of Fair Trading for a decision as to whether the exercise of certain local authority functions meets the competition test.

110.     Part 2 applies a modified form of the competition test in the Competition Act 1998 to voluntary partnership agreements, and to certain other agreements, where the object or effect of those agreements is the restriction, prevention or distortion of competition in the market for provision of bus services.

111.     The agreements to which the test will apply are:

• agreements between the local authority and more than one operator ("voluntary multilateral agreements");

• agreements between the local authority and one operator ("voluntary bilateral agreements") if, when taken together with one or more other such agreements, they would have an effect on competition; and

• agreements between bus undertakings, decisions by associations of bus undertakings or concerted practices by bus undertakings, where the agreement, decision or practice in question has been certified by a local transport authority in accordance with paragraph 18(4) of the amended Schedule 10.

112.     Paragraph 19 of the amended Schedule 10 provides that price-fixing agreements cannot be subject to the provisions in Part 2 of Schedule 10; such agreements would instead continue to fall to be considered within the provisions of the Competition Act 1998.

113.     The Schedule provides that where an agreement is subject to this competition test, the prohibition in Chapter 1 of the Competition Act 1998 on agreements, decisions or concerted practices that would prevent, restrict or distort competition does not apply. The modified competition test applies in place of the provisions of the 1998 Act. The Schedule also applies investigation and enforcement powers of the OFT as set out in the Competition Act 1998, with the exception of the power to impose financial penalties, to relevant agreements which do not meet the competition test in Part 2 of this Schedule. The provision includes power for the Secretary of State to modify the application of relevant investigation and enforcement powers in the Competition Act 1998 in respect of agreements subject to this revised competition test. That power could not, however, be used to empower the OFT to impose financial penalties.

114.     This clause extends to England and Wales.

Part 4: General provisions relating to passenger transport

Clause 42: Detention of certain PSVs used without PSV operators' licences

115.     Schedule 1A to the Goods Vehicles (Licensing of Operators) Act 1995 enables regulations to be made permitting an authorised person to detain a goods vehicle and its contents in circumstances where the person using that vehicle did so in contravention of the requirement to have an operator's licence for that or any other vehicle. The Goods Vehicles (Enforcement Powers) Regulations 2001 came into force on 4 January 2002.

116.     Subsection (1) makes a corresponding provision for the unauthorised use of passenger vehicles adapted to carry more than eight passengers as public service vehicles (PSVs). It inserts a new section 12A into the PPVA 1981, which gives effect to a new Schedule 2A to that Act (inserted by subsection (2)). The content of new Schedule 2A to the PPVA 1981 is contained in Schedule 3 to the Bill. The purpose of new Schedule 2A is to empower the Secretary of State to make regulations to facilitate the detention of certain PSVs used in contravention of the requirement to hold a valid PSV operator's licence. These provisions are based on the ones which already apply to goods vehicles, as described above.

117.     This clause and the Schedule extend to Great Britain.

Clauses 43 to 46: Registration of local services

118.     These clauses amend provisions in the TA 1985 relating to the registration of local services (as defined in section 2 of that Act) and the determination of traffic regulation conditions. They extend to England and Wales.

Clause 43: Determination of applications for registration where restrictions in force

119.     Clause 43 amends section 6 of the TA 1985 (registration of local services) to give effect to new section 6A of that Act which it inserts. That section makes provision in respect of applications to register local services in areas where a quality partnership scheme has been made, and that scheme includes restrictions on the registration of local services (see the note in respect of clauses 13 and 14 in paragraphs 69ff. above).

120.     The new section 6A prescribes the procedure to be followed when such an application is received. The traffic commissioner is required to give notice of the application to relevant local authorities and operators. Where authorities or operators make representations in response to that notice the traffic commissioner must decide, after following the prescribed procedure, whether the effect of accepting the application would be detrimental to the quality partnership scheme. In so doing, he must apply the registration criteria contained in the scheme. Where the traffic commissioner decides that such a registration would be detrimental, he may refuse the application, require the applicant to amend it or, where the applicant has not already done so, require the applicant to give an undertaking under section 118(4) of the TA 2000 (effect of scheme) that he will provide services in accordance with standards specified in the scheme. The provisions provide a right of appeal to the Transport Tribunal against the decision of the traffic commissioner.

Clause 44: Applications for registration where quality contracts scheme in force

121.     This clause amends section 6 of the TA 1985 (registration of local services) to give effect to new section 6B of that Act which it inserts. That clause provides for the registration of services within the area of a quality contracts scheme in certain circumstances, as an exception to the general rule (contained in section 129(1)(a) of the TA 2000), that such services cannot be registered in those areas.

122.     New section 6B provides that where an operator wishes to provide, in the area of a quality contracts scheme, a service otherwise than under a quality contract he may apply to register that service with the traffic commissioner. The traffic commissioner on receiving the application must consult the authority or authorities that made the quality contracts scheme. The traffic commissioner may not accept the registration unless, within a prescribed time, the authority certifies that the provision of the proposed service will not have an adverse effect on the services provided under quality contracts.

Clause 45: Traffic regulation conditions for anticipated traffic problems

123.     Clause 45 amends section 7 of the TA 1985 (application of traffic regulation conditions to local services subject to registration under section 6). Under the existing legislation a traffic commissioner can impose traffic regulation conditions on the providers of local services when asked to do so by the traffic authority in relation to a particular traffic problem. Such conditions can be imposed only where the traffic commissioner is satisfied that they are necessary in order to prevent danger to road users, reduce severe traffic congestion, or to reduce or limit noise or air pollution.

124.     The effect of the amendment is to extend the circumstances in which a traffic authority may ask the traffic commissioner to exercise those powers to situations where that authority reasonably foresees that a traffic problem is likely to arise.