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Mr. Clive Betts (Sheffield, Attercliffe) (Lab):
I congratulate my hon. Friend on his new post. I welcome the amendments and new clauses that the Government have tabled. They
are very much in the spirit of local responsibility and local accountability, and that is what Labour Members believe in. Does he have any idea of how long the board’s deliberations might take? Will he assure us that, as part of those deliberations, there will be no requirement to go back to any of the operators to seek their views on the board’s comments, and that if there is a discussion between the board and the transport authority, there will be no obligation to involve the operators in it?
Paul Clark: I thank my hon. Friend for his comments in welcoming me to my post. How long the process takes will depend, in part, on the nature of the scheme. Obviously, a city-wide scheme will take longer than a localised scheme because of the advance work needed build up to having a scheme to work with, regardless of any provisions in the Bill; the time needs to be taken for that to be done.
The Secretary of State will have the power to specify time limits for boards and we will consult on the time limits in the next few months. As I recall it, my right hon. Friend the Member for Doncaster, Central indicated in Committee that we are considering time limits of six weeks and, as I have said, allowing invitation to tender to happen while the appeal is taking place. Such an approach will focus minds on ensuring that the goal is to deliver quality bus services that are fit for purpose in our cities and towns, and fit for passenger use today.
I hope that my comments have reassured hon. Members that the amendments will address the key concern expressed in Committee that it should be for elected local authorities to take the decision on whether quality contracts schemes should go ahead.
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Mr. Betts: I was trying to tease an answer out of my hon. Friend on a second question. Is it the case that once the transport authority has consulted and set out a scheme, the board will look at it? From then on, the discussion is between the board and the transport authority, without the operators having the right to be consulted again or have further input into the process.
Paul Clark: My hon. Friend is right that there would be no requirement to consult the operators again. In fact, the QCS boards will consider the scheme only after the consultation process, when everyone has had the opportunity to participate.
Ian Stewart (Eccles) (Lab): I thank my hon. Friend for his clear delineation of the role of the QCS boards, but can he assure me that any future guidance given to them will reiterate their role as being to determine whether a scheme has met the statutory criteria, not whether it is the only or even the best scheme to deliver best practice on buses?
Paul Clark: The role of the QCS boards is clearly laid out. They judge whether due process has been followed and whether a scheme meets the five public interest criteria. It is not their role to make a judgment about a local authority’s overall transport policies. I hope that my hon. Friends and the Liberal Democrats will conclude that the Government amendments address their concerns and will therefore not seek to press them.
Government amendments Nos. 124 to 128 deal with TUPE and pensions issues. There was a good debate in Committee about the ways in which a quality contracts scheme could affect bus workers in the area concerned. I agree wholeheartedly with those who argued in Committee that we need to ensure that appropriate protections are put in place to safeguard bus workers’ interests. That is why the Government tabled amendments in the other place, so that the protections afforded by the TUPE regulations would apply where employees transfer to a new employer on the coming into force of a quality contract. Those amendments were a considerable advance on the Transport Act 2000 as it was originally enacted, which contained no provisions about TUPE. Nevertheless, we listened with great care to the points raised in Committee by several hon. Members, and especially by my hon. Friend the Member for Manchester, Blackley (Graham Stringer). In light of that debate, I am pleased to be speaking to Government amendments Nos. 124 to 128 today. These amendments will further enhance the protections that the Bill already provides.
Government amendment No. 124 describes an additional situation that is to be treated as a “relevant transfer” for the purposes of the TUPE regulations—that is to say, an additional situation where the protections of TUPE will apply. When a local authority has awarded a quality contract to somebody other than the incumbent operator, there is a risk that the incumbent might decide to withdraw from the local bus market before the contract comes into force. That could lead to a short-term gap in bus service provision, which the local authority may well decide to fill by means of a subsidised service agreement with another operator. The amendment provides for such a situation to be treated as a “relevant transfer” for the purposes of the TUPE regulations, so that the incumbent operator’s workers can benefit from the same protection as the Bill already provides in relation to services that transfer straight to the quality contract operator. Government amendments Nos. 125 and 126 are consequential on Government amendment No. 124.
Ms Angela C. Smith: I echo the comments made a moment ago by my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts), and welcome my hon. Friend the Minister to his role on the Front Bench. I also warmly welcome the Government’s efforts to ensure that TUPE provisions apply when a quality contract is introduced. Will my hon. Friend confirm that where the amendment refers to the
“coming into force of a quality contract”
it means the point at which the scheme comes into operation?
Paul Clark: That is my understanding of the exact operation of the amendment. It affords protection from that very moment.
Government amendment No. 127 is a technical amendment, intended to provide certainty that the pension protections afforded by sections 257 and 258 of the Pensions Act 2004 will apply when there is a TUPE transfer in connection with a quality contracts scheme in exactly the same way as those protections apply to a normal TUPE transfer. Those sections of the Pensions Act set out the minimum level of pension provision that must be made available to a person who is subject to a TUPE transfer and who had pension rights before that transfer.
Amendment No. 128 is also about pension protection. It provides a power to make regulations to specify pension protection requirements over and above that afforded by the Pensions Act. It also places a duty on the Secretary of State to exercise that power to ensure that workers involved in the provision of bus services in the scheme area before the scheme was made do not lose out in pension terms as a result of the scheme.
The Government’s intention is to draw on the existing arrangements that apply where a local authority outsources activities that were previously undertaken by the authority in house. Under those arrangements, workers who transfer from the authority to the contractor are granted rights to acquire pension benefits that are the same as, or count as being broadly comparable to or better than, the pension rights that they had before the transfer. Our amendments will provide a similar level of protection.
The detail of how that protection will work will be set out in regulations, which is consistent with the local authority analogy, where the details are set out in directions. That will enable the Government to consult fully with trade unions, local authorities and bus operators before finalising the detailed provisions. The amendments provide, on the face of the Bill, a clear minimum level of protection that future regulations will have to provide for particular employees.
Ian Stewart: I am pleased to hear about the developments that the Government have placed in those amendments, but will my hon. Friend clarify that the trade unions can now enter into discussions and negotiations with the employers about pensions on the basis that he has outlined?
Paul Clark: We are making that provision in the Bill, and as I said, we will be consulting on our guidance and so on with trade unions and bus operators alike to take the provisions forward. They are clearly laid out on the face of the Bill to give a true minimum position.
I shall now turn to Government new clause 9, together with Government amendments Nos. 121 and 122. In Committee, my hon. Friend the Member for Manchester, Blackley and other hon. Members made an eloquent plea that passenger transport executives that are running a quality contracts scheme should have the power to take over operating the buses if the contractor goes into liquidation or for some other reason is no longer able to provide services under the quality contract before that contract is due to end. They accepted that such a power would not be easy to use and would be used only in an emergency, and they drew attention to similar powers with regard to franchised railway services. My right hon. Friend the Member for Doncaster, Central promised to consider the matter further in the light of the debate. The Government have now done so, and I am pleased to have moved new clause 9.
My hon. Friends have also tabled amendments similar to those that they tabled in Committee. There is not an enormous difference between the two sets of amendments, so I shall describe those tabled by the Government. They consist of a new clause whose effect would be to empower a local transport authority to operate interim services, and two minor consequential amendments. The proposed new power would allow a local transport authority to provide services as an operator of last resort in a quality contracts scheme area. That would be
possible only when a quality contracts operator ceased to provide the contracted services before the quality contract was due to expire. The power could be exercised by the local authority only for a time-limited period. In one respect, the power goes further than amendments Nos. 98 to 100, tabled by my hon. Friends, as it would apply to any local transport authority in England or Wales that has made and brought into force a quality contracts scheme, whereas their amendments would apply only to areas with passenger transport executives. It is nevertheless a modest and limited power; it applies in only a very specific set of circumstances, and it certainly would not give local authorities a general power to run bus services.
Mr. Clelland: I entirely understand where my hon. Friend is coming from, and new clause 9 is very welcome. He says that the power will be time-limited. What will happen if the time runs out, but a new operator has not been found?
Paul Clark: I thank my hon. Friend for that intervention. The power is time-limited; the proposal is that the time should be limited to nine months, with the option of having a further three months thereafter. It is, in our opinion, highly unlikely that a transport operator would not be found, because if things got to that stage, I suspect that the proposed scheme would not have met other criteria. Our genuine belief is that it is highly unlikely that we would end up in the situation that he describes.
Norman Baker: The Liberal Democrats welcome the new clause as a sensible step in the right direction. My only question is about the difference between the nine-month period and the 12-month period to which the Minister referred. The last three months are subject to approval by the traffic commissioner. Is the Minister planning to publish guidelines on the circumstances in which the traffic commissioner would be empowered or encouraged to give that three-month extension? As the times—nine and 12 months—are quite limited, presumably any discussion with the traffic commissioner would have to begin some time before the nine-month limit was up.
Paul Clark: Obviously, in the situation that we are describing, the traffic commissioner would watch things closely in the interim period in which a local authority was acting as an operator of last resort. As I have indicated, we are consulting on how provisions in the Bill will operate, and that is another way in which consideration will be given to the matter. Now that my hon. Friends have heard what I have said about the new clause—in particular, now that they know that it would apply not just to PTEs but to local transport authorities elsewhere in England and Wales—I hope that they will be persuaded not to press amendments Nos. 98 to 100.
Finally, I turn to Government amendments Nos. 123 and 129 to 138. Clause 44 will, in certain circumstances, enable local bus services to be registered in an area covered by a quality contracts scheme. The amendments are essentially technical amendments to improve the clause. They look rather complicated—they certainly did to me—but the intention is fairly straightforward; it
is to set up a procedure for varying bus registrations when, exceptionally, they apply within the area of a quality contracts scheme. The general rule is that bus operators cannot register services in the area of a quality contracts scheme, but clause 44 provides a procedure for them to do so if the authority that made the scheme is satisfied that the proposed service would not be detrimental to the scheme. A service that has been registered under those new provisions may subsequently be varied or cancelled. Clause 44 makes no provision for that, so the normal process for varying registrations under section 6 of the Transport Act 1985 would apply. Under the Bill as it stands, that means that it would be possible for an operator to register a service that the local transport authority is happy to accept, but then to vary it in a way that the authority would not be happy with.
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Clause 44 as drafted does not adequately address the issue, and neither does the Transport Act 2000. The purpose of this group of amendments is to rectify that. Some variations to the registrations—probably most of them—would be perfectly acceptable to the authority that approved the service in the first place, but others could totally change the nature of the service in ways that the authority could not have anticipated and which would have an adverse effect on services within the scheme. It is only right that the authority should have an opportunity to comment before the traffic commissioner accepts the variations.
The Government have considered whether a similar procedure for cancelling registrations is also needed, but have concluded that it is not. As the local transport authority did not make provision for these services in its quality contracts scheme, it would presumably not be detrimental to the scheme if they were withdrawn. If the authority thought subsequently that the services were valuable, it would have the option to vary the scheme so as to include them. The amendments therefore deal only with service variations.
I have spoken at some length about the amendments, but I make no apology for having done so. They are significant amendments, nearly all of which have been tabled in response to right hon. and hon. Members in the Public Bill Committee. I conclude by thanking all those who have contributed to the development of the Bill. I hope the amendments will substantially improve the Bill, and I hope right hon. and hon. Members in all parts of the House will support them.
Stephen Hammond (Wimbledon) (Con): I welcome the Minister to his new role and commend him for his courage in taking on the Bill at this stage. I agree entirely with the intervention made by the hon. Member for Lewes (Norman Baker).
The Government’s management of the process and of this part of the Bill has been shambolic, illogical and discourteous—shambolic because in the past 10 days they have produced no fewer than 165 new amendments and 12 new clauses, and illogical because a number of those new clauses make a nonsense of what the previous Minister told us in Committee was absolutely necessary. Some of the concerns that she raised to objections to the approvals board and some of the justifications that she gave us for the approvals board have proved to be a
nonsense. Finally, the Government’s management of this part of the Bill has been discourteous to the House. We finished consideration of the Bill in Committee on 8 May. The Government chose to wait until 17 October to produce the bulk of their amendments. Last Thursday, the very last business day before Report, they produced another three amendments and another new clause.
Some of the amendments in this large group are substantive, some are technical and some are consequential. A number of amendments have been tabled by my hon. Friends and me to Government new clause 9. I understand the necessity for the new clause, if it is a clause of last resort. The Minister has just assured us that he sees it as such, and that there is no chance of its being a back-door way for local authorities to start running bus companies again.
There is a real possibility that bus operators, particularly small operators, may go out of business in the current climate. We are already seeing operators struggle as a result of the iniquitous distribution of funds for the concessionary fares scheme. The underfunding of the national scheme is threatening the scheme and already driving bus services off the road. My hon. Friend the Member for Scarborough and Whitby (Mr. Goodwill) and I were both contacted last week by Mr. Peter Shipp, the chairman and chief executive of the East Yorkshire Motor Services Group, who described the difficulties facing his firm. He spoke of “disastrous consequences” and a
“situation that is getting worse, not better”
because of the underfunding of the national concessionary scheme.
Furthermore, in an age of rising fuel costs and the uncertainty surrounding the bus service operators grant, more small operators will find it difficult to survive. The clause provides for that and for the scenario where an operator gets into trouble because it is tied into a quality contract and can no longer fulfil its obligations. If an operator goes out of business, it is clear that those who use its services need to be protected. It is therefore right that local authorities should be able to step in as operators of last resort, but only for a limited period. Provided that it is for the limited period that is the premise of the Bill, I understand the necessity for it and will support it. However, I am concerned that people may use it as an excuse to return bus services for a prolonged period to be run by local authorities, thus depriving the sector of the private sector funds and innovation it needs if it is to flourish.
I see the necessity for the new clause, but it must not be a back-door route. Normal services should be resumed as quickly as possible in the event of an operator going out of business, and my new amendments (a), (b), (c) and (d) would place an obligation on the local authority to invite tender for the provision of replacement services no later than a month after the termination of the original service. Amendment (b) is of particular significance because it would firmly place an obligation back on the local authorities to ensure that they did not take their time, that services continued and that the tender was put out. That strikes me as reasonable and generous.
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