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It cannot be beyond the organisation of local authorities—be they local transport authorities or councils—to arrange the tender for a new route within a month. Failure to do so could jeopardise the service and
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the route, and they would have to accept that urgent action should be initiated. My amendments (g), (h), (i) and (j) would ensure that once arrangements had been made for a replacement service to begin, the authority would cease to be the operator within six months. That is a sensible and generous period; after all, the Minister has just reassured us that he does not expect anyone not to wish to be involved in the tendering process.

Amendments (e) and (f) are inspired by my firm belief that partnership arrangements are considerably preferable to quality contracts. As we have seen in a number of cases, partnerships have brought innovation and good and efficient services, and they are proven to work. When an operator has failed, for whatever reason, to fulfil its obligations under a quality contract, surely it is irresponsible and short-sighted to replace that quality contract with another. That method has been tried and it has failed. If something is broken, why would we replace it using the same broken method? That would be illogical. I suggest that we at least provide the option of it being replaced with something that works. There should be an option to replace a failed quality contract with a voluntary or statutory quality partnership.

Norman Baker: All three parties agree that we are discussing a matter of last resort. However, I am struggling to understand how on the one hand we can tell local authorities to look at alternatives to what was in place, while on the other trying to reduce the time that they have to discuss the matter before they have to go out to tender again.

Stephen Hammond: I do not think that the local authorities would have any difficulty in putting in place a statutory quality partnership or a statutory quality contract. Like me, the hon. Gentleman knows that if local authorities wish to operate a route, they will do so and get a tender for it very quickly.

Quality contracts have seemed to be failing. I have looked for hard evidence of where local authorities are looking to implement quality contracts because they think that there will be an improvement over and above quality partnerships. I have seen no evidence of quality contracts having delivered anything more beneficial than a quality partnership has.

Ms Smith: I thank the hon. Gentleman for giving way. If the quality contracts under this new law prove successful, as Labour Members truly believe they will, will the hon. Gentleman’s party commit itself to not repealing this legislation if it forms a Government in future?

Stephen Hammond: I thank the hon. Lady for that intervention. She knows the answer, as I made my position clear throughout the whole Committee stage, just as my hon. Friend the Member for Scarborough and Whitby made his clear on Second Reading. We do not believe that quality contracts will be successful. We believe that they will be detrimental, and a future Conservative Government will repeal them.

Ms Smith: My point was this: if Labour Members are right and they prove to be successful, will the Conservatives change their minds?

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Stephen Hammond: As I said, we do not believe that they will be successful. Throughout the passage of the Bill, I have asked for someone to produce evidence of any reason why a quality contract would provide benefits over and above a voluntary partnership or a statutory quality partnership, but no passenger transport authority from anywhere in the country, or anyone else, has produced that evidence.

Norman Baker: If the Conservatives form a Government, what will be their position if a quality contract has been entered into by a local authority? Will they require it to withdraw from that contract?

Stephen Hammond: The hon. Gentleman and I share one ambition—that the next general election should be fairly soon. Even if it were 18 months away, I would advise that quality contracts should not be entered into.

I accept that new clause 9 is necessary, but it would be much improved by the amendments that I have outlined. We will test the will of the House at the appropriate time, particularly on amendment (b), which would give a clear statement and clear guidance on this point.

I turn to Government new clauses 13 and 14 and my amendments thereto. The Minister took some time to talk about scrutiny boards. This is undoubtedly the most controversial element of the Bill, and it makes what we have seen today all the more astounding. We spent many sittings of the Public Bill Committee discussing the proposed approvals boards for quality contracts schemes. The then Minister, the right hon. Member for Doncaster, Central (Ms Winterton), went to great lengths to spell out the benefits of approvals boards, telling us that

We were told that approvals boards were more flexible, would help to introduce quality contracts, and aided local autonomy. Since then, operators, local authorities and other stakeholders have formed their response to the Bill around the concept of approvals boards, yet at the very last minute the new Minister has introduced a whole new approvals process. I cannot be alone in being surprised and dismayed by this last-minute change of heart. Over the past 12 months, I have had countless meetings with various stakeholders to discuss the merits and demerits of approvals boards.

Graham Stringer (Manchester, Blackley) (Lab): As always, I am listening carefully to the hon. Gentleman. Does he accept that he is being inaccurate when he says that local authorities have formed their plans on the basis of what was said in Committee? Passenger transport executives and authorities, and other transport authorities, have continued to lobby the Government for something along the lines of these Government amendments, so his comments are completely inaccurate.

Stephen Hammond: The hon. Gentleman might think so, but I do not agree. Several local authorities have formed a response on this basis. Would we have had these amendments if this Report stage and Third Reading had been on 8 July, as they were due to be? I do not think so. We have been given just a week to examine these proposals. What is the point of having long
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consultations if the goalposts are to be shifted at the 11th hour? The Government’s conduct over the summer beggars belief. We are all prisoners of their whims, but not, I hope, for much longer.

Let us consider some of the detail that the new Minister described. In his letter to the Chairman of the Public Bill Committee, he said that the amendments would replace existing provisions about quality contracts and put in place quality contracts schemes scrutiny boards. We have not even had a chance to see whether the approvals boards will work, but we are replacing them with scrutiny boards. If approvals boards were so necessary in May, why are they now redundant? The Minister seems to be making a fool out of the previous Minister: his amendments wreck her “much needed protection” of May. The amendments undermine the credibility of his Department. If a Department is thinking one thing in May, why would it suddenly be thinking another thing in October? It has listened to one set of legal advice in May, and is now contradicting itself after listening to another set of legal advice in October.

4.30 pm

The assertion that new quality scrutiny boards

may or may not be true, but it does not seem very true. If the Government wanted to respond, they could have done so in any of the numerous sittings of the Committee, but they did not. It simply will not do. If the approvals board would have reduced the risk of a judicial review, it seems only logical—and the new Minister did not answer this point—that quality contracts scrutiny boards will increase that risk. A quality contracts scrutiny board offers only a non-binding opinion, potentially allowing the will of local authorities to prevail whatever happens. It brings into serious doubt the Minister’s comments in his letter about

The boards clearly do not do that, and there is a clear prospect of many more costly judicial reviews.

The Minister claims that if a quality contracts scrutiny board provides an opinion that the authority’s proposals meet the statutory public interest criteria, the rights of appeal will be restricted to points of law, but he forgets the law that his Government passed. There is considerable legal opinion suggesting that the Human Rights Act 1998 will simply not allow that, and legal opinion has been given saying that that point will be tested time and again in the courts. If operators can appeal on points of fact at any stage, is it not likely that each new quality contract will be different, and challengeable on each point of fact?

It seems fairly clear that the Government’s change of heart on this matter is nothing to do with ensuring that the much needed protection the previous Minister described is in place, but is more designed to appease and pacify those who still live under the illusion that re-regulation is the golden ticket to increased bus patronage. I cannot help but suspect that the new clauses will not have the impact the new Minister desires, and will lead to a huge number of costly judicial reviews for operators, and more importantly, for local authorities.

Paul Clark: The provision of the boards and the inclusion of due process and the five public interest criteria is about recognising the balance needed between
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the legitimate requirements of operators currently running those services and—quite rightly—the decision-making process of democratically elected authorities. The due process and the five public criteria tests are intended exactly to ensure that minds are focused and that we avoid long, drawn-out judicial review processes.

Stephen Hammond: Yet again, the Minister has not answered my point about the Human Rights Act. I am sure that we will come to that again later.

There are a number of further questions that the Minister needs to answer if he is to convince anyone that the scrutiny boards are going to work. What is the purpose of such a board if it has no powers? We are told that its role is advisory, which is fine, but if in practice the board throws out a proposed scheme and the authority seeks to go ahead with it anyway, is it not true that an appeal can be made to the Transport Tribunal? Is it not therefore the case that the Transport Tribunal holds the ultimate power? How will the QCS boards carry out their functions? If an authority says to a board, “Our scheme will increase patronage by 5 per cent.”, how will the quality contracts scrutiny board determine whether that is a valid prediction? Will it have to conduct as thorough a consultation as the authority, or does the Minister claim that due process does not involve consultation? In what circumstances does he believe that the outcome of an application for a quality contracts scheme will be different under the new arrangements from that under the previous arrangements, or, indeed, from that under the arrangements that the hon. Member for Manchester, Blackley (Graham Stringer) proposes in his amendments? Is it not true that the same unelected people who would have sat on the approvals board will now sit on the tribunal? Is it not therefore unlikely that they will reach a different decision?

I repeat that concerns have been expressed for a long time that the provisions that we are considering might contravene the Human Rights Act and will be challenged in the courts. I fear that the new arrangements that the Minister is attempting to introduce today will make a possibility a probability. The new clauses are so important and so potentially detrimental to bus services that I will, with your permission, Mr. Deputy Speaker, test the will of the House at the appropriate time, especially with regard to new clause 13.

We went into great detail in Committee about the composition of the boards, and my concerns remain. I urged the Government to ensure that the people on the boards were appropriately qualified and experienced and, of course, independent. I also urged them to ensure that the Secretary of State could not interfere too much in the boards’ processes and procedures. I tabled a host of other amendments, which were designed to fine-tune the role and procedures of the boards. I do not intend to revisit all those issues, because we do not have time, but the amendments would have improved the Bill.

Let me explain the rationale behind the amendments that I have tabled to the new clauses. Amendment (a) to new clause 14 would ensure that when a local authority began to consult on its quality contracts scheme, it sent a copy of the consultation document to the QCS board. It would also ensure that, at the end of the consultation procedure, the board was sent copies of all further documents that the authority issued as part of the
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consultation—for example, replies to any responses that it received. Those changes are essential if the board is to take a complete and fair view of the consultation that has been carried out. After all, that is one of the board’s main roles. I hope that the Minister accepts that the amendment is fair and uncontroversial. It would not place a significant burden on local authorities and would greatly help the QCS board to reach a fair decision about the consultation. I cannot foresee any reason for the Minister refusing to accept the amendment.

Amendments (b) and (c) would slightly extend the QCS board’s mandate. If a board decided that the local authority that proposed a quality contract had not fulfilled its public interest criteria, it should be able to recommend that the authority consider scrapping the scheme. If the board decided that the local authority that proposed a quality contract had not fulfilled the Bill’s the requirement to consult, it should be able to recommend remedial action to ensure compliance. These amendments would preserve the advisory function of the board while allowing local authorities to benefit from the expertise of those who serve on the scrutiny board.

I deal now with the amendments to new clause 15. There are two overriding reasons for my opposition to quality contracts schemes. First, the innovation of private sector investment working in partnership with local authorities throughout the country has meant that bus services improved in quality and quantity. I am worried that quality contracts will reverse that process, and that the travelling public will suffer. Let us remind ourselves that private investment in the bus services slowed the decline in patronage.

Mr. Clelland: The hon. Gentleman seems to be lauding the success of deregulation and privatisation, but patronage in passenger transport authority areas has halved since bus deregulation. Although there has been a slight increase of 9.5 per cent. over the past 10 years, most of that is down to increases in patronage in London. The situation outside London is no better—in fact, it is a lot worse—than it was in 1985.

Stephen Hammond: Yes, but there are two points about that. One is that patronage in county council areas has increased. More importantly, 86 per cent. of the decline in bus patronage since 1950, which is when bus patronage started, happened while buses were still regulated, not in the period of deregulation.

Mr. Paul Truswell (Pudsey) (Lab): Will the hon. Gentleman give way?

Stephen Hammond: I am sure that the hon. Gentleman will make exactly the same point, but I am happy to give way.

Mr. Truswell: The hon. Gentleman is very gracious, but I am not going to make quite the same point. Given his party’s obvious antipathy to any form of regulation, no matter how diluted through quality contracts, will he extend that principle to London? Does he plan to tinker with a system that has delivered such great improvements in bus transport for passengers in the capital?

Stephen Hammond: My party is not opposed to all regulation. As the Minister does not know, but as his predecessor does, I supported the statutory quality
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partnership scheme throughout Committee and on Second Reading. As the hon. Member for Pudsey (Mr. Truswell) knows, the issue in London is a devolved matter and not something over which we have competence. However, my constituents in Wimbledon would say that the huge increases in the precept that the previous Mayor exacted from them were the reason why there might be more buses on the road, not regulation. There is no clear evidence that regulation has brought better bus services anywhere.

David Howarth (Cambridge) (LD): What has happened in Cambridge is often cited as an example of the success of partnerships. Nevertheless, the increase in bus patronage in Cambridge had rather more to do with the geography of an historic town, which allowed the county council more scope in restricting car traffic, and with the city council, unusually for a district council, offering a subsidy for buses. People in Cambridge would not reject the option of a quality contract, as the hon. Gentleman seems to be doing, which would have the additional benefit of allowing them to control fares. If a bus company has a local monopoly, the way it makes money is by restricting services and increasing fares.

Stephen Hammond: I am sure that the hon. Gentleman is looking forward to explaining to his constituents why a quality contract is necessary when all the benefits could be derived under a statutory quality partnership.

David Howarth: The point is that local authorities would benefit from having the option of moving to a quality contract if the current improvements continued, especially if fares continued to be high and if the volume of services was restricted. Having the option is fantastically beneficial, even if local authorities do not use it.

Stephen Hammond: But the hon. Gentleman has just given the lie to that argument. Everything that local authorities wished to achieve under a quality contract could be achieved under either a voluntary partnership or a statutory quality partnership. That is the key point.

The other reason I am concerned about quality contracts is that there is a chance that operators will challenge them in the courts. Quality contracts have damaging implications, the first of which is financial. In this day and age, the last thing that local authorities want is heavy legal costs. Quality contracts also have the potential to damage the relationship between the local authority and the bus operator. It is essential that that relationship should be good if good services are to be provided.

Proposed new section 127A(2) of the Transport Act 2000 says that anyone who was or should have been consulted by a local authority wishing to make a quality contract scheme has the right of appeal to the Transport Tribunal. Under normal circumstances, that could be done on either a point of law or a question of fact. However, new clause 15 says that if the QCS board has decided that a local authority has followed due process, the appellant loses that right.

As I have said before, that is likely to be tested in the courts under the Human Rights Act. My amendments therefore restore the much needed protection that the previous Transport Minister talked about when she did
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not want judicial reviews. My amendments (a) and (b) to the new clause would end that discrepancy and restore the right of appeal on a question of fact. That would be a major step forward in reducing the possibility of a judicial review.

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