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Session 2007 - 08
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Local Transport Bill

Local Transport Bill [Lords]

The Committee consisted of the following Members:

Chairmen: David Taylor, † Ann Winterton
Baker, Norman (Lewes) (LD)
Betts, Mr. Clive (Sheffield, Attercliffe) (Lab)
Carswell, Mr. Douglas (Harwich) (Con)
Hammond, Stephen (Wimbledon) (Con)
James, Mrs. Siân C. (Swansea, East) (Lab)
Kidney, Mr. David (Stafford) (Lab)
Knight, Mr. Greg (East Yorkshire) (Con)
Laxton, Mr. Bob (Derby, North) (Lab)
Leech, Mr. John (Manchester, Withington) (LD)
McCarthy, Kerry (Bristol, East) (Lab)
Scott, Mr. Lee (Ilford, North) (Con)
Smith, Ms Angela C. (Sheffield, Hillsborough) (Lab)
Stewart, Ian (Eccles) (Lab)
Stringer, Graham (Manchester, Blackley) (Lab)
Watts, Mr. Dave (Lord Commissioner of Her Majesty's Treasury)
Winterton, Ms Rosie (Minister of State, Department for Transport)
Wright, Jeremy (Rugby and Kenilworth) (Con)
John Benger, Annette Toft, Committee Clerks
† attended the Committee

Public Bill Committee

Thursday 24 April 2008


[Ann Winterton in the Chair]

Local Transport Bill [Lords]

1 pm
The Chairman: I welcome everyone back to the Committee this afternoon. I see that not much progress was made this morning, but there it is.

Clause 12

Development of policies by ITA no longer joint duty with district councils
Question proposed, That the clause stand part of the Bill.
The Minister of State, Department for Transport (Ms Rosie Winterton): As I said this morning, clause 12 will result in the duties to develop local transport policies and to produce local transport plans applying just to the integrated transport authority—following consultation with its constituent councils—in each integrated transport area. The changes will help to promote a more integrated approach to transport planning across major conurbations outside London. The clause relates to transport planning duties in the six metropolitan counties. In the metropolitan counties, the duties in the Transport Act 2000 to develop transport policies and to produce a transport plan setting out those policies sit jointly with the passenger transport authority and the metropolitan district councils.
The wording of the duty to develop transport policies is proposed to be amended by clause 8. As amended, the duty on local transport authorities will be to
“develop policies for the promotion and encouragement of safe, integrated, efficient and economic transport.”
A further duty in the 2000 Act is for local transport authorities to
“carry out their functions so as to implement those policies.”
Clause 12 reflects a shift in responsibility towards integrated transport authorities—the new name that will be given to passenger transport authorities by the governance part of the Bill. The clause is thus an important plank in our policy for the Bill and I hope that the Committee accepts it.
Question put and agreed to.
Clause 12 ordered to stand part of the Bill.

Clause 13

Quality partnership schemes
Stephen Hammond (Wimbledon) (Con): I beg to move amendment No. 40, in clause 13, page 13, line 25, leave out subsection (3).
Good afternoon, Lady Winterton.
This is a probing amendment because, having read subsection (3) several times, I am not sure what it achieves. Under section 114(3)(a) of the 2000 Act, authorities must be satisfied that a quality partnership will “improve the quality of local services provided in the whole or any part of their area, or combined area, by bringing benefits to persons using those services”.
The Bill proposes a change to that: authorities must be satisfied that a quality partnership will
“bring benefits to persons using local services in the whole or any part of their area, or combined area, by improving the quality of those services”.
It seems to me that this is just an exercise in moving words around. The meaning of the provision seems to be exactly the same, so I look to the Minister to explain exactly why the words have been turned round in this fashion.
Ms Winterton: I am grateful for the hon. Gentleman’s explanation of the intention behind the amendment, which was not terribly clear to us at first sight. He is probably quite right in saying that there is a certain moving around of the words and I shall explain why.
Under the 2000 Act, before making a quality partnership scheme, the local authority must be satisfied that the provision of the facilities under the scheme and the provision of bus services to the specified standard will meet one of two requirements. They must either improve the quality of local services by bringing benefits to passengers or they must reduce or limit congestion, noise or air pollution. It is true that, on reflection, the wording in the current legislation seems slightly odd because it is quite difficult to see how services can be improved by bringing benefits to passengers. Surely, it should be the other way round: benefits are brought to passengers by improving services. In effect, the Bill changes that wording around. The amendment would revert back to the original slightly odd wording.
I hope that right hon. and hon. Members agree that the new wording makes better sense and rightly puts the immediate focus on how schemes can be used to benefit passengers. I hope that helps to clarify the position for the hon. Gentleman and that he will withdraw his amendment.
Mr. John Leech (Manchester, Withington) (LD): I take a slightly different view of the Conservative amendment, which appears to go out of its way to make it more difficult to introduce a statutory quality partnership. On Second Reading, the Conservatives appeared to argue that statutory quality partnerships were preferable to quality contracts, but the amendment would make it more difficult to set up a statutory quality partnership.
Stephen Hammond: I made the intent of the amendment clear in my opening remarks. I know that the hon. Gentleman is leading us down a certain path, but there is no point in his saying what he thought I meant when I told him exactly what I meant. I hope he will accept that.
Mr. Leech: I thank the hon. Gentleman for his intervention, but, given what was said by Conservative Front Benchers on Second Reading, I feel that perhaps there may be a little more to the amendment than he has put forward in his speech. It appears that in reality the Tories in Parliament are showing their true Thatcherite colours regarding the provision of bus services. They do not seem to want any changes that would be to the benefit of passengers if it would in any way affect the profits of the operators.
The amendment would mean that an authority must be satisfied that both the provision of facilities and local services of the standard specified by the statutory quality partnership would improve the quality of local services, rather than simply bringing benefit to the people using local services, which is what the Government propose in the Bill. The Government’s wording is slightly more relaxed and will make it much easier to introduce a statutory quality partnership, which will obviously have benefits for local transport authorities and bus operators.
The Conservatives are clearly hopelessly divided on the issue of statutory quality partnerships. They support the idea of statutory quality partnerships in local government, but in this and subsequent amendments they appear to be trying to wreck any opportunity to introduce them. If the interests of the public are paramount—as indeed they should be—the phrase
“bring benefits to persons using local services”
should be sufficient to permit the implementation of statutory quality partnerships.
Stephen Hammond: It would have been easy to fall asleep during the Liberal Democrat contribution. Having explained exactly why I tabled the amendment, it might have been helpful if the Liberal Democrats had simply accepted that rather than trying to prejudge in their own mind why I might have introduced it—one can hear the hon. Member for Lewes behind that oration.
The Minister explained fully exactly why the words have been changed around. As I said at the start, this is a probing amendment to test why the words seem to have been moved around—almost all the same words are being used. I can assure the hon. Member for Manchester, Withington that the intent of the amendment is nothing more than that in this instance. Therefore, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Stephen Hammond: I beg to move amendment No. 41, in clause 13, page 13, line 30, leave out subsection (4).
The Chairman: With this it will be convenient to discuss the following amendments: No. 42, in clause 14, page 14, line 36, leave out subsection (2).
No. 43, in clause 15, page 15, line 3, leave out subsection (3).
Stephen Hammond: The amendments look at some of the provisions of the quality partnership. We are trying to understand the Government’s thought process in detail. From the outset I think we are all agreed that if the Bill is to do anything it should be to increase bus patronage and usage, and for the benefit of passengers. We are all agreed that where partnership has worked it should be followed in other instances, and it is to be congratulated. Statutory quality partnerships are a tool for local authorities and the bus industry. If an operator wanted to produce a service for passengers beyond what is provided for by the quality partnership, the amendments would try to find out whether the quality partnership should restrict the introduction of that service on that route, which in essence is what subsection (4) does. It would allow the authorities to impose restrictions on any local services where such services were believed to be detrimental. I am not sure that there is yet an evidential case to be put to prove whether that might be detrimental to the quality partnership in place.
Ian Stewart (Eccles) (Lab): I thank the hon. Gentleman, and it is good to see you in the Chair, Lady Winterton.
Does the hon. Gentleman accept that what is really meant is the opposite of what he is saying? Does he not understand that our constituents—his too, I am sure—are concerned when a bus operator takes a bus off a remote and perhaps not so viable route, only to run it on the most viable route? That happens regularly and that is what the clause on quality partnerships is about.
Stephen Hammond: That may be what the hon. Gentleman believes. I am interested to hear what the Government believe. If there are viable bus operator services on certain routes that will benefit passenger transport, I want to know why that should not be allowed by the quality partnership. So that bus passengers can benefit, should there not be the opportunity to have more than one service? That is the thrust of my amendments.
Ian Stewart: But how does the hon. Gentleman, the spokesperson for the Conservative party, reconcile that with the fact that some of his own party members—Mr. Greaves, a local authority member, for example—totally disagree with his national party?
Mr. Greg Knight (East Yorkshire) (Con): We need further and better particulars.
Ian Stewart: I am happy to give them.
Stephen Hammond: The hon. Gentleman is referring to a letter written by a retiring councillor, copied to Mr. Greaves, which was leaked to today’s Daily Mirror—ably shown up by the hon. Member for Bristol, East.
Kerry McCarthy (Bristol, East) (Lab): You seem to be implying that the letter was written by one person. I understand that quite a few Tory councillors signed it. Do you have any idea how many people signed?
Stephen Hammond: You are inaccurate. I have seen the letter.
The Chairman: Order. In fact, I do not know how many people signed. The hon. Gentleman might.
Stephen Hammond: Lady Winterton has probably not had the benefit that I have had, which is to have seen the letter. It was signed by one Tory councillor, who is retiring. He is inaccurate in almost all his letter. At the outset he states that he has never had any invitations to London from Tory shadow Transport Ministers. In fact, I have invited him to Parliament twice, and he has accepted the invitation twice. My colleague, the former shadow Secretary of State, my hon. Friend the Member for Epsom and Ewell (Chris Grayling), invited him twice, so he has visited at least twice. One needs to be careful about picking out the sentiments expressed in just one letter.
The Chairman: Order. We have had a little bloodletting and it is about time that we got on with the substance of the amendment.
Stephen Hammond: Thank you, Lady Winterton.
To return to the amendment, I want the Minister to clarify what restrictions might be imposed by local authorities on the registration of services not included within the framework of the quality partnership. Why does she consider it necessary for the traffic commissioners to be told how to do their job? Surely they will be aware of all operational quality partnerships in the relevant area and will not need to be told by the local authority what the impact of accepting or rejecting an individual registration application might mean. Does she agree that there could be a restriction of opportunity for bus passengers because of the provision?
We are keen that the partnerships work and we understand the need for quality partnerships. However, I am extremely doubtful whether restricting services outside the quality partnership will necessarily be beneficial to the Bill’s aim of increasing bus patronage.
Mr. Clive Betts (Sheffield, Attercliffe) (Lab) rose—
1.15 pm
Stephen Hammond: I have finished.
Mr. Betts: I am sorry that the hon. Member for Wimbledon did not give way to me. Unless we have a proper dialogue about the implications of the Bill and the practical applications for our constituents, all we shall receive from the Opposition is a theoretical free-market diatribe that does not relate in any way to what most of us experience on a daily basis when we see constituents. If there are no restrictions on other operators in the context of a quality partnership, it will not work.
I do not have quality partnerships in my constituency; they are being developed in north Sheffield. However, I have one major route on which operators fall over themselves to deliver a service. There are probably 15 or more buses an hour. Many pensioners living on estates near by, who do not have a service in their area, find it a struggle to get to the main route.
Stephen Hammond: Had the hon. Gentleman not risen on my very last word, I would have given way to him. I will be happy to do so in future so that we can have a dialogue.
I am interested in the example that the hon. Gentleman has given, because it does not take away from my amendment. He said that a quality partnership was needed for that estate because pensioners cannot get to the main route. This is my argument: if there were a quality partnership on the other route, which has 15 buses, should there be only one operator on it? My amendment would allow operators to work in conjunction with a quality partnership.
Mr. Betts: I thank the hon. Gentleman for explaining why he did not give way earlier. I accept that he had finished his speech, and I look forward to further exchanges.
It might be possible to have a quality partnership with the operator on the main route, or even with more than one operator on the main route, and to take two or three buses off the main route when there are 15 an hour would probably not detract from the service. Those buses could do a little detour and be used in other areas that are not adequately served, providing a much better overall service. However, if there was no power to put restrictions on other operators coming on the scene and taking over the released slots on the main route, the quality partnership would never get off the ground because no operator would divert services from the main route if they considered that somebody else was about to bat through behind them and replace the services. Because of the need for certainty and for things to be worthwhile for the passengers, the local transport authority and the bus operator coming into the deal, there has to be some ability to restrict other operators coming in, otherwise the whole thing would fall apart and it would not work.
Ms Winterton: I agree with my hon. Friends the Members for Eccles, for Bristol, East and for Sheffield, Attercliffe that the amendment illustrates how out of touch Conservative Front Benchers are on the issue. As my hon. Friend the Member for Sheffield, Attercliffe so rightly pointed out, many of our constituents want us to take action to improve bus services. The hon. Member for Wimbledon may say that the amendment is simply probing, but it reflects the view of Conservative Front Benchers on Second Reading, where it was said that these are controversial provisions and that Conservative Members had
“yet to hear from the Minister exactly what can be achieved using a statutory arrangement that cannot be delivered using the voluntary arrangements that already have a proven track record in many areas of the country.”—[Official Report, 26 March 2008; Vol. 474, c. 206.]
There are some places where voluntary arrangements have worked, but there are too many places where they have not. We therefore need to bring in statutory quality partnerships if we are to respond properly to what local authorities have told us.
Stephen Hammond: I am sure that the Minister will be keen to put it on the record that where voluntary partnerships work and where they can be helped to work, that is much the preferable route.
Ms Winterton: It depends on what is going to be best for passengers; part of the test here is to ensure that it will deliver. I do not know whether the hon. Member for Ilford, North objected when, in particular reference to the issue of registration restrictions, the Transport Committee said:
“Quality partnerships will not work if operators outside the partnership are allowed to come into the area and compete against partnership services, possibly overloading the network on the core routes and undermining the efficiency of the partnership”.
Southend-on-Sea, a Conservative borough council, said that
“the benefits of a Statutory Partnership are important to this Council rather than a Voluntary Partnership as a means of ensuring frequency, timing and maximum fare levels. This has not been achieved through the current voluntary partnership arrangements and it is unlikely that this will be achieved even within the new proposal for voluntary partnership as set out”.
People want to be able to have these statutory quality partnerships.
Ian Stewart: I distinctly remember saying at the first sitting of the Committee that I was in favour of always trying a voluntary approach first. As a Government, we did that in previous Bills. That system has been tried. Some of us highlighted what we thought were the limitations of the voluntary approach and those have come to pass—there are weaknesses in such an approach.
Does my right hon. Friend agree with me—and with Tory councillors on passenger transport executives throughout the country who do not agree with their own party—that now is the time for provisions to be introduced to deal with the limitations of a voluntary approach?
Ms Winterton: My hon. Friend is absolutely right, and it is extraordinary that Conservative Front Benchers do not recognise the strength of feeling out there. Hertfordshire council, which is Conservative controlled, said:
“The overall vision for quality partnerships, whether voluntary or statutory, remains vulnerable to other operators moving in and upsetting the balance required to make the partnership work. In Hertfordshire we have had experience of this, compromising the potential of voluntary partnerships and effectively neutralising the benefit to the operators concerned. This has a damaging legacy for the scope to introduce future partnerships unless something is done to control other providers.”
Norfolk county council, which is also Conservative controlled, said:
“There is however concern about the ability of operators that do not participate in a partnership still being able to operate along the route, especially if their services are of a lower standard. They have the potential to undermine delivery of the agreed benefits to passengers, particularly by taking revenue from operators within the partnership. It is suggested that these problems could be overcome by giving the Traffic Commissioner powers not to accept operators’ registrations except with the agreement of the relevant local authority.”
That is exactly what we are trying to achieve through our proposals, which have been amended from the draft Bill in response to comments from such councils and the Select Committee. The amendment would simply remove the traffic commissioner’s ability to do that.
Stephen Hammond: The Minister is quoting a number of councils, and has chosen to quote Conservative councils. She will accept that a number of voluntary partnerships are working well in Labour-controlled councils. For example, when Brighton had a Labour-controlled council, it worked well in voluntary partnership, as did Nottingham, York, Oxford and so on. We could spend our time in Committee discussing why voluntary partnerships have worked in Labour areas, as well as what she is doing, which is suggesting that they have not worked in Conservative areas.
I am trying to establish what evidence the Minister has for deciding whether allowing another operator on to a route that goes into a voluntary partnership would negate the possibility of bus patronage increasing.
Ms Winterton: Our proposal with registration restrictions is that if a local authority had specified timing, frequency and fares, and another operator decided to try to use the facilities, which would effectively undermine the scheme and be detrimental to it, the traffic commissioner could restrict it from operating on the route. It is quite simple.
We believe that there are instances of local authorities and operators being willing to invest in a scheme and to provide, for example, four services an hour—one every 15 minutes—with a specified maximum fare. That would provide certainty and stability. If it is achieved, we do not want someone else to undercut that service, perhaps by arriving two minutes before the other service, when we know that that would have a detrimental effect on the scheme and on passengers.
That is one of the most important points to be made to us on how voluntary partnerships operate now and how quality partnerships should operate in future. That is exactly why we are doing this, with safeguards. We shall come to admissible objections, but the point is to have a well thought out, properly developed and properly funded scheme.
Mr. Leech: Is there not a bit of a fantasy from the Conservative party here? Local authorities are deciding to introduce quality partnerships because the local bus operators are not delivering the services. To suggest that we introduce a quality partnership and suddenly other operators are going to try to run a service that they have not tried to run in the past is fantasy land.
Ms Winterton: The hon. Gentleman is quite right. There are, as I have pointed out, local authorities of all political hues that have said they need greater powers in this area. As was backed up by the Select Committee, we need to look at the issue of registration restrictions; it is absolutely right that we respond to that. That is the reality of what is happening out there in the country, and that is what local authorities and passengers are experiencing. We need to make these changes to respond, and I am afraid that the amendment would undermine that.
1.30 pm
Stephen Hammond: I seek confirmation. We have to consider all sorts of circumstances, but does the Minister accept that an operator running a service—one that evidentially would be beneficial—alongside a quality partnership would not be excluded by the proposal?
Ms Winterton: This is how we envisage the quality partnerships: the local authority will say that it wants to set up a scheme—for example, to introduce a bus corridor or to have better information at bus stops, which might mean real-time information—and that it is prepared to put in the investment. It will then probably specify that it wants whoever uses the route to have a particular standard of bus. In future, it will also be able to say that it wants services to run at a particular time and frequency, and that there could be a maximum fare imposed.
One or two bus operators might agree to participate in such a scheme. What we do not want is to allow another operator to disrupt the scheme if that will be detrimental to passengers and the scheme. We are saying that, given that the authority will have laid down registration criteria, the traffic commissioner will be able to refuse a registration if involving another operator would disrupt the scheme .
Stephen Hammond: I was well aware of how the quality partnership is intended to work, but I am grateful for that further explanation.
The Minister used the term “detrimental”. I accept the point. Does she accept that perhaps there is a circumstance in which the quality partnership will work so well that it might be beneficial to bus patronage in the area if another operator ran alongside? Will she confirm that, in such a circumstance, even though she does not think it likely to occur, the registration of that service, given that it would evidentially be beneficial, will not be restricted?
Ms Winterton: First, of course it is true to say that if a new service is not going to be detrimental to the scheme the traffic commissioner will say that it is acceptable. We will expect the traffic commissioner, in those circumstances, to consult the local authority and the operators about how the scheme will work. The local authority at that point will be able to make representations, saying, for example, “We do not believe that there is enough patronage along that route to sustain another service. We have asked these operators and they have agreed to run the scheme with a maximum fare. If another bus arrives two minutes before the buses that they are operating, it is likely that they will not be able to make an adequate return.”
That is the idea behind these restrictions. Of course, if bus patronage improved massively and the buses of the two operators running along the route were packed all the time, the local authority could say that it was happy to have another service. The traffic commissioner would say that it would not be a detriment to the scheme and therefore would accept it.
The provisions are not horrendously complicated or against common sense. As I said, we added them in response to Select Committee recommendations and representations that we received from local authorities. That is why I am extremely concerned that the amendments proposed by the hon. Member for Wimbledon would remove the provisions, thereby removing the opportunity for authorities in those circumstances to take action to try to curb disruptive competition. Given that explanation, I hope that the hon. Gentleman will not press his amendment.
Stephen Hammond: I am grateful to the Minister for her extensive explanation. What she said at the end was the reassurance that I asked for in my opening remarks, for which I am grateful. Therefore, having had the reassurance that I seek, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Graham Stringer (Manchester, Blackley) (Lab): I beg to move amendment No. 89, in clause 13, page 14, leave out lines 23 to 25.
The Chairman: With this it will be convenient to discuss the following: Amendment No. 44, in clause 18, page 16, line 39, leave out paragraph (a).
Amendment No. 90, in clause 18, page 17, line 2, leave out from ‘revised’ to end of line 3.
Amendment No. 45, in clause 18, page 17, line 8, leave out paragraph (e).
Amendment No. 91, in clause 18, page 17, leave out lines 8 to 12.
Amendment No. 94, in clause 18, page 17, line 9, at end insert
‘on the basis that an “admissible objection” will be restricted to matters dealing with the undermining of the commercial viability of existing local services being operated in any part of the area to which the scheme would relate,’.
Amendment No. 95, in clause 18, page 17, line 10, at end insert
‘, provided that such provision specifies that the meaning of “relevant operator” shall not include any person who does not operate local services within any part of the area to which the scheme would relate,’.
Amendment No. 92, in clause 18, page 17, line 11, after ‘determination’, insert
‘by the authority or authorities’.
Amendment No. 93, in clause 18, page 17, line 12, at end insert—
‘(f) to the extent that such a determination is to be made by a person other than the authority or authorities, for the notification of the authority or authorities that an objector has purported to make an admissible objection and for the authority or authorities to make representations regarding that objection to the person making the determination,’.
Government amendment No. 81.
Graham Stringer: I am not sure about the procedure in this situation. With the Committee’s permission, I intend to withdraw amendment No. 93, which would make the transport authority party to admissible objections, and amendments Nos. 94 and 95, which would limit the scope of admissible objections. After I tabled the amendments, the Government issued new draft guidelines that cover those points. I am unsure whether to withdraw the amendments now or at the end of the debate on this group.
The Chairman: Just crack on.
Graham Stringer: I shall do so.
I shall try to deal briefly with amendment No. 92, which would transfer responsibility for dealing with admissible objections from the traffic commissioner back to the local transport authority. I expect that we will deal with the point in principle in more detail when we discuss quality contracts, but it is a regular and well-used procedure in local government that objections—whether to planning permissions, licensing conditions or changes in traffic management or parking schemes—are made directly to the local authority. That would be more appropriate in this case than going to an outside body.
In a sense, the clause gives an incentive to any operator to put in an objection on the basis of potentially wrecking the scheme. That would be more sensibly dealt with by the local authority, which, of course, would have to treat any objection in a reasonable way. It would be subject to the normal challenges that any objector could make via the courts if it did not behave in a reasonable way and follow a reasonable procedure.
I understand the Government’s wish to make the procedures as watertight as possible and I have no doubt about the Government’s intentions in these areas. Clearly, the intention is to make bus services better and to have a much better way of dealing with the services than the deregulated system that we have now. What worries me about this proposal, a number of proposals that we shall come to later and provisions in other Bills and Acts of Parliament that are or have been before the House is that often the answer to a problem is seen to be the creation of a quango or an office that is outside the normal democratic process. This is just one relatively small example. I am trying to replace the appeal body with the local authority, as is consistent throughout the rest of local government.
The other amendments, starting with amendment No. 89, deal with removing what is, in effect, a veto of potential operators of quality partnership schemes, but before getting into the reasoning behind that, it is worth making a few comments about the place of quality partnership schemes within the breadth of the Bill. The Bill is intended to improve bus services by bringing a measure of off-road competition instead of on-road competition, a measure of regulation to bus services and a measure of accountability to the public money that is spent in that regard.
There are three ways of improving the system. At one end are voluntary partnerships, which tend to work best where there is a monopoly bus operator—sometimes a municipal bus operator—and a relatively small or historic town. Those partnerships work relatively well, but although they are often accompanied by increasing ridership, they are also often related to a decline in the network of services that people can use, so they are not, of themselves, totally wonderful. They are not a panacea, but they do work in parts of the country.
At the other end are quality contracts, which I and the Government are keen to see come into operation. Quality contracts are the next item on the agenda. I think that those two types of scheme are where most bus services will end up. I have become very sceptical about whether quality partnerships will work, because where there is a good relationship between the authority and the bus companies, probably everybody will prefer a voluntary arrangement, and where there is a poor relationship and services have been in decline, a franchise system, as envisaged in a quality contract, is likely to be the best solution.
Mr. Leech: Does the hon. Gentleman not agree that, in certain circumstances, local authorities and operators may choose to have a statutory partnership—a quality partnership—simply to avoid the competition from other operators that might try to get in on the act when there is a voluntary arrangement?
Graham Stringer: That is a fair point, although it is not quite the point that I was making. One quality partnership exists in the country, in South Yorkshire. I might be over-cynical, but I think that it has been brought in as one example that the bus operators can give to say, “We really don’t need quality contracts,” which is what would give the taxpayer and the travelling public the best result. However, what he describes could happen.
I did not start off by believing that quality partnerships could not work. I did not believe that until my right hon. Friend the Minister was good enough to allow me to talk to her legal advisers and the Bill team. I went through the details and asked practical questions about how the most profitable slots are allocated between different bus operators. The most profitable time in most cities is between 7.30 and 8.45 am—I cannot think of one where it is not—so that is when most buses want to operate.
1.45 pm
The nature of a quality partnership is that the integrated transport authority invests in real-time information and bus shelters, and the bus companies agree to put on newer, better buses with disabled access, possibly with real-time information on them. That is the background of the provision. However, if two or three competing bus companies have put in investment, how will it be decided who gets the most profitable slots? An inbuilt conflict in the system will make it difficult to operate. That is where I am coming from and, in a sense, I do not think that many quality partnerships will ever happen. In the Government consultation during the pre-legislative scrutiny of the Bill, they effectively agreed to give the bus operators a right of appeal, which was dealt with in the previous amendment.
Mr. Lee Scott (Ilford, North) (Con): Is the object of the amendment to stop bus operators making any amendments to the measure whatever?
Graham Stringer: No. The objective of the amendment is to remove the right of veto over the schemes of some bus operators. If the difficulties in the schemes can be made to work, why do we need to give bus operators a veto? In the House of Lords, the Government said it was highly unlikely that the veto would be used. Competition elements in the Bill that must be abided by would make it difficult. That part of the legislation is unnecessary and if the amendment is taken together with amendment No. 92, the bus operators could still make objections, but it would be to the local authority rather than an outside body. Doing the latter would undermine the motivation behind the scheme. As I said, in the real world, we are more likely to end up at both ends of the proposals.
Stephen Hammond: I am interested in that last remark. I have just looked again at amendment No. 92, which relates to local authorities determining the admissible objection. That is clearly the thrust of where the hon. Gentleman wants to go. If local authorities are determining the objections and are party to the quality partnership, would it not be better to have an individual, independent adjudicator instead of the local authority because there is a possibility that it may not be independent?
Graham Stringer: I understand the hon. Gentleman’s point, which is a good legal point. However, it is not unusual for local government to receive objections to its schemes, whether they relate to planning or highways. If there is a partnership, it would be sensible to proceed in such a way. If a local authority or a transport authority behaves unreasonably, there is the normal recourse to the courts.
Ms Winterton: It might be helpful if I make some general remarks about admissible objections—what they are about, why they are in the Bill, and how we expect them to work. After I have dealt with the amendments, I will speak to my amendment No. 81. I am slightly unclear at what point I should address the amendment proposed by the hon. Member for Wimbledon. Perhaps I will do mine first and then he will move his—I ask for guidance.
The Chairman: For the advantage of the Committee, the only amendment being moved is Mr. Stringer’s amendment No. 89. We are discussing the other amendments, but they will be moved later.
Ms Winterton: Thank you, Lady Winterton.
For our policy partnership scheme to deliver results, it is important for bus operators to be willing partners in the scheme. That was stated in the Transport Committee report on the draft Bill. It is in no one’s interests for the scheme to include requirements that are simply unrealistic or undeliverable. It is also important to remember that in the changes that we are making in the Bill we are allowing a whole new set of criteria to be included in quality partnership schemes: fares most importantly, and frequencies and timings.
My concern in setting out the role of traffic commissioners and the need for admissible objections is particularly about small operators in the scenario. Small operators, in the drawing up of a quality partnership scheme, may already be running a service along a route, but might be forced to abandon that route because they simply did not have the resources to meet quality partnership scheme requirements, if the requirements were unnecessarily demanding.
To address the point made by my hon. Friend the Member for Manchester, Blackley about dividing up profitable routes in a quality partnership scheme, we see a need for negotiation between all the operators involved and the local authority, ending up in a fair deal for everyone. The Bill will change competition law provisions to make that feasible. As hon. and right hon. Members may know, one of the problems at the moment is that it is difficult for operators to sit down in discussion together or with the local authority, because it goes against competition law. We are changing that so that operators can look at what is proposed and reach an agreement about how it would work. I do not share my hon. Friend’s gloom about the fact that those quality partnership schemes will be unachievable. I think that they will be achievable, particularly because of the changes that I have just outlined.
We are certainly not talking about individual bus operators having a veto over the standards proposed in a quality partnership scheme. Moreover, we certainly do not want schemes that are in the best interests of passengers to be undermined by frivolous or vexatious objections. That is why we have moved to a system whereby only admissible objections to requirements in a scheme, by relevant operators, would require the local authority to think again about a particular standard or an aspect of it. I will come back to the “thinking again” bit.
It might be helpful if I explained what we are talking about when we say “admissible objections” and “relevant operators”. There was understandably quite a lot of concern about that. I hope that in some instances the guidance that we have now published makes much clearer what we are talking about—as my hon. Friend said. To help the Committee, we have also published a draft set of regulations, which cover those matters.
Mr. Leech: Is there a danger of operators, when they hear that a local authority may be considering going down the route of a quality partnership, notifying the traffic commissioner of their intention to start operating services so that they become an operator that must be consulted?
Ms Winterton: That point has been raised, but I hope that I can reassure the hon. Gentleman by saying that merely registering a service and pretending that it will be operated would not do. If an operator wanted to register a service, the traffic commissioner would be interested in whether it had relevant depots and staff and adequate vehicles. It would not be just a question of disruption. Traffic commissioners will be wise to people who just want to register a service on the off chance. They would have to show that they were serious about running a service.
We have proposed that an objection should be admissible only when it would not be practicable for an operator who is providing, or intends to provide, services to the standard specified in the proposed scheme, or when it would not be commercially viable for a competent and efficient operator to provide services to a standard specified in the scheme. I shall return to how the proposals will work in practice.
The draft regulations propose clear criteria that must be met before an objection would be admissible. They specify deadlines for each stage of the process to ensure that the making of a scheme is not unduly delayed by the admissible objection process. What specific issues in a quality partnership scheme could an operator object to? In terms of practicality, which is the first ground that I addressed, an operator could object if it needed more time to procure vehicles or to take on more staff to deliver the quality enhancement stipulated in the scheme. If the operator was operating only one service an hour on a route and wanted to operate two services, for example, it could ask for more time to recruit extra staff, to provide more buses or to adapt existing buses if there were accessibility issues.
On commercial grounds, the operator might object that it would not be possible to provide the requested service and make a reasonable financial return. I shall return to that, and explain how it will be particularly beneficial to small operators.
Objections under the commercial criteria, however, would have to be addressed case by case, taking account of local circumstances, market trends and cost and revenue implications in the context of the scheme as a whole. It would be for the bus operator to make its case, but if it said that the scheme was not commercially viable, the local authority or the traffic commissioner would have to take into account issues such as the estimated cost of operating services to the specified standards, the expected revenue from operating those services—taking into account any potential increase in demand—whether the operator could be expected to secure an appropriate rate of return from the operation of services to the standard specified in the scheme, taken together with other services the operator provided in that area, and the views of other relevant operators about whether it would be commercially viable to provide services to that standard. Therefore, where two operators were satisfied that a particular set of requirements was commercially viable, but a third operator objected, it seems unlikely that the objection would be admissible.
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A key point here is that the operator and the traffic commissioner would be considering what would be expected from a competent and efficient operator—not necessarily the operator making the objection. To determine that, they would need to have regard to the appropriate rates of return for operating similar local services elsewhere.
The aim of the process is to prevent ill-conceived, vexatious or frivolous objections, while protecting the legitimate interests of operators involved in the provision of local services and who would be affected by the scheme. If, in response to consultation—because the process would be that a local authority would say that it wished to make a scheme—an operator in the area felt they had grounds to object to the authority’s proposals on fares, frequencies and timings, which are the possible issues for objection, the operator would initially object to the local transport authority. If that authority rejected the objection, the operator could refer the matter to the traffic commissioner for a determination.
The traffic commissioner would make a decision and inform all parties. If the commissioner decided that the objection was not admissible, the local transport authority could make the scheme as proposed. If the objection were admissible, the authority would either have to amend the scheme or omit that particular provision. It does not mean that a scheme could not be made. It is not a right of veto, but the traffic commissioner might say, “We do not believe this will work at 50p a passenger, but it might work at 75p a passenger.” It does not mean the authority would have to go right back to the beginning; it could simply amend that bit of the scheme to make it practical or commercially viable.
I shall illustrate why we think that is helpful to smaller operators, who have made representations to us. They do not feel that they would always have the economies of scale to respond to the demands of a quality partnership scheme. The process we are suggesting has the flexibility for them to make the case that if they are a competent and efficient operator, they should not be subject to unreasonable demands. For example, if a local transport authority proposed a particularly demanding scheme that two big operators could live with—because economies of scale meant that they could absorb the costs—a small operator could still successfully make an objection by comparison to similar operators of their size in similar environments.
A practical example would be a small, traditional operator—many of us know that some smaller companies in our areas have been running local services for years without complaint, at relatively low but not necessarily rock-bottom prices. The local transport authority could decide to invest in new bus lanes city-wide and enter into negotiations with, for example, the major operator in the city. It could then consult on a quality partnership scheme with tight fare controls on the basis that the large operator—operator B—was willing to commit to low fares throughout the whole city because he expected more fare payers on the busiest routes and could use the extra money to offset less revenue on others.
The small operator would not have the luxury of using the busiest routes and being able to subsidise the others. He might face bankruptcy if he was forced to live with the fares. He would make representations to the local transport authority saying that the fares were unreasonable but, if it ignored those representations, he could go to the traffic commissioner who could consider the matter on the basis of comparisons with other small operators in similar areas and decide whether that small operator was making an unreasonable objection.
The small operator would have the protection of being able to make representations that it would not be commercially viable for him to run the scheme and that it would drive him out of business, perhaps in some circumstances leaving only one operator in the town. By the same token, the traffic commissioner could say that the small operator had been operating inefficiently for years and that a competent operator could easily live within the proposed fare limits. In each case, the objection would be inadmissible and the local transport authority could proceed as proposed. We are not saying that means that the quality partnership would not be allowed; we are saying that it might need to be varied or that, for example, it did not include fares. The measure is important protection, particularly for small operators.
Some concerns have been expressed about how long the admissible objections procedure might take. In response, the procedure prescribed under the regulations sets clear deadlines for each stage of the process. For example, if a local authority notifies a bus operator that it does not consider its objection to be admissible, that operator would have 14 days to refer the matter to the traffic commissioner. The regulations stipulate that, if either party fails to meet a deadline such as getting further information to the traffic commissioner, a determination can still be made. Operators would not be able to employ stalling tactics to delay the process.
Even if there were no opportunity for operators to register admissible objections, we anticipate that making a quality partnership scheme would take a minimum of 18 weeks from when the local transport authority first publishes the notice and launches a consultation about the proposal to when the scheme is made. Under our proposals for admissible objections, in a best-case scenario the admissible objection procedure need not add anything to that time scale. Even in a worst-case scenario, in which more information might be requested from either the local authority or the operator, we would expect the admissible objections procedure to add no more than seven weeks to the overall timetable. We have set out the details on page 13 of the guidance.
However, if the authority says that the traffic commissioner’s scheme would not work without more changes and, as a result of the extra fare level, it would have to vary that aspect of it too, would it become a new scheme? Would there be a chance for further objections to the traffic commissioner?
Ms Winterton: No. The idea is that when the traffic commissioner goes through the process he would say that he wants particular aspects of the scheme modified. For example, if it were the fare scheme, that aspect would be dealt with.
The most likely scenario would involve the small operator. Let us suppose that he said that it was not feasible for him to take part in the process, but that he was an efficient, capable operator. He might say he was not making undue profits from the service and that he had run along the route and was now being excluded from it, but that he could show how it was not feasible for him to continue the service. That would be the stage at which the traffic commissioner could say that the transport authority should modify the scheme.
The important thing about the process is that it would not go back to square one every time. We would have a discussion about the different ways the scheme could work in terms of fares. If an ordinary, competent, efficient operator would need to charge 75p instead of 50p the scheme would go back to the transport authority for consideration. It would then, we hope, be modified.
Admissible objections can relate to only three areas—fares, timings and frequencies—not about whether there is the right kind of bus. It would be appropriate in those circumstances for a discussion to take place about whether the particular point raised by the operator—that is, about fares—should be addressed. If points about fares, frequencies and timings were raised, the traffic commissioner might wish to consider them all. If it was simply a discussion about fares, that is the issue that would go backwards and forwards. It would not necessarily mean trying to redesign the whole scheme. It would depend on what an individual had objected to.
Mr. Betts: I thank my right hon. Friend. If an objection is made on fares and the traffic commissioner says, “Okay I partly take on board that objection; I think the scheme will work but only at different fare levels”, that would be reported back. The transport authority would take that on board and simply implement the scheme with the new fare levels. However, when a scheme goes back to the transport authority, it presumably has to discuss it with the operators in the partnership. If they say they can modify the fare levels but that in doing so they may have to change the frequencies as well, does that become a new scheme to which further objections can be raised? It seems to me that it will because it has changed another element that was not objected to previously, because it was thought to be part of a package that has now been changed.
Ms Winterton: I do not think that would need to be an entirely new scheme. It is probably a slightly grey area. I suspect that in practice we are talking about authorities making modifications in terms of the traffic commissioner’s suggestions. As I have said, that does not need to be a one-way process—going right back to the beginning to consult all over again. The idea is to find something that meets the requirements of all those interested and is for the benefit of passengers.
Mr. Knight: On a similar point, where the traffic commissioner decides to modify the scheme—let us say there has been an objection on two grounds and he tinkers with both of them and the scheme goes back—could another operator who sees the amended scheme and does not like it put in an objection at that stage because the scheme now being proposed is not the scheme to which he did not object in the first place?
Ms Winterton: The only operators who would have an interest and would be able to make representations—as I said earlier and as is clarified in the guidance—are those who would be running along the route, and had registered and said they were going to run it. As I said, the idea of somebody doing that on a whim would be fairly transparent and unlikely. In those circumstances there are likely to be one or two operators and during the process they would be involved in the discussions.
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To start with, this goes through the local authority procedure so it is the local authority which, in the initial instance, decides whether it wants to listen to an operator objection and take them on board. It also determines whether those objections are admissible and whether it agrees with them and then appeals to the traffic commissioner if it does not.
It is highly likely, in those circumstances, that both the operators would be involved in the discussions. If there were two operators in a scheme, they would both be involved in the discussion about fares, timings and frequencies in the first place. It is certainly not our intention that admissible objections go on and on after the traffic commissioner has made his decision. We have published draft regulations and, if people feel that there might be a possibility of revisiting objections over and over again, we would look at that. To go back to my earlier point, this concerns trying to get partnership agreements. We anticipate that most of the participants in this will be those who want to find with a local authority a way of ensuring that the quality partnership scheme can work. We believe that this is an effective way of doing so.
Ian Stewart: Does my right hon. Friend understand my anxiety, which is shared by others, that the new powers of effective veto given to the transport commissioner put him or her in a position of second-guessing everything that is going on? That could act as a dead weight and hold up, or stop, what would be good schemes that would benefit our constituents. I heard the Minister say that she does not envisage a plethora of admissible objections, but can she understand our anxieties?
Ms Winterton: Of course I can understand that people feel that this might become a long, drawn-out process. Page 13 of the guidance shows that in the worst case scenario we anticipate that a scheme might be delayed by something like seven weeks. My hon. Friend must recognise that the reason it is important to involve the traffic commissioner in the discussions is that we are also talking about registration restrictions. We are also taking an important new power to give to traffic commissioners to keep others out of the scheme.
It is important that, from the outset, the traffic commissioner is involved in drawing up the scheme and looking at fares, frequencies and timings. If he or she is to have the ability to introduce registration restrictions, it is important that that is not done in a vacuum. My hon. Friend needs to see those two parts of the equation together. We are giving an enormous power to traffic commissioners to insist on registration restrictions, so it is important that they can look at the scheme—particularly on those issues—from the outset. That would enable the commissioner to take the later powers as well, which would be difficult to do otherwise.
Mr. Leech: In the past, operators have been quick to threaten legal action about the possible implementation of faulty contracts. Is it not possible that operators will threaten legal action if the traffic commissioner alters a scheme significantly enough for them to argue that it is no longer the scheme that was originally proposed?
Ms Winterton: The real danger would be an operator taking action if there were no ability to appeal to the traffic commissioner so that the commissioner could come to a final decision with the local authority as to whether the scheme could work, because it would be much easier to apply for judicial review otherwise. Part of the point of introducing this process is to give certainty to a local authority in these circumstances that they can implement the scheme.
Amendments Nos. 89 to 91 would remove the opportunity for operators to register admissible objections at all, leaving it for local authorities alone to determine the requirements in a scheme. I emphasise that we are not talking here about a general right of veto, and the guidance illustrates the very specific circumstances in which an objection from the relevant operators would be admissible. I hope that that reassures my hon. Friend the Member for Manchester, Blackley about the way the system will work.
The effect of amendment No. 92 would be to leave it to local authorities alone to determine whether an objection is admissible. As I said, the problem with that is that it would leave a bus operator who believes his objection is admissible with no recourse other than to seek judicial review. That is an expensive and time-consuming process and the proposal in our draft regulations is that the traffic commissioner should act as arbiter when needed. The commissioner’s existing expertise in the bus industry and his independence from those involved makes him a good candidate for providing an independent arbitration on areas of disagreement.
The draft regulations also propose that the traffic commissioner be able to call on independent expert advisers when necessary. If he needs to make a judgment, for example, as to whether an objection is admissible on commercial viability grounds, he may seek the advice of an expert assessor. That strikes me as a much quicker and more effective alternative.
Mr. Knight: Will the traffic commissioner have the power to award costs if he feels an objection is absolutely frivolous, and a lot of people have taken a lot of time to collect the evidence to reject the objection? Would he be able to award costs against someone whom he feels behaved unreasonably?
Ms Winterton: The right hon. Gentleman makes what would be a good point if we had not clearly narrowed down the areas for making an objection and who can make one. The first test is whether the objection is admissible. Is it someone who runs along the route? Is it someone who is registered? The fear was that anyone might object, such as someone who lived alongside the proposed quality partnership scheme or any operator from another part of the country. That brings me to the Conservative amendment, which I fear would allow that. That is when we would be more likely to get into the area of frivolous objections. We have tried to narrow it down, so that an objection would be only from interested parties. It would also, as I said, be a fairly quick process. It would be up to the operators to provide evidence. We are trying not to have a system in which costs are a deterrent but trying to avoid costly judicial review. We have put the package together so that we are not talking about huge costs.
The amendments of the hon. Member for Wimbledon obviously take the completely opposite view from that of my hon. Friends. Amendment No. 44 would guarantee operators the right to lodge admissible objections about absolutely any requirement concerning frequencies, timings and maximum fares. It would remove the scope to specify any exceptions in regulations.
I understand why operators might be nervous about how we have narrowed down the scope of “admissible objections”, but there are good reasons. One situation in mind is that in some places a local authority may be subsidising a bus operator to provide services to a particular standard. For example, there might be a subsidised service agreement under which the authority is paying an operator a subsidy to run two services an hour on a particular route, at a maximum single fare of £2. Suppose that the authority proposes to make a quality partnership scheme including the set of requirements on that route—two services an hour, maximum fare £2. Should bus operators be able to argue that those requirements are uncommercial and hence register an admissible objection to their inclusion in the scheme? Clearly, operators objecting on that basis would be unreasonable, because the local authority is already providing a subsidy to compensate for the fact that the requirements cannot be met commercially. That point is covered in regulation 4 of the draft regulations, which I hope will provide some reassurance.
Amendment No. 45 would remove the power to make regulations defining “admissible objections” in the context of quality partnership schemes. However, we believe that it is important to be able to provide greater clarity about the meaning of “admissible objections”. That goes to the heart of what we have been discussing. I think that Parliament wishes to know more—as probably do the industry and local authorities—about what we mean by admissible objections. The draft regulations enable us to do that and remove the uncertainty that there would be if there were none.
Stephen Hammond: For the sake of clarity, the admissible objections, which we now know are being defined by the Government, are being defined by guidance.
Ms Winterton: Draft regulations.
Stephen Hammond: Are the admissible objections currently in guidance, which is then going to be made into regulations? Is that what the Minister is saying?
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Ms Winterton: There is guidance and, at the back of the guidance, draft regulations. That is what is in this note, which the Committee should have. We are consulting on those, but thought it would be useful for the Committee to have them in order to inform its discussions.
It is not clear from the hon. Gentleman’s amendment whether he is saying that all objections should be admissible. If that were the case, we would find it difficult to agree with him because we want to ensure that good schemes cannot be undermined by frivolous, vexatious or ill-founded objections. That is in the interest of operators and local authorities but particularly that of passengers.
I turn to Government amendment No. 81. I have already explained the role we envisage for the traffic commissioners in the admissible objections process. Although the commissioners have considerable expertise relating to bus services through their existing regulatory roles, they might wish to call upon an independent expert—for example an expert in transport planning or economics to help them reach a judgment about the commercial viability of a particular set of requirements in a scheme. If a traffic commissioner wishes to call on independent expertise it will be necessary to remunerate that person.
The purpose of the amendment is to ensure that the necessary powers are in place for such payments to be made. The details of any payments would need to be specified in regulations. In the draft regulations that we published last week, we propose that where a traffic commissioner employed the services of an independent expert, he should pay that person such remuneration as determined by the Secretary of State. I am sorry for speaking at such length but this is an important part of the Bill. My hon. Friends have raised a great number of questions through their amendments. I hope that I have been able to give some reassurance on those matters and that hon. Members who have tabled amendments will withdraw them and support this Government amendment.
Stephen Hammond: This is a large set of amendments. I listened carefully to the hon. Member for Manchester, Blackley explain his amendment No. 89. I had read it as amendment designed to wreck quality partnerships and so prevent any admissible objection. Although his explanation was helpful, the guidelines now define admissible objections such that amendment No. 89 is no longer applicable. My concern was, and still remains, that, even if it was not a wrecking amendment, taken together with amendment No. 92, it could effectively stop any objection—even if it fell within the criteria specified within the guidelines. I therefore remain concerned about amendment No. 89.
I turn to my amendment No. 44. The Bill makes significant changes to how quality partnerships will operate. It amends the Transport Act in such a way that there is now specification as to the requirements of fares, frequency and timings. When the Committee met in the other place, there was considerable discussion, as there has been this afternoon, about admissible objections. Clause 18(3), which amendment No. 44 addresses, says that admissible objections provisions can be overridden
“in such circumstances as may be prescribed”.
This is where the amendment looks to the Minister for detail, although we have had a great deal of detail and I think that I am reassured by her. However, when this clause was discussed in Grand Committee in another place the Minister there said:
“Virtually every circumstance could be prescribed.”—[Official Report, House of Lords, 6 December 2007; Vol. 696, c.GC86.]
That is what I am trying to get to in the essence of the amendment. The Minister said that circumstances are to do with frequencies, fares and timings by relevant operators and must not be ill-conceived, frivolous or vexatious. If that is the prescription, I would look to withdraw the amendment. If it is not and the prescription is wider than that, then I would press this amendment. I look again, hopefully, for the Minister to intervene to say that what I have set out as the terms of the prescription is right. Otherwise, what is being said in another place is considerably wider than what she has just said to the Committee. If she can reassure me I am happy to withdraw. My concern is with what the Minister in the other place said.
Clause 18(3) says that admissible objections provision can be overridden in circumstances that may be prescribed. As I understand it, the Minister is now saying the prescribed circumstances deal with frequencies, fares and timings by the relevant operator provided they are not ill-conceived, vexatious or frivolous. If she could confirm that those are the prescribed circumstances and they are not wider than that, then I am happy to withdraw.
Ms Winterton: Obviously, the Minister in the other place was saying that within the Bill there were lots of circumstances that could be prescribed but what we have done in the draft regulations is to make it much clearer and more specific. I think he was giving the undertaking there that we would be clear about the circumstances that could be prescribed, which is what I have been trying to describe today.
Stephen Hammond: That is extremely helpful. I am sure the Minister will understand that what was said in the other place was extremely wide-ranging. We needed that reassurance.
Every so often, Lady Winterton, one makes a complete mistake. Sometimes it is better just to be honest about this. My amendment No. 45 failed to recognise that these were not just guidelines but regulations. I had been wondering why we were amending guidelines in a Bill about regulations. Clearly, I have made a mistake. I will not seek to press that one. I apologise to the Committee.
Government amendment No. 81 seems to be dealing with provisions to appoint a person as adjudicator or assessor in order to determine whether an objection is admissible. To a large extent that is sensible. We have had the specification of admissible objections. There is clearly some ability to update those guidelines.
It must be clear what defines the competencies of the adjudicator and the assessor and how they are to be selected. It must be clear under which procedures they are going to operate. For local authorities and bus operators, having an adjudicator and an assessor is better than it being done by the local council, the route suggested by the hon. Member for Manchester, Blackley. I understand that the Minister will be putting into guidance the criteria for how these new posts are to be appointed and the procedures to be followed. Government amendment No. 81 enhances the Bill and will have our support.
Mr. Leech: Clause 13 is crucial and these amendments are very important in determining whether or not the Local Transport Bill will be a success in improving bus services. I had intended to give a personal example from my constituency about why effective quality partnerships were important but, given the length of the debate so far, I have decided not to so that my remarks can be briefer.
Deregulation of the bus services in the majority of the country has been a complete and unmitigated disaster. It has been about putting profit before passengers, which is why statutory quality partnerships and quality contracts are so essential in areas where bus companies are not willing to work with local authorities to get the best deal for passengers.
Quality partnerships and quality contracts must be workable, and bus operators should not be able to veto reasonable schemes. Existing legislation has made it almost impossible to introduce quality partnerships and quality contracts and, as the hon. Member for Manchester, Blackley said, only one has been set up since it was put in place. Amendment No. 89 would remove the ability of bus operators to make an admissible objection to a statutory quality partnership that covers maximum fares, frequency and timings. It has been tabled because there is a clear desire to protect the interests of passengers and the right of local authorities that have made significant investment in transport infrastructure to demand a certain standard of service from operators of bus services within their area. In my constituency, hundreds of thousands of pounds have been spent on creating a quality bus corridor but, unfortunately, no bus operator is prepared to run a quality service along that route.
Ideally, local authorities would engage with bus operators at an early stage of planning before publishing a proposed scheme. That would give operators an early opportunity to offer input to the feasibility and acceptability of a scheme and therefore help to minimise the number of situations in which a bus operator later felt compelled to submit an admissible objection. Operators should have a right to object. That said, not all objections should be of sufficient weight and importance to impede a statutory quality partnership that specifies frequency, timings and maximum fees.
It is therefore important that the definition of what constitutes an admissible objection and a relevant operator is worded tightly under the regulations to ensure that it cannot be abused by operators who do simply do not wish to be constrained by the requirements of a reasonable quality partnership. A watertight wording is also in the interests of operators who need to know that, when they genuinely need to object on commercial grounds, they can do so. Whatever side of the divide we fall, the need for clarity and certainty in such matters is paramount. The uncertainty of whether there will be legal action needs to be eradicated as much as possible.
We also recognise that operators must have a voice with which to object to unreasonable demands from local authorities. We are particularly keen to ensure that the Bill does not harm small, family-operated bus companies in rural areas, for example, that provide a basic but well-run service that meets local needs by subjecting them to compliance with such grand demands such that a quality partnership might price them out of the market. I was glad to have reassurance from the Minister that that has been taken into consideration, and that the matter is not about ensuring that only large bus companies can enter quality partnerships and object to them.
Given our worries about small operators, we added our support to amendment No. 94 under which an admissible objection would be restricted to matters dealing with the undermining of the commercial viability of existing local services being operated in the area to which the proposed scheme would relate. It would mean that, if a relevant operator who was running an existing scheme was unable to provide services to the standard specified in the quality partnership on a commercially viable basis, it would constitute an admissible objection. We want the Government to clarify in which circumstances they envisage that would be the case. Would it apply in subsidised service agreements under which the local transport authority provides a subsidy to an operator such that they can reach the standards specified in the scheme or might there be other circumstances in which bus operators would not be allowed to object?
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In order to prove that a service cannot be provided in a commercially viable way, would the operator have to pass commercially confidential information to the local authority? That appears to be the case, but, should the local authority decide the objection is not admissible, and should the bus operator subsequently refer the matter to the traffic commissioner, the guidance states that, where the commissioner has to make a determination as to whether the commercial viability ground has been shown, the commissioner may seek the advice of an expert assessor. That is provided for by Government amendment No. 81.
Indeed, when the Bill was in Committee in the Lords, Lord Bassam of Brighton said that the traffic commissioner would have to certify the evidence submitted by the relevant operator. How does that work if the local authority takes a decision? Does it also have powers to certify an operator’s evidence? We are not clear about what access, if any, the local authority has to commercially confidential information—which may be objectionable to operators—or whether, in the case of objection on the ground of commercial viability, the local authority would be able to take an informed decision and therefore have to lengthen the admissible objections procedure, simply to refer the matter back to the operator and on to the traffic commissioner and assessor for determination.
The Government acknowledged in Committee in the House of Lords that the sharing of commercially confidential information and its coming into the public domain was a complicated issue and that admissibility would depend on exactly what was submitted. Further details of what exactly might be submitted and who might see it are urgently required, together with further clarification of the procedures, particularly with regard to objections on the basis of commercial viability, if the Committee is to be able to scrutinise this part of the Bill effectively.
Graham Stringer: I thank my right hon. Friend the Minister for a full and comprehensive explanation of how quality partnerships work. It was a bit like when I talked to the lawyer from the Bill team; the more one goes into the detail of how the partnerships will work, the less convinced I am that they will ever happen in that way, for some of the reasons the hon. Member for Manchester, Withington outlined. We will end up either with voluntary partnerships where everybody agrees or with statutory quality contracts.
I listened carefully to what the hon. Member for Wimbledon said and I hope I have not misled him in moving amendment No. 89. The essence of what I was trying to say in that amendment—maybe I did not say it very clearly—is that we are effectively turning traffic commissioners into economic regulators. They will be expected to be able to judge commercial matters about the profitability of buses running on particular routes. If there is a real partnership, that is better done in negotiation—and if there is no negotiation than there is no partnership. That was the real point of that amendment: to say that this is better done not by an external body but by the transport authority in negotiation. I listened carefully to what my right hon. Friend the Minister said and ask leave to withdraw the amendment.
As for amendment No. 92, in answering some of the Committee’s points, my right hon. Friend the Minister has gone a long way in defining “admissible objections” pretty closely—she made great efforts to do so. If she intends to continue with a traffic commissioner under the more tightly drawn guidelines, I hope that she will look again at having the local integrated transport authority determining the objections, as opposed to the traffic commissioner.
On the viability of a route and partnerships where both bus operator and local authority are investing, the more my right hon. Friend went through it, the more likely it seemed that things would be done by negotiation between the parties, rather than by a straightforward objection to the local authority. I hope she will look again at that, as a compromise position on the two amendments. Having said that, I am happy to withdraw amendment No. 89.
Ms Winterton: With leave of the Committee, I want to give my hon. Friend some reassurance. The regulations provide for the local authority to decide, in the first instance, whether an objection is admissible. The traffic commissioner will deal with an appeal against what the local authority has decided in the first place. In such instances, that will involve only an appeal against what the local authority has decided.
As my hon. Friend knows, traffic commissioners are used to making determinations on bus operators, so we feel that they have the experience. However, it is firmly in the local authority’s gift to decide in the first place whether an objection is admissible, and to take that into account. The traffic commissioner comes in only on the appeal front—that addresses the Liberal Democrat point about judicial review. It is important to have a process that will ensure that that is not the only recourse available. The hon. Member for Manchester, Withington raised a number of questions that I may need to write to him about. I was not able to make note of the whole variety, but if I feel that anything has not been answered I will of course come back to him.
Graham Stringer: I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Stephen Hammond: I have only a few words to say on the clause, which begins the section of the Bill dealing with quality partnerships and quality contracts and which marks a return to re-regulation—in some small way with quality partnerships and considerably more with quality contracts. At this stage, it is appropriate, before we go down those lines, to remember some of the facts.
While it is true that bus ridership has declined after regulation, it is also true that bus ridership fell more quickly between the second world war and when the bus system was deregulated. It is also true that patronage numbers have declined more slowly post-deregulation than pre-regulation. Such points are important. It is clear that, during the past 10 years, the reliability of services has improved. Ten years ago, operators ran 98 per cent. of scheduled mileage on time. Now, the figure is 98.9 per cent. Overall customer satisfaction with the bus service is generally high at about 81 per cent.
While we understand where the Government are going with the provision, it is clear that voluntary partnerships are working well in large areas of the country. I would have hoped that the Minister might at least have acknowledged that at the beginning of her remarks.
Mr. Leech: Does the hon. Gentleman accept that there are larger parts of the country where voluntary partnerships are not working well—in fact, that they are working well in the minority of areas?
Stephen Hammond: I accept that there are large areas of the country in which such partnerships are not working well. I could spend time talking about geography, but I shall not do so. I understand why the Government want to move on from voluntary partnerships to quality partnerships. We have had a good debate and, as a result, some things have become a lot clearer, and quality partnerships stand a decent chance of working.
Ian Stewart: I am pleased that the hon. Gentleman made that statement, but was it sincere? How does he reconcile his words with the views of members of his party, who genuinely seem to be questioning the sincerity of the Conservative party leadership on such matters? Opposition Front Benchers are treating members of the Conservative party like country yokels.
Stephen Hammond: Lady Winterton has ruled on that matter already. We spoke about it in some depth about an hour and a half ago, but I am happy to go down that line and say that that was the expression of one councillor. He was the only signatory to the letter and he is retiring at the end of April. I have already explained to the Committee that I have invited him twice to London at least, on my own initiative. I do not regard Councillor King as a country yokel. He has done an extraordinary job for transport in West Yorkshire.
None the less, the hon. Member for Eccles has referred to the view of one person. Equally, as I said a few moments ago, there were probably several councillors throughout the country who were unhappy that they were not consulted about the 10p tax rate. We can all play that game. I hear the Minister saying that she was unhappy about the 10p tax rate. [ Interruption. ] Oh, she wishes to change her view.
Ms Winterton: I said that local councillors do not administer the 10p tax rate. The important point is that local councillors are heavily involved with the provision of public transport in their area, and it is absolutely true that Conservative councillors are dismayed by the attitude of their Front Benchers towards the Bill.
Stephen Hammond: There will be a number of letters from other Conservative councillors to make it clear that they are not dismayed and that Opposition Front Benchers have consulted them. I notice that the right hon. Lady did not demur from my comment about the 10p rate.
It is important to move on now. While discussing quality partnerships under this and other clauses, we have been absolutely clear about several things, such as the prescription, who will assess admissible objections and our the belief that partnerships would be better. The hon. Member for Manchester, Blackley said that it would be better if work between the local authority and the operator were done by consultation and negotiation. That must be the way forward. We have had useful debates on the amendments. I want to lay it down in the stand part debate that, while we have supported certain things that the Government have done in this section of the Bill, we need to put history into context as well.
3 pm
Graham Stringer: I shall be brief. I cannot let the hon. Gentleman get away with repeating what I think is an inaccurate assessment of the history of bus patronage. My first point, which I made during the discussions on amendments to this clause and to clause 18, is that where voluntary partnerships are working and patronage is going up, they are working on a reducing network—the network is declining and the bus companies are focusing on radial routes. That has been the case in many historic towns where the headline figures are given, but not the detail of what is happening.
Stephen Hammond: Does the hon. Gentleman accept that that is not true in a city such as Nottingham?
Graham Stringer: The general picture is one of decline in the networks. There is a particular example in Nottingham where there has been many changes. What always riles me and other hon. Members on this side of the Committee is the non sequitur that because bus patronage had been in decline since the second world war, deregulation had no impact on bus patronage.
Bus patronage had been declining evenly across the country. We have a direct comparison—I refer the hon. Gentleman to page 9 of the Transport Committee report on the Bill, which shows the graph. When buses were deregulated, that decline continued in metropolitan areas. Bus fares went up. London offers a comparison because it was the same as everywhere else in the country, but when it was regulated while the rest of the country was deregulated and there was no subsidy—that can be taken out of the equation—the graph went flat for London. So, we have a real comparator.
The Conservatives like to pretend that deregulation has not damaged bus services, but all the real evidence says that it has.
Mr. Douglas Carswell (Harwich) (Con): Does the hon. Gentleman not accept that people in London are naturally more reliant on public transport than people elsewhere and that that could account for the difference?
Graham Stringer: It is the case that 92 per cent. of people in London use public transport to go to work, whereas the figures in other parts of the country are much lower.
Mr. Carswell: Is that a yes?
Graham Stringer: Yes, it is. I am coming to that point, but I do not think that it detracts from the essential argument that transport across the country was in decline fairly evenly. There was a regulated system in London, which continued to carry the same number of people, and a deregulated system in the rest of the country. I know that this is causing a lot of pain to the Conservatives, who are having to face up to the objective facts.
Stephen Hammond: I am delighted to talk about the objective facts. The hon. Gentleman’s argument is undermined by the other area in the United Kingdom that was wholly deregulated, which is Belfast. After the Good Friday agreement, Belfast had 21.4 million passenger miles being travelled. It has been wholly regulated, as the hon. Gentleman suggests, and is now in steep decline.
Graham Stringer: The hon. Gentleman often makes an exceptional case for London, where the facts do not bear that out. If he thinks that one can compare what has been happening in Belfast over the past 30 years with events in the rest of the country, he makes a major error. Further, the regulated system in Belfast is not the same as the regulated system in London.
Stephen Hammond: This is the point I am making, and it is where the Minister is out of touch. She will remember that there was the Good Friday agreement, and we are looking at a period that did not involve the exceptional circumstances that people might want to look to. Therefore, we can look at 10 years of another wholly regulated market, which is showing a different experience. The hon. Gentleman makes the point about London, but he must accept that there is another wholly regulated market, which is experiencing something rather different.
Graham Stringer: We could go on swapping facts for a long time on this matter. I do not believe that Belfast has shown the same curves as the rest of the UK has shown over the last 30 years.
Stephen Hammond: It has not; the decline is faster.
Graham Stringer: Indeed. The important factor is that London was exactly the same as the rest of the country in relation to the decline in bus passengers. As soon as it was regulated while the rest of the country was not, that flattened off.
Mr. Carswell: Is the hon. Gentleman perhaps confusing correlation with causation? Yes, London has had a regulated market and bus patronage may have increased, but does he not accept that there other factors in London—for example, car ownership? Car ownership in London was 61 per cent. in 1994; it was 61 per cent. in 2004. It has levelled off. That is not the case in the rest of the country. Might that also account for the differential?
Graham Stringer: I understand the difference between correlation and causation. The graphs are so explicit. Put the point the other way round: it is much easier to argue that people have not invested in cars because there is a good, regulated bus service. That is why there is a difference from the rest of the country.
I could not resist correcting the hon. Member for Wimbledon. We have had this debate many times in Westminster Hall and on the Floor of the House. I hope that one day that the Conservatives will sit down and look at the facts about bus fares and bus patronage.
Question put and agreed to.
Clause 13 ordered to stand part of the Bill.
Clause s 14 to 16 ordered to stand part of the Bill.
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