Clause
29
Extension
of maximum period of quality
contracts
Graham
Stringer:
I beg to move amendment No. 127, in
clause 29, page 26, line 36, leave
out subsection (3) and
insert—
‘(3) Subsection (2)
is
omitted.’.
The
amendment continues the debate that the hon. Member for Wimbledon
introduced and would make the length of quality contracts more flexible
and potentially longer, in line with the process in rail franchising
and that in Greater London.
There are two issues here
and—with your permission, Lady Winterton, as we are speeding
along this morning—I will discuss the length of quality
contracts and the scheme itself, which is related to this issue.
Listening to what the hon. Gentleman said in proposing the previous
amendment and looking at this amendment, we see that while quality
contracts are a considerable improvement on what we have, they are by
no means a perfect mechanism. There is a lot of evidence—not
just in this country, but around Europe—that quality contracts
would and will improve the quality of bus services. However, there are
problems, which members of the Committee will have seen with rail
franchises and, indeed, the franchises for the tram system.
If a franchise is let to a
private operator to achieve all the benefits of commercial
operation—response to the market, the innovation that the hon.
Member for Wimbledon mentioned and investment that allows that
innovation and response to happen—the contracts
necessarily become front-loaded. The commercial operator will want to
spend the money and get the return on it at the beginning, and towards
the end of the contract there is
deterioration. The
amendment says that the process should be in line with permissive EU
legislation, which would allow 50 per cent. extension to the
contracts—that is normal in rail franchising and in
London—so that they could be extended from 10 years to 15. There
would be an immediate benefit in doing that in stabilising the whole of
the public transport system that relies on buses. If a quality contract
were coming to its end and the operator was unsure about retaining that
contract, whether because they had not been very good or because there
were aggressive competitors in the market, there would probably be less
interest in it. However, that would be exacerbated if the scheme itself
came to an end at the same time, so the marketplace would not know what
sort of scheme was going to be in
place.
We come back to
the point, is what is good for London good for the rest of the country?
It is assumed that in London the schemes for franchising buses go on
and that when it comes to the end of the scheme in 10 or 15 years, the
market will know what to apply for. What is envisaged in the
Bill—the scheme itself is covered in more detail in later
clauses, but it is relevant to the amendment as well—is the
scheme having to go back to square one and be looked at again. That
seems disruptive and it will bring a lack of stability to the
system.
The amendment
says that it should be possible to extend 10-year franchises by 50 per
cent., as is allowed under EU regulation. The stability of the process
would be helped if the scheme was allowed to continue unless there was
some very good reason that it could not, which could be picked up in
the local transport
plans.
Ms
Winterton:
My hon. Friend’s amendment relates to
clause 29. As I said earlier, the clause extends the maximum length of
each individual quality contract from five years to 10. At present,
while a scheme can run for 10 years, a contract can run only for five.
We have responded to points made to us by local authorities and others
that it is more appropriate for it to be able to run for the same
period as the scheme.
I understand the points that my
hon. Friend has made, but under the system that we propose a quality
contracts scheme will replace deregulated services with a series of
contracts and, at the same time, suspend the free market in the area.
The task of setting up a regulated network from scratch, which is what
we are talking about, is rather different from adapting an existing
one, which is more the case that we have in London. That is why the
Bill provides for a review
point.
After the
period for which the scheme is approved, which may not exceed 10 years,
it must be reviewed. If the authority is minded to extend it, a further
consultation must take place to ensure that it has delivered at least
some of what was promised, and that a scheme is still relevant and
likely to deliver more. If, however, the scheme is not intended to
expand in scope and will not involve new areas or new bus services, it
can go ahead without approval, although there will be an appeal
mechanism in it. If it is going to expand, the approval of the
board—or in Wales, the Welsh Ministers—will still be
necessary. The
amendment would affect the length of individual contracts within a
quality contracts scheme. The 2000 Act extends the contracts from five
years to 10; the amendment would allow further extension. However, we
consider that the best way forward is to set the contract length at the
same length as the overall scheme. We believe that much can change in
10 years—whether it is demand for services, travel patterns,
technology and so on. It is not unreasonable to require authorities to
review quality contracts schemes at least once a decade. If the
duration of the scheme is to be limited to 10 years, the duration of
individual contracts must be similarly
limited.
I know that
my hon. Friend the Member for Manchester, Blackley believes that there
should not even be a 10-year quality contracts scheme duration, and
therefore that it is reasonable to extend the contracts themselves.
However, for the reasons I have set out, we believe it reasonable to
ask local authorities to look at the schemes after 10 years to ensure
that they are delivering what was promised and that if they are to
continue they can do so without having to go through a whole approvals
board if they are not particularly different. We believe that that is
the right balance to strike, and in view of that I hope that my hon.
Friend will withdraw his
amendment.
Graham
Stringer:
I welcome the increase in the length of the
contract from five years to 10, although I would quibble with the
phrase “removing a free market”. One kind of market is
being changed to another where there is off-road rather than on-road
competition. It is important that we continue to make that point. What
I do not think my right hon. Friend the Minister really
addressed—I am happy to give way now or wait until we consider
this on Report—is the fact that the coincidence of the end of
that period and the end of the scheme is bound to bring uncertainty and
instability to the market. I would be grateful if my right hon. Friend
reflected on that, either now or at a later stage. How could current
operators and, potentially, new operators take decisions in their own
companies to invest if they did not know what was going to happen? The
coincidence of the end of the scheme and the end of the contract
represents a serious
point.
The second
point is the length of the contract. As hon. Members on both sides of
the Committee know, I am not the greatest advocate of EU
regulation—by and large, I think we are better off without most
of it—but I do not understand why in the rest of the country
there should be less flexibility and less application of European laws,
including the ability to extend those contracts by 50 per cent., than
is the case in London and within the rail franchising
system.
Regarding my
right hon. Friend’s final point, on which I ask her to reflect,
I completely understand that this is a new scheme. The London scheme
changed slightly over the period after privatisation. There had been a
publicly-owned system and there was a relatively smooth transition to a
franchise system, whereas in this instance we are moving from a very
lightly regulated
system to a franchise system. That, I accept, is a much bigger change
within the market. I also accept that it may need to be assessed. What
I do not necessarily accept is that this needs to be assessed at the
end of 10 years. Why cannot it be dealt with while the scheme is going
on? If there are failures or if extensions are needed—as my
right hon. Friend correctly points out, that might be the
case—that might be dealt with in the local transport plans,
which would be consulted
upon. I am happy to
come back to those points on Report, but I think that there are real
market issues. That is a different debate from the one about whether to
accept quality contracts. If one accepts quality contracts, there is a
real practical debate here about how to help the market to work to
maximum
effect.
11.30
am
Ms
Winterton:
The 10-year time period provides a good
opportunity to review the scheme itself and, if an authority had
decided to let a contract for the full 10 years, to say what would be
the new parts of a new tendering process. Running the two together
would not necessarily bring instability but could provide a good
opportunity to look at how the scheme is operating, to see whether it
had delivered and whether there should be different specifications in a
new tender process. The two might fall quite well together.
With regard to EU regulations,
I understand that the Community regulation to which my hon. Friend
refers recognises the difference between, for example, a design, build
and operate system for a light rail system compared with a bus
contract. There is a period of 15 years for rail contracts and 10 years
for bus contracts. Community regulation does specify difference in the
maximum.
I have
listened to the points made by my hon. Friend but it is still within
the local authority’s ability to vary either of the two periods
if it wishes to do so. There is a maximum when an authority would be
required to review the success of the scheme. If there were no major
changes to the way the scheme was to be run it could go ahead without
having to go an approvals board. I hope that reassures my hon.
Friend.
Graham
Stringer:
It does, in parts. As I understand it—I
do not mean to be sarcastic—the London bus system, which does
not have trams or trains, has the right under EU legislation to extend
those contracts if it wishes. I do not see why that should be
changed.
There is a
genuine difference between us on assessment of how the market might
respond to the ending of both the contract and the scheme at the same
time. My right hon. Friend has been very helpful and open-minded in
this debate and I ask her to remain so for further discussions on these
practical issues before we consider the Bill on Report. They are not
matters of principle but of making the scheme work, and on the basis
that we can return to the matter on Report and that there will be
ongoing discussion, 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:
As the Minister said, clause 29 has the effect of
extending the maximum duration of the contract from five to 10 years by
amending section 130 of the 2000 Act. As I said while we were
considering amendments Nos. 255 and 256, I am unsure whether the move
can be justified given that quality contracts are an uncertain beast at
the moment. The ramification is that the clause and the succeeding
clauses, far from extending the quality contracts rules from five years
to 10, might in a number of cases extend the quality contract to 20
years. That is an extraordinary provision for something that is untried
and untested. It creates an unnecessary restriction on the market and,
therefore, I will be asking my colleagues not to support the
clause.
Ms
Winterton:
Once again, the hon. Gentleman is showing his
complete hostility to the idea of quality contracts. As I have said,
there is a review of the quality contracts scheme after 10 years. Yes,
if it has not changed substantially, it can continue. We think that is
the right balance to strike, but the hon. Gentleman—because he
does not really believe in quality contracts in the first place—
is simply opposing the clause to illustrate more clearly than ever that
Conservative Front Benchers are hostile to these ideas.
Question put, That the
clause stand part of the Bill:—
The
Committee divided: Ayes 10, Noes
4.
Division
No.
14
]
Smith,
Ms Angela C. (Sheffield,
Hillsborough)
Question
accordingly agreed to.
Clause 29 ordered to stand
part of the
Bill.
Clause
30
Continuation
of scheme for further
period
Stephen
Hammond:
I beg to move amendment No.
214, in
clause 30, page 27, line 48, at
end insert—
‘(i) a list
of—
(i) those people who
have declared an objection to the continuation of the scheme,
and
(ii) the objections
declared by those people mentioned in
(i).’.
The amendment looks at the
whole concern about extending quality contracts beyond their initial
period. We have discussed the consultation process that a local
authority must engage in if it wants to introduce a
quality contracts scheme. I have argued that the consultation document
should contain certain additional elements and be made available to a
wider range of individuals and organisations.
I am glad to
see that where a local authority wishes to extend a
quality contract scheme, it must engage in a similar process of
consultation: that seems only logical. My intention
with the amendment is, as with my previous set of amendments, to ensure
that the consultation procedure is robust and effective. Those who
receive the consultation document, and are invited to respond to it,
must be aware of all the facts about the proposed extension of the
scheme. That is probably already adequately
covered.
However, the
consultation document is produced by the local
authority, and the very production of the document is evidence that the
authority thinks the extension would be a good thing. I am concerned,
too, that the document should also contain the evidence or views of
people who think that the extension would not be a good thing. They
should be entitled to have their points of view expressed and
understood by those who are consulted, so those points of view should
be in the document. In that way, people reading the document would be
able properly to assess and analyse the successes and failures of any
schemes in place, and members of the Committee will know from what I
have already said that I think there will be more concerns than
successes. Nevertheless, unless the consultation document includes the
views both of those in favour of an extension and of those opposed to
it, the consultation process cannot be as fair and open as possible. I
hope the Minister will reassure us that the document will be balanced,
even-handed and able to contain the views of both
sides.
Ms
Winterton:
The clause and these amendments will introduce
a new process to be used where a local transport authority wants to
continue a quality contracts scheme beyond its initial approval period.
This process would allow it to do so without having to make a new
scheme. Under the current legislation, it is not possible to continue a
quality contracts scheme in that way, and the authority would have to
go through the full process of making a new scheme if it wanted to do
so. The Bill would introduce a more flexible system, which will enable
a lighter-touch approvals process to be applied depending on the extent
of the changes. Under these provisions, if an authority wanted to
extend a quality contracts scheme, it would be required to publish a
consultation document reporting on the effectiveness of the scheme so
far, as well as making a case for continuing it for a further period of
up to 10 years. Where it is proposed that the scheme should not be
expanded to cover additional services, the scheme will not need to be
submitted for approval. This is, as I have said, a much lighter touch
than exists under current legislation, which requires in such
circumstances a whole new scheme to be
made.
In
my view, a consultation document should be drafted in impartial,
neutral terms with the objective of seeking open views from any
stakeholders with an interest in the proposal being considered. To
include details about objections to the proposal in the consultation,
including the identities of those who have objected, would cloud
neutrality and, as a result, could unfairly influence responses to the
consultation. I do not think that should be the objective of any
consultation, whatever the issue being
discussed.
Norman
Baker:
Will the Minister confirm that under the Freedom of
Information Act 2000, any comments made in support of or against any
particular proposal
of the consultation document will in fact be available for public
inspection?
Ms
Winterton:
I gather that certain exceptions are applied.
As I have said, however, the consultation is not supposed to be a
summary of everybody’s views. It is supposed to gather those
views. Until the consultation process has been carried out, it would
not be possible to have the objections, unless the hon. Gentleman means
to go back 10 years to when the scheme was originally made. Again, I do
not think that would make sense. The idea of the consultation document
is to say, “This is the view of what has happened in terms of
the scheme, and this is why we want to take it forward.” If
there were an objection to its being taken forward, it could go through
an appeal process. However, if the local authority wants to continue
with the scheme, and if it is the same, with no new proposals for
different services, it should be able to go ahead. The process gives
the opportunity to set down why the authority thinks it should
continue, and what has been achieved so
far.
Norman
Baker:
On the consultation point, the image I had in my
head was akin to a planning application where, if a planning
application is made, it is possible for individuals to write in to say
they are for or against the application. Those letters are on a public
file and can be inspected by the public at large. I hope the Minister
will tell me a similar sort of process will apply in this
case.
Ms
Winterton:
There would be a consultation document. If the
scheme was coming to the end of its 10-year period, the local authority
would set out why it believed it should go ahead with the scheme. If
there are no new proposals in the scheme, and it is roughly the same as
it was before, it does not need to go through the approvals process. It
can be appealed against, but it does not need to go through the
approvals
board.
11.45
am
If somebody
reading the document said, “Well, I do not agree with that, I do
not want the scheme to go ahead, I am going to appeal against it going
ahead”, it would go through that appeals
process. That is the system that would be adopted. If the scheme was
changing entirely it would need to go to the approvals board and
through a similar process whereby individuals would write in saying,
“We do not believe that the scheme should go ahead, will you
take our views into consideration?”. The approvals board would
see all those cases. That would be more of a consultation exercise but
there could be appeals against it.
Stephen
Hammond:
I think I heard the Minister say earlier that her
wish for consultation and the documents that set it out should be open,
fair and balanced. I take the Minister at her word and look forward to
that being the direction in the guidance, when it is set out, as to how
the procedure might work. With that acceptance and reassurance from the
Minister, I beg to ask leave to withdraw the amendment.
Amendment, by leave,
withdrawn.
Clause 30 ordered to stand
part of the Bill.
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