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Lord Dixon-Smith: The Minister did not pick up the point which I thought I had made plain as regards the circumstances in which the Government might agree to a quality contract scheme. I have every sympathy with a quality contract when there is only one operator or, as in some rural areas, none at all. There, the only way of running a service, for which one would pray there was a level of demand, would be through such a scheme. There is a clear distinction between that situation, which would warrant a quality contract scheme, and the one outlined by the noble Lord, Lord Bradshaw. He pointed out that under the legislation it is conceivable that a passenger transport authority for a metropolitan area might seek to make a single quality contract scheme and thereby deprive a number of people, who are providing a good service and a living for many people, of the ability to make that living. Therefore, there is a distinction.

I wish that the Minister had answered my point but perhaps in the flow of his eloquence he simply forgot.

Lord Whitty: I did not forget it, but the answer is more complex than the noble Lord was looking for. The Secretary of State, when approving a quality contract, will take into consideration everything which surrounds it; for instance, the content and the way in which it has been drawn up. Certain aspects would undoubtedly be possible disruption, the non-optimum use of existing assets and so forth. All those issues could be taken into account in deciding whether to approve.

As regards the noble Lord's second remark, quality contracts come into play when the local authority is satisfied that it cannot reach its transport objectives

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without going down that road. Therefore, there will have been a failure in the previous system. Whatever the operator was providing or potentially could provide, the local authority will already have judged that it would be better provided on a single arrangement with a single operator or consortium of operators with statutory backing. That judgment will have been made by the local authority before it goes down the quality contract road.

There is a closer analogy with the situation mentioned by the noble Lord, Lord Bradshaw, relating to refuse collection. In most circumstances in which the contractor changes, the majority of staff, and the majority of trucks, are taken on by the new contractor. I suspect that we would see a similar situation were a major local authority such as Manchester to move to a single and new contractor under a quality contract. Therefore, I believe that the degree of disruption has been exaggerated during discussion of the amendment.

Lord MacKenzie of Culkein: I recognise the difficulties and complexities to which my noble friend referred. I shall want to reflect on whether I with others have been barking up the wrong tree, but in the mean time I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 143 not moved.]

Clause 126 agreed to.

Clause 127 agreed to.

Clause 128 [Effect of scheme]:

[Amendments Nos. 144 and 145 not moved.]

Clause 128 agreed to.

Clause 129 [Tendering for quality contracts]:

Lord Dixon-Smith moved Amendment No. 146:

    Page 78, line 38, at end insert--

("( ) An invitation to tender under this section may not include conditions with respect to the terms and conditions of employment of persons to be employed in providing any service to which the invitation to tender relates.").

The noble Lord said: I have been trying to decide whether this is the reciprocal of Amendment No. 121A, moved by the noble Lord, Lord Stoddart of Swindon, or whether it is the reverse. But I am afraid that in the end I had to conclude that it was the opposite! However, that gives me cause for hope because, if it is the opposite of that particular amendment, presumably it should support the position that the Minister took in rejecting that amendment. Indeed, I believe that the Minister made the case for this amendment when he rejected that one. I must confess that I had some difficulty in understanding why the two amendments were not grouped together in order that we might have this rather interesting debate at the same time.

However, in response the Minister said that the Bill was about service to the public and not about terms and conditions of employment. He said that one could not legislate in this Bill for the employees of bus companies. In a sense, that makes my case. The history books show that on occasion in the past local

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authorities--I do not wish to point a finger in any particular direction--were not unknown for slipping clauses into contracts which related to the conditions of service of employees of contracting companies. I felt that that was improper then and I believe that it would be improper now.

I support what the Minister had to say earlier and I hope, therefore, that he might support me in this amendment. I beg to move.

Lord Whitty: The noble Lord, Lord Dixon-Smith, tempts me, but I fear that he misinterprets me. My previous position in relation to the amendment moved by my noble friend Lord Stoddart was that we should not on the face of the Bill require local authorities to be constrained to observe the terms and conditions of the pre-existing contractor. That remains my position. However, the Government would wish to change the situation where effectively there was a blanket ban on local authorities being able to do so, should they wish to and should they regard that as part of the way in which they can achieve better value.

Contrary to the noble Lord's view, we believe that it is perfectly proper for local authorities to do that if they wish to exercise that degree of influence. It may well be, for example, that training provisions and the level of experience of workers is important to the delivery of value for money and performance standards. Local authorities should be able to take such matters into account.

However, to complicate matters further, that is not the position at present. The Government intend to modify the current situation by means of an order under the Local Government Act which would allow local authorities to observe employment terms and conditions on a voluntary basis. I am opposed to that being done, as my noble friend Lord Stoddart argued, on a mandatory basis, but I would allow local authorities to do so. In the meantime, and until I move that order, the noble Lord's amendment is redundant because the current position is that local authorities are banned from so doing. Therefore, I believe that we should have the substantive discussion on an order under local government legislation in a few weeks' time.

Lord Dixon-Smith: I do not wish to enter a debate about when we shall break for the summer. However, it is interesting, to say the least, to see how the ground has shifted between debate on Amendment No. 120 and that on Amendment No. 140, if I may express it in those simplistic terms.

I am quite pleased to hear that my amendment is redundant, although that will lead me to certain conclusions. At the moment I am somewhat disturbed to hear that the matter can be settled in another way under different legislation in a few weeks' time, even if none of us is here. However, I suspect that we shall have to be here in order for that to happen. Clearly, there will be something to say at that point.

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I believe that this is an interesting issue. I shall need to consider both what the Minister said and what he considers to be appropriate courses for future action. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 146A:

    Page 79, line 24, at end insert--

(" ( ) If no acceptable tender is received or if there are no tenders for a service, after consultation, the terms of the contract shall be revised and the tender procedure re-started.").

The noble Lord said: This small amendment is intended simply to deal with the situation in which no acceptable tender for a quality contract is received. People may say that that cannot happen because one will never arrive at a quality contract if one does not negotiate it. However, in an open tender process it is conceivable that no satisfactory tender--or no tender at all--will be received. There should be provision to deal with that situation. I should prefer the terms of the contract to be looked at and the tender procedure to be gone through again in full. The alternative appears to be for the authority to come to a negotiated conclusion with someone who had previously not tendered satisfactorily.

Local authorities must have proper tendering processes. An element of negotiation may help to make some complex contracts more satisfactory, particularly for construction projects, but we are not dealing with a situation of that complexity. For the sake of everybody's peace of mind, the Bill should contain a mechanism such as that outlined in the amendment. I beg to move.

9.15 p.m.

Lord Whitty: The Bill already recognises the possibility of there being no acceptable tenders and makes provision for regulations under Clause 130(2)(a) in those circumstances. It is not sensible to prescribe in detail in the Bill what should happen. Local authorities will have a number of options open to them. They might include short-term action, such as the use of emergency powers--which is covered by the same clause--to maintain continuity of service. There might be a retendering exercise, with or without modification to the proposed contracts. A local authority could even fundamentally review the need for a quality contract scheme.

It is not helpful to box local authorities into a single course of action in those circumstances. They should be free to take whatever action is appropriate, subject to any regulations that may be made. We should leave local authorities with that flexibility, given that the Bill already recognises that eventuality.

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