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Baroness Farrington of Ribbleton: My Lords, perhaps I may remind noble Lords that this is Report stage. Once the Minister has finished replying, it is not possible for noble Lords to intervene. Perhaps it would be helpful to the House if my noble friend were to offer to write to the noble Lord.

Lord Biffen: My Lords, I am more than happy to receive a reply in writing. I apologise for my mistake.

Baroness Scott of Needham Market: My Lords, I am grateful to the Minister for that reply--although I am slightly disappointed. To those on these Benches, as longstanding advocates of devolution, the principle of the devolved assemblies making their own decisions is the right one. However, I remain firmly of the view that this is an operational matter. Since many of the contractors will be the same bus companies, I am surprised that they will require six months in Scotland and 21 months here. Twenty-one months is a long period of time. I am reminded that we had three transport Ministers in less time than that at the start of the Parliament. Nevertheless, for the present I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 110 not moved.]

Clause 127 [Postponement of scheme]:

[Amendment No. 111 not moved.]

Clause 128 [Effect of scheme]:

Lord Dixon-Smith moved Amendment No. 112:

The noble Lord said: My Lords, this group of amendments deals largely with the problems of quality contracts, which create a local monopoly. The amendment seems to me a reasonable one. Paragraph (b) of subsection (1) of the clause states that,

    "no local service shall be provided in that area"--

namely, the area of a quality contract--

    "unless it is provided under a quality contract",

for the duration of the contract.

The contract might be in place for up to 10 years. Circumstances can change dramatically over that time. It is possible to conceive of situations where community developments so change circumstances that an operator might come along and wish to run a service that simply had not been a consideration at the planning stage of the quality contract scheme. Even though the operator might be willing to take a purely commercial decision, because of the existence of a quality contract scheme that would not be possible under the Bill as it stands. We do not believe that to be a reasonable way forward.

Amendment No. 113 has been tabled to provide a greater degree of flexibility. It refers to,

    "local services which are additional to the local services to be provided under the quality contract".

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In other words, it envisages the consequences of just those kinds of changes which can and do take place from time to time in communities. We do not believe that it is right that additions to services within an area of quality contracts should necessarily be prevented. The amendment seeks to prevent an absolute monopoly being created.

Amendment No. 114 deals with a slightly different situation--where a contractor or service provider is in default for a period of time. It will allow a person who is prejudiced as a result to,

    "apply to the appropriate national authority for a declaration that such default has occurred and, upon the making of such declaration, subsection (1) shall no longer apply".

In other words, the contract would come to an end. Once again, we believe that that safeguard ought to be on the face of the Bill. The Minister will undoubtedly have some explanation as to why it is not, but it seems peculiar to me. Such provisions, which are meant to deal with a certain situation, ought to be on the face of the Bill so that everyone can understand them. Indeed, not only should they be in some part of the Bill; they should also be on the face of the Bill in relation to the actual part with which one is dealing so that both pieces of legislation can be read together, thus making everything clear.

Amendment No. 115 deals with a different matter; namely, terms and conditions of employment in respect of a contractor. It says that such terms and conditions should not be part of a an invitation to tender. That phraseology was, more or less, in the original draft of the Bill, but has since been withdrawn. There is unfortunate experience as regards what happens when local authorities intervene in this regard. We do not believe that to be appropriate. The Government have said that the clause is redundant because it represents the current position at law. That may well be so, but I understand that the law is about to change. If that is the case, we need to know that the position is, none the less, secure. We do not believe it to be appropriate that transport authorities should become involved in matters such as the conditions of employment of their contractors. That is why the amendment has been tabled.

Amendment No. 116 has been tabled because we believe that the suggested wording--we love to help the Government in this way--is helpful. It would make the wording of the Bill both clearer and briefer. That is a worthwhile ambition to which we should all aspire. Amendment No. 117 deals with a provision for the termination of a scheme in default. Amendment No. 178 seeks to include quality contracts schemes in the effects of the Competition Act. As I understand it, they are more or less excluded at present. The Government may well argue that, by making these contracts subject to the Competition Act, we are nullifying them. That would be a highly beneficial effect. However, as I said, we object to the creation of artificial monopolies. We believe this to be an appropriate amendment.

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This is a slightly diverse group of amendments. I hope that I have worked through them with a degree of clarity, though I suspect that I may have failed. I have no doubt that the Minister will put me right if that is the case. I beg to move.

3.30 p.m.

Baroness Thomas of Walliswood: My Lords, there are two amendments in this group tabled in the name of my noble friend Lord Shutt of Greetland. These amendments were originally tabled by the noble Lord, Lord Morris. Unfortunately, the noble Lord is not present in the Chamber, and my noble friend is unable to reach us today due to the current weather conditions, living as he does in the far North West. Rather than attempt to put forward the arguments, I ask the Minister to be good enough to supply us with the answers to these amendments that he will have had prepared for him. I believe that to be the best that we can do in the circumstances.

Lord Whitty: Perhaps I may begin by dealing with the point made by the noble Baroness, Lady Thomas. I shall be happy to write to the noble Baroness and her noble friend explaining our understanding of why those amendments are unnecessary, and shall do so as rapidly as possible.

I turn to the amendments in the name of the noble Lord, Lord Dixon-Smith. There were occasions during his remarks when he could not disguise the fact that he would rather like to delete quality contracts from the Bill. Therefore, even in his eyes, these amendments would be second best. They are, to a significant degree, directed at diluting the principle of exclusivity in relation to quality contracts situations--a discussion that we have had on at least one occasion, though probably more, during the passage of the Bill.

The Government believe that the whole point of quality contracts is the fact that the exclusivity principle is crucial as regards the services covered by them. If, for example, it were possible for other operators to have freedom to continue to run services in competition with quality contracts services, that would undermine the quality contracts arrangements. Frankly, that would be the direct and obvious effect of Amendments Nos. 112 and 113. It is simply not practical to run a quality contracts operation in parallel with a deregulated system for buses for those same services. Therefore, I cannot accept the principle of these amendments.

Amendment No. 114 seeks to provide a more limited mechanism for disapplying the exclusivity provisions. This would apply where there has been a declaration by the national authority that a QC contractor has persistently and materially defaulted on the terms of a contract. Such a declaration could be sought by a person who has been prejudicially affected by the default. The procedure being proposed here is slightly odd. I do not believe that it is an appropriate or a necessary remedy. Like any other contract, a quality contract imposes contractual operations on the operator. As with any contract, the remedy for default

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rests with the contracting authority--in this case, the local authority--rather than anyone else. Therefore, I do not believe that amendment to be appropriate.

Amendment No. 115 would reintroduce a provision that was, at one point, included in the Bill. It would replicate the provisions of the 1985 Act. As the noble Lord said, it is also true that this amendment is unnecessary under the law as it stands. However, he is also right to say that the law is about to change, although I suspect that the noble Lord and I disagree rather profoundly on the matter. The law is about to change in what I would regard as a positive way: where employees' conditions may be relevant to the achievement of best value, the decision as to whether or not that is written into the contract should be left to the discretion of the local authority. An order is due to be made under the Local Government Act 1998. It will remove the blanket ban that the previous government imposed in relation to transport legislation, as regards when such matters are taken into account by local authorities. While I understand where the noble Lord is coming from, I am coming from almost diametrically the opposite direction. Therefore, the amendment would be contrary to current policy.

If I understand the noble Lord correctly, the general intention behind Amendments Nos. 116 and 117 is that quality contracts schemes must be terminated in various circumstances, including a need for urgent action to keep the services going or to meet unexpected need. This would also include cases where there is no tender, or no acceptable tender, for a quality contract.

Clause 130 is only about exemptions from the requirement to go out to competitive tender; it is not about ending the quality contract altogether. Thus the purpose of Clause 130(1) is to ensure that local authorities can take urgent steps to keep bus services going or to meet urgent needs. Such steps might be accepted if an operator were to go bankrupt or if, for example, a special case arose where something even more disastrous than the weather that we have seen of late were to arise. To cover such cases, we envisage that regulations referred to in Clause 130(3) would fix a limit on the length of such a special contract, after which the local authority would have to go out to tender, as originally intended. Therefore, I do not think that the noble Lord's intended amendment of the clause is appropriate here.

Amendment No. 178 amends Clause 152. The clause provides for the competition test set out in Schedule 10 to apply to the exercise of a local authority's functions under the Bill with regard to quality partnerships, ticketing schemes, subsidised services and so on. The amendment would add quality contracts to that list making them subject to the competition test. There is no obvious need for quality contracts to be brought under the terms of Clause 152. Quality contracts are by definition awarded only after a competitive tendering process. The Bill provides adequate safeguards to ensure that the procedure for making quality contracts is open, subject to consultation and transparent in its

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proceedings. I therefore do not believe that the amendment is necessary. I hope that the noble Lord will not pursue it.

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