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For example, is it possible that there could be agreement on a quality partnership scheme between a local transport authority or authorities and a bus operator or operators, and a third bus operator could make a challenge to the Office of Fair Trading on the basis that an uncompetitive or non-competitive practice had been put in place by the agreement of the quality partnership scheme between the local transport authorities and two bus operators rather than three, the third bus operator being the one that is complaining? For example, a quality partnership scheme might provide four buses an hour on a particular route, and a third operator wants to come in because he believes that the market could stand six buses an hour. Could he be denied the right, perhaps by traffic commissioners—I do not know who—to run those two additional services? Could he then go to the Office of Fair Trading on the basis that the quality partnership scheme was affecting the ability to compete? It would be helpful to hear from my noble friend what the role is or is not of the Office of Fair Trading with regard to quality partnership schemes.

The issue of admissible objections is a weakness in the Bill’s proposals. If a local transport authority is investing significantly in new facilities, it should be able to specify standards on fares, frequencies and timings. As I mentioned in the example that I used in relation to the Office of Fair Trading, a quality partnership may specify that there should be four buses per hour on a particular corridor and that those services should be evenly distributed for the benefit of passengers and to try to avoid bus war scenarios, one of which is still going on in Preston. Under this provision, you could find that, although this had been done to assist passengers and stop bus wars, it could then be thrown out under admissible objections.

As I understand it, there is no compulsion on operators to provide a service where a quality partnership scheme is in operation but, if they do, they should comply with the standards specified in the scheme. The Bill as it stands appears to allow an operator to object to the standards relating to frequency and timings even though such standards may have been specified following consultation and the full process. Objections are allowed by “relevant operators”. The definition of who might be a relevant operator seems wide-ranging; it might be any operator who operates or has operated services in the area covered by the quality partnership scheme. I am

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sure that my noble friend will correct me if I am wrong, but that presumably means that operators not involved in the quality partnership scheme might be able to raise objections to it.

One admissible objection from a bus operator might be on the basis that the levels of services provided or proposed in the quality partnership scheme were such that at least some of them could not be operated on a commercial basis. To reiterate what has already been said, where does the issue or the role of subsidy come into quality partnership schemes? Where does it come into it in such a way as to negate any admissible objection by a bus operator seeking to argue that services provided for within the quality partnership scheme were not necessarily all commercially viable?

I am not particularly optimistic that my noble friend will accept the amendment, but I hope that he will give a full explanation as to how he sees it working and that he will be able to respond to some of the questions that I have sought to raise.

Baroness Scott of Needham Market: I do not wish to get involved in the emerging division between local authority and PTE-type people on the one hand and bus operator-type people on the other. I simply make the point that, whichever side of the divide you are on, the need for clarity and certainty in this area is absolutely paramount. One cannot expect bus operators to make the sort of investment that they might make unless they can be clear that the agreement will stick and that, as the noble Lord has just said, the Office of Fair Trading cannot suddenly intervene and pull the rug from under their feet.

Equally, from the point of view of local authorities, it is not just the amount of money that they invest in a quality partnership but the political capital that they invest when they do it. There is now a consensus that tackling congestion is the key to tackling a range of problems. Whether they are economic growth or environmental issues, tackling congestion is essential. Local authorities that are prepared to allocate road space in a different way take a huge amount of grief; indeed, they lose elections because of it. That is why many of them are so reluctant to do it. Where they do it and it is part of a quality partnership arrangement, they need to be sure that the arrangements will stick.

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The existing quality partnership arrangement has been a waste of time. Without fares, frequencies and timings, there is nothing in a current statutory quality partnership that cannot be achieved by a voluntary route. Indeed, I was involved in putting together one of the very first ones in Suffolk in 1993 where, incidentally, the quality of driver training formed part of our voluntary quality partnership. If quality partnerships are to move on to the next level, they need to include these issues, but that means that we need to build in certainty for both sides. If the guidance is clearly understood and debated before the Bill completes its passage, that will provide clarity for everyone as we move forward.

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Earl Attlee: I have Amendment No. 19 in this group. I am grateful to other Members of the Committee who managed to restrain my enthusiasm for speaking to it prematurely.

The Bill amends the Transport Act 2000 to allow frequencies, timings and maximum fares to be included in the partnerships. That seems sensible, and many noble Lords have commented that any proposed scheme should principally take the public interest into account. I was interested to see that the Bill lifts the Transport Act provision that schemes can include requirements as to frequency and timing of services only,

What does that mean in practice? Why are some schemes that provide frequencies, timings or maximum fares acceptable while others are not?

It is clear that all authorities should have the ability to set requirements. This is particularly important in rural and remote areas. Where 16 per cent of rural houses are without a car, the lack of mobility causes significant difficulties, including isolation and social exclusion. For people who live in rural areas, bus services are an essential, not a luxury. The ability of authorities to help remote and rural communities with the problems they face depends fundamentally on minimum frequencies at a cost that is not prohibitive. However, it is almost as important that such services are linked up and co-ordinated with the essential services intended by the journey. This argument applies equally to non-rural areas, which is why there are no circumstances in which this should not be the case. I look forward to the Minister’s explanation of what,

is for.

Lord Berkeley: I apologise for being slightly late for this group. I shall speak briefly to Amendment No. 16A, which is tabled in my name. It covers the issue of frequencies, timings and fares within statutory quality partnerships. The noble Lord, Lord Low, was braver than me when he said that instead of guidance we should have regulations. He is quite right about that. I suggested that the guidance needs to be redefined every five years but, as other noble Lords have said, the key issue is what is included in it. Perhaps the 148-page document from the Department for Transport and the OFT will give us the answers. Like other noble Lords, I have not read it all in the space of a day, but we need clarity, which I hope it gives, about whether it allows bus operators to know whether they are forming a cartel and whether they are allowed to charge the same fares. I live in Oxford and two companies run a bus up my road every few minutes. They both charge the same fare, which seems quite high, but the tickets are not interchangeable, which is crazy. That needs clarification. However, you will have to be pretty keen to do these things if you are to go through this document and ensure that you will not be looked into by the Office of Fair Trading for running a cartel or whatever. Perhaps my noble friend can clarify some of these issues.

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Lord Snape: I, too, apologise to noble Lords for missing parts of this debate. I shall be extremely brief in what I have to say. It is fascinating that one of my noble friends thought that partnerships included fares and services. There have been demands for them to do so but partnerships mean just that, and you cannot call it a partnership if you lay down detail to that extent. We will come in due course to the debate on quality contracts and their value or otherwise, but if you are in a partnership, fares and services should be discussed. The view in the bus industry is overwhelmingly that if you are spending £750,000 a time on a double-decker bus, you want some say in the fares charged to passengers on that bus and in where and at what time of the day you operate it. That is not unreasonable.

I welcome the proposal to ease the present restrictions. Again, at the risk of boring noble Lords, during my time as chairman of Travel West Midlands, we introduced a new service in Coventry known as Prime Line in partnership with the city council. I emphasise that the city council provided the infrastructure. The service was quite successful and the number of passenger carriers increased dramatically. Along came another operator who wished to operate on the same route. Despite the view that the private sector is full of wicked capitalists and pirateers, TWM could make no objection to that. In fairness to the other operator, he too provided new vehicles to a satisfactory standard, which is not always the case. The problem was that, under the existing legislation, we could not co-ordinate fares or timetable services because of the danger of the OFT saying that we were colluding unnecessarily. It is impossible to talk about integration of various modes of transport when, under the existing law, directors are likely to find themselves getting their collars felt if they try to integrate one mode of transport—that is, the bus. I hope that the Minister will offer us some comfort on that point. We will return to the vexed question of fares and services under a later clause.

Lord Bassam of Brighton: We have had a fairly wide-ranging discussion around this group of amendments. That is no great surprise because they are fairly broad in their extent and in the range of concerns that they cover. I should offer an early admission, particularly to the noble Lord, Lord Low of Dalston: in framing our response to this group of amendments, we had not anticipated that he would raise issues particularly relating to equalities and to bus users who have a particular disability. That is an oversight on our part because we had not anticipated that admissible objections would be abused in that way. I apologise for that as it is clearly an important subject. We shall have to think carefully about what the noble Lord said. He made some important observations and comments.

We have addressed equality issues. Chapter 3 of the impact assessment, which looks at the Local Transport Bill, covers some of them. I found the document helpful. It provides an interesting background on the nature of bus users, breaking them down by race, gender and so on. Part of the Government’s overall drift is to improve transport

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provision for people with disabilities. We have made some considerable progress in that regard. In framing legislation, we have to take very careful account of some of the general principles involved in the Disability Discrimination Act 2005, which in many ways is landmark legislation.

We take particular care and concern of those issues. I am very mindful that we shall need to study carefully the observations of the noble Lord, Lord Low of Dalston, on the Bill. We do not anticipate that the admissible objections process would be used or abused in the way in which the noble Lord thought might be the case. I take his point that frequency of service and timing are very important. In Government, we feel that we have an obligation to raise standards on provision, which is part of the Bill. Raising standards on bus provision means that we have to take account and ensure that others, on our behalf, take account—that is how this works—of people’s disabilities and what they bring as passengers.

I live in an area where bus services are very good and we have a modern fleet. I know that the company that provides the service is very mindful of people with disabilities and provision is sensibly made to ensure that a wide range of customers find the service easily accessible. It is probably a model of good practice. I know other areas are moving in the same direction, if they have not already got there.

That said, the issue of admissible objections is important. I am grateful to all Members of the Committee who have addressed it, even though the purpose of the amendment is to strike away the provision. Perhaps I should explain how we arrived at our position on this concept. In the draft Bill, published last May, the provisions on quality partnership schemes included a requirement that, if a local authority wanted to specify maximum fares as a standard of service, the scheme must include a procedure for reaching agreement with operators on the initial determination or subsequent revision of such fares. The noble Lord, Lord Rosser, picked up on the point that the draft Bill included no such provision for requirements about minimum frequencies or the timing of services.

In consultation, operators argued—we thought not unreasonably—that they could be put at very grave financial risk if provisions on any of these matters were imposed by local authorities without their agreement. In fact, any sensible local authority would take care to consult operators, even before consulting the public, to ensure that its proposals were practicable and cost-effective. It seems highly unlikely that a requirement would be imposed over the heads of operators.

The Transport Committee in another place commented that it is not right that one party to a partnership—the point made by the noble Lord, Lord Snape—can set bus frequencies, timings or anything else without the consent of the other parties. It recommended that the Bill should include provision to guarantee that partnership criteria such as frequencies and timings are set by agreement between the authority and the bus operators. The Government accepted the committee's view that the spirit of partnership needs to be maintained as far as possible.

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At the same time, we do not want to enable operators simply to veto any proposal to include frequency, timing or maximum fare provisions in a quality partnership scheme. In particular, we would not want a single operator to be able to block a scheme that had good support from other operators in the area. In short, operators should have a right to object, but not all objections should be of sufficient weight to rule out frequency, timing or maximum fare provisions being included in a quality partnership scheme.

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The provisions in Clause 12 are supplemented by those in Clause 17, which enable the Secretary of State, or Welsh Ministers, to specify in regulations the meaning of “admissible objections” and “relevant operator”. The regulations would also describe how questions as to whether particular objections and operators fell within those categories would be determined.

If this amendment and the related amendments to Clause 17—that is, Amendments Nos. 16, 18, 20 and 21—were accepted, operators would have no redress if a local authority imposed a totally unrealistic frequency or timing requirement or a maximum fare that was totally inadequate to cover the cost of providing a service, particularly one of the quality required. Rather, they would have one option left open, which would be to withdraw services entirely from the area covered by the quality partnership scheme—in other words, the exercise of a veto. We can argue that that would render the scheme worse than useless, and it would obviously have a seriously detrimental effect on the interests of passengers. Indeed, if the Government accepted these amendments, the potential effect would be contrary to one of the stated aims of the Bill, which is to improve the provision of public transport.

Therefore, we need to strike a reasonable balance. We are aware that these are sensitive issues requiring further consultation with all involved—in particular, the local authorities and the bus industry—before any regulations are made. I make the commitment that that careful further consultation will take place, and we will work closely with stakeholders on the development of the regulations, so there will be an iterative process.

Meanwhile, the draft guidance, which has been made available in the Library of the House, gives a clear indication of the Government’s intentions in this provision. They are set out in box 1 of volume 3, which deals with quality partnership schemes. I stress that this is only a preliminary view, and the Department for Transport will no doubt develop its thinking further in the light of the views of interested parties and, of course, in the light of the comments made today in Committee.

To summarise the description in that box, the Government consider that an objection should be “admissible” if, first, it is made in writing within a specified time by an operator of services directly affected by the proposals; secondly, it is made either on the grounds that it would not be reasonably practicable for operators to meet the standards of

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service specified at the time they would come into effect or that the likely demand for the services would not be sufficient to enable operators to provide services to the standard specified on a commercial basis; and, thirdly, the traffic commissioner has certified that the evidence submitted by the relevant operator is sufficient to substantiate the objection.

Although that represents the Government’s current thinking on this matter, we do not wish to set it in stone in the Bill when we clearly need to consult the parties further and ensure that we have the balance right. Even after consultation, we may find that we need to refine the definition from time to time, and that is the advantage of putting the detail in regulations rather than in primary legislation.

I hope that my noble friend Lord Rosser and the noble Lord, Lord Low, now understand the purpose of the “admissible objections” provision—I am sure that they did before—and, in view of what I have said, that they will not press their amendments.

I turn to Amendment No. 16A in the name of my noble friend Lord Berkeley. My noble friend has come at this from a different angle, suggesting that the definition of “admissible objections” should be dealt with in guidance from the Secretary of State—and presumably from Welsh Ministers—rather than in regulations. It is a matter of judgment which form of rule-making is preferable in which case; one fits in one set of circumstances and another fits in a different set of circumstances. Regulations have the force of law, whereas guidance, even statutory, is generally something which people must have regard to, take account of, think about, reflect on and so on. They are made by statutory instrument and laid before Parliament and are therefore subject to greater scrutiny and consideration. That is not the case with guidance, unless special statutory provision is made. Introducing a parliamentary procedure for guidance may remove some of the necessary flexibility achieved by setting our provisions in guidance in the first place. Guidance is helpful as it is more easily amended over time to reflect different trends, pressures and even different sorts of services.

I am not attracted to the idea that guidance should be reviewed every five years, which seems arbitrary. It may be better to review it after shorter periods—it depends on the need of the time. It might need to be reviewed more quickly in the light of experience, or it may be so robust that it lasts for longer, but we would know only once it was in place and properly tested. Regulations can be amended at any time. I do not see how the amendment would improve the Bill. For the reasons that I have given, I hope that the noble Lord will withdraw it.

The amendment of the noble Earl, Lord Attlee, is interesting, too, because it comes at “admissible objections” from a slightly different direction. If I understand the amendment properly, it would not delete the provisions on admissible objections as they would apply to quality partnership schemes which make requirements as to frequency, timing or maximum fares. Rather, it would provide a power to disapply those provisions by regulations, and, I

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presume, a further set of regulations could reapply them by revoking the first set. We could, at least in theory, try out both approaches and see which worked better.

I am not persuaded that anything is wrong with the provision as drafted. It would allow regulations to provide that new Section 114(6B), the admissible objections rule, would not apply,

The phraseology has that benefit. The rule could then apply in some circumstances, but not in others. Virtually every circumstance could be prescribed, although it would be an unusual use of the power to disapply the rule in all circumstances. I am not sure that much is to be gained by the amendment, and a great deal could be lost because the power to disapply the rule in some circumstances would be lost.

I shall respond to one or two of the questions and points that were made in addition to those that I have covered. The noble Lord, Lord Low of Dalston, mentioned services in a partnership having to be profitable. Nothing is specified on that issue, but companies clearly seek to make an overall operating profit from their commercial services. Not each specified service has to make a profit from that perspective; companies operating across the piece will seek to ensure that those services are profitably run. Quality partnership schemes do not rule out some services being subsidised; they cover subsidised services. Local authorities would be able to subsidise socially necessary services which would not otherwise be provided, as they do at present.

The noble Lord, Lord Rosser, referred to the draft Bill and the quality partnership scheme including maximum fares with the agreement of operators. We have extended the scheme also to frequency and timings, as I have made clear, simply to ensure that authorities cannot impose unrealistic requirements on operators. We have introduced the idea of admissible objections to ensure that operators do not have a carte blanche veto. Instead, they would have to demonstrate to the satisfaction of the traffic commissioners that the requirements in the scheme were not deliverable or viable. That is an important test.

The noble Lord, Lord Rosser, raised the question of the role of the OFT in quality partnership schemes. The local authority function of making quality partnership schemes must satisfy the competition test. That is why the OFT is involved in this issue. In Part 1 of Schedule 10 it is made clear that any registration restrictions would also have to satisfy that test. The OFT is the enforcement agency and could require changes to a scheme if it were found not to meet the competition test.

The noble Lord asked about the general role of the OFT and why it is on the front page of the guidance. It largely drafted volume 5 of the guidance, as agreed through the Bus Partnership Forum. The OFT has a role under Schedule 10 to the Transport Act 2000 to adjudicate on whether quality partnership schemes satisfy the competition test.

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