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Grand Committee

Monday, 17 December 2007.

The Committee met at half-past three.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) in the Chair.]

The Deputy Chairman of Committees (Baroness McIntosh of Hudnall): I remind the Committee that if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and will resume after 10 minutes.

Local Transport Bill [HL]

(Third Day)

Clause 54 [Powers of traffic commissioners where services not operated as registered]:

Lord Rosser moved Amendment No. 64:

The noble Lord said: This amendment relates to Clause 54, which seeks to give additional powers to traffic commissioners,

The Bill refers, towards the bottom of page 47, to,

That subsection relates to where a traffic commissioner,

Subsection (5) states that they,

The amendment would ensure that, as well as being sent to the operator or, if appropriate, the local traffic authority, copies of reports on remedial measures that the traffic commissioners produced, following inquiries, would also be sent to,

It is difficult to see how an integrated transport authority could not be affected by any recommended remedial measures; hence the amendment, which makes it clear that if it was, the traffic commissioner would be required to send it a report as well. I beg to move.

Baroness Crawley: My noble friend has made a very reasonable request. Having looked at Clause 54 again, it seems rather surprising that there is no

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requirement to send a copy of a report on bus performance to the authority that is responsible for local transport policy. I am happy to reflect on the points that my noble friend made and see whether we can come up with a suitable amendment on Report. With that reassurance, I hope that my noble friend will withdraw the amendment.

Lord Rosser: In the light of that, I am happy to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 54 agreed to.

Clause 55 [Additional sanctions for failures by bus operators]:

[Amendment No. 64A not moved.]

Baroness Crawley moved Amendment No. 64B:

(a) as respects England, unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament;(b) as respects Wales, unless a draft of the instrument has been laid before, and approved by a resolution of, the National Assembly for Wales.”.”

The noble Baroness said: Clause 55 would amend Section 155 of the Transport Act 2000, which empowers the traffic commissioner to impose financial penalties on bus operators who fail to operate their services on the terms of the registered particulars, who fail to comply with the requirements on a quality partnership scheme or who operate unlawfully in the area of a quality contracts scheme. It introduces two new financial penalties in addition to the existing straightforward fine. But there is also a provision for the Secretary of State or the Welsh Ministers to prescribe additional penalties by statutory instrument. The Bill as introduced makes no special provision for orders under this clause, so they would stand to be subject to the negative resolution procedure in accordance with Section 160 of the Transport Act 2000. The Delegated Powers and Regulatory Reform Committee of this House recommended that, given the broad nature of the power, an affirmative resolution procedure would be more appropriate. The Government accept this recommendation. I beg to move.

On Question, amendment agreed to.

Clause 55, as amended, agreed to.

Clause 56 agreed to.

Clause 57 [Revival of certain powers of PTEs]:

Lord Rosser moved Amendment No. 65:



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The noble Lord said: As I understand it, the Bill proposes reinstating the power of passenger transport executives to own and provide vehicles to operators. This amendment would enhance that power formally to allow passenger transport executives to provide vehicles to community transport operators. I believe that most PTEs do this as a matter of course but Amendment No. 65 would regularise that position.

Amendment No. 66A would give passenger transport executives the operator of last resort powers if a quality contract was terminated or services under that contract ceased, perhaps because the operator had defaulted on the contract. Not dissimilar powers are available to the Government under rail franchising and, I believe, to Transport for London for bus franchises in London. Obviously, the power is intended to be used as a last resort and only for so long as it is necessary for the passenger transport executive to procure an alternative provider of services.

Amendment No. 66 relates to the infrastructure. Depots are an obvious requirement for any quality contract scheme. The incumbent operator will generally own their own depots and is under no obligation to release them to a local transport authority or, indeed, to any other successful bidder to help facilitate an initial quality contract. Reference has already been made to the fact that a prominent bus operator, the chief executive of Stagecoach, was quoted in a Sheffield newspaper in October 2006 as saying:

Local transport authorities may decide to build and lease new, modern, purpose-built facilities to help facilitate the quality contracts schemes. However, as we well know, in some of the largest urban centres with the strongest economies, finding a suitable site and getting planning permission, which is also a headache, could prove to be very challenging indeed. The amendment would allow passenger transport executives to acquire land compulsorily where this is required for the purposes of securing services under a quality contracts scheme. For example, the power might be required to acquire a depot without which services might not be effectively operated.

I have sought to explain the purposes of these amendments. I hope that my noble friend will be able to respond sympathetically. I beg to move.

Lord Snape: I do not think that anyone could undermine the principle of quality contracts quite as well as my noble friend just did in proposing these amendments, which would be another raft of public expenditure writ large if QCs are accepted or become commonplace as a result of the passage of this Bill. I should like to put a number of questions to the mover of these amendments, in particular on Amendment No. 66A. Could my noble friend envisage such an amendment being necessary if quality contracts were not part of this Bill? Has there been any example of quality partnerships up and down the country failing in the way he just outlined that they might? My noble friend talked about operators defaulting. Under the

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2000 Act, has there been any example of an operator defaulting so far as quality partnerships are concerned and the fairly expensive measures outlined in this group being necessary under existing legislation?

My noble friend referred to the comments made by the chief executive of Stagecoach. I have never been involved in the Stagecoach operation, but it is perfectly legitimate for the chief executive of that or any other company to say that they will dispose of their facilities and premises in any area up and down the country in any way they want if they are no longer necessary because of this legislation and the implementation of quality contracts. I wish that those who advocate quality contracts with such passion—I know that the brief to which my noble friend referred was prepared by the aptly named Mr Jeremy Bray on behalf of the Passenger Transport Executive Group—would acknowledge that their proposals will be extremely expensive. It is not just a question of switching from one operator to another. The problems outlined so ably by my noble friend will happen from one end of the country to the other.

After the Minister has replied, I should be grateful if my noble friend would outline an idea of the amount of public expenditure that will be necessary to meet the cost of the amendments.

Lord Berkeley: I am sorry that I missed a foretaste of this debate among Labour Party Members on this Committee the other day. I very much support these amendments in the name of my noble friend Lord Rosser. As he said, they are very similar in intent to what has been done with railway passengers. My noble friend Lord Snape said that there has never been a case of operators defaulting. That may be true, but there was not a case of operators defaulting or failing on the railways until Connex did it. Then there were powers in railway legislation for the Government to take it over until they could find another operator.

Lord Snape: I hope that my noble friend will acknowledge the difference between railway franchising and the legislation that brought that into being and the legislation before the Committee. They are as chalk and cheese. They might refer to methods of transport, but the sort of provisions and difficulties to which my noble friend referred were envisaged and drawn up as part of the railway franchising process. They have not been for “bus franchising”—if that is the right term for quality contracts, which I believe it is.

Lord Berkeley: I hear what my noble friend says. Of course, they are completely different, but the effect on the passengers is much the same. The buses would not run, just as the trains would not have run. This attempt by my noble friend Lord Rosser is to ensure that the buses keep going if an operator withdraws. Perhaps it is the wrong way, but if the noble Lord, Lord Snape, could say, “Someone else will step in immediately, even without a contract or bus garages”, that would be fine. But there is a lot to be said for something like these amendments.



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3.45 pm

Lord Bassam of Brighton:My noble friend Lord Rosser has raised some interesting points and some interesting points have been put to him during the debate. Perhaps I should make it plain that the Government cannot accept any of the amendments as they are, but they raise issues that we might want to explore further. I shall explain.

The main purpose of Clause 57 was to put the PTEs on an equal footing with other local transport authorities. Those other authorities do not have a specific power to lease buses to operators, but can do so as a use of their general well-being powers under Section 2 of the Local Government Act 2000. That procedure has been used in relation to contracted services and approved by the Department for Transport and the authorities’ auditors. The PTEs are in a different position, partly because they do not currently have well-being powers, although if Clauses 86 and 87 of this Bill are enacted, their parent authorities will have them in future, but more importantly because the power they explicitly had under the Transport Act 1968 was taken away by orders made under the Transport Act 1985 and there is, therefore, doubt whether even the provision of well-being powers would be enough to authorise them to lease buses. That is because well-being powers are limited inasmuch as they cannot confer a power on an authority to do something which they would otherwise be unable to do because of a prohibition, restriction or limitation in other legislation. Therefore, Clause 57 is explicitly seeking to remove the implied prohibition in Section 10(1)(viii) of the Transport Act 1968 in particular circumstances.

The revived power is expressed in narrow terms, linked to the operators providing services to the PTE under contract, either the normal subsidy contract or a quality contract. We are not in favour of giving them an unrestrained power to lease out buses, even for purely commercial operations. We believe that that could create distortions of competition between different operators.

The next amendment concerns the PTEs’ power to acquire land by compulsory purchase. I shall reflect on what my noble friend has said, but the existing power is very broad and would be construed in relation to a PTE’s current statutory functions which, since the Transport Act 2000 came into force, have included, potentially, letting quality contracts. It is not immediately obvious, therefore, that the power needs extending in this way.

Finally, and most intriguingly, there is the question of whether PTEs should get back not only some of their power to lease buses, but also some of their power to operate them. The Government have no intention of restoring the power in full and going back to the pre-1986 position. However, I am persuaded that Amendment No. 66A would not allow them that possibility and scope and could allow them to operate buses only in narrowly defined circumstances where they would indeed be operators of last resort. Noble Lords have pointed out that there are similar provisions on rail franchising and in London bus legislation.



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We should not simply dismiss the arrangement out of hand. It raises a number of issues, however. One is whether it is right to give the power to the PTEs themselves, rather than requiring them to set up operating subsidiaries which, as I understand it, is the practice elsewhere and was a requirement under the Transport Act 1985 when the original PTE power was removed. Another is that they would have to have a PSV operator’s licence under the Public Passenger Vehicles Act 1981, and if they were to be in a state of readiness to take over services at any time, they would have to get it from the traffic commissioners well in advance. This is not a formality, as any bus operator would explain. It would mean having a transport manager with a certificate of professional competence who, presumably, would have to be available to step in at any time even though he or she would not be needed to manage any transport for most of the time. This may not be a problem for PTEs at the moment, but I suspect it could be in the future, particularly if new European Commission proposals are adopted which would considerably tighten the rules on transport managers and professional competence. I shall certainly ask the Minister of State and officials to look again into some of these matters between now and Report, but I cannot agree to this set of amendments today. It would not be appropriate to do so, and I am not entirely confident that they would work, but it is worth our giving some further thought to some of the issues raised by the noble Lord, particularly in the last amendment in the group.

Lord Snape: I apologise for detaining your Lordships for another couple of minutes on Amendment No. 66A, but I get the impression that the Minister is fairly sympathetic to at least some parts of it. Will he say in what circumstances he would envisage its provisions being necessary if he is prepared to take another look at it, as I suspect he is? Most bus companies—I am talking not only about the big five, if that is the right term for them—are fairly reputable organisations. It is inconceivable that many other companies that run buses in the United Kingdom would go bust, so why does the Minister think it necessary to have this fallback position in relation to the amendment, if that is indeed what he thinks?

Lord Bassam of Brighton: The noble Lord, Lord Berkeley, gave my noble friend an example in a sense. One of the operating companies could go into administration, and it might be appropriate in that circumstance for the PTE to step in as a last resort. I have the confidence that my noble friend Lord Snape has that nearly all bus operators are reputable. I am sure that the big five are capable of dealing with most of the problems that sometimes occur in any industry. There may be an occasion—I hope that there will not be—where a small operator, perhaps in extremis, fails and goes into administration and someone needs to step in and be that operator of last resort. As my noble friend has said, we have not had anything close to that yet, but it would offer a measure of public reassurance if another operator did that. Most of us, however, would not envisage or welcome it happening.



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Lord Snape: I apologise again for returning to the amendment, but it is important. If we are talking about quality contracts, and we are, am I right in thinking that the Minister thinks that the quality contract might go in the first place to a smaller company as I outlined when we debated the whole principle of quality contracts last week? Does it not illustrate the weakness of the whole quality contract franchising business that, all too often, it is likely to go to the lowest bidder, who all too often will not have the ability, the facilities or the financial backing to continue the quality contract in its entirety? Does that not indicate the weakness of the whole quality contract concept?

Lord Bassam of Brighton: I do not accept my noble friend’s premise. Nor do I accept his premise that a quality contract would necessarily go to the lowest bidder, because this is not just about finding the lowest bidder for a particular service in those circumstances. As we have already discussed quality contracts, the scope for their development is constrained and, as we found with the operation of the Transport Act 2000, this has not yet been a route that people have particularly wanted to explore. I therefore do not see this as the big threat that my noble friend may see it as. I am not saying that he sees it as a big threat, but we want to explore this particular small issue. We shall take it away and see whether we might need to have recourse to it at some point. As I said, I do not give an absolute commitment to bring something back. There may well be circumstances in which it would be a useful provision to have, but I suspect they would be very rare.

Lord Berkeley: Perhaps I may clarify something about the comparison with the railways. The two franchises that have failed since the process started were GNER and Connex. The quality of service in Connex was reported as being variable, GNER’s was and is pretty good, but they both failed for financial reasons. Interestingly, when the Strategic Rail Authority was responsible for the railways it had a team of people with the necessary expertise, safety case and everything, who were available and ready to step in should anybody withdraw so that the services were not disrupted. I hope that my noble friend may wish to explore that kind of thing as regards the quality contracts on the buses.

Lord Bassam of Brighton: We cannot ever have a complete failure in a public transport undertaking because the very nature of the thing is that it is there properly to serve the public. We do not want to see a breakdown in service. We certainly cannot have that. As regards Connex’s operations with rail franchising, the experience was not good—I certainly did not enjoy it.

Lord Rosser: I understand that my noble friend is saying that he will look at the issue of operator of last resort. I should like to clarify what he said in relation to purchase. I thought he was saying—and I want to check whether I have misunderstood this—that the powers might already be there to enable the purchase.

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I was not sure whether that was what he was saying or whether he is turning it down straight and not saying that he thinks that the power may be there anyway. No doubt when he responds he will pick that matter up and put it clearly on the record.

The amendment would supply the PTEs with the necessary costs. Cost is obviously one of the things PTEs would have to take account of in the equation—whether they did it, what cost would be involved and whether they thought it was a cost that they were prepared to stand.


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