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22 Jan 2008 : Column GC57

22 Jan 2008 : Column GC57

Grand Committee

Tuesday, 22 January 2008.

The Committee met at half-past three.

[The Deputy Chairman of Committees (LORD COLWYN) in the Chair.]

The Deputy Chairman of Committees (Lord Colwyn): Before the Minister moves that the first statutory instrument be considered, I remind noble Lords that in the case of each statutory instrument the Motion before the Committee will be that the Committee consider the statutory instrument in question. I should perhaps make it clear that the Motion to approve the statutory instrument will be moved in the Chamber in the usual way.

Passenger and Goods Vehicles (Recording Equipment) (Downloading and Retention of Data) Regulations 2008

3.31 pm

Lord Bassam of Brighton rose to move, That the Grand Committee do report to the House that it has considered the Passenger and Goods Vehicles (Recording Equipment) (Downloading and Retention of Data) Regulations 2008.

The noble Lord said: The regulations represent the final stage of a series of legislative changes that are necessary to reflect the introduction of digital tachographs throughout the European Union. The EU drivers’ hours and tachograph rules require most HGVs and some buses and coaches to be equipped with a tachograph to monitor drivers’ driving times and rest periods through recording the time, speed and distance of journeys. The rules also require that drivers and operators keep records of hours worked. The first generation of analogue tachographs recorded the information on paper disks. However, due to increased abuses and manipulation of the equipment, digital tachographs were developed and, for vehicles first brought into service on or after 1 May 2006, these new tachographs are now mandatory under EU legislation. The digital tachograph records information electronically on both the unit fitted to a vehicle and a magnetic card that is personal to an individual driver.

The EU legislation requires member states to ensure that the data necessary to enforce the rules can be made available for at least 365 days after recording and under conditions that guarantee the security and accuracy of the data. Because of the risk of overwriting of data or its loss for other reasons, the EU regulation makes regular downloading of data mandatory. However, the rules leave the frequency of downloading to individual member states. These regulations would specify that data must be downloaded at least every 56 days for vehicle units and at least every 28 days for drivers’ cards.

In addition, the new EU legislation requires drivers to keep records covering the previous 28 days in their vehicle. That is inconsistent with existing domestic

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legislation, which requires drivers to return records to their employer within 21 days. To avoid conflict, the regulations extend the period within which drivers must return records to their employer to 42 days. The regulations will apply throughout Great Britain. Similar provisions are being made for Northern Ireland. The regulations have already been considered and approved by the other place. Happily, I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Passenger and Goods Vehicles (Recording Equipment) (Downloading and Retention of Data) Regulations 2008. 4th Report from the Statutory Instruments Committee.—(Lord Bassam of Brighton.)

Lord Hanningfield: I welcome the regulations, which will obviously help to improve safety on our roads. I do not oppose them in any way, but I have one or two questions for the Minister, so that we know exactly where we are going. In another place, there was discussion of how the regulations might affect rural bus services. Where there is a distance of, I think, over 50 kilometres—that will obviously be the case in some rural areas—the bus driver might be required to conform to the regulations. I gather that discussions are ongoing and are not yet finalised. Perhaps the Minister could tell me where we are on bus drivers and the regulations.

I gather that recent figures on the checking of offences have shown that one in 27 offences is caused by drivers from the European Union whereas for UK drivers the figure is only one in 99. Are the Government doing anything about the fact that there is considerably more offending by European drivers? I would also like confirmation—I think that it was confirmed in the other place—that the regulations apply only to vehicles that were registered after early 2006, so that older vehicles, such as horse boxes, do not have to be regulated in this way at the moment. This year, the requirement by VOSA to check drivers has risen from 1 per cent of days worked to 2 per cent. Perhaps the Minister could explain that to me. We very much support the regulations, but I should like these questions to be answered for the sake of clarity.

Lord Newby: I apologise that my noble friend Lord Bradshaw is unable to be here this afternoon, but it is a great pleasure for me to be discussing subjects other than those that relate to the Treasury brief.

We, too, have a number of questions, although we welcome the regulations as a whole. As we have heard, there are serious issues about the way in which the regulations are being implemented in respect of bus drivers, particularly rural bus drivers. I believe that the Minister made an offer to my noble friend Lord Bradshaw when these matters were discussed previously that a meeting would be arranged with the relevant Minister, Mr Fitzpatrick. My noble friend would like to know whether that offer still stands and, if so, when a meeting might be held.

This issue has also been raised, but how will foreign lorries, of which there are increasing numbers on British roads, be covered? Who will be responsible

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for enforcing the regulations, which are repeatedly breached, particularly by Irish and eastern European drivers? How secure does the Minister think that the smart cards are? What steps are being taken to prevent forging or dual use of cards—that is, a driver possessing more than one of them? Finally, why is the evidence of speeding not routinely accessed and looked at by the enforcement authorities? Anybody who has driven more than a few miles on a motorway knows that speeding by vehicles covered by these regulations is rife and is a deliberate way of avoiding the drivers’ hours regulations. We support the thrust of the regulations but would be grateful for answers to those questions.

Lord Bassam of Brighton: I am grateful to both noble Lords who have participated, particularly the noble Lord, Lord Newby, who is acting as a stand-in for the noble Lord, Lord Bradshaw. He has usefully alighted on issues that I know the noble Lord, Lord Bradshaw, has close to his heart. As the noble Lord, Lord Hanningfield, will remember, the noble Lord, Lord Bradshaw, raised the issue of rural bus services, on which we have had some useful discourse.

It is perhaps worth reminding ourselves why we have these regulations. They are intended to promote road safety; I do not think that there is anything between us on the importance of doing that. They are also intended to promote decent working conditions and fair competition. Those are all important objectives. As such, they are of particular importance to the road transportation industry and to drivers throughout Europe, as we have been reminded by some of the questions asked this afternoon.

The regulations will improve the security of drivers’ hours recording and prevent abuses. It has been estimated that, in the longer term, they will save money by reducing administrative burdens associated with the current analogue system. This is relevant, because we estimate savings of around £15 million a year in 2009, rising to £24 million a year in 2010. That is no insignificant saving.

The regulations complete the legislative process through which they were introduced. One can fairly argue that they more than offset other operating costs to operators, which I am sure will be welcome to smaller operators, in particular those operating bus services. In preparing the regulations, we consulted widely and took on board many of the comments received. Our final proposals on downloading default periods received strong support from the industry, the Vehicle and Operator Services Agency and the police, who have responsibility for enforcing the EU drivers’ hours and tachograph rules across Great Britain. Without the downloading requirements set out in the regulations, enforcement authorities would have difficulty obtaining key information from digital tachographs and those few unscrupulous operators would find it easier to avoid providing these data. That would have an adverse impact on road safety.

It is also worth reminding ourselves that there is a need to amend existing legislative requirements on record keeping to avoid a conflict with the new EU requirements and to ensure that drivers and operators

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are not put in a position where they cannot comply with the law. The revised period of 42 days for drivers to return records to their employer reflects views put forward by the industry during consultation. The regulations provide for enforcement of the new requirements. They will make specific provision for proceedings against corporate and unincorporated bodies for offences under the drivers’ hours and tachograph legislation generally. The burden of record keeping will now be firmly placed on transport operators.

Both noble Lords referred to rural bus services; I had the full version of the concern about that when this matter was discussed last year. Both old and new EU regulations apply to bus drivers operating on routes of more than 50 kilometres, so in that respect nothing has changed. The new EU regulation has changed some core provisions on breaks and rest periods. In addition, drivers on regular services on routes of more than 50 kilometres now need to record their hours using tachographs rather than written records, so the scope for falsification is more limited. When the new EU regulation was being negotiated, the Government received little evidence from the industry to suggest that these changes would cause any problems for bus operators, particularly rural bus operators. Our flexibility to provide dispensations for particular circumstances is very limited. I see no realistic prospect of securing the necessary level of support from other member states to change the regulation.

The noble Lord, Lord Newby, asked about the meeting that I agreed to organise. Jim Fitzpatrick, my colleague, recently met representatives of rural bus operators and the Confederation of Passenger Transport to explore the issues that have been raised this afternoon and the solutions that there might be within the constraints of the new EU regulation. Following that meeting, he agreed to provide further clarity on what constitutes a route for the purposes of the 50-kilometre limit. Officials will shortly be holding discussions with the Vehicle and Operator Services Agency and the Confederation of Passenger Transport on the issue.

In the end, it is for the courts to interpret the law. The Government can vary how the domestic drivers’ hours rules apply to drivers of regular services on routes not exceeding 50 kilometres, but not to the extent that the rules would conflict with or undermine the EU regulation, which takes precedence over domestic legislation. In the past, the courts have ruled that attempts to split a route artificially—for example, by changing the destination board on a vehicle part-way through a journey—do not have the effect of dividing a longer route into two shorter routes. We are not in a position to overturn that decision. That is as much information as I can provide on that issue. I understand the point that is being made on it, but I think that the companies will have to adjust. Some of the savings that they will make in the cost of operating the system will compensate them for some of the additional costs that they might have to bear in rostering and so on.

3.45 pm

Both noble Lords raised the issue of enforcement against foreign drivers. That is understandably a matter of concern. The noble Lord, Lord Hanningfield, gave

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some figures, which sounded familiar to me. They underline a problem of which we are very conscious. It is not surprising that foreign drivers find it more difficult to comply with UK road regulations; I am sure that UK drivers experience similar difficulties abroad. That does not mean that they should be immune from the full force of the law and proper regulation.

We in this country rightly pride ourselves on our efforts to drive up driver standards. For a long time we have proudly told the world that we are one of the best and safest countries in the world in which to drive. That is certainly still the case. I think that our road safety record is the third or fourth best in Europe, which is a great credit to the way in which Governments of both faiths have endeavoured to drive up standards.

All commercial vehicles and drivers are required to comply with the law, irrespective of whether their operating base is in the UK or elsewhere. VOSA targets the non-compliant using modern technology, such as automatic number-plate recognition to spot operators who have a poor track record of compliance and weigh-in-motion centres to spot overweight vehicles. I am sure that that approach is the most effective use of resources and that it minimises the risk of inconveniencing the compliant.

VOSA also makes considerable efforts to share information about non-compliance across the EU, as we would obviously prefer such car drivers not to enter the UK in the first instance. Since the beginning of 2006-07, VOSA has significantly stepped up the level of enforcement activity in respect of commercial vehicles undertaking international journeys. It has also doubled the number of enforcement checks on potentially non-compliant vehicles during the past financial year and will increase the level of checks again by a further 20 per cent in the current financial year. It has committed 10 extra front-line staff around the country to extend the work of the now completed south-east international pilot for transport nationally and it has been given an extra £2 million in 2008-09 for HGV enforcement.

All drivers are required to carry records for the current day and the previous 28 days to enable enforcement authorities to check compliance with EU drivers’ rules at the roadside. The regulations do not affect enforcement at the roadside. They are necessary to ensure that GB operators maintain sufficient records so that drivers’ hours checks can be undertaken by enforcement officers at operators’ premises.

Enforcement against non-Great Britain HGV operators is now easier and we have endeavoured to ensure that the burdens on courts are proportionate. The Road Safety Act 2006 introduced new measures to allow foreign offenders to be issued with on-the-spot fines. Those measures will enable VOSA and the police to issue fixed penalties to both UK and foreign offenders in respect of non-endorsable and endorsable offences. Where offenders cannot show that they have a satisfactory UK/GB address, they will be required to pay a deposit on the spot, equivalent to the level of the fixed penalty. Vehicles can be immobilised by the police or VOSA. The only case in which a driver or vehicle is prohibited

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from continuing a journey is if it seems likely that the driver will abscond or when they have declined to pay the requested financial deposit. The penalties will be graduated so that they reflect the severity of the number of offences committed and the scheme is equivalent to the on-the-spot fines levied by the enforcement agencies in most other member states.

I made reference to the south-east pilot. In recognition of concerns about the greater proportion of vehicles breaking the rules being those driven by drivers on international journeys, last year VOSA increased the level of roadside enforcement resources available in the south-east. The objective of that was to increase fivefold the number of vehicles checked at south-east ports, as compared with the previous financial year, and to double the number of vehicles on international journeys checked inland. That pilot resulted in a significant increase in the number of vehicles checked for roadworthiness and the number of prohibitions issued for non-compliance. Those prohibitions can have a fairly dramatic effect. The pilot has now been wheeled out nationwide.

The noble Lord, Lord Hanningfield, asked about the application of the requirement to fit a digital tachograph. My understanding is that the requirement applies only to new vehicles put into service from 1 May 2006; I think that that is the answer that the noble Lord is after. There is no mandatory requirement for operators to retro-fit older vehicles with a digital tachograph.

I have probably covered all the points raised. If I have not, Members of the Committee are free to ask again.

Lord Hanningfield: Will the Minister comment on why VOSA increased the number of vehicles checked, in terms of days worked in the year by drivers, from 1 per cent to 2 per cent? I just want an explanation for that; I am not necessarily against it.

Lord Bassam of Brighton: The level of enforcement checks is laid down in EU legislation. Up to the end of last year, there was a minimum requirement check of 1 per cent of days worked by drivers, which was roughly 1.1 million tachograph charts per annum. From 1 January this year, this has increased to 2 per cent, which is roughly 2.2 million charts.

Lord Hanningfield: What is the reason for doing that? As I say, I am not necessarily against it. Was it just to be more effective in checking vehicles?

Lord Bassam of Brighton: Exactly so. From the information that I gave earlier, it is clear that our enforcement activity is beginning to hit hard and show results. That is to the credit of the enforcement agency and, of course, means that we can have more confidence in continued improvements in driver standards, including, we hope, for those drivers not from the UK over the longer term.

On Question, Motion agreed to.

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Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 2) Order 2007

3.52 pm

Lord Davies of Oldham rose to move, That the Grand Committee do report to the House that it has considered the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 2) Order 2007.

The noble Lord said: I start by setting out the purpose of this order. At present, the Financial Services Authority—the FSA—is responsible for regulating the sale of general insurance products, including travel insurance sold by insurers and insurance brokers. However, the sale of travel insurance products sold as a package alongside a holiday, which I will call “connected travel insurance”, was exempted from regulation when the Government implemented the EU’s insurance mediation directive in 2002. Although this decision was based on a desire to control the regulatory burden, the Government were aware of concerns with this market and were committed to review that position in due course. Since then, there has been continuing concern that the unregulated position of connected travel insurance may mean that standards are lower, putting consumers at risk. Moreover, consumers have less protection and redress when buying insurance from an unregulated supplier.

In 2006, therefore, the Government launched a review into this issue and called for evidence. Last June, they announced their intention to extend the scope of FSA regulation to include the selling of connected travel insurance and published draft legislation and a consultation document. In December, they published a summary of the responses to that consultation and confirmed that regulation would be extended to connected travel insurance. The order before us puts that decision into effect by amending Article 72B of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 to limit the exemption set out in that article.

The order will mean that the exemption from FSA regulation no longer applies to the greater part of connected travel insurance. The exemption will, however, still continue to apply to insurance linked to an event where the travel is provided by the organiser of that event and to the hire of a vehicle that does not provide sleeping accommodation—car hire is an obvious example. The Government are retaining these exemptions because they have not been made aware of any concerns relating to the sale of insurance in those markets.

I will now explain the reasoning behind the decision to limit this exemption and the reasons why I hope that the Committee will support this order. Travel insurance is an important product that offers both financial protection and peace of mind. However, it is not a comprehensive product. It is important that consumers understand under which circumstances they will and will not be covered. Travel insurance is also a relatively complex insurance product, which often provides medical, emergency, repatriation and liability cover.

22 Jan 2008 : Column GC64

As I said, in recent years there have been growing concerns from consumer groups and sections of the industry that the market is not working as well as it could. In 2006, a Which? survey found that only 35 per cent of 26 travel agents surveyed asked medical questions, only 19 per cent explained what the policy covered and no explanations were given of what the policy did not cover. In all cases, the disclosure standards of regulated banks and insurers selling the same product were far higher. Research commissioned by the British Insurance Brokers Association also found consistently higher standards of disclosure by regulated companies.

Promoting and ultimately requiring higher standards of disclosure across the board is an important reason to regulate. Not only should customers know what they are and are not buying, but one of the features of insurance law is that a policy can be voided if the customer has made incorrect or simply insufficient disclosures. Regulation is designed to reduce the risks of that happening. Perhaps even more important, if incorrect or insufficient disclosures occur under a regulated sale, consumers will have far greater options for redress and compensation than might otherwise be available. The Financial Ombudsman Service and the Financial Services Compensation Scheme provide a comprehensive dispute resolution service covering regulated companies with an upper compensatory limit of £100,000.

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