Instruments drawn to the special attention of the House
Transport Act 1985 (Amendment) Regulations 2019 (SI 2019/572)
Date laid: 15 March 2019
Parliamentary procedure: negative
This instrument aims to align domestic law with EU law for community transport operators. For a long time, “not for profit” was interpreted to mean “non-commercial”; however, the legal relationship between an EU Regulation and domestic legislation was unclear and this instrument seeks to achieve clarity.
We draw this instrument to the special attention of the House on the ground that it gives rise to issues of public policy likely to be of interest to the House.
1.These draft Regulations are laid by the Department for Transport with an Explanatory Memorandum (EM) and an Impact Assessment (IA). The Regulations are being made fully to align and clarify the relationship between an EU Regulation and the 1985 Act.
Background
2.In Great Britain, the Public Passenger Vehicles Act 1981 (“the 1981 Act”) requires that anyone using a Public Service Vehicle (PSV)1 on a road for carrying passengers for hire or reward must hold a PSV operator’s licence.
3.Sections 19 and 22 of the Transport Act 1985 (“the 1985 Act”) provide the domestic legislative framework for exemptions from the 1981 Act.
4.A section 19 permit allows an organisation to provide transport for its own members or other people that it exists to help, and to charge for providing that transport. The vehicle cannot be used to make a profit (directly or indirectly) or carry members of the general public.
5.A section 22 permit allows a body to run a community bus service (“a section 22 service”), which is a local bus service registered with the Traffic Commissioner. Members of the general public can be carried on a section 22 service. Additionally, the vehicle may be used for other purposes in order to provide financial support for the community bus service.
6.These exemptions allow certain types of organisation to operate passenger transport services without holding a PSV operator’s licence, on a not-for-profit basis, following the issue of a “permit.” These “permits” are commonly used by “Community Transport” operators to provide transport for passengers unable to access the wider transport network. Passengers include children, and older and disabled people. However, as the Department for Transport (DfT) explains, there is no precise, or legal, definition of what “Community Transport” means.
7.EU Regulation 1071/20092 (“the EU Regulation”) was implemented in 2011 and governs the requirements across Europe for road passenger transport operators, setting the standards to be applied to PSV licence holders. The EU Regulation sets out the requirements which transport operators must demonstrate.
8.However, operators are exempt from the EU Regulation’s requirements if they fulfil any of the criteria below:
- either they operate exclusively for non-commercial purposes or have a main occupation that is not as a road passenger transport operator; and
- they only operate domestically and have a minor impact on the transport market because of driving short distances.
9.DfT’s longstanding view was that permit holders automatically meet the “non-commercial” exemption from the EU Regulation. The view was that “not-for-profit” equated to “non-commercial.” However, this has been challenged and concerns have been raised that some organisations operating under the permit system are in fact operating for commercial purposes.
10.The 1985 Act is not fully aligned with the EU Regulation and appears to allow permits to be issued in certain circumstances that are not covered by the exemptions to operator licensing in the EU Regulation. This could lead to a fine being levied against the Government for non-compliance with the EU Regulation, unless action is taken.
11.There is currently no guidance on the scope of the exemptions from the EU Regulation. The EU Regulation allows Member States to exempt national operations having only a “minor impact” on the transport market and this would provide extra flexibility to the community transport sector. However, this exemption for an operator having a “minor impact” on the transport market is not directly applicable (unlike the rest of the EU Regulation) and has to be given effect in a Member State’s domestic legislation, which has not yet been done in the UK.
Consultation
12.Following an investigation by the Driver and Vehicle Standards Agency, the Government recognised that the assumption that any organisation meeting the “not-for-profit” requirements of the permit system was exempt from the EU Regulation was no longer sustainable. Instead, the Government acknowledged that this needed to be determined on a case by case basis. In July 2017, DfT wrote to permit issuers explaining this and stated that it would consult on the issue.3
13.In December 2017, the House of Commons Transport Committee issued a report Community transport and the Department for Transport’s proposed consultation4 and a Westminster Hall debate on the report was held on 10 May 2018.5
14.The Government’s Consultation on the use of section 19 and section 22 permits for road passenger transport in Great Britain6 ran for 12 weeks from 8 February to 4 May 2018. The consultation sought views on amending the 1985 Act to provide greater legal certainty as to how it fits with the EU Regulation; implementing the exemption for national transport operations with a “minor impact” on the market because of the short distances involved; and draft guidance as to the interpretation of the exemptions from the EU Regulation.
15.DfT received 494 written responses to the consultation, and over 550 people attended the workshops that the Department ran during the consultation period.
16.The IA explains that the majority of the responses asked for further clarity on the proposed text of the guidance and many community transport operators and local authorities suggested the inclusion of real-world examples or good practice examples of how to evaluate certain types of service. The consultation responses showed that there was no consensus amongst stakeholders on how the exemption for road transport operators operating exclusively for non-commercial purposes should be interpreted.
17.There were mixed comments on the introduction of the exemption for transport operations with a “minor impact” on the transport market because of the short distances involved. Those representing the community transport sector generally favoured it being introduced, but had some concerns over how it would work in practice. On the other hand, the commercial sector, who already believe that permit holders have an unfair competitive advantage, did not support the introduction of the exemption.
18.DfT explains that the consultation responses made clear that the sector needs clarity over how the PSV operator licensing system applies to community transport operators that hold section 19 and 22 permits.
Judicial Review
19.In December 2018 solicitors acting on behalf of the Bus and Coach Association applied to the High Court for permission to judicially review the Department’s current position in respect of community transport. Specifically, they are challenging the Department’s approach to the non-commercial exemption. The EM explains that while the judicial review process is ongoing, DfT will not make any further statements about what “exclusively for non-commercial purposes” means. This means that this aspect of the draft guidance, which formed part of the Government consultation on community transport in 2018, will not be finalised until the outcome of the judicial review is known. The Department will then amend the guidance to bring it in line with the court’s decision.
Purpose
20.These Regulations amend the 1985 Act to make clear that a permit can only be applied for and held by an organisation that is exempt from the directly applicable EU Regulation setting out the PSV operator licensing requirements. These Regulations also give effect to an exemption that is available to Member States to exempt, from all or some of the requirements of the EU Regulation, national transport operations only having a “minor impact” on the transport market because of the short distances involved.
21.The Government say that this approach will bring clarity on the scope of the exemptions and the relationship between the EU Regulation and the 1985 Act.
Impact
22.If an existing “not-for-profit” permit holder determines that it does not meet one of the three exemptions from the EU Regulation, they will have to obtain a PSV operator’s licence in order to continue operating as they currently do; or change the type or method of their work. The PSV operator licensing regime is costlier, mainly because of the requirement to have a transport manager, but the exact costs will depend on the number of vehicles run by the operator. The average annual costs of having to comply with the PSV operator regime range from £3,875 for a micro-operator (one to five buses) to £484,141 for a very large community transport operator (with over 100 vehicles).
23.The IA explains that of the approximately 6,300 section 19 and 22 permit operators, DfT has already identified that at least 3,150 (educational and religious institutions) will be exempt from the requirements of the EU Regulation by virtue of operating passenger transport services as ancillary to their main business. These organisations will be able to retain their permits for use as before. Therefore, the number of section 19 and 22 permit operators potentially affected by the requirements of the EU Regulation and the transition to PSV operator licensing-related requirements is approximately 3,150 operators or 50% of the sector.
Conclusion
24.Given the potential impact of these changes on community transport operators, we bring these Regulations to the attention of the House on the ground that they give rise to issues of public policy likely to be of interest.
1 A PSV is defined as a motor vehicle used for carrying passengers for hire or reward which is adapted to carry more than eight passengers or is adapted to carry eight passengers or fewer and used to carry passengers for hire or reward at separate fares in the course of a business of carrying passengers.
2 Regulation (EC) No 1071/2009 establishing common rules concerning the conditions to be complied with to pursue the occupation of road transport operator and repealing Council Directive 96/26/EC.
3 Department for Transport (DfT), Issue and Use of Section 19 and Section 22 Permits for Road Passenger Transport in Great Britain (31 July 2017): https://ctpermits.org/wp-content/uploads/2017/09/170731-DfT-Letter-to-Permit-Issuers-GB-Night-Mode.pdf [accessed 28 March 2019].
4 Transport Committee, Community transport and the Department for Transport’s proposed consultation (First Report, Session 2017–19, HC 480).
6 DfT, Consultation on the use of section 19 and section 22 permits for road passenger transport in Great Britain (February 2018): https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/680319/section-19-section-22-permits-consultation.pdf [accessed 28 March 2019].