Bus Services Bill [HL]

Report: 2nd sitting (Hansard - part one): House of Lords
Monday 24th October 2016 Lords Chamber

Report (2nd Day)

15:17

Clause 4: Franchising schemes

Amendment 18

Moved by

[Lord Ahmad of Wimbledon]

18: Clause 4, page 15, line 11, leave out from “scheme” to end of line 12 and insert “are excluded from the functions to which section 101(1)(b) of the Local Government Act 1972 applies, where the franchising authority is a local authority within the meaning of section 101 of the Local Government Act 1972.”

[The Parliamentary Under-Secretary of State, Department for Transport (Lord Ahmad of Wimbledon) (Con)]

My Lords, the Government have tabled technical amendments which tidy up the Bill and correct drafting references. I will go through them briefly in turn. More information about the purpose of the amendments is provided in the letter I sent when they were first tabled.

Amendment 18 makes it clear that the Bill does not prohibit, for example, an executive from exercising franchising functions on behalf of a mayoral combined authority. It does not enable decisions that the Bill stipulates are mayoral decisions—such as the decision to move to franchising—to be taken by anyone other than the mayor.

Amendments 43 to 46 and 83 to 86 are identical amendments ensuring that certain references in the Bill are to all authorities that are part of a scheme rather than only the authorities that initially made the scheme.

Amendments 75 and 76 ensure consistency by amending the Bill so that certain enhanced partnership provisions refer to both facilities and measures. Amendments 79 and 80 ensure that regulations can be made regarding aspects of appeals that are needed in the context of a transition to an enhanced partnership scheme.

The Government have also tabled amendments correcting references and straightforward drafting errors. These are Amendments 20, 50, 52 to 56, 61, 62, 65, 74, 77, 78, 94 and 96. I beg to move.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I will not detain the House by commenting on the amendments in detail. As the Minister has said, they are largely technical and intended to tidy up the legislation. We accept that they reflect the spirit of the Bill and the terms in which we have been debating the issues so far. I will not rehearse the argument we have already had about why tidying up is still taking place because we have explored that in some detail. At this point in the Bill’s progress, I do not think that that would be helpful and we are therefore content to support the amendments.

Amendment 18 agreed.

Amendment 19

Moved by

[Lord Kennedy of Southwark]

19: Clause 4, page 15, line 12, at end insert—
“(9) A local service contract must require that new vehicles delivering local services meet the specifications of the low emission bus scheme as set out by the Office for Low Emission Vehicles in its 2015 document “Low Emission Bus Scheme: Guidance for participants” if the vehicle comes into service after 1st April 2019.”

Amendment 19 agreed.

Amendment 20

Moved by

[Lord Ahmad of Wimbledon]

20: Clause 4, page 15, line 30, leave out “local transport” and insert “relevant local”

Amendment 20 agreed.

Amendment 21 not moved.

Amendment 22

Moved by

[Lord Whitty]

22: Clause 4, page 15, line 44, at end insert—
“( ) An award of any new franchise or contract shall not be made on the basis of labour costs estimated by the potential franchisee or contractor assuming labour costs for new employees at less than the labour cost of workers who are covered by TUPE protections in accordance with section 123X transferring to the new franchisee or contractor.”

[Lord Whitty (Lab)]

My Lords, in moving Amendment 22 I shall speak also to the other amendments in this group in my name. I do not intend to speak for long, partly because my voice is giving out and partly because all these amendments reflect one particular dimension of the effect on the workforce of franchising and enhanced partnerships.

Amendment 22 deals with the awarding of franchises. It asks that awards shall not be made to a company solely on the grounds that it intends to pay its future workforce less than the current workforce. Of course, those who are TUPE-ed over when there is a new franchise or enhanced partnership will be covered by TUPE and therefore it will not be possible for them to be paid a lower wage. But it also indicates that there has been the occasional problem in London—where by and large the franchising system has worked well—of a two-tier workforce developing. If the Government are not prepared to accept the wording of these amendments, I would like them to indicate that they recognise that there would be a concern if franchising in particular led to two-tier workforces and the consequent industrial relations and management problems. Amendment 22 deals with the issue upfront by saying that a franchise shall not be judged on the basis of the intention of the potential franchisee to pay a lower rate than to those who are transferred over.

The remaining amendments in the group deal with the situation once the franchise is awarded. Amendment 47 deals with a situation where a franchise is already in place or has just been awarded and those who are TUPE-ed over from the former operator are paid at the previous rate under the TUPE provisions, which are clearly set out in the Bill—I thank the Government for that—but subsequent employees could be paid at a lower rate. That is a recipe for very poor industrial relations and probably other tensions in the way in which the franchisee would operate. Again, it would be helpful if the Government could indicate, at least in guidance, that this is not a desirable outcome of the franchise process.

Amendments 48 and 87 deal with dismissals following the award of an enhanced partnership or a franchise. They provide that there should be no dismissals solely as a result of the award of that franchise, in order to protect individuals over and above the TUPE regulations from unfair dismissal as a direct result of the franchise award. Amendments 41, 42, 81 and 82 simply delete the phrase “at the same time” because some of these consequences may not be immediate. The principle that is already enunciated in the Bill should apply whether or not it happens at exactly the same time as the award of the franchise.

This is a potentially difficult problem which might not normally be dealt with in primary legislation but would be left to the franchising process, but it would be helpful if the Government could indicate that the kind of outcome that we have occasionally seen will not arise when we extend franchising in particular to other parts of the country outside London. I hope that the Minister can say a few warm words about the Government’s intention and reflect it in any guidance that the department gives to those tendering for franchises. With that intention in mind, and underlining that this can be and has been on occasion a difficult situation to deal with post the franchising operation, I beg to move Amendment 22.

[Baroness Randerson (LD)]

My Lords, in my various discussions with bus operators, it has become clear to me that recruiting bus drivers is a complex and localised process. A standard tariff of wages across a large area can attract people in one part of it and be inadequate in another. Certainly, the experience of Transport for London has been along those lines: it is difficult to attract drivers in central London and easier in parts of outer London. That applies also to areas such as Bristol. Therefore, how one deals with the TUPE regulations and the transfer of staff from one company to another is essential to good relations between the workforce and the employer. We on these Benches support the intention of the amendments in the name of the noble Lord, Lord Whitty.

[Lord Kennedy of Southwark (Lab)]

My Lords, as this is my first contribution to Report today, I draw the attention of the House to my declaration of interests: I am a councillor in the London Borough of Lewisham and vice-president of the Local Government Association.

The amendments in this group, all in the name of my noble friend Lord Whitty, with the exception of Amendment 70, which is in my name and that of my noble friend Lady Jones of Whitchurch, concern TUPE protections for employees, and have our full support. They are important amendments, as they seek to provide protections for employees and to ensure that, where new employees are taken on, their terms and conditions will not be any worse than those afforded to employees covered by the TUPE protections.

Amendment 70 would add trade unions and employee groups to the list of organisations that must be consulted. We do not accept that new Section 138F(6)(g), which refers to,

“such other persons as the authority or authorities think fit”,

fits the bill. The amendments have our full support.

[Lord Ahmad of Wimbledon]

My Lords, the noble Lord, Lord Whitty, made some important points about protections for workers in the bus services industry. As he acknowledged, we have included the TUPE provisions in the Bill to protect those staff affected by the initial introduction of a franchising scheme or an enhanced partnership scheme in an area, recognising that the transition from the current market to a contract or a number of contracts could be difficult and uncertain for existing staff.

However, as I have said a number of times, the Bill is devolutionary. It gives considerable flexibility regarding the nature of the contracts to be awarded by those authorities taking forward franchising and, potentially, enhanced partnership schemes. As I have said in discussions with the noble Lord outside the Chamber, I agree entirely that people should be paid at a rate that reflects the hard work they are doing. I also note the noble Lord’s comments about the danger of a race to the bottom on terms and conditions and the perception of a two-tier workforce. Any authority contracting for services will need to consider a number of factors when assessing bids for contracts, and the Bill will require it to consult and engage with employee representatives at an early stage.

However, it would not be consistent with the rest of the Bill to mandate the basis on which contracts are procured by local transport authorities or the contents of those contracts, as Amendments 22 and 47 propose. Employees and their representative groups will have plenty of opportunity to raise such points during the consultation process for the respective schemes.

15:30

There are also practical issues with the amendments; for example, they would require all new employees to be offered terms and conditions no less favourable than those provided to employees who are covered by TUPE. But employees who transfer under TUPE could well be on a range of different terms and conditions reflecting their different roles and length of time in employment. This could also, in practical terms, lead to feelings of unfairness and resentment among transferred employees as it would put their terms and conditions on a par with those employees who were only newly recruited. It would also place a financial burden on operators—and so local transport authorities—by requiring them to employ people at something other than the going legal rate. Any such requirement could perhaps be sufficient to prevent some authorities from pursuing franchising schemes.

Turning to the amendments regarding potential dismissals, again, I have some sympathy with the intention behind the subsections concerning redundancies that may be made before or after the introduction of a local service contract. These amendments are designed to deal with a situation where an operator may use franchising as a cover to shed employees before contracts are transferred. Employment law already deals with unfair dismissal of employees and therefore we do not feel that it would be appropriate for the Bill to be a vehicle to address such issues. In any event, the scenario that these amendments address is a highly unlikely one. I find it hard to imagine that an employer will chose to bear the redundancy costs associated with dismissing an employee if it is able to transfer them to a new operator under TUPE instead. It is also my understanding that a provision of this nature was not included in the existing quality contract scheme legislation—which franchising will replace—debates on which the noble Lord took part.

On a similar basis, I cannot support Amendments 41, 42, 81 and 82. These amendments seek to broaden the situations that are to be treated as a “relevant transfer” for the purposes of TUPE. The amendments would broaden the Bill’s provisions so that TUPE protections would apply where a new operator begins providing local services some time after the previous service has ceased. As I have already mentioned, the TUPE provisions are designed to ensure that there is a smooth transition from one operator to another when franchising or partnerships are first introduced. The Bill therefore protects those employees who are providing services at the point of transfer. As I have said, any decisions taken in advance of the introduction of franchising or, potentially, enhanced partnership contracts are for the operator concerned, and it will need to ensure that it acts fairly and reasonably.

That said, I note the noble Lord’s suggestion and I will reflect on that to see how we might best restate the importance of TUPE protections and provisions, as he said, within the guidance that accompanies the Bill. I hope, on the basis of the explanation that I have provided and the reassurance that we will see what more we can do with guidance in respect of TUPE provisions, that the noble Lord feels minded to withdraw his amendment.

[Lord Whitty]

My Lords, I thank the Minister for that reply. He started very well and he finished quite well with those assurances that he would look at it further, but in between there were some arguments that did not really address the issue. These amendments are not, in any sense, stopping the Bill being devolutionary, as local authorities will make their own decisions. It is the principles on which they make those decisions that I am concerned with. At the beginning of his remarks, the Minister recognised that there would be a problem with a two-tier workforce, but went on to argue about people being brought in at the same rate as somebody who has additional skills and responsibilities. That is not the intention; if that was implied by my amendment, it was certainly not the intention and a slightly different form of words would make that clear. What I am really saying to the Government is that if they do not wish to put it in the Bill, the Minister’s recognition that there would be problems if a two-tier workforce developed after franchising and that that could be conveyed to the potential franchising authorities, then that, to a large extent, would meet my point.

The Minister referred also to the consultation that will take place with trade unions and representatives of employees. That will help to some extent but there also needs to be some indication to those carrying out the franchising operation that they must bear this in mind, and the way in which the franchise is operated must avoid that outcome of a two-tier workforce. The Minister probably said enough for me not to press the amendments today but I hope that in his further consideration he will see whether there are ways in which his department could convey my anxieties—which I think he shares, in part—about the potential outcome of franchising decisions. In that spirit, I beg leave to withdraw the amendment.

Amendment 22 withdrawn.

Amendment 23

Moved by

[Lord Judd]

23: Clause 4, page 16, line 7, at end insert—
“(d) a National Park authority”

[Lord Judd (Lab)]

My Lords, I did not participate when this group was debated last week. I put forward this amendment because I wanted the opportunity to debate it properly today.

I very much welcome the amendments that the Minister made to Clauses 1, 4 and 9, that will require local transport authorities to consult neighbouring national park authorities when preparing franchising or partnership schemes. I thank him and his officials for so readily listening to the concerns and taking on board the points raised about the importance of national parks authorities being listed as statutory consultees, and putting that in the Bill.

I also very much welcome the amendment the Government tabled to Clause 7, which adds national parks authorities as statutory consultees for advanced ticketing schemes. This should ensure that there is more opportunity to include routes serving national parks in Travelcard and other joint ticketing arrangements. Providing a national parks authority with more opportunity to influence all these schemes will help ensure that the needs of both residents of and visitors to these areas are taken into account, and will contribute to ensuring that these beautiful areas are accessible to everybody and not just those with a private car. They also have the potential to contribute towards combating traffic congestion which threatens to spoil the parks and to undermine their purposes. This is particularly important in light of the Government’s aspirations, as set out in the eight-point plan for national parks, to see more people gain from the health and well-being benefits offered by these inspiring areas.

Overall, it is good to see the progress made to this part of the Bill. However, I still have this further amendment, which relates to ensuring that LTAs consider the impact on NPA policies when assessing proposed franchising schemes. We all know that NPAs are, obviously, not local transport authorities but they have played a key role in delivering bus services in recent years and their core strategies contain relevant policies relating to transport and access which should be taken into account when preparing franchising schemes. For example, the New Forest National Park Authority’s core strategy includes policy on access to promote safer access and more sustainable forms of transport to, from and within the national park, and specifically refers to support for the New Forest Tour bus services.

It is essential that the impact on such policies is considered when assessing proposed franchising schemes. The amendment I propose to Clause 4 should ensure that this happens. I hope that, even at this late stage, the Minister could give this further consideration before we come back to the final stage of the Bill. I am very willing to come and see him if he would like me to do that to discuss it in more depth. I hope he will feel able to meet this point as he has so commendably and readily done on the other points raised previously. I beg to move.

[Baroness Scott of Needham Market (LD)]

My Lords, I wish to support the noble Lord, as I did in Committee. I echo his comments about the Minister’s willingness to meet the concerns that we have raised here. However, there is a big difference between consulting—which could frankly just mean writing to the national park authorities and ignoring what they say—and a genuine process of taking into account the work that they have been doing in their areas, particularly in public transport. I hope that in the spirit of the way the Minister has behaved so far, he will take this extra step.

[Lord Ahmad of Wimbledon]

My Lords, I thank the noble Lord for his amendment and the noble Baroness for her contribution. The amendment would make national park authorities relevant authorities as far as new Section 123B is concerned. As the noble Lord pointed out, this section deals with the business case and primarily concerns the authorities that will be making a franchising scheme with transport powers.

I would like to clarify where we stand on this point and on the question that the noble Lord raised. To be clear—I hope this gives a level of reassurance to the noble Lord—the Bill requires the franchising authority to think about the impacts of bus franchising on neighbouring local transport authorities, and this should ensure that cross-boundary services are carefully considered. Regarding his point and that of the noble Baroness on the business case, the provisions we have already made in the Bill will ensure that any authority looking to proceed down this line will pay due consideration because it is now a statutory requirement. I therefore feel that the Bill has been strengthened to reflect the noble Lord’s concerns.

I am always happy to meet with the noble Lord to further understand elements that he wishes to raise. I think the guidance is playing an important part in this and while we have included national parks specifically when it comes to franchising in terms of the actual statutory consultee, we will also bring notice to appropriate authorities when they are considering the overall proposal in the first place. I hope that with this assurance—and I always welcome meeting with the noble Lord—he will at this juncture be minded to withdraw his amendment.

[Lord Judd]

My Lords, in view of what the Minister has already done in meeting points of this Bill that have been put to him, we cannot doubt his personal commitment to the cause. That is beyond blemish. However, the Government took a very significant step with their eight-point plant for the national parks. I spoke earlier about its purposes and I will not repeat that. However, if they are to be able to fulfil their potential, it is crucial that they are not just one of the people to be consulted—the need to consult them should be in the Bill. This is tremendously important in fulfilling the spirit of what the Government set out in their commitment to the national parks.

I therefore take what the Minister has said today very seriously and I will go away and think about it. However, I still hope that he may on reflection feel that he can meet this point in the Bill, as he did with the other points. That really would be tremendous news, but at this stage I beg leave to withdraw the amendment.

Amendment 23 withdrawn.

Amendment 24 not moved.

[The Lord Speaker (Lord Fowler)]

I should inform the House that if Amendment 25 is agreed, I cannot call Amendments 26 and 27 because of pre-emption.

Amendment 25

Moved by

[Baroness Randerson]

25: Clause 4, page 16, leave out lines 9 to 18

Amendment 25 agreed.

Amendments 26 and 27 not moved.

15:45

Amendment 28

Moved by

[Baroness Scott of Needham Market]

28: Clause 4, page 16, line 26, after “an” insert “independent”

[Baroness Scott of Needham Market]

My Lords, Amendment 28 returns to the question of an independent audit of proposals for new franchising schemes. I thank the Minister for meeting me in September to discuss this matter and for his subsequent letter. The purpose of the amendment is to provide the House with an opportunity to look again at the question of an independent audit and for the Minister to elaborate and build on the letter that he sent me.

The issue here is protecting the public against the careless use of local taxpayers’ money. I have always believed in devolution; indeed, I have long thought it was a scandal that our major cities constantly have to go cap-in-hand to government whenever they want to undertake a capital programme. But I am also a great believer in democratic accountability, and there is a real problem in mayoral models in that the very concentration of power in the hands of one individual that makes it such an attractive option to government also runs a significant risk of poor decision-making because it is untested by debates in traditional committees or through effective scrutiny.

The Public Accounts Committee published a report in July in which it said:

“There has been insufficient consideration by central government of local scrutiny arrangements, of accountability to the taxpayer and of the capacity and capability needs of local and central government as a result of devolution”.

The committee went on to talk more about its concerns about capacity issues, particularly financial and technical skills, which have been exacerbated by budget cuts. Providing a requirement for a mayor to give information that proposed new schemes, potentially worth millions of pounds, have been independently audited is an important safeguard. The auditor usually engaged by a local authority may very well have their independence compromised by their wish to hold on to the contract.

Equally importantly in terms of public confidence is that the audit should be seen to be independent. The Public Accounts Committee had this to say:

“Robust and independent scrutiny of the value for money of devolved activities is essential to safeguarding taxpayers’ money, particularly given the abolition of the Audit Commission … Currently, local auditors focus on individual bodies’ financial statements and arrangements for securing value for money, rather than assessing value for money itself”.

In his letter to me, the Minister referred to the guidance on the matter that he had agreed to develop, and I would be grateful to hear more about that today. He referred to the availability of freedom of information as a means of achieving transparency. I wonder whether he can confirm today that such freedom of information requests will not be met with commerciality exemptions. I beg to move.

[Lord Shipley (LD)]

My Lords, I support this amendment, to which my name is attached. My noble friend Lady Scott of Needham Market said that it related to the protection of the public, and I agree entirely with all that she said. I draw the Minister’s attention to the fact that the context is not the same as it was when we debated this matter in Committee, because an amendment was agreed on day one of Report extending franchising powers to all relevant councils and local transport authorities. I supported that in the Lobbies but I have always believed that it must be accompanied by a robust and thorough audit and full scrutiny of any proposal for franchising.

Detailed audit and scrutiny processes exist within mayoral combined authorities because this House wrote into the Cities and Local Government Devolution Act much more comprehensive arrangements for audit and scrutiny than had originally been planned. As my noble friend Lady Scott of Needham Market made clear, it is not as much as we wanted, and many feel that it is not enough—but it is, nevertheless, more than is proposed in the Bill for non-mayoral combined authorities.

I hope that the Minister will give much further consideration to the proposal that there should be full scrutiny and audit of any franchising plan proposed by a council or local transport body which is not a mayoral combined authority. My noble friend Lady Scott received a letter from the Minister dated 5 October which expresses much agreement on the need for the audit process to be credible and open to public scrutiny, and accepts that there must be robust evidence and analysis. Indeed, on page 2 the letter accepts that the process should be independent, and one in which other people will have the right to challenge the report. Clearly the process must be seen to be transparent.

We need an auditor with appropriate professional standing who is clearly independent of the contractor and also has professional knowledge of audit, finance and, crucially, transport. I suggest to the Minister that it will be a rare person indeed who, as auditor to a council or a local transport body, has all those skills. It is my view that a specific appointment should be made.

I accept that this matter could be subject to further discussion during the passage of the Bill and then in the production of guidance—but, now that the House has extended franchising powers to non-mayoral combined authorities, having a robust and independent audit system has become increasingly important.

[Lord Snape (Lab)]

My Lords, I support the views put forward by the two previous speakers. Under previous legislation, there were five main tests for franchising. I do not propose to go over them, but they were fairly stringent. Attempts by local authorities to introduce franchising previously failed those tests.

We are in uncharted territory with the Bill. It does not seem inherently fair that the authority that wants to set up a franchising scheme can be judge and jury for that scheme, which appears to be the current situation. We need a degree of independence in judging the merits or otherwise of such a franchising proposal. Common fairness demands some sort of independent scrutiny of the proposals.

I do not know the Minister’s intention, but I hope that he will see the common sense and fairness behind the noble Baroness’s amendment. If an independent element is not introduced, one can just imagine the number of judicial reviews that will be held—from one end of the country to the other—if bus companies feel that they have been unfairly treated by the franchising authority acting as judge and jury. So the amendment is eminently sensible and I hope that the Minister will act on it.

[Lord Kennedy of Southwark]

My Lords, Amendment 28 in the name of the noble Baroness, Lady Scott of Needham Market, and the noble Lord, Lord Shipley, simply inserts the word “independent”. It is, however, extremely important, as it makes clear that the auditor conducting an assessment must be independent of the authority. I very much agree with the point made by the noble Baroness when she spoke about the concentration of power, the protection of the public and the importance of independent scrutiny. One would hope that any authority seeking to make use of franchising powers would do this anyway, but adding the word is a wise move, in particular if we consider the role of the Competition and Markets Authority in complaints. The authority would surely want the most robust information available that had been independently verified to evidence that decisions taken were sound. This should not cause the Government any problems, and I hope that they will accept the amendment.

[Lord Ahmad of Wimbledon]

My Lords, first, I thank all noble Lords who have spoken on this amendment. The intent and the sentiment behind the Government’s position and that of noble Lords is no different: we all want appropriate scrutiny and independence of the auditing function. The Bill, as I am sure noble Lords will acknowledge, introduces the role of the auditor to provide that external assurance that certain information used in a franchising assessment is of sufficient quality and that the analysis of information by that franchising authority is both accurate and robust.

I completely agree that any auditor performing the franchising auditing functions for a local authority should act independently and impartially. Indeed, the Bill requires an auditor to be someone with a recognised professional qualification as per Part 42 of the Companies Act 2006. By requiring the auditor to have the appropriate professional qualification, we are ensuring that the person appointed has professional and organisational credibility, including in relation to the independence of their advice. It would not, for example, be possible for a franchising authority to use transport modelling consultants, or other specialists, who did not hold the appropriate auditing qualifications. Additionally, the Bill provides for the auditor’s report to be published. This aims to address the issue of transparency raised by the noble Baroness and the noble Lord in relation to the conclusions reached by the auditor.

Although there is no obligation in the Bill for further materials to be published, the requirements of the Freedom of Information Act 2000 will apply. These could be used, for example, to seek access to further, more detailed information produced by the auditor and held by a public authority—a point which the noble Baroness specifically raised. As to a blanket view on FoI requests, I am sure the noble Baroness will respect the fact that each FoI request is looked at on its individual merits. As I said, the FoI could apply, for example, to seek further access and information produced by the auditor and held by a public authority. Together, the provisions we have already made, and which I have highlighted once again, provide for a high level of transparency.

I also explained in Committee that we intend to publish statutory guidance once the Bill has received Royal Assent—a point which the noble Baroness also raised. This will include guidance about the terms of reference for the auditor. In my letter I mentioned those terms, so let me provide some more detail. The guidance will make it clear that any auditor will be expected to act with independence, regardless of whether they are the local authority’s existing auditors, and that the auditor’s report will be open to public scrutiny as part of the consultation materials.

My officials also intend to work with local transport authorities and to meet representatives from a selection of auditors as the guidance on this issue is developed to ensure that it addresses the concerns that the noble Baroness has raised at various times during the Bill’s passage, and those that I have mentioned again today. She has rightly highlighted the importance of the role of the auditor and their independence in her amendment. However, I hope that with the provisions already made, to which I have referred, she is minded to withdraw her amendment.

The noble Lord, Lord Shipley, asked about non-mayoral combined authorities. I can assure him that both mayoral and non-mayoral combined authorities will have to go through an audit process of their franchising proposals in this regard, so in essence it will be the same process for both.

[Lord Snape]

When they go through the auditing process, will the auditor’s decision be binding, or can the authorities ignore it and proceed anyway?

[Lord Ahmad of Wimbledon]

Again, I do not think I can give a blanket assurance. The auditor is there to see that due process has been followed, and that decision will be subject to public scrutiny. Any auditor is there to do a job and will do it to professional standards. I hope that, based on the assurances I have given, the noble Baroness is minded to withdraw her amendment.

[Baroness Scott of Needham Market]

I thank noble Lords who have spoken in the debate. Their response suggests that I was right to return to this question, and indeed the Minister’s response would also suggest that I was right to do so. There is widespread agreement that this is a difficult issue. Of course, it is not just about a potential loss of taxpayers’ money if the scheme goes forward. These schemes are extremely expensive even to start developing, so it is essential that local authorities have sound financial advice all the way through about the financial viability—and, given the relationship with the Competition and Markets Authority, about the legal liabilities—before they embark down this route.

On the question of freedom of information, although I understand that each application has to be treated separately, there are exemptions in the legislation for commercial agreements. My nervousness is simply caused by the fact that every time someone asks questions about a potential franchising scheme, they receive a blanket, “No, we can’t talk about that because it is commercially sensitive”. I am not sure that I would put the same reliance on freedom of information as a transparency tool in this case as the Minister does. Nevertheless, I am confident that he has taken the issue seriously and that his officials are working on the guidance and with local authorities and auditors—so I thank him and other noble Lords for that and I beg leave to withdraw the amendment.

Amendment 28 withdrawn.

Amendment 29

Moved by

[Lord Ahmad of Wimbledon]

29: Clause 4, page 17, line 23, at end insert—
“( ) such persons as appear to the authority or authorities to represent employees of persons falling within paragraph (a),”

Amendment 29 agreed.

16:00

Amendments 30 and 31 not moved.

Amendment 32

Moved by

[Lord Whitty]

32: Clause 4, page 17, line 25, at end insert—
“(ca) appropriate representatives of any affected employees,”

Amendment 32 agreed.

Amendment 33

Moved by

[Lord Ahmad of Wimbledon]

33: Clause 4, page 17, line 31, at end insert—
“( ) the Passengers’ Council”

Amendment 33 agreed.

Amendment 34 not moved.

Amendment 35

Moved by

[Lord Whitty]

35: Clause 4, page 17, line 31, at end insert—
“( ) In subsection (4)(ca) “appropriate representatives of any affected employees” means—(a) representatives of a recognised trade union, if an independent trade union is recognised by existing operators in the area of the proposed franchising scheme,(b) in any other case, employee representatives appointed or elected by the affected employees who have authority from those employees to receive information and be consulted on their behalf.”

Amendment 35 agreed.

Amendments 36 and 37

Moved by

[Lord Ahmad of Wimbledon]

36: Clause 4, page 17, line 34, at end insert—
“( ) a National Park authority,( ) the Broads Authority,”

37: Clause 4, page 18, line 9, at end insert—
“( ) a description of the authority’s or authorities’ proposed plans for consulting in order to seek views on how well the scheme is working,”

Amendments 36 and 37 agreed.

Amendment 38 not moved.

Amendment 39

Moved by

[Baroness Jones of Whitchurch]

39: Clause 4, page 19, line 31, at end insert—
“(7A) The scheme must specify whether consideration has been given to the wider social, economic and environmental benefits of the scheme, in accordance with the Public Services (Social Value) Act 2012.”

[Baroness Jones of Whitchurch]

My Lords, in moving Amendment 39, I shall speak also to Amendment 73. These amendments would require those opting for a bus service under franchise, and those developing enhanced partnership schemes, to apply the principles of the Public Services (Social Value) Act 2012 when determining the type of service to be commissioned.

As we discussed in Committee, the social value Act recognises that public services can play a transformative role in communities. Rather than simply opting for a narrow definition of value, it requires those procuring services to consider the economic, social and environmental benefits of each bid. It allows local authorities to think about public services in a more coherent way, particularly on a combined-service basis, and encourages those bidding for contracts to be more imaginative about the community benefits their service could bring.

Often this can result in better-designed services, with other benefits and efficiencies. In the case of bus services, it could include, for example, a commitment to train and employ a number of long-term unemployed people to work on a contract; or it could include a number of apprenticeships and work experience places for young people; or it could include a commitment to support an existing community bus service, perhaps with some shared facilities; or it could include an environmental plan with targets for green energy and reduced CO₂. Of course these are just examples, but the point of social value in this context would be to encourage bus operators to commit to their own added-value measures without costing any more money.

In a letter on this issue to the noble Baroness, Lady Scott, and in our discussion in Committee, the Minister expressed some sympathy with these aims but argued that it would be better covered in the guidance that accompanies the Bill. However, we were disappointed with this response, because the fact is that the social value Act is simply not being embraced in the way that was intended. We believe that it would benefit from being on the face of the Bill to underline the importance of this approach.

As we mentioned in Committee, the operation of the social value Act was reviewed last year by the noble Lord, Lord Young. He concluded that, where it was used effectively, it resulted in commissioners being much more innovative and delivering much more responsive public services. This is great news. However, the noble Lord, Lord Young, then went on to conclude that the opportunities and advantages were simply not widely enough understood and take-up of the concept was therefore low. This is our opportunity to put this matter right by embedding this approach in the provision of local bus services in the future. However, that will only happen if it sits in the core of the Bill; if it is buried away in guidance notes, as the Government are proposing, it runs the risk of being ignored and misunderstood again in future.

I hope that the Minister will reconsider his position on this and that noble Lords will feel able to support the amendment. I beg to move.

[Baroness Scott of Needham Market]

My Lords, I offer the support of these Benches for the amendment. It would be rather strange if we did not, because the social value Act 2012 was a Private Member’s Bill taken through this House by my noble friend Lord Newby. I raised the question of the use of this Act in Committee, so I am grateful to the Labour Benches for picking this up and transferring it into an amendment.

As we have heard, the social value Act allows public bodies to take a much broader range of issues into account than conventional procurement practices do, so they can think about the environment, community well-being and the local economy. It actually goes one stage further, because the Act makes people think about the considerable financial power of public procurement in an area and is a way of local authorities and local health authorities harnessing their own commissioning power for the benefit of their communities.

As we have heard, the evaluation last year by the noble Lord, Lord Young, was that, while there had been some real success stories, the social value Act was not being used enough and was not sufficiently understood. I have a lot of sympathy with an amendment which puts this on the face of the Bill because it forces commissioning authorities to really think about whether they have given sufficient consideration to this. Overall, it is a way of ensuring that compliance improves.

I was very taken with the conversations I had on this matter with HCT, formerly Hackney Community Transport, which is a social enterprise that provides bus services in a range of areas as diverse as London boroughs and Jersey. It feels very strongly—and made the point to me—that current procurement practices often freeze out smaller businesses. That is a great pity because some of the best bus operators in the country are the small, local ones. It is important to find ways to strengthen this aspect of the Bill and really help local authorities, in their various forms, to make the most of this considerable new power.

[Baroness Randerson]

My Lords, I am very pleased indeed that this duo of amendments has been put down. They link well with Amendment 97, which provides a mechanism for expressing and recognising community value.

I simply add to what has been said already that it is essential that the Government recognise that bus services fulfil a vital social service, especially in rural areas. The knock-on effect of social isolation is far more costly than any subsidy put into bus services. That is why concessionary fares for older people have been so effective. I know that the Government recognise that effectiveness. We should add to that social impact the huge potential contribution of bus services in reducing air pollution, particularly in urban areas. Therefore, it is important that the Minister uses every opportunity in the Bill to emphasise the importance of the social value of bus services in general.

[Lord Cameron of Dillington (CB)]

My Lords, I am glad that the noble Baroness, Lady Randerson, mentioned the whole question of rural areas, as I support this amendment from a purely rural perspective. I apologise to the House that this is the first time I have spoken on this very important Bill. Unfortunately, on previous occasions, I have been unavoidably committed elsewhere, prior to the Bill’s scheduling by the Whips. I thank noble Lords for their support for rural areas during the passage of the Bill, which I have followed. I am also grateful to the Minister for understanding and championing the rural cause in his draft guidance and policy statement which came out earlier this month.

This amendment spells out the importance of the wider social and economic benefits to rural areas provided by public transport services. I will not make a Second Reading speech, but it is very obvious—I know this point has been made before—that if you live in the country and cannot drive for reasons of poverty, disability, youth, old age, et cetera, the lifeline supplied by a good rural bus or community transport service is crucial to your quality of life and your ability to access the services of modern life. In these austere times, all services in rural areas are being cut back across the board, such as health centres, primary schools, jobcentres, post offices, banks—to dip into the private sector—magistrates’ courts and police stations. All our local rural services are disappearing one by one. This inconsiderate—as might be said—wave of closures is exacerbated by the simultaneous withdrawal and diminishing availability of public transport services. On a personal note, that includes the Wheels to Work schemes for youngsters, which are particularly dear to my heart.

The amendments we are discussing undoubtedly infer that the local transport authorities should consult with the providers of services—some of which I have just outlined—and ask them what assessments or assumptions they have made vis-à-vis public transport for the delivery of those services in rural areas. Actually, I would like to see the amendment read: “The scheme must specify whether consideration has been given now and in the future to the wider social, economic and environmental benefits of the scheme”.

I shall give noble Lords one good example. I have been involved in rural proofing for some years. Some government departments are improving their rural proofing, but not all. They are not always very knowledgeable in this regard, but the situation is improving. For example, the justice department assures me that when it closes a magistrates’ court, it does so following a careful assessment of local public transport and the distances involved in order fully to understand the new difficulties and costs to witnesses, police and even the accused and their families, of getting to their soon-to-be-not-so-local court. Therefore, one can only assume that these assessments and cost-benefit studies—it would be nice to think that the justice department is not the only one doing them—must be based on the existing public transport systems.

That is why LTAs need to consider the wider effects, as spelt out in these amendments, of any changes being brought about by the introduction of a franchise agreement or an enhanced partnership plan, and why I would like to see these considerations being an ongoing process. We do not want to see our rural communities totally stripped of public services because the right hand, the service deliverer, does not know what the left hand, the transport provider, is doing or proposing to do. It is important that they work together.

16:15

[Lord Berkeley (Lab)]

My Lords, we debated many of these issues in Committee and earlier. I mentioned in Committee the issue of Cornwall being allowed to do certain things, even though it does not have a mayor. I was rather shocked to hear the Secretary of State for Communities and Local Government at a conference in Exeter on Friday, which was about making the south-west flourish and grow. Somebody raised the question of what a mayoralty can do which a local authority cannot. The Secretary of State responded, “If you want any money for the regions, including for transport, you had better get an elected mayor pretty quick”, and said that Somerset, Devon and Cornwall must have an elected mayor if they want any money. We can debate long and hard whether those three counties plus the cities of Plymouth and Torbay would ever agree on an elected mayor; that is a slightly different issue. He went on to say that the agreement that has been reached between Cornwall Council and the Government was of no interest because there was no money involved. They would not get any more money unless they elected a mayor. I imagine that this applies to any other rural part of the country.

Can the Minister say in this connection—because it is all to do with money at the end of the day—whether the Government have changed their policy on regional support for transport? The regions, and certainly Cornwall and the south-west, will lose a lot of money because of the Brexit situation, so if they want any money for extra services such as bus services, whether they are community services or something else, does that mean that they will have to become a mayoralty, and we will have a mayor of the south-west and a mayor of Cornwall? This is quite radical. The Secretary of State was absolutely adamant about this in response to several questions from the audience. Maybe the Minister has not had a chance to hear about this, but it will be interesting to hear whether the Government’s policy has changed.

[Lord Ahmad of Wimbledon]

My Lords, I thank all noble Lords who have taken part in this debate. On that final point from the noble Lord, Lord Berkeley, I am sure he will not be surprised to hear that I will look into those comments. However, the Government’s position has been made clear during the course of the Bill. Certainly, on the franchising issue and specifically on mayoral authorities, we believe that they are the preferred model because of their governance issues. On the other issues he raised, I have not seen those comments so it would be inappropriate for me to say any more at this juncture. However, I will read his contribution and come back to him.

The amendments before us concern the Public Services (Social Value) Act 2012. As we all agree, and as I have said repeatedly, we accept the principle that it encourages those who commission public services to talk to their local providers and communities to design better services. The noble Baroness, Lady Scott, first raised this issue at Second Reading and it has been a constant theme throughout the passage of the Bill.

As I have said before, and as noble Lords have acknowledged previously, the 2012 Act already applies to certain procurements by local authorities. In addition, based on our discussions both at Second Reading and in Committee—I hope noble Lords have seen the draft guidance that my department issued recently—we have taken on board the comments and contributions made in the debates on the Bill to ensure that that is reflected appropriately in the guidance. As I am sure noble Lords have seen, it sets out that where the provisions of the Act do not apply because the procurement value falls below relevant thresholds, there is still a need for local authorities to apply the core principles of the Act when procuring services. So not only have we listened but we have acted to strengthen the guidance beyond the original provisions of the Act.

As I said in Committee, we do not believe that we need reference in the Bill to an existing piece of legislation that applies in its own right. However, we accept the principle, and that is why we have strengthened it in the guidance that will accompany the Bill. More broadly, I think that noble Lords are keen to ensure that authorities think about the social, economic and environmental benefits and impacts of schemes. I agree entirely but point out that the Bill already requires authorities to think about these benefits through the franchising and enhanced partnership provisions.

As noble Lords will no doubt recall, as part of their assessment of their proposed franchising schemes, authorities will need to consider value for money, which will include detailed analysis of the social, economic and environmental impacts. Likewise, for enhanced partnerships, the Bill specifies that a scheme can be introduced only where it brings benefits to people using buses or where it reduces congestion, noise or air pollution. Therefore, the Government have listened and, as can be seen from the way we have strengthened the guidance accompanying the Bill, as well as the provisions of the Act relating to the procurement of services, we have specifically considered the social, economic and environmental costs of schemes, and that is well embedded in the Bill.

I hope that noble Lords will be assured by the action we have taken to strengthen and enhance the guidance accompanying the Bill. The existing legislation will be brought to the attention of local authorities and will be referenced in that guidance. We feel that using the guidance is the appropriate way to address this important topic. Again, I thank noble Lords, particularly the noble Baroness, for raising this issue at an early stage in the Bill. I feel that we have made progress and I hope she will feel minded to withdraw the amendment.

[Baroness Jones of Whitchurch]

My Lords, I thank noble Lords who spoke in support of our amendment. I agree very much with the noble Baroness, Lady Scott, about the creative role that smaller companies such as HCT can play. I also very much welcome the comments of the noble Lord, Lord Cameron, about the need to rural-proof and about how amendments of this kind can help that process. I assure him that the particular needs of rural communities have been a common theme throughout our debates, and indeed further amendments have been tabled picking up that theme.

I thank the Minister for recognising in the debate and in the draft guidance the validity of some of the issues that we have been raising. I think that our differences always related to the profile that the social value Act would get if it was buried away in the guidance notes. We still have concerns about that and would still like to look at other ways of raising the profile of the Act within the Bill. In the meantime, there is obviously scope for us to look again at the draft guidance and whether there is anything more we can do around that. However, on the basis that the Minister has gone some way to meet our expectations, I do not intend to push the amendment to a vote.

Amendment 39 withdrawn.

Amendments 40 to 42 not moved.

Amendments 43 to 46

Moved by

[Lord Ahmad of Wimbledon]

43: Clause 4, page 29, line 37, leave out “who made” and insert “operating”

44: Clause 4, page 30, line 24, leave out “who made” and insert “operating”

45: Clause 4, page 30, line 29, leave out “who made” and insert “operating”

46: Clause 4, page 30, line 36, leave out “who made” and insert “operating”

Amendments 43 to 46 agreed.

Amendments 47 and 48 not moved.

Clause 5: Power to obtain information about local services

Amendment 49

Moved by

[Lord Ahmad of Wimbledon]

49: Clause 5, page 32, line 46, at end insert “, and
(b) to provide the information before the end of such reasonable period as may be specified by the franchising authority.”

[Lord Ahmad of Wimbledon]

My Lords, in Committee, a number of noble Lords tabled amendments concerning the information that authorities can require of bus operators in association with either franchising or enhanced partnership proposals. I thank all noble Lords for their discussions on this, both inside and outside the Chamber. My noble friend Lord Attlee made some important points about the purpose for which authorities may use the information they receive. I agree that authorities should be able to use information acquired in connection with a franchising proposal only for that specific purpose and should not be able to use it, for example, to develop or negotiate an enhanced partnership. I am therefore tabling a number of amendments to ensure that any information received by an authority from a local bus operator can be used only in connection with the purpose for which it was requested.

The amendments also make it clear that an authority may disclose the information it receives from operators to any persons carrying out activities on behalf of the authority; for example, an auditor—a subject we covered earlier—or a consultant, or, in the case of enhanced partnerships, any other authority that is party to the proposals. The authority will, of course, need to ensure that any third party acting on its behalf treats the information with due care, and I would expect that to form part of any contract that the authority enters into with a consultant. This will also be made clear in the Bill’s statutory guidance.

In Committee, the noble Lord, Lord Berkeley, made an important point about the need for operators to respond to information requests from local authorities within a reasonable time period. I agree with him and am bringing forward a number of amendments to that effect. In turn, I expect local authorities to work with their local bus operators to determine what is reasonable, and to adjust the time period based on the breadth and depth of the information request.

I know it will please the noble Lord, Lord Kennedy, and the noble Baroness, Lady Jones, when I say that there are a few technical government amendments in this group which tidy up the drafting of the Bill. Amendments 88 and 93 make it clear that a local authority can require information to determine whether to vary or revoke an enhanced partnership plan or scheme, and that a joining authority can also require such information. Amendments 91 and 92 make the drafting more precise. I beg to move.

[Baroness Jones of Whitchurch]

My Lords, again, we do not feel the need to make much comment on these amendments. Apart from the now-routine technical amendments, the remainder are very much in the spirit of requiring bus operators to supply the relevant information to local transport authorities within a specific timeframe. We welcome the improved wording and the explanation given by the Minister today. We are happy to support the amendments.

Amendment 49 agreed.