Bus Services Bill [ Lords ] (First sitting)
Tuesday 14th March 2017
(7 years, 1 month ago)
Public Bill CommitteesRead Full debate Bus Services Act 2017 View all Bus Services Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 March 2017 - (14 Mar 2017)
The Committee divided: - Ayes: 10 / Noes: 6 - Question accordingly agreed to.
The Chair
Before we come to the detailed consideration of the Bill, I have a few preliminary points to make. I remind hon. Members that mobile devices must be switched off or to silent, and that we do not allow tea or coffee to be drunk in the Committee Room during sittings. We will begin by considering the programme motion on the amendment paper, and we will then consider a motion to enable the reporting of written evidence for publication. I hope that we can take these matters formally, without debate.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 14 March) meet—
(a) at 2.00 pm on Tuesday 14 March;
(b) at 11.30 am and 2.00 pm on Thursday 16 March;
(c) at 9.25 am and 2.00 pm on Tuesday 21 March;
(2) the proceedings shall be taken in the following order: Clauses 1 and 2; Schedule 1; Clauses 3 to 6; Schedule 2; Clauses 7 and 8; Schedule 3; Clauses 9 to 15; Schedule 4; Clauses 16 to 21; new Clauses; new Schedules; Clauses 22 to 26; remaining proceedings on the Bill;
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Tuesday 21 March. —(Andrew Jones.)
Ordered,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Andrew Jones.)
The Chair
Copies of written evidence that the Committee receives will now be made available in the Committee Room. We will now start the detailed, line-by-line consideration of the Bill. I will allow hon. Members to take off their jackets during the sitting if they wish. I again remind Members to ensure that mobile phones are switched off or to silent.
The selection list for today’s sitting is available in the Committee Room. It shows how selected amendments have been grouped together for debate. Those that have been grouped together are generally on the same or a similar issue. A Member who has put their name to the leading amendment—the first named amendment in a group—is called first. Any other Member is then free to catch my eye and indicate that they wish to speak on all or any one of the amendments within that group. A Member may, if they wish, speak more than once in a single debate on a group. I will work on the assumption that the Minister wishes the Committee to reach a decision on all the Government’s proposed amendments.
Please note that decisions on amendments take place not in the order in which they are debated, but in the order in which they appear on the amendment paper. In other words, debate occurs according to the selection and grouping list, but decisions are taken when we come to the clause that the amendment affects. I hope that explanation is helpful to Members. I will use my discretion as we go through proceedings, as will the other co-Chair, to decide whether to allow a separate stand part debate on individual clauses and schedules following debates on relevant amendments.
Clause 1
Advanced quality partnership schemes
The Parliamentary Under-Secretary of State for Transport (Andrew Jones)
I beg to move amendment 1, in clause 1, page 2, line 43, leave out from beginning to end of line 4 on page 3.
This amendment removes an order-making power under which the Secretary of State may confer on a local transport authority with an advanced quality partnership scheme power to enforce traffic offences.
The amendment removes the Secretary of State’s ability to confer the functions to enforce traffic offences on authorities that make advanced quality partnership schemes. English local authorities outside London that can enforce parking violations already have powers to enforce bus lane contraventions, including moving traffic violations in bus lanes. The measure that was made in the other place would broaden those powers beyond the scope of bus lanes and allow the enforcement of other moving traffic offences such as contraventions in yellow box junctions. There are already provisions in part 6 of the Traffic Management Act 2004 to permit the enforcement of other moving traffic violations.
The Government have not yet made a decision on whether to provide these powers to authorities, but we continue to discuss the issue with the Local Government Association and other organisations; I have met the LGA to discuss this issue on two occasions. A key concern remains that if the powers are granted, they could be misused to generate revenue for local authorities—indeed, I had a letter from a councillor only a few days ago suggesting that it would be a highly desirable thing to do from a revenue-raising perspective—but their primary purpose is traffic management, and that kind of attitude reinforces the Government’s concerns.
I recognise that congestion can have a major impact on local bus services, but authorities can take action to address it through new infrastructure measures and technological solutions, for example by enforcing moving traffic offences in bus lanes, as I mentioned earlier. Given the existing powers available to local authorities and the existence of part 6 of the Traffic Management Act, I hope that hon. Friends and colleagues on the Committee will agree that the additional legislation, particularly where it relates to only one type of partnership, is unlikely to achieve better outcomes.
Daniel Zeichner (Cambridge) (Lab)
It is a pleasure to serve under your chairmanship, Mr Nuttall. I am sure that the discussions we will have in Committee over the next six sittings will be civil and cordial, as they were on Second Reading. Indeed, the Opposition would be delighted to save everyone a lot of time and agree to the Bill as it now stands, because we believe that it was much improved in the other place—but we appreciate that the Government have other plans. At the outset, may I put on the record that for many years I have been a member of the trade union Unite? As it represents many members in the bus industry, I have regular conversations with it.
Government amendment 1 on moving traffic offences may be a curious place to commence our discussions, but it highlights the fact that, welcome though many of the Bill’s measures are, they are only a part of what is needed to achieve what we all want to see: a much more comprehensive and thriving bus sector. Although many more public transport journeys are made by bus than by any other form of public transport, sadly the number of journeys and, in many cases, their speed is declining. The industry tells us that part of the problem is traffic congestion, which is why enforcement of moving traffic offences matters, as the Minister indicated.
When I went to meet my local bus company soon after being elected, to continue the long period of constructive dialogue that local bus manager Andy Campbell of Stagecoach and I have had over many years, he was absolutely clear that one of the biggest problems facing buses in Cambridge was the snarl-ups at a major junction where the yellow box had been removed after a major reconfiguration. However, what is the point of a yellow box if everyone knows that there is no sanction for transgressing it? That point struck me last Friday as I did exactly that at another junction in the city, just as everyone else does. The measure introduced in the other place would give local councils the powers to do what the police no longer have the resources to do. That is not their fault, but a direct consequence of Government cuts—cuts add to congestion, and they add to delays on the buses.
This destructive Government amendment removes an order-making power under which the Secretary of State may confer on a local transport authority with an advanced quality partnership scheme the power to enforce traffic offences. Part 6 of the Traffic Management Act 2004 gave the Government the power to make regulations and publish guidance relating to the civil enforcement of road traffic contraventions, such as the regulations we have been talking about for parking and moving traffic offences. As I have outlined, we believe that it is important that all councils should have enforcement powers to deal with moving traffic matters such as banned turns and yellow box junctions, to help improve the reliability and punctuality of buses, which would in turn increase bus patronage, which is something we are all trying to achieve.
It is disheartening to see the Government refusing to enact the power. According to Department for Transport figures, road traffic levels and congestion are projected to increase by 55% and 86% by 2040. The powers could help local authorities with advanced quality partnership schemes to reduce congestion, improve punctuality and increase bus ridership, so why not do it? We know that the Government do not really trust councils and run scared of press columnists who whip up scare stories. In the meantime, every driver stuck by a gridlocked crossing, and every bus passenger stuck because their bus cannot move, is the loser. I exhort the Minister to be brave and make yellow boxes work. If that is good enough for London and Cardiff, why not for Cambridge and Yorkshire?
The Chair
May I ask at the outset that any hon. Member wishing to speak will indicate that clearly by standing up, as they would in the Chamber? I want to include everyone.
Huw Merriman (Bexhill and Battle) (Con)
I accept your invitation on that basis, Mr Nuttall. It would be incredibly remiss of me not to make at least a brief contribution, as I see a fellow member of the Transport Committee, the hon. Member for Blackley and Broughton, looking at me and no doubt remembering some of the things I said on this point in that Committee.
I live in a constituency where we do not even have civil parking enforcement. The hon. Member for Cambridge is correct that at the moment the police do not have the resources to deal with traffic offences. In my constituency they have even given up on dealing with people who park in a bay for two hours. As a result, many parts of the constituency are chock-a-block and no one is taking responsibility.
I am greatly concerned about the fact that there is no direction from above, conferring powers but also making sure that powers are used. I do not want to vote against the Government but I would ask the Minister to consider how they can ensure that councils take responsibility for powers that they can utilise, and how to improve council enforcement with respect to traffic movement.
The Transport Committee is currently undertaking an inquiry on urban congestion, and it is clear to us that difficult decisions must be taken. I would like local authorities to be granted more powers, and I would like us to ensure that they take them rather than arguing with the police about who does nothing.
Andrew Jones
My hon. Friend makes an interesting point. I think that councils, rather than arguing with the police about who does nothing, have significant powers, and we should encourage them to take action. I hope that we can move to much greater civil enforcement, and to people leading their councils with a view to shaping their local areas and making them better environments, in all respects, including traffic management. As for whether the Government trust councils—a point raised by the hon. Member for Cambridge—the Bill is an enabling one that gives councils powers. Clearly his underlying point is not correct.
The Government are unconvinced that, without further controls, the proposals would be anything other than the potential for revenue-raising by councils, rather than traffic management. That view is reinforced when I receive letters such as one that I had stating, “This is an opportunity for us to get some cash in.” However, I am not against the principle and will continue to talk with the Local Government Association. I discussed it only last Thursday with the LGA—Councillor Martin Tett, the leader of Buckinghamshire County Council, is leading on it—so there are live conversations.
I am happy to give the Committee my commitment that we shall continue with those discussions, but I want to make sure that we see the issue from the point of view of traffic management. If the LGA will do further work on that we can continue to talk. I do not think that the Bill is the right place to tackle moving traffic offences.
Graham Stringer (Blackley and Broughton) (Lab)
I understand what the Minister is saying, but the provision is not about enabling councils to carry out a function; it is about restricting current and future ministerial teams. Why does he want to restrict the powers of his Government and following Governments, if they think fit, to confer that power on local authorities?
Andrew Jones
I am happy to consider the commencement of these powers, but we have to go through a number of safeguards yet. I do not think that we are in a position to go any further. I am quite happy to keep this dialogue going, but the case has not been made in a way that has convinced me or other departmental colleagues. Indeed, I think that there are reservations across the House more broadly.
This is not about restricting powers; it is about granting powers to councils to enforce moving traffic offences. I know that they want them. These powers have been on the statute book for 13 years and not commenced. Our predecessors probably had some of the same reservations that I have had. I do not think that we can go any further than my commitment to keep talking and not to be against this in principle.
Lilian Greenwood (Nottingham South) (Lab)
I am sure that the Minister is aware of the report by Professor David Begg for Greener Journeys about the impact of congestion on bus passengers and the fact that bus journeys have been reducing by 10% each year. If that trend continues, will he look again at traffic management? Clearly, congestion hits buses harder than it hits other vehicles. If bus speeds are reducing, that can hit bus patronage. This goes against the very ethos of his Bill, which is to increase bus patronage and encourage the use of the bus as a means of transport.
Andrew Jones
The hon. Lady is absolutely right. The heart of the Bill is more powers to get more passengers on to buses. That is what the Bill is for. I am certainly aware of the report by Professor Begg; I have read it and discussed it with him. Indeed, we have spoken at a couple of conferences together and discussed the matter. I have no doubt that congestion is a factor. At the same time, the Government are taking significant action to tackle it. Only last Friday morning we announced a further £110 million of schemes to tackle congestion and particular pinch points on the strategic road network.
We are aware of the impact on congestion and are taking action. I am aware of the concerns in the industry. I support, for example, the introduction of bus priority measures, where it is appropriate and when councils, as local highway authorities, take these actions. That still does not mean that we are in the right place to take this issue forward today.
Amendment 1 agreed to.
Andrew Jones
I beg to move amendment 2, in clause 1, page 4, leave out lines 37 to 42.
This amendment removes a requirement that, under an advanced quality partnership scheme, new buses providing local services must meet eligibility requirements contained in the “Low Emission Bus Scheme” (a programme of grants to support the use of low and ultra-low emission vehicles), where the vehicle comes into service after 1 April 2019.
The Chair
With this it will be convenient to discuss the following:
Government amendments 6 and 11.
Andrew Jones
The amendments would remove the requirement that from 1 April 2019 all new buses used to deliver services as part of a partnership or franchising scheme in England must be low-emission vehicles. As a result of changes made in the other place, the Bill currently requires such vehicles to meet the eligibility requirements contained in the low emission bus scheme.
I support the spirit behind the changes made in the other place. We all want to see greater use of low-emission buses. Last July, we published details of the local authorities and operators that will be sharing the £30 million budget under the low emission bus scheme. That builds on budgets that have come from previous Governments in support of cleaner vehicles. In the autumn statement, my right hon. Friend the Chancellor of the Exchequer announced that a further £100 million will be made available over the next few years to help to spread the use of such buses.
The drafting of the Bill as it stands, however, is not the way to go about encouraging greater use of these very impressive vehicles. The requirement would tie the hands of authorities looking to implement franchising, advanced quality partnerships or enhanced partnerships. It would require them to specify standards for newer vehicles that are higher than in other parts of the country. It is a bit of a centralist approach, which goes against the principle of the Bill, and it would certainly result in additional costs, which could make the difference between whether schemes are viable or not. The likely consequence is that many local transport authorities would simply not pursue such schemes at all, which would lead to lower levels of bus use and potentially worse environmental outcomes than would have been achieved without the provisions. Even where schemes are set up, the provision could be circumvented for several years if authorities simply do not introduce any new buses at all, which would be a perverse consequence and the opposite of what it seeks to achieve.
Daniel Zeichner
I hear what the Minister says, and of course there is always a debate to be had about how to drive up standards, but the evidence is clear that unless such mechanisms are used, it does not happen. It is disappointing that the Government intend to remove the provisions in the Bill that would ensure that schemes 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.
However, we are a little cheered by the fact that the Government amended the Bill to specify that the standards of service that may be specified in a scheme include requirements about emissions or types of fuel or power. Our amendment says that schemes must ensure new vehicles party to the scheme meet the low-emission specifications, but the Government’s amendment says only that standards of service may include requirements about emissions, and does not set out what they may be.
The draft guidance is not much better. It says that the Department
“would encourage authorities to think about how they can use the tools in the Bill...to help improve the emission standards of the vehicles used and therefore local air quality”,
but adds
“it is important to remember however that these tools are designed to help authorities...not dictate standards.”
While that may be a very cosy way of arranging things, it does not do what is necessary to drive up standards.
We all know how pressing the air quality issues in this country are and how frequently the Government have been losing in the courts. We think this is a straightforward opportunity to take robust action, but sadly the Government’s response is to think about it. We need more robust action to make the buses in our country greener and cleaner.
Andrew Jones
To say that the Government are just thinking about it does not capture the spirit of what I said earlier about our low emission bus scheme and the further funding that was allocated in the autumn statement. I agree that air quality is a significant and pressing issue, and I have no doubt that progress with buses is at the heart of improving the air quality in our towns and cities. However, the Bill is explicit that emissions standards can be specified in partnership schemes or included in local service contracts, in the context of franchising. Emissions standards can be included in schemes, thus giving local authorities the flexibility to determine an approach that is right for their area.
I am not quite as doomy and gloomy as the hon. Gentleman on this issue. From my discussions with bus operators, I see a recognition that new low-emission vehicles present a fantastic opportunity. They are moving their fleets in that direction and we are supporting them in that work. In my constituency, the Harrogate Bus Company will move to an electric fleet for much of its service. It will be a leader for low-emission buses across the country and I have supported it in its enthusiasm.
That also has good public recognition but that does not mean we should dictate cost, which could have a perverse effect rather than the positive motive behind the amendment. That is the reason the Government have tabled it.
Amendment 2 agreed to.
Andrew Jones
I beg to move amendment 3, in clause 1, page 6, leave out line 1.
This amendment and amendment 4 remove a requirement to consult representatives of employees of affected bus operators about a proposed advanced quality partnership scheme. The representatives must be representatives of a trade union recognised by bus operators or, if there are no such representatives, appointed or elected representatives of the employees.
The Chair
With this it will be convenient to discuss the following:
Government amendments 4, 8 and 9.
Amendment 22, in clause 4, page 18, line 16, leave out “advanced quality partnership scheme” and insert “franchising scheme.”
This amendment would amend a provision in the franchising scheme section that refers to advanced quality partnership schemes.
Amendment 27, in clause 9, page 44, line 33, at end insert—
“(i) appropriate representatives of any affected employees”
This amendment would make appropriate representatives of any affected employees statutory consultees when a local authority is consulting on a proposed enhanced partnership.
Amendment 28, in clause 9, page 44, line 33, at end insert—
‘(6A) In subsection (6) (i) “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; or
(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.”
This amendment specifies what is meant by the term “appropriate representatives of any affected employees” in Amendment 27.
Andrew Jones
A number of amendments have been tabled by the Government, the hon. Members for Cambridge, for Nottingham South and for Scunthorpe that relate to the consultation of employee representatives in relation to proposed partnership and franchising schemes.
Government amendments 3, 4, 8 and 9 would remove the requirement for authorities to consult representatives of employees about proposed advanced quality partnership and franchising schemes.
The Government introduced amendments in the other place to require authorities to consult employee representatives about proposed franchising schemes, as it is those schemes that are likely to impact on staff. The Bill, therefore, already places a requirement on authorities to consult employee representatives in the appropriate circumstances, which ensures that any trade unions that represent employees will be consulted on franchising proposals.
The further amendments that were made in the other place in relation to consultation of employee representatives and trade unions on proposed franchising schemes therefore partly replicate Government amendments. Government amendments 8 and 9 would simply remove that duplication. In the light of that duplication, I hope the hon. Member for Cambridge will feel able to withdraw amendment 22, which would amend further that duplicated text.
I completely understand the need for employee representatives to be consulted on proposed franchising schemes because these proposals could have a direct impact on bus industry employees in an area. It is, therefore, completely correct that they are consulted and that employee representatives can be involved in that process. However, I do not consider it necessary to consult employee representatives when establishing an advanced quality partnership or an enhanced quality partnership, as amendments 27 and 28, tabled by the hon. Members for Cambridge, for Nottingham South and for Scunthorpe, would require.
In most cases, a partnership is likely to lead to changes such as multi-operated ticketing schemes. Only in a very individual, particular set of circumstances will an enhanced partnership lead to changes for employees that could be similar to those arising from franchising.
Government amendments 3 and 4 would remove the amendments made in the other place. I hope on the basis of my explanation, and the Government’s clear intention to support employee representatives speaking up on behalf of employees in an area where there will be changes, that the hon. Gentleman feels able to withdraw his amendments.
Daniel Zeichner
We were rather hoping that the Government would be minded to retain the parts in the Bill on employee consultation. It is disappointing that they feel the need to remove recognised representatives of affected employees from the list of statutory consultees when authorities are making advanced quality partnership and franchising schemes.
It seems a touch petty and perhaps an ideological dig at trade unions. I cannot imagine where in the Department that might have come from but I know the Minister is better than that, so I hope he might think again.
I do not understand why the Government think that local authorities should not hear from trade unions or other employee representatives when they are consulting on schemes that could have a profound impact on the local bus workforce. One thing that strikes me about the whole discussion about partnerships, which we all support, is how few people are actually aware of them in any area. Not many of my local councillors are aware of them. We have to dig deep to find that these wonderful partnerships already in place, so here is an opportunity to involve more people and to spread the word. The expertise of those frontline staff in providing the services is unique. I generally find that if I want to know what is going on, I talk to the people delivering the service on the ground. They often have a rather different take on what is happening, so if people want to know what is happening, go and talk to the drivers. Their expertise and their local knowledge is not, it seems, to be taken into account.
We are disappointed at the Government’s removal of what seemed to us to be harmless and sensible provisions. When this was discussed in the other place, the Minister, Lord Ahmad, said:
“I agree that it is important that employee groups are consulted appropriately on proposals to improve local bus services. I agree particularly that significant changes to local bus services could well impact local bus industry employees, so it is only fair that they are given the opportunity for input in such circumstances.”
He also said:
“I agree that employee groups and others affected by the proposals should always be consulted formally on franchising schemes”.—[Official Report, House of Lords, 29 June 2016; Vol. 773, c. 1651.]
I appreciate we are extending this to the other forms of partnership, but the principle seems fairly clear.
Amendments 22, 27 and 28 are partly related to drafting issues. We think that amendment 22 corrects a minor technical error in the Bill and clears up what we think must have been a typo, because clauses 4 to 6 relate to franchising schemes but clause 4 refers to “advance quality partnership schemes”. Amendments 27 and 28 would, in our view, simply tidy it up the Bill and bring clauses 9 to 15 on enhanced partnerships in line with those on advanced quality partnerships and franchising. My amendment inserts into the section on enhanced partnership plans and schemes a requirement that a local authority or authorities must consult appropriate representatives of any affected employees.
Huw Merriman
Just so that I am clear on this: the hon. Member is expecting that local authorities would consult with the employees of an organisation where they are already employed by a non-local authority employer. This is not relating to municipals on that basis. If that is the case, surely that opens up a Pandora’s box: whenever a local authority wishes to change a contractor for refuse services, it has to talk to all of the employees of all of the refuse companies. Where does this end? Where does this link to the desire to make the process simpler for local authorities? If this amendment were to be accepted it would make the process incredibly cumbersome.
Daniel Zeichner
I would not disagree that the processes are complicated. Our point is that if you are looking to redesign local services, who better to talk to than those that are actually involved in delivering them? I accept the hon. Gentleman’s point that it does raise other issues, and I would agree that talking to the people providing those services gives us a better chance of getting the end system better, whether it is the provision of refuse services or any other services,.
Huw Merriman
Is there not a danger that you spend a lot of time talking at great cost and actually delivering very little, which is exactly contrary to what we are trying to do with this Bus Services Bill?
Daniel Zeichner
When we are redesigning services that are going to have a major impact on people across a local area, it is certainly worth talking to people. Quite often, we are talking about representatives of people. It is a question of having one or two extra consultees, so I am not sure that it is a huge extra burden. My worry is that people who have the knowledge are being excluded from those discussions. My practical experience on the ground, as I already intimated, is that very few people know about these partnerships. The involvement of many more people would lead to a better outcome.
Amendment 27 refers to
“appropriate representatives of any affected employees”.
That means representatives of recognised trade unions or employee representatives who have been appointed or elected by the affected employees. The amendments effectively make trade union representatives statutory consultees when a local authority makes enhanced partnership schemes. That is already provided for elsewhere in the Bill—local authorities bringing in advanced quality partnership schemes or franchising schemes must consult with “appropriate representatives”. There is no reason why that should not also be the case for enhanced partnership schemes.
Graham Stringer
It is a pleasure to serve under your chairmanship for the first time, Mr Nuttall. I rise not to make a long speech, but to save you from telling me that an intervention on the Minister is too long—I suspect that such an intervention would be. I want to use these amendments to ask him on what principle he has decided what should be done at the centre—what should be the Secretary of State’s or Government’s decision—and what should be devolved.
We are on our third set of amendments. The Minister has argued that the Opposition amendments are otiose and too prescriptive and, in effect, that things would be better left to normal procedures. He said that traffic management would be better dealt with by current policies and that bus emissions schemes would be better left to local schemes. A number of amendments have been tabled—some by him—that take powers away from local authorities and give them to the centre, but he has also argued that some things should be left to local authorities.
This is a good Bill, which I want to support, even if the Government remove some improvements that have been inserted by the other place, as I am sure that they will. It will still remain a good Bill that I wish to support, but will the Minister explain what principles he is using to decide what should remain within his ambit and what should be devolved? At the moment, what has been devolved down and what has been left at the centre is very confusing, if not to say arbitrary.
Andrew Jones
There are a few questions to deal with. Let me start with the underlying principles. I agree that devolution has not been tidy over the past few years, but it has generally progressed from the ground up. I am a great supporter of devolution; we should trust people to make local decisions wherever possible. The hon. Member for Blackley and Broughton suggested that the principle was a little arbitrary, but actually, it comes down to whether there is governance and some kind of control. If we can ensure that we have governance and control, I am happy to see devolution progress. A further point could be accountability, which we might come on to during our debate on franchising.
I am all in favour of consultation with employee representatives when there are material changes to people’s working conditions. A franchising scheme would mean that, which is why we put employee representatives in that proposed new section in the Bill. That is unlikely to be the case for the simple, more structured partnership arrangements, which are about local authorities and bus companies coming together to agree and put forward a set of consumer offers.
Lilian Greenwood
I wonder whether the distinction that the Minister is making is right. Employee representatives clearly have a role and need to be consulted on issues that affect the terms and conditions of their members, but does he not accept the point made by my hon. Friend the Member for Cambridge? The people who deliver those services—the frontline workers in the bus industry—have valuable expertise, so there is value in consulting them and seeking their view on operational aspects and not just the bits that might affect their employee terms and conditions. Does he not accept that there is value in gaining their expertise as part of the process?
Andrew Jones
Yes, I do accept that. I worked in business for 25 years before coming to Parliament. If changes are going to be made or if a company seeks to improve, the best thing to do is to talk to people and take them with you. I fully recognise that; doing so is good practice.
I would expect any authority developing partnership schemes to talk very widely. The whole point of partnership schemes is to get people to come together to decide on a set of customer benefits and deliver those benefits to put more people on buses. The authority will be free to consult as widely as it wishes—that is fine, I am all for it doing that—but in areas where terms and conditions change, we need to go further and make it mandatory. That is the difference between us on the Bill; it is not a big difference.
Is consultation a good thing? Of course it is. Are employee representatives at the heart of that? Of course they are, but where terms and conditions are changing, we need to make it mandatory.
Question put, That the amendment be made.
Andrew Jones
One of the most interesting parts of the Bill is the proposal to see greater powers in the world of partnerships between the bus companies and local authorities. Clause 1 introduces new advanced quality partnerships, which build on the existing quality partnership schemes that were first introduced in the Transport Act 2000. Under the existing schemes, a local transport authority has to invest in bus-related infrastructure. That might be priority lanes, new bus stops or a bus station. Local bus operators that choose to use those facilities improve the quality of their services in return, so there is an offer from both the operators and the local authority. Indeed, operators that do not participate cannot use the facilities provided by the authority.
Advanced quality partnership schemes have a broader scope. In addition to, or instead of, the provision of facilities, an advanced quality partnership scheme can include measures taken by a local authority that will help buses. It might use other areas within its powers as an authority, such as traffic management policies or parking policy. The new advanced quality partnership schemes can therefore include a wider range of requirements that operators must meet, including in relation to the marketing of services and tickets, the provision of information to passengers, and even smartcard requirements.
An advanced quality partnership scheme may be made only by an LTA or LTAs working together in England. The existing quality partnership scheme provisions will continue to apply in Wales, as will such schemes made by an English authority in conjunction with a Welsh authority where we are dealing with cross-border services.
This is an interesting addition to the range of powers available on a local basis. There is strong support of partnership arrangements in the bus sector. Indeed, I have travelled around our country a lot over the past couple of years looking at different bus arrangements, and good partnership working has been at the heart of progress. We have seen that right across the country. Clause 1 is a welcome addition.
Daniel Zeichner
There is much to agree on here. We understand the case that a bus service cannot be run without infrastructure around it and the co-operation of the local authority, so we strongly welcome the extra flexibility that the advanced partnerships will bring.
However, I return to a point I made earlier about the lack of understanding in the wider world about what is going on with these schemes. I was slightly troubled by the response to my questions to the Department about analysis of the success of existing partnerships across the country. There seems to be a certain vagueness about that, which may reflect the fact that the Department has many other things to work on. I appreciate that, but as we move on to create extra types of partnership scheme, it is useful to know what has and has not worked around the country before. I encourage the Department to do a little more research on that, as we process these schemes.
There is a question over who exactly will be come forward to use these advanced quality partnerships and the enhanced partnerships that we will come to later in the Bill. I divert back to the moving traffic issue. The hon. Member for Bexhill and Battle probably created the soundbite of the day when he referred to the many years spent talking about doing nothing. There is a further danger. It is clear to me that very few people in the wider world understand what the Government are trying to achieve here.
This is a worthy intention, and we support the Government’s proposals on advanced quality partnerships. We are disappointed that they have not felt able to maintain the amendments made in the other place, but we appreciate that that is their role in life, and we strongly support advanced quality partnerships.
Andrew Jones
I have just a couple of comments. I agree that right across the country we are seeing good partnership working. I have seen it with my own eyes, and I also look at sales data that comes into the Department. The idea that the Department is ignorant of such matters is not entirely fair. I agree that knowledge of these things might be limited locally. I have no means of quantifying that, but I suspect that there could be some truth in it. The point remains that where there is good partnership working, we see more passengers on buses. I am not too worried about whether people know about the formal structures behind the scenes. I want to see the outcome of that planning and preparation, which is a stronger bus market that is growing in an area.
Question put and agreed to.
Clause 1, as amended, accordingly ordered to stand part of the Bill.
Clause 2 ordered to stand part of the Bill.
Schedule 1
Further amendments: advanced quality partnership schemes
Question proposed, That the schedule be the First schedule to the Bill.
Andrew Jones
The schedule contains only consequential amendments to the Transport Act 1985 and the Transport Act 2000 that are necessary for the effective implementation of the advanced quality partnership scheme provisions. They are technical amendments that will ultimately ensure that, once the advanced quality partnership scheme provisions are in force, the existing quality partnership provisions in sections 114 to 123 of the Transport Act 2000 will enable such schemes to be made only by Welsh authorities or jointly by English and Welsh authorities. The schedule also amends the Transport Act 2000 to require local authorities in England that make advanced quality partnership schemes to satisfy themselves that any adverse impacts on competition are outweighed by the benefits secured.
The amendments that the schedule will make are perhaps a little dry, but they are necessary.
Question put and agreed to.
Schedule 1 accordingly agreed to.
Clause 3
Transitional provision
Question proposed, That the clause stand part of the Bill.
Andrew Jones
The clause automatically turns all existing quality partnership schemes made by English authorities into advanced quality partnership schemes. Such schemes may then take advantage of the new provisions and flexibilities of the advanced quality partnership schemes, but will not be obliged to do so.
Graham Stringer
Will the Minister tell the Committee how many quality partnerships the clause affects?
Andrew Jones
The clause affects all the existing quality partnership schemes. I do not have an exact number for the hon. Gentleman but, having seen some schemes in action, I am aware that there are good schemes all over the country. I could not give a precise figure without checking but it is into double figures. [Interruption.] Inspiration is now arriving in the form of a written brief that gives the answer as 10.
Andrew Jones
Yes, it is double figures.
Clause 3 is a small measure that makes transitional arrangements to turn existing quality partnership schemes into advanced quality partnership schemes. I commend it to the Committee.
Daniel Zeichner
A theme is emerging through these discussions. I return to my point about the number of these schemes and the understanding that exists across the country. While I entirely take the Minister’s point that, for the bus passenger, the issues are whether the bus is running, the quality of the bus, the fares and all of the rest of it, my worry is that many of the people who should know a bit more about this locally—local authorities and local councillors—are probably unaware of what has happened in the past and what the opportunities might be in the future. I encourage the Department to talk more about these partnership schemes because, if we only have 10 across the country, that rather suggests that there are many areas that do not currently benefit from these schemes.
My part of the world in Cambridge is frequently cited as one of the good examples. Although I have robust conversations with my local bus company—we will perhaps come on to that later on—the relationship between the bus company and the local authority has helped deal with some very pressing issues over many years. That has meant that the traffic in Cambridge, although still grindingly slow, has not got any slower. I would suggest that the number of my local colleagues who know about how that has been achieved is relatively small. It is not talked about or discussed.
I think that there is a lot of potential to look at the good examples—and there are other good examples across the country—and make more of the opportunities that exist.
Andrew Jones
The hon. Gentleman and I will spend part of the day agreeing with each other, because I do agree on that point. Partnerships have been working—we have seen that. He has direct first-hand experience; I have direct first-hand experience from many visits around the country. My focus is on consumers—getting consumers on to buses—but his point about whether the partnerships are widely understood among passengers does not worry me.
Are the partnerships understood among councillors? That is potentially a little disappointing. Perhaps that builds slightly on the pithy phrase from my hon. Friend the Member for Bexhill and Battle. Councillors really should know if their local authority is engaged in a partnership. It would be surprising and disappointing if that were not the case. As a general point, we should all take the opportunity to talk up the bus market.
I have toured many bus conferences and local markets over the past 21 months or so and it has been very good fun. I see an industry that is changing rapidly—we talked about the low emission changes earlier—but I do not think the changes are fully understood and appreciated by customers. Perhaps people have excluded themselves from the bus market in recent years and are unaware of how things have developed to offer them a much better product.
Part of what we have to do is go round and encourage people to use buses and just try it. We have a “catch the bus” week organised by Greener Journeys every year; that has been successful and is growing in momentum. I have participated in that wherever I have been able to do so—and that has been quite a lot—and I support more of that work.
I agree about partnerships being the bedrock of a good marketplace. It is about customers, and if councillors do not know about these matters, they certainly should.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clause 4
Franchising schemes
Andrew Jones
I beg to move amendment 5, in clause 4, page 15, line 11, at end insert—
“But each of paragraphs (b) to (f) has effect only if the Secretary of State by regulations so provides.”
This amendment enables the Secretary of State to control the bodies, other than mayoral combined authorities, that may introduce franchising schemes. The Secretary of State must make provision by regulations before county councils and other authorities in England referred to in paragraphs (b) to (f) may be franchising authorities.
The Chair
With this it will be convenient to discuss Government amendments 7, 17 and 18.
Andrew Jones
Government amendments 5 and 7 reinstate the original provisions of the Bill to require authorities that are not mayoral combined authorities to apply to the Secretary of State before they can consider implementing franchising. The amendments will mean that only mayoral combined authorities will be able to access the franchising powers automatically. Amendments were made in the other place to provide automatic access to franchising powers to all authorities, regardless of the seriousness of their intent or their suitability to take franchising forward. The Government’s view is that automatic access to franchising should be available only to combined authorities with directly elected Mayors because combined authorities with Mayors, when established, will provide clear, centralised decision making for transport across a relatively wide local area such as a city region.
Gloria De Piero (Ashfield) (Lab)
Selston is a rural parish in my constituency. People have to turn down jobs in Nottingham because there is no bus service to get them back at night, and an elderly gentleman cannot get back from his beloved Nottingham Forest on a Saturday evening if there is a late afternoon kick-off. Why would my constituents have to apply to the Secretary of State to control their bus services and routes when others would not?
Andrew Jones
The hon. Lady makes a point about the value of local bus services. I agree that many people rely on them. Some communities are connected only via buses in the world of public transport. We are talking about automatic access—franchising is a significant jump for an authority that wishes to go down that route. I am quite relaxed about who franchises. We have a suite of powers and the Government are neutral.
Julian Knight (Solihull) (Con)
I wonder whether the Minister is familiar with the experience of the future mayoralty in the west midlands. The Mayor will give accountability to the process and, effectively, big decisions will be made at that level. Local people can therefore have a better input into what happens across the whole region.
Andrew Jones
I was coming to the point my hon. Friend has made and made very well. Mayors will have access to significant budgets, which they can commit to bus services if they wish, and will be responsible and accountable for a decision to move to a franchising model. This is a question not of some areas having fewer rights than others, but of ensuring that the governance arrangements are in place when making that significant jump.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
The Minister has talked about the accountability that comes with a Mayor. Can he also talk about the guidance that accompanied the Bill and why Cornwall is regarded as an exception? I welcome all areas wanting to take on powers for franchising, but I cannot distinguish a difference between the north-east and Cornwall. I cannot see why Cornwall should be looked on favourably whereas the north-east would not automatically have those powers.
Andrew Jones
I will certainly address that, but first I will finish answering the point made by the hon. Member for Ashfield. When a village requires a service but does not have one, local authorities have the power to tender for services and subsidise them. The point is to get more passengers on to buses to make buses a much more sustainable, financially secure mode of transport. That is at the heart of the Bill.
Franchising is a significant step and attracted much of the attention within the industry as we developed the Bill. My personal view, as I have said, is that partnerships are at the heart of the Bill. I can imagine some areas choosing to go down a franchising route, and they can do so if they wish—it could be appropriate in some areas, and Greater Manchester, for example, has indicated throughout that it wishes to go down that route. Other areas, even combined authorities with Mayors, have indicated to me that they would be unlikely to go down that route, but we are keeping the access to that route open. That is because we have Mayors with significant budgets, and they have the responsibility and accountability.
Other authorities, such as Cornwall, should be able to have access to franchising powers where they are well placed to make franchising a success and where they have a clear plan to benefit passengers. We want to ensure that franchising powers can be made available to authorities that have the ability, the powers and, importantly, the funding to make a success of franchising, and where franchising will benefit passengers. The amendments therefore enable other authorities to access the powers, with the Secretary of State’s consent, on a case-by-case basis.
It will help the Committee if I set out in more detail how we envisage things working in practice—that might address the concerns of the hon. Member for Ashfield. Last October, we published a draft policy statement setting out the sorts of factors that the Government would take into account when determining whether to provide an authority that is not a mayoral combined authority with access to franchising powers. We are clear that the Secretary of State will not take the final decision on whether franchising powers proceed in these areas, nor will he review every last detail of an authority’s plans. Our statement set out the core requirements that we consider are necessary to implement franchising successfully.
Our intention is that authorities that wish to secure the Secretary of State’s consent to pursue franchising will need to demonstrate that they have five things in place. First, they must have clear plans to use franchising to deliver better services and outcomes for passengers—this is about passengers, not process—and explain why those outcomes could not be achieved through other routes. Secondly, they should have sufficient powers to make franchising a success. Those powers could include control over local roads and parking or planning. An authority may have those powers itself, or it could explain how it will work with other authorities that have them. That might include, for example, the creation of a key route network of local roads across different authorities but under one management organisation and decision-making structure.
Thirdly, authorities need to demonstrate that franchising can be put into practice across the geography of the area, explaining why the area that they propose is appropriate—that will obviously be with reference to individual travel patterns. Fourthly, they must be able to demonstrate that they have the capability and resources to deliver franchising effectively. We will be looking for evidence of successful delivery of complex projects, previous commitments to improving public transport, sustainable local investment in transport schemes, and robust plans to resource a financing system.
Gloria De Piero
May I ask about a basic principle? In principle, would the Minister prefer bus routes and times of services to be dictated or set by elected politicians or bus companies?
Andrew Jones
It is not a case of one or the other. There will be different models in different places—I am quite relaxed about that. We cannot say that one is better than the other. I can see areas where there is a route to franchising; Manchester certainly feels that that would work for it. There are other areas where we have partnership working already and the decisions are made by bus companies that are seeing passenger growth. I want to continue to have innovative bus companies seeing markets and opening up routes to take advantage of those markets, marketing their services and developing a product that was not there before. I have seen that in my constituency. It is not one or the other, but a mixture of both. I see quite a complex market with different providers doing different things, but at the heart of that I see collaboration and co-operation, which effectively will be built into the partnership powers.
I was explaining the criteria that we will consider for franchising. The final one of the five is that the authority will need to demonstrate that it has effective decision-making and accountability arrangements for its decisions on franchising. That relates to a point that was made by my hon. friend the Member for Solihull. Those arrangements should be transparent to local people and a named individual should take the decisions—it could be the Mayor or a council leader. That is what is likely to demonstrate accountability most clearly.
Lilian Greenwood
I completely accept what the Minister says about local elected politicians having to take responsibility for their decisions, particularly if they move into franchising. However, will the Minister explain something that I do not understand? If Nottinghamshire County Council, for example, wanted to provide better bus services, why is that not a decision it could take? It is accountable to the electorate through county council elections and can make many decisions about the local authority services for which it is responsible. Why is the provision of bus services through a franchising model different from every other decision that the local authority might take and for which it is accountable in the normal, democratic way?
Andrew Jones
Moving to franchising is a fundamental change that will affect potentially hundreds of thousands of people. It is not something that can be entered into lightly. Any decision to move to franchising can only be reversed in certain circumstances. It is therefore right that people know exactly how the decision to implement franchising was taken and by whom, so that there is clear accountability for such decisions at the ballot box. The policy statement we have put out does not absolutely require a single person to take the decision to implement franchising. Authorities are free to suggest alternative approaches and explain why they believe that they offer sufficiently high levels of transparency to the public. We would, however, be likely to require some persuading that a complex structure would be an appropriate route. I am trying to keep things simple, with a line of accountability, rather than make anything more complex.
I do not want to give the Committee the wrong impression. The hurdles that we are talking about are not designed to be impossible. The Government are not seeking to put barriers in the way of authorities that wish to go down the franchising route. I am quite neutral about the different types of model they will have access to. This debate is about who has automatic access and who has a further set of questions to answer before they get the powers to do so. I have just been detailing the criteria for that.
I can see examples where franchising will work, but I am putting my thoughts into the views of local authorities, which is not exactly in the spirit of what the Bill is trying to do. I can also see areas where it will be inappropriate, which is again putting my views on the matter. That is not what the clause is about. It is about having a suite of powers so that local authorities and bus companies can come together to put more passengers on to buses, so that buses are no longer the Cinderella part of public transport that they have been, as Members have suggested today.
Lilian Greenwood
I thank the Minister for giving way; he is being very generous. What is the balance between a local authority choosing to go down the franchising route and a local authority taking completely the opposite view? I looked at the Campaign for Better Transport report yesterday, which shows the impact of some of the decisions that local authorities have taken. Local authorities can choose to remove all subsidy from all supported services, which seems to me a huge decision, but they can do that without asking the Secretary of State whether it is okay, yet if they want to introduce a system to improve bus services, they have to leap over the Minister’s five hurdles. It seems disproportionate that to improve services they have to leap over five hurdles, but to remove all subsidy from local authority provided bus services, no reference to the Secretary of State is required. How is that a fair balance?
Andrew Jones
The hon. Lady makes an interesting point. We all know that councils are under financial pressures. I was a councillor for eight years, which included financial responsibility during the financial crisis of 2008 and the years to follow, until I came here. The point is that where councils make investments to subsidise services, those will be targeted interventions, usually to meet a particular need. It could be to do with the village that the hon. Member for Ashfield highlighted, for example. We all know that that happens around the country.
However, if an area moves to franchising, it affects the entire market, not an individual route. It is a significant jump of enormous scale that affects hundreds of thousands of people, so we are looking at having greater controls before councils have access to those powers. That is all this is about. It is not about taking the view that they should not go down that route or putting up impossible hurdles. These are sensible measures that give authorities a realistic chance of effective delivery of a franchising model. They are simply sensible tests.
Amendments 17 and 18 will ensure that two cross-references in schedules 3 and 4 are correct. The relevant regulation-making power will be in new section 123A(4) of the Transport Act 2000. The amendments make that minor change and are technical in nature.
We have had a conversation about the principles of franchising and we have made the case very clearly that the Government support franchising as a model and recognise where automatic access is appropriate. We also recognise that such is the scale of the decision that further tests are required before authorities have access to those powers.
Bridget Phillipson
Will the Minister say a bit more about the timescales for bringing forward the regulations?
Andrew Jones
I will check out the timescales. Our intention is bring all this through as quickly as possible, because there are mayoral combined authority elections on 5 May, I think. That is no more than a few weeks away and it will be appropriate to have these things in place. Timescales will obviously be involved in setting up franchising schemes. We have built notice periods into some of the provisions in the Bill. I will be able to get some more information for the hon. Lady in a moment.
Bridget Phillipson
I understand the point the Minister is making about the areas where the powers will be available automatically, but will regulations also be brought forward for areas that do not have a Mayor and that will require the approval of the Secretary of State to commence the process?
Andrew Jones
We expect that the regulations will only be made if they are needed to turn on that type of authority. It would require an authority to apply, rather than the other way round. If an authority applies to the Government and makes it case, we can take that forward. It is not a question of the powers being there automatically; they would be there on an on-demand basis only.
Daniel Zeichner
As the Minister has indicated, the clause takes us to the heart of the Bill. We strongly welcome the opportunity for combined authorities with a Mayor to move to a franchised system. It has been the call of bus campaigners, including myself, for many years for areas to be able to adopt the London model. Finally, there is a real chance to make it happen. I will come on to my objections to limiting that opportunity only to combined authorities with a Mayor, but I will start by making it absolutely clear that, for those areas to which it is being offered by the Government, we want to ensure that it actually happens. As the Minister has indicated, with mayoral elections only a few weeks away, this is a key issue.
Those who have read the guidance closely have been alarmed by phrases such as the need to make “a compelling case”. The worry is that there will be opportunities, once again, to frustrate such schemes before they are brought to fruition. I certainly welcome the assurances given by the Minister on Second Reading when he was pressed on this point. I think he will probably assure us again this morning that he does not wish to put any hurdles in the way. That will be strongly appreciated by those who have done the devolution deals and expect the promise to be honoured.
Moving on to whether franchising should be available to other authorities, it is clear that Members of the other place felt that it should, hence their amendment. The amendments before us would enable the Secretary of State to control the bodies, other than mayoral combined authorities, that may introduce franchising schemes. They require the Secretary of State to give consent for such a franchising authority to take the preliminary step of preparing an assessment.
We have made no secret of the fact that we believe powers to franchise bus services should be available everywhere, partly for the reason raised by my hon. Friend the Member for Ashfield. Across the country people find that bus services are disappearing and that they are left completely isolated. Figures from the Campaign for Better Transport, year on year, show that more and more councils are unable to support services in key areas. People’s hopes are being raised by the possibility that something can change.
I am sure Ministers would say that resources cannot be created out of thin air, but many of us would argue that there are resources in the system and they could be applied more comprehensively. That is what authorities are looking for—to be able to use levers that are not currently available to help people who are not able to get to their local town to watch the football, do the shopping and all the other things that people need to do.
Gloria De Piero
May I make a point about rip-off bus fares from private companies? I have a constituent who travels from Eastwood to West Bridgford, which is a journey of about 11 miles. She works in administration and earns about £15,000 a year. It costs her £9 a day to get to work and back. That sort of rip-off bus fare is why it is important that local politicians have some say over the bus services that companies are providing.
Daniel Zeichner
My hon. Friend is absolutely right. We heard a series of examples on Second Reading from across the country. That might come as a surprise to people who live in London, where we can travel across the city for a flat fare. Even though it went up considerably under the previous Mayor from a decade ago, it is still extraordinary value compared with the rest of the country.
I have to pay far more to go one stop when I am in Cambridge in an unregulated area than I do in London. That is why the London scheme has attracted people for so long. The opportunity to regulate the system has produced a better outcome. It is no wonder that citizens across the country are demanding parity.
Bridget Phillipson
On Second Reading, an unhelpful distinction was made at times between urban and non-urban areas. In an area such as mine, which is largely urban, albeit with some semi-rural areas, the bus service is appalling and holds back jobs. It affects people getting to work, businesses and a range of investment across the region. Government Members appear to think that everything is rosy in all urban areas. In a lot of urban areas, the service remains very poor with high fares. As is the case in the constituency of my hon. Friend the Member for Ashfield, it can be very expensive for people who are often on low wages.
Daniel Zeichner
My hon. Friend is absolutely right. That is why there is so much hope attached to the Bill and to the idea that we can go back to having a comprehensive local public transport system that delivers for people. The truth is that we have had a 30-year experiment with an unregulated market, the end result of which is exactly as my hon. Friends describe. This a chance to move forward. In some areas the Government are responding, but in many other parts of the country, it looks as if the hurdles will be too high.
The Minister talked about local decision making and accountability, saying that the Bill is about enabling new opportunities and giving local authorities new choices on how to improve their services. However, as has been said, taking the decision out of the hands of local communities and putting it squarely in the Secretary of State’s hands does not seem like localism to us. It seems particularly peculiar that a local authority must seek consent before taking even the preliminary step of preparing an assessment of a potential franchising scheme. How on earth can a local authority present a compelling case to the Secretary of State to gain approval if they are prohibited from even assessing a scheme?
We understand the Government’s point that strong governance and accountability are key to making franchising a success, along with a commitment to improving transport and to a coherent economic geography. However, we do not understand—my hon. Friends have made this point well—why the Government believe that those things can only be achieved with an elected Mayor. Why are Mayors seen to be more accountable than other elected local authority leaders?
I turn again to my personal experience, because for some reason Cambridgeshire seems to be at the heart of many of these issues. In my area in a few weeks, we will have elections on the same day for a Mayor of Cambridgeshire, who will have powers to franchise buses, and for a county council for Cambridgeshire, with a leader who does not have powers to franchise buses. A great irony is that the current county council leader put himself up for selection for Mayor and made the final shortlist. Therefore, in a few weeks’ time we could have had the same person being elected on the same day to two roles, one of which one would be deemed sufficiently accountable to franchise whereas the other would not. I am not going to tease the Minister by pressing for a reasonable explanation.
Julian Knight
The hon. Gentleman seems to suggest that all the power rests with the Mayor. In the West Midlands combined authority, the Mayor is effectively first among equals. The leaders of all the councils who make up the authority have a say in decision making.
Daniel Zeichner
Surely that is the case in other places as well. In my area the leader of the county council, who is a Conservative, has been elected and the choice will be made again in a few weeks’ time—however, we shall see what happens in the local elections. I think the local electorate are confused about the situation, based on my experience of what we are seeing on the doorstep, but I think the Minister can see the point. For many people it seems irrational to have so much invested in the mayoral issue.
In reality, we all know what is going on: franchising is being used as a bargaining chip to convince some combined authorities to accept a Mayor that they do not necessarily want as part of their devolution deal. Without going into the chequered history of those negotiations over the past year or two, one could say that they have not always been easy or straightforward. We think that the approach being taken is wrong, which is why we oppose it. Beyond that—this goes back to the points being made by my hon. Friends—the trouble is that what is happening denies bus passengers in many areas the prospect of better services.
Scott Mann (North Cornwall) (Con)
In Cornwall, the proposals are seen as very positive. Our local authority have made positive noises about the opportunities that they could present. The hon. Gentleman talked about some of the mayoral authorities in Manchester but in areas such as Cornwall, the bus network has degraded over a number of years, and this presents us with a real opportunity to provide a proper rural service.
Daniel Zeichner
We do not disagree, but we do wonder. The hon. Gentleman will say that Cornwall is very special, and clearly something very special has happened. Some authorities seem to get different treatment from others. Our point is that everyone should be able to take advantage of the possibilities that such a system brings.
We have seen that it can work in different circumstances. The experience in Jersey, for instance, has shown that franchising can be successful if, to use the terminology, it is applied to a relatively wide local geography. Jersey has seen impressive results from franchising, including a 32% increase in ridership since 2013. Customer satisfaction has also increased, and a partnership has developed between estates and the operator.
I know that some say that franchising destroys competition, but we say no. Far from it: it moves competition from on the road to off the road. As we all know, in too many areas of the country, competition has ceased to be meaningful. Over many years, powerful operators have driven others out. We understand why they do not want that situation to be challenged—it is perfectly rational from their perspective—but on behalf of passengers, we know that it must and should be challenged. This is a key way to make it happen.
Small operators have made strong representations to many of us. They are clearly concerned about the possibility of being squeezed out. I am not sure that there is any reason why a franchise system would not benefit from a range of operators, including small operators. If it is to work over time, it absolutely needs a range of operators, or we are back to where we started.
I understand why smaller operators feel alarmed, but they are vulnerable the whole time to much more powerful bigger operators—I think we know who I am talking about—that could move in on them at any point. We do not want to return to a system in which we have an ossified estate across the country with very little competition or choice, and where the poor person stuck at the bus stop in Nottinghamshire feels not only that there is nothing they can do but that there is nothing anyone else can do on their behalf to change the situation.
Bridget Phillipson
I would like to illustrate the point that my hon. Friend is making about the north-east. The then Competition Commission referred to geographic market segregation in the north-east. The competition that was promised to follow deregulation has never materialised. There used to be lots of small operators, but they have long since vanished, the big operators having pushed them off the road. The competition that we were promised does not exist in the north-east; it certainly does not exist in my community. We need only look at the routes offered by operators to understand the market segregation. Any improvement would be welcome.
Daniel Zeichner
I agree with my hon. Friend. I am sure that the Minister is familiar with many of these arguments.
We reject the Government’s amendment to limit local councils’ powers to improve bus services for passengers. However, despite that—much of the debate on this clause has concentrated on the issue of whether franchising should be available to other parts of the country—I return to the positive point that we want those mayoral combined authorities that were promised franchising powers to have them at the earliest opportunity, just a few weeks from now. We are disappointed that the Government are seeking to overturn our extension of franchising powers to all authorities, but we will not frustrate the process or do anything that could delay the handing of those powers to the mayoral combined authorities that have been promised them.
Bridget Phillipson
It is a pleasure to serve under your chairmanship, Mr Nuttall. Like my hon. Friend the Member for Cambridge, who speaks from the Front Bench, I welcome the Bill and the measures that it introduces. I have spent a lot of time in my seven years here campaigning on bus issues due to the local problems that we face. Any changes to the current system are to be welcomed. I wish areas well with the automatic powers, as they proceed in improving services for local people. Of course I want that for my community, too. Although I understand the Minister’s point that the steps that he described in the process are not intended to be hurdles too difficult to overcome, I hope that the Government will remain committed to delivering that.
Change has been a long time coming, and hopefully we are now getting there, but I hope that the Minister and his colleagues will see the measures through, particularly in areas such as the north-east. We have a combined authority covering seven local authority areas, with an integrated transport authority. We have Nexus, which the Minister will know has other powers, such as the operation of Tyne and Wear metro. We have an extensive network that in many senses works well. What we do not have is the powers we need to make sure that bus routes serve the needs of local people. That is not simply about making it easier for people to get around—although that would be wonderful, because it is not often very easy, frankly, to get around on local buses in my constituency—but if we are to thrive as a region and if we are to create the jobs and support the businesses and the growth that we all want to see, we need a transport network that allows that to happen. In too many parts of my constituency, where buses are the only means of transport, that is incredibly difficult.
To give one example, Doxford international business park in my constituency houses thousands of employees with many big international firms. I frequently visit businesses there, and employees, many of whom are shift workers, often tell me that it is incredibly difficult to get a bus after 8 or 9 o’clock. That holds back investment and makes it difficult to retain staff. Although the transport authority is looking at proposals to extend the Tyne and Wear metro, as I know my hon. Friend the Member for Cambridge is well aware, in the short term we need bus services that will allow people to get to work readily and inexpensively, which is not currently the situation.
On Second Reading, many of us talked widely about the failure of deregulation and the fact that it did not deliver on its promises. I will not dwell on that, other than to say that, in the case of the north-east, on every test that was set out for deregulation back in the 1980s, deregulation has been an unmitigated disaster and has had the reverse effect to the one intended. More than 30 years on from all we were promised about greater efficiency, lower fares and greater passenger numbers, the opposite has happened in the north-east. We have got less competitive services that are less efficient, more expensive and less convenient for the people I represent. Of course, it has given operators the freedom to do exactly what they like, when they like, at a time when we put tens of millions of pounds into local bus services.
Operators receive significant taxpayer subsidy with little accountability, and when things go wrong and operators cut routes arbitrarily with little notice, often affecting the most vulnerable in our community, there is no recourse. We can have dialogue with the operators—I meet them regularly to make the case—but ultimately it is an entirely commercial decision over which local people have no say. It is a source of real frustration that when minor changes to routes can result in local people being cut off from hospital services, GP appointments and the ability to get to local shopping facilities or schools, the operators can say, “We’ve heard what you had to say; unfortunately, we are pressing ahead regardless,” and there is no opportunity for local people to influence that in any meaningful sense.
We are talking not simply about routes that are unprofitable, but usually about the fact that they are not profitable enough. Outside London, big operators such as Stagecoach have made considerable profits, far greater than they make in London. I do not seek to deny operators the right to make a profit. My point is that they make a decent profit in areas such as London under a regulated service; they could do the same in the north-east. The profit margins would perhaps not be quite as high and would not be the double digits that they are used to—no one would seek to stop them running a competitive or profitable service—but if we are going to give them significant taxpayer money, the least we can expect is that they take on board the concerns of local people and use that wisely.
Julian Knight
The hon. Lady is making a very good speech and I sympathise in many respects about the lack of accountability when bus service routes are cut; my constituency has suffered in the same way. Does she agree, though, that this is almost an argument for combined authorities and Mayors, with their buying power, and the idea that they can bring these companies to heel, through their powers and through the threat, for example, of removing the franchises?
Bridget Phillipson
The inconsistency in the Government’s approach is the patchwork way in which they have brought about these different devolution deals. From what the Minister had to say earlier, I am still none the wiser, really, why Cornwall presents an exceptional case when an area such as the north-east does not. We have a combined authority; what we do not have is a Mayor. I believe there should be accountability and that can come in many different forms. In the west Midlands, it will come through the election of a Mayor; in the north-east, it was a widely held view that a Mayor would not offer that same accountability and there was not broad support for a Mayor covering such a big region. However, we do have a combined authority and an integrated transport authority, and we have the structures in place that will make franchising work and give local people the confidence that there will be accountability in the process. That will differ, but I have difficulty in understanding why different models are acceptable in different parts of the country, other than for the obvious political reasons that spring to mind.
Scott Mann
In terms of Cornwall and what is being raised at the moment, I want to be clear. Do you have a devolution deal for your area?
Scott Mann
I just think it might be relevant to know whether you have one. Cornwall does already; that might be the reason for the position that we are in.
Bridget Phillipson
Yes, the north-east has a combined authority. It has gone through the process of further devolution. The sticking point was the Mayor. As I understand it from the Government’s guidance, the difference with Cornwall is that bus franchising was agreed to as part of that devolution deal. Unfortunately, that was not on the table for the north-east. I wish Cornwall well and am glad that it will have those powers. I ask only for a bit of parity, so that we in the north-east get the powers that Cornwall will enjoy. That is symptomatic of the Government’s patchwork approach to devolution, which is borne out not by different local circumstances, but often simply by reaching convenient deals depending on the politics of the situation, rather than ensuring that the best service is delivered for all people.
I ask the Minister to talk a bit more about the difference in approach, because I do not fully grasp why the north-east should not have those powers. Though I take on board his point that unnecessary hurdles should not be put in the way, I am concerned that, to start the process, we will require that approach from the authority. If that case is put forward, I hope that it will not be something that the Department and Ministers seek to frustrate, because the issue is important for the people I represent.
This is a welcome step. Bus services are incredibly important for our country. We mention them too little, although I have tried to play my part in the past few years in talking about them at every given opportunity. The people I represent have only buses to rely upon; they have no access to rail or light rail. Getting this right, and having a system that is fair and works for everybody, is absolutely vital. I hope that Ministers are sincere in their commitment to ensure that areas that seek out these franchising powers will be able to do so, that their case is considered carefully and seriously and that we do not seek to frustrate a process that would lead to real benefits for areas such as the north-east—and not simply in terms of individual routes or services. If the Government are genuine in their commitment to create the so-called northern powerhouse and to see areas such as the north-east thrive and reach our economic potential, we need these powers to deliver real change. We need to link buses to other forms of transport so that we can have tickets and fares that work across all operators, which we do not have at the moment. We need routes where local people can have a say.
The Minister talked about investment in lower-emissions vehicles and has talked previously about investing in smart ticketing. Again, I welcome those steps; but were it not for significant taxpayer investment, that would not have happened in areas such as the north-east. Some of the smart-ticketing schemes that he has come to see in Tyne and Wear came about through taxpayer investment. I welcome that, but bus operators will rarely do these things out of the goodness of their hearts. Where we have significant investment from the taxpayer, it is right that we ensure there is value for money and accountability. I hope that I can work with the Minister and others in the region to get the best possible deal for the north-east, that he looks carefully at what the transport authority may wish to put forward in the months ahead and that we can reach a solution where local people get the service they need and our economy is supported to grow.
Graham Stringer
I agree completely with my two hon. Friends. I will try not to repeat the excellent points they have made. I have a nuanced difference with my hon. Friend the Member for Houghton and Sunderland South when she says that the objectives of the Transport Act 1985, which deregulated buses, were the same as the objectives under discussion today. I have been around long enough to have talked to the people who advised the Government and drafted the Bill that eventually led to deregulation, and there is no doubt that they were ideologically driven. They had no idea what the outcome would be when they proposed the deregulation process. They had a belief, which has turned out not to have come to fruition, that if we had competition on the road, that would lead to a better outcome.
The evidence that I, as a member of the Transport Committee, have seen and individual right hon. and hon. Members will have seen—this is worth bearing in mind during the whole debate—is that over the 31 years that it has been there, the deregulated bus system has been a disaster for many bus users. It will be possible to find small instances up and down the country of bus services having improved, but in the overall scenario there has been a dramatic fall.
It is worth considering how we got to the current hotch-potch of schemes. The Government, in the form of the right hon. Member for Tatton (Mr Osborne), who was then Chancellor of the Exchequer, wanted elected Mayors as part of the drive to get the economic potential out of our major urban regions, which have been neglected since even before bus deregulation took place. By and large, most councillors whom I know do not like the idea of elected Mayors. It is not a fashionable thing to say at the moment, but I agree with the right hon. Member for Tatton that elected Mayors are an improvement in the democratic process, because they provide a focus for accountability. However, should that really be the only criterion that we use to determine whether locally elected people can have the powers to improve their bus services? I think that it is a very odd criterion to use. The six areas that have got the powers have done that deal—they have negotiated with the Government—and we have ended up in the situation we have. In supporting the Bill, I respect that deal, but it does allow us, during this debate, to reflect on what we are losing or not gaining during the process.
We are losing the opportunity genuinely to devolve powers and improve bus services. If only the Minister, who is a completely reasonable man, had been there 31 years ago, we might not have ended up in this situation, in which he has to defend centralism in the name of devolving to authorities.
I listened carefully to the five points that the Minister made which local authorities that want the powers will have to observe. I ask him whether any council or councillors who wanted to re-regulate buses via a franchising system would not have to follow those rules anyway. Would they not have to show that they had the necessary resources and that there was clear accountability? Would they not have to consult? Would they not have to know what area they were dealing with? Would they not have to have an effective decision-making process and to show that the plans were sustainable? If they did not do that, they could be challenged in the courts.
The reality is that it is not just councillors who do not like the idea of elected Mayors. The bus industry does not like the idea of franchising. It is not that we are losing competition—the fact is that the large companies are operating without competition in many areas. The measure introduces competition off-road, probably more efficiently and effectively, and the bus companies do not like it.
If an authority that has been granted the powers to bring in a regulated franchise system does not follow the rules, the bus companies would be straight in front of the courts claiming that councillors had not carried out their proper responsibilities or their fiduciary duties and there would be a judicial review. I have talked to bus companies, which have been looking at the Human Rights Act 1998 and all sorts of ways to try to stop this process. In a sense, the Minister is making bricks without straw.
I do not think that the reasons that have been given are good enough to carry on centralising. Another belief underlying the Bill is that somehow elected politicians and officials at a central level are somehow more competent and effective than elected councillors and officials at local level. Can the Minister give evidence of that?
If we look at the huge mistakes that central Government have made—I could just go through different computer schemes without looking at other areas—it is extraordinarily difficult to make the case that centralism works better than localism. This is not a party political point; it is a point about decentralisation. I have been around local government and central Government long enough to know that there are enormous differences in quality at both levels. Some councillors, to put it politely—I could use offensive words—are not as effective or as good as they could be. I have also met Ministers and civil servants at a national level of whom the same could be said. In principle, it is better for people closer to the ground to be able to make those decisions. We are where we are in the negotiations, but if the Minister is serious about devolution, that is where we should end up.
If this is really a Bill about devolving power, will we end up with more civil servants working on these programmes? There are pages and pages of guidance. If we ask for all sorts of consultations that would happen at a local level anyway, are we not just switching resources in a wasteful way to central government? I know why we are where we are on this. There was a negotiation to get what local authorities in certain areas knew they needed—better bus services—and the objective of the then Chancellor of the Exchequer was, as he saw it, to improve the structure of local government to make it more economically dynamic.
The Bill allows us to shine a light on what has happened in the bus industry, which has lost two-thirds of passengers in urban areas. By allowing decisions to be made locally, we could achieve a more immediate improvement in bus services in all parts of the country. If the electorate’s representatives want it, presumably it would mean that the electorate in those areas want it. There may be some areas that do not want it, but that should be a local matter.
Andrew Jones
There are many points to reply to, but I want to highlight some data about bus usage. This is to challenge the assumption that somehow in the mid-1980s—I am not quite sure when it was but the hon. Member for Blackley and Broughton was very generous: I was either at university or working for B&Q—that precipitated a decline in the bus industry. I just do not think the evidence supports that.
If we go back to the 30 years prior to deregulation in, say, 1985, between 1955 and 1985, the number of passenger journeys fell by 2% per year, from 15.5 billion a year to 5.5 billion. Since deregulation—and I accept that numbers have continued to fall—it has fallen at an average rate of 0.2% per year. On the idea that deregulation was the cause, those responsible for deregulation would probably argue that they stopped a precipitate decline. We should not get too worried about archaeology; we should be more concerned about what we can do for the future.
Gloria De Piero
Does the Minister know the figures for London? I am just interested.
Andrew Jones
No I do not, but I am sure they are available if we go and check. I was only trying to clarify something and provide extra information to help our debates.
Graham Stringer
I can possibly help the Minister on this point. I was referring to a number of Transport Committee reports that pointed out what he said: the bus industry was in decline because we had cheap petrol and for all sorts of other reasons. However, a straight comparison can be made from 1985 to 1999 between London— regulated—and the rest of the country. The lines went in the same way, but when the regulated system, without subsidy most of the time, was left in London, passenger numbers remained the same, whereas passenger numbers in the rest of the country went into sharp decline.
Andrew Jones
I am aware we are seeing different trends in London and in cities, but London has extraordinary and acute transport needs. Planet London is quite different from many other parts of our country.
I will address some of the points that have been made. The hon. Member for Houghton and Sunderland South spoke with great passion about the importance of buses in her area. We agree on this matter. In the north-east, there was a challenged attempt to get a quality contract in place, and a lot of resource went into that. However, the legislation was cumbersome and nobody managed to achieve it, so we will repealing it as part of this process.
The question that arose in a number of places was whether we are approaching this with good faith. I can confirm that we are. We are not seeking to put barriers in place. I have met Nexus on a number of occasions and I support its positive ambitions for the area in the metro and on buses. Our door is open, should it wish to take that up.
We have heard a bit about the very interesting bus market in Cornwall. Apart from living in an important and beautiful part of our country, people have a real passion for their bus market, as my hon. Friend the Member for North Cornwall said. The authority will not have automatic access to franchising powers, but it is a good example of an authority that the Government would consider to be highly likely to demonstrate the factors we discussed. It is a unitary authority that covers a wide geography, with the necessary wider powers to improve bus services. It has a good track record of delivering projects, and it would be free to apply to the Secretary of State, just like any other authority. Is there parity between the north-east and Cornwall? Yes—both are free to request that the Government introduce regulations for that category of authority, if such regulations are not available at the time, then go further to seek the Secretary of State’s consent to proceed with franchising powers.
Bridget Phillipson
I am grateful for and appreciate the Minister’s earlier comments, but may I refer him to the guidance that accompanies the Bill, of which he is no doubt aware? It guidance makes it clear that during negotiations with the Government, Cornwall made a strong case for franchising powers and, as such, the Secretary of State is minded to grant them. Although Cornwall can go through that process should it wish to do so—I wish it well if that is its approach—the north-east does not have that same commitment, so although what the Minister says is right, there is a subtle distinction between the two areas. I welcome what the Minister has said and I look forward to the north-east being granted similar consideration.
Andrew Jones
The door will most certainly be open. We do not seek to put barriers in the way. The whole point about the Bill is that it is an enabling one. My last conversation with Cornwall suggested that it probably would not go down the route of franchising, so it may not seek to make an application to the Secretary of State. However, it has done something interesting with its bus market, which is why Cornwall gets a lot of attention. A partnership has been established with the primary local provider in Cornwall—FirstGroup, I think—which has changed networks and routes and co-ordinated services. We are seeing the company invest in a new fleet, and patronage on the bus network has grown and the market has become profitable. Cornwall is an interesting example of what can be achieved by working together, which is why the authority is often discussed and held up as a poster area for the marketplace. Interestingly, it is using some of the powers in the Bill before we have got to the Bill, but not necessarily in the franchising area.
Lilian Greenwood
Does the Minister not believe that the fact that Cornwall would potentially have the use of franchising powers may have assisted it in the partnership negotiations? The very fact of having access to powers can be enormously important in assisting an authority, perhaps in getting a bus company to listen in ways it would not otherwise do.
Andrew Jones
That is a possibility, and it would, of course, be a possibility that would exist absolutely everywhere.
Andrew Jones
Cornwall does not have automatic franchising powers, but it could apply for them in the same way as all other authorities. That goes a bit towards the national versus local capability that the hon. Member for Blackley and Broughton mentioned.
My general view is that we should support localism. We stand a better chance of a good delivery of a service to solve a local problem if the decision is made as near as possible to the point at which the service is delivered. The service would be tailored to the local need. That should be a basic principle, but does it lead us to question the criteria? No, because the criteria for the introduction of franchising are significant—this is a significant step. They are safeguards; it is not about putting barriers in the way but about ensuring that everything is fit for purpose in order to proceed. The key point is that we do not want to stifle investment by the bus industry, and that could well happen if an authority attempted to pursue franchising under automatic powers without delivering it. Once a category of authority has the powers, there is a permanent risk of its deciding to use them, whatever a court may ultimately decide. It is a question of getting the balance right and getting the safeguards in place without making them onerous hurdles.
The hon. Member for Cambridge said that there is hope attached to the Bill. Yes, in some ways there is. People want buses. It is a good thing. I have to say that I have been pleased to see how the industry has received more retention, not just among the big operators but from some of the smaller ones—
Bus Services Bill [ Lords ] (Second sitting)
Tuesday 14th March 2017
(7 years, 1 month ago)
Public Bill CommitteesRead Full debate Bus Services Act 2017 View all Bus Services Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 March 2017 - (14 Mar 2017)
The Committee divided: - Ayes: 10 / Noes: 6 - Question accordingly agreed to.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Chair
I remind the Committee that with this we are discussing Government amendments 7, 17 and 18. I call the Minister to pick up where he left off in his reply to this morning’s debate.
The Parliamentary Under-Secretary of State for Transport (Andrew Jones)
If we had been paying more attention, at 24 minutes past 11 I would have said that we were done, that we had had a good debate on the issue and should now proceed to a vote. I think I have said all I need or wish to say on the issue. I hope I have answered colleagues’ questions about the principles of franchising and access to franchising, which will be a feature of our bus market. We have built in to the Bill safeguards of accountability and preparedness of local authorities, as well as protection for small and medium-sized companies.
Lilian Greenwood
The Minister is characteristically generous. During the break, I reflected on the points made by my hon. Friend the Member for Houghton and Sunderland South. The Minister has been clear that franchising should be one of the options available, particularly to mayoral authorities, in trying to deliver for passengers. He put passengers at the heart of the matter. Will he take this opportunity to condemn the language used by one of the major operators, who described local authority leaders who were trying to improve passenger services as “a bunch of unreconstructed Stalinists”? Does the Minister agree that that is unhelpful language when referring to local authorities that are seeking to do the best for their constituents?
Andrew Jones
I do not know who said it, the context or to whom they said it. As a general principle, I suggest that constructive engagement and partnership is part of the way forward. People need to find their appropriate personal language that will help that to be achieved.
Nic Dakin (Scunthorpe) (Lab)
The Minister has been most generous in taking interventions. It is great to serve under your chairmanship, Mr Owen. Before he took the intervention from my hon. Friend, the Minister said that there is protection for small and medium-sized companies in the Bill. Will that cover companies such as Hornsby Travel, which has celebrated 100 years as a small family business doing excellent work in my constituency and the north Lincolnshire area, and is concerned about the impact of franchising on its capital, stock and drivers?
Andrew Jones
That protection would certainly encompass companies such as the hon. Gentleman describes. In many parts of the country there are excellent family-owned businesses that have been serving their communities for a long time with high-quality product and are much liked by their customers. I see them as having a significant role in the bus industry, whichever regulatory model is chosen by local authorities on a local basis. I most certainly do see that as part of the picture. That concludes everything I have to say on Government amendment 5.
Question put, That the amendment be made.
Daniel Zeichner (Cambridge) (Lab)
I beg to move amendment 19, in clause 4, page 15, line 24, at end insert—
“(6A) The terms as to standard of service that may be specified include terms about bus punctuality and bus journey speeds.”
This amendment specifies that a local service contract may require bus operators to meet standards of service including terms about bus punctuality and bus journey speeds.
The Chair
With this it will be convenient to discuss amendment 20, in clause 4, page 15, line 45, at end insert—
“(12) A local service contract may require that new vehicles delivering local services are equipped with Wi-Fi if the vehicle comes into service after 1st April 2019 and that existing vehicles are equipped by 1st April 2022.”
This amendment specifies that a local service contract may require new vehicles delivering local bus services to be equipped with Wi-Fi after a specified period.
Daniel Zeichner
It is a pleasure to serve under your chairmanship, Mr Owen. I have already referred to the fact that although the Bill is welcome, there are many issues that affect our bus services that it does not address. Our amendment 19 specifies that the standards of service that a local service contract may require bus operators to meet should include certain levels of punctuality and journey speeds.
As we all know, the resources available to traffic commissioners, who are currently responsible for enforcing punctuality, are woefully inadequate. Despite their honest endeavours, it would be hard to argue that the current system works. One of the highlights of my relatively short time as a Member of Parliament was visiting my local traffic commissioner. I am not sure whether other hon. Members have made the same journey, but meeting a traffic commissioner is an extraordinary thing, because they are relatively invisible to the wider public. They do a difficult job with very limited resources. Although, obviously, my traffic commissioner believes the system works perfectly, I think many independent observers would say that it does not do all that it is expected to do. It is not just those observers who think that; the industry clearly believes that congestion is a major problem and a key challenge.
There is compelling evidence, some of it compiled by Professor David Begg and Greener Journeys, that congestion is actually getting worse and journey times are increasing. That of course leads to greater cost, because more buses are needed on the road to maintain service frequency. What is worse, because journey times are longer, passengers quite rightly get increasingly frustrated—we even see that in London, I am afraid—and as frustration rises, people vote with their feet and turn to other modes of transport. All that of course leads to higher costs, which in turn lead to higher fares, which potentially lead to a spiral of decline.
There is absolutely no doubt that journey times and punctuality are really important. We believe that the Government should address that serious issue, but we are not convinced that the Bill does so effectively. Greener Journeys suggests that the Bill should set guidance encouraging local authorities and bus operators to set targets for average bus speeds by making them a requirement of schemes. Reducing journey times would have the twin benefits of reducing congestion on our roads and improving bus reliability, with positive knock-on effects for both our environment and bus patronage. If buses run more quickly and are more punctual, more people want to use them. It is a virtuous circle—the opposite of the spiral of decline that I just alluded to. It is that simple. We believe it is important that that goal is specified in the Bill.
Although the draft regulations recommend that authorities consider trends in journey speeds when assessing their business case for a franchising scheme, there is no mention in the Bill of journey speeds or punctuality. The Bill does specify that
“a reduction or limitation of traffic congestion”
should be a likely outcome of both advanced quality partnership schemes and enhanced partnership schemes, but strangely that aspiration is not included in clause 4 for franchising schemes. We assume that is an oversight.
We are pleased that the Government amended the Bill to specify that the standards of service that may be specified in all schemes—advanced quality partnership schemes, franchising schemes and enhanced partnership schemes—include requirements about emissions or types of fuel or power, but we do not believe that that goes far enough to tackle declining bus journey speeds in this country.
Amendment 20 deals with free wi-fi access. The Department for Culture, Media and Sport recently—in fact, on the very day that the Bill received its Second Reading—released its digital strategy. Regrettably, that document is rather short on ambition for our digital infrastructure, and it is revealing about the lack of a connected approach across Government that the strategy lacks creativity about how that infrastructure can be delivered and how we can drive change. That lack of a connected vision was criticised as recently as December by Lord Adonis, who chairs the National Infrastructure Commission. That is why we have tabled the amendment, which I hope will improve passenger experiences and provide a step change in public access to free wi-fi. The benefits of public internet access are abundantly clear—indeed, they have been clearly stated by the Government in their digital strategy, which said:
“The UK’s digital infrastructure must be able to support this rapid increase in traffic, providing coverage with sufficient capacity to ensure data can flow at the volume, speed and reliability required to meet the demands of modern life.”
Pioneering cities such as Newcastle and Sheffield are offering free public wi-fi, the uptake of which is proving the old maxim that, if you build it, they will come. We need not look far to see other examples of success on our bus network. Award-winning Nottingham City Transport buses already offer free wi-fi, helping people to stay connected and definitively proving that, with a vision and a strategy, it can be done. It is not only the provision of free wi-fi that is so encouraging to see but the capacity that has been provided for users. It makes available 50 to 100 megabytes per device, which is far above the Department for Transport’s stipulated requirements for the rail network.
Those forward-looking councils have realised that ubiquitous connectivity will become an essential requirement of modern infrastructure in years to come, and are helping to build that infrastructure in creative ways and provide it free of charge to citizens, recognising that the net benefits outweigh the initial outlay.
Lilian Greenwood
My hon. Friend mentioned the free wi-fi on Nottingham City Transport buses. It may be useful to say, if he did not already know, that free wi-fi is installed on 100% of its fleet. Does he agree that, as the Government have made it a condition of rail franchises that wi-fi should be provided on future franchises, it would be even-handed were a similar requirement to be placed on bus operators? Rather than it just being something enjoyed by rail passengers, it should also be something that bus passengers have the opportunity to use.
Daniel Zeichner
As ever, my hon. Friend is both wise and prescient, because that was just about the next point I was going to make. She is absolutely right. In fact, we do not need only to look at councils to see arguments in support of the amendment; the arguments have effectively been inadvertently made by the Government themselves. They argued in the digital strategy that commuters expect good connectivity; of course, they were referring to the rail network, but the same surely applies to buses. We know that more journeys are taken by bus each day than by train. It seems odd to exclude those commuters who travel by bus from the roll-out of free wi-fi that is taking place as rail franchises come up for renewal. The roll-out is slow and has been rightly criticised for not matching the data requirements that all rail commuters need, but it is welcome that it is taking place at all.
Buses reach a different demographic from trains—particularly the young and those in education, who happen to be the demographics that use data most of all. Recent Ofcom research found that young people spend 24 hours a week online—it may seem like 24 hours a day, but it is per week. They consume data and take on information at a phenomenal rate, so there can be little doubt that the amendment will serve a purpose. In an answer to a question from my hon. Friend the Member for Sheffield, Heeley (Louise Haigh), the Government admitted that they do not yet collect data on free wi-fi available on buses. However, it is clear that provision is patchy at best, in spite of the clear public benefits.
I anticipate a number of the arguments the Minister may make in defence of the status quo. The first may be that the increasing speed and access to 4G is rendering the need for public wi-fi less important. However, that argument falls down on two key fronts. First, ubiquitous access to 4G is far from a reality for many millions of consumers in urban and rural areas alike. Secondly, patterns of data usage prove that consumers overwhelmingly prefer to use fixed wi-fi to access and consume their data requirements. Yes, mobile data has seen a 600% increase since 4G technology came into public use, but interestingly, the “Connected Future” report by the independent National Infrastructure Commission found that 80% of data usage is still consumed over wi-fi.
On the go, we access data for our emails, to conduct video conferencing via emergent apps and to stream TV, radio and Netflix—in short, to go about our daily business on what has become the fourth utility: internet connectivity. That means that by the end of the month many of us have to top up our data and spend yet more money on what should be considered an essential. However, in many areas even that ready access to data remains a luxury, as 4G coverage in Britain remains in the international slow lane, behind countries such as Albania and Latvia. Lord Adonis said that coverage needs to be meaningful, and by coverage he meant access in the home, at work and on the go. The current binding commitments will not deliver that ubiquitous level of data coverage for quite some time.
Graham Stringer (Blackley and Broughton) (Lab)
It is a pleasure to serve under your chairmanship, Mr Owen, for what I think is the first time.
I will speak briefly to amendment 19. Punctuality and reliability are extremely important, as my hon. Friend said, in persuading people to continue to use buses and attracting people back on to them. The problem is that on many occasions it is difficult to know why the bus does not turn up or is late. Bus companies blame congestion—which is, no doubt, part of the problem—for affecting their reliability and punctuality, and they ask for more privileged use of public sector road space via bus lanes. I do not completely accept that, because the last time I looked at hard statistics—I would be interested if the Minister had up-to-date statistics—I found that about a third of reliability problems were to do with bus companies not maintaining their vehicles properly, resulting in mechanical breakdowns, and another third were due to drivers not turning up and there being no reserve pool to deal with that. It is obviously in the commercial interests of bus companies, and perhaps, on many occasions, of bus passengers, to have bus lanes, and each case should be considered separately against agreed criteria, but we really need to know why things are going wrong.
This is a slightly historical case, but some years ago the FirstGroup buses in Rochdale were in such poor condition that the wheels fell off while they were going along. The traffic commissioner wrote a report about it and the company was fined. FirstGroup does not therefore have a great record. It is also the case, not just anecdotally —there is some evidence, and even more anecdotal evidence—that when buses are delayed for whichever of those three major reasons, they do not complete the route. They take shortcuts. It would be in the interests of public service if each bus had to carry a GPS, so that under the deregulated system, and more so under a franchised or an enhanced quality partnership, the taxpayers and the local transport authority could know where the buses were at any particular time. I would interested in hearing whether the Minister thinks that all buses being required to carry GPS, and have its information made public, would help our understanding of what is happening to bus services.
Andrew Jones
Amendments 19 and 20, tabled by the hon. Members for Cambridge, for Nottingham South and for Scunthorpe, propose that the Bill explicitly state that bus punctuality, journey speeds and the provision of w-fi are standards that an authority could specify as part of a franchise contract. Any authority that chooses to implement franchising will be free to determine which services run in an area and the standards of services, including those important matters. Authorities will have to consider as part of their assessment of the proposed franchising scheme whether the proposals represent value for money and are affordable, taking into account the costs of requiring those standards.
I think we all agree that the provision of wi-fi on buses is an extremely attractive prospect for customers. I entirely agree that where an authority wants to require the provision of wi-fi on services, it should be able to do so, and the Bill allows for that. In terms of bus punctuality and journey speeds, there is nothing in the Bill to prevent an authority from specifying the standards it expects from operators running services under franchise contracts.
I was asked about journey time guidance. We said to the Transport Committee that we would produce guidance on setting journey time targets. We intend to do that, though I recognise, as the hon. Member for Cambridge rightly said, that the guidance is not yet drafted.
The provision of customer information was at the heart of the contribution from the hon. Member for Blackley and Broughton. He is right; customers do not always have access to the level of information that is desirable to let them plan their journeys or be communicated with should there be a problem. The Bill includes clauses on open data, and making information available will hopefully create fantastic new products through which customers can receive that information. The open data powers in clause 18 are sufficiently broad to require real-time information for all buses to be provided. That requires GPS on the buses.
I would like customers outside London to have access to the information that is available to bus customers within London, but the amendments would make provision for something that is already provided for. This is about local decision making, rather than making things mandatory. I assure the hon. Member for Cambridge that the Bill already gives franchising authorities powers to set the standards he seeks, and I hope he will therefore withdraw the amendment.
Daniel Zeichner
I suspect we will rehearse some of our previous arguments about whether decisions should be made at the centre or locally. Earlier, we heard about the incredibly prescriptive approach that the Government are taking to allowing local authorities to franchise; now we are told that on this issue, the Government are quite happy to leave it to local authorities to make up their own minds. I suggest there are some inconsistencies here, exactly as we discussed in relation to driving up environmental standards.
The amendment is about ensuring we get the kind of connectivity, and particularly wi-fi connectivity, that we all agree the country needs. That is not just something we would like to have. Sadly, in the modern world, although we are enjoying ourselves as well, we are often working while we travel around. For Britain to prosper in the 21st century, we need connectivity. If we leave it down to local negotiations, the operators will almost inevitably say, “This is going to raise the cost by a little bit,” which will make it harder for the franchising authority to insist upon it. We can stop that happening by specifying the key things we believe are needed. Wi-fi is an essential part of people’s daily lives. The answer is not to leave this down to local negotiations but to insist upon it in the Bill. We will pursue this, not just because it is important for bus infrastructure but because it is part of creating the kind of digital Britain that we will need if we are to prosper in the years to come.
On the points made by my hon. Friend the Member for Blackley and Broughton, I am sure that he has been involved over many years in discussions with bus operators about where the burden of responsibility lies for punctuality. Of course, if we could solve that, we would probably have solved the entire problem with the Bill. It will always be a complex debate. The partnership arrangements are partly about trying to ensure that bus operators can run their services on time. I am in no doubt that bus operators want to do so. Whenever I meet the manager of my local bus company, he is absolutely clear that that is what he wants to do. The arguments, particularly in many of our precious historic cities such as my own, are about dedicated road space. Obviously, operators would love to have that, but there are other competing interests.
We think that punctuality and journey times are key. We think that they are so important to the future of the bus industry that specifying them, not just as an accidental by-product or consequence of schemes but as part of the agreement, is far more likely to concentrate minds locally on ensuring that they are achieved. Punctuality and reliability are key qualities that bus passengers look for. We all know from our own experience that if people cannot rely on the bus to get them somewhere, they will always turn back to their cars. The only way to have modern local transport systems that people use is if they are sure that the transport is reliable enough to get them there and that they will make their connection, so they are not late for work, school or college. Punctuality and journey times are not an added extra; they must be central to the process, which is why I will not withdraw my amendments.
Question put, That the amendment be made.
Graham Stringer
I beg to move amendment 34, in clause 4, page 16, line 9, at end insert “, reflecting local conditions.”
This amendment would clarify the scope of comparing a scheme during the assessment of a proposed franchising scheme.
The Chair
With this it will be convenient to discuss the following: amendment 35, in clause 4, page 16, leave out lines 32 to 36.
This amendment would remove the requirement on the Secretary of State to issue guidance on the preparation of an assessment of a proposed scheme.
Amendment 36, in clause 4, page 16, line 35, at end insert—
‘(5A) In preparing guidance, the Secretary of State must ensure that it is not over-burdensome on the authority.
(5B) The guidance shall specify that the authority may decline to assess a potential scheme if the bus operators have previously proved unwilling or unable to implement similar schemes.
(5C) The guidance shall specify that the ultimate decision to go ahead with any scheme will rest with the authority.”
This amendment would prescribe some of the content of the guidance on preparation of an assessment of a proposed scheme.
Graham Stringer
The amendments cover two general areas. One is the principle that has reared its head in nearly every debate: centralism versus localism, devolution versus keeping things at the centre. The second is what controls and criteria are at the centre. To put it another way, it is about whether the hurdle in the Transport Act 2000—it said that franchising could be introduced only if it was
“the only practical way of delivering better bus services”—
was an impossibly high hurdle to pass. The hurdle is not quite as high as that in some of the guidance, but I am concerned that high hurdles are being introduced that will make it more difficult to set up a franchising scheme.
I will speak first to amendment 35 and then to amendments 34 and 36—it is easier to take them that way. At the end of the debate, I should like to press amendment 36 to a vote, unless the Minister, having heard such persuasive arguments, is willing to accept it. That would be a pleasant surprise, but in the absence of that happening, I will press it to a vote.
Amendment 35 would remove the Secretary of State’s right to issue guidance on the preparation of an assessment of a proposed scheme. Local authorities have to act within the law. They have to act in a reasonable way. They cannot act in a unreasonable way, otherwise council tax payers and interested companies can judicially review them. There is a lot of history where local authorities have been unreasonable in their behaviour and have lost.
Why do we need a centralised set of rules from the Secretary of State? I do not want to repeat the debate that we had earlier, but I mentioned that there are good officials at a local level and good officials at a central level; and good elected councillors at a local level and good Ministers and Members of Parliament at a national level. There are also poor ones. The question why this should be centralised was not answered.
The Department for Transport and its officials will draw up the guidance. In another franchising area—railways—the Department completely messed up the west coast main line. The Minister is looking puzzled, but I will take him back to the summer of 2012, from memory, when the whole of the franchising operation had to be abandoned because the Department got it wrong.
The Bill says that the same Department should have precedence over local officials and be able to set guidelines. Not only is the competence of the centre not proved, there is also duplication. If I stray back into railways, with your indulgence, Mr Owen, Transport for the North was meant to be devolved. What happens in the Department? A whole team of people is set up to mark and check on what is happening in the devolved authorities. The cost of officials doubled. In the previous debate when I asked the Minister whether there would be more or fewer officials at the centre at the end of this, there was no reply.
The Minister has not made the case that, in allowing franchising in those areas, there should be all those rules, regulations and guidelines. I know I am not allowed to use props, but I have before me the consultation on draft regulations and guidance, which is a mere 150 pages long. That is just the consultation. One hesitates to think how big the eventual document will be when all the i’s have been dotted and the t’s crossed.
We are bedevilled in this country with centralisation, and with people in the Department for Transport who set criteria for pelican or puffin crossings and all sorts of detailed strategies, all of which would be better left to local decision making. I would like the Bill to be about devolution and not to say, “Well, you can take the decisions as long as we agree with them.” I did not take an exact quote when the Minister was answering questions about local control, but he said that was, “All right as long as there was some control from the centre.” That is not devolution. Mistakes will be made locally, as they are nationally. Why would one set up the inefficient system of a national scheme marking local schemes to make it doubly expensive and probably more likely that mistakes happen?
I guess the Minister will not accept the logic of leaving local authorities on the spot to take decisions in the way in which they normally do. Some of those local authorities are huge in terms of resources. Why does the Secretary of State know better? I have no idea whether Kent County Council wants to franchise buses because it is the other side of the country from where I represent, but it is a huge authority that has had good leadership over the years—not from the Labour party—and it might want to take those powers. Why should it or its districts, or Lancashire or its districts, not take the powers? Those are well run councils that take decisions in a legal way.
Amendments 34 and 35 assume that the Minister will not accept amendment 36. Amendment 34 would change proposed new section 123B(2)(b), which says:
“The assessment must…compare making the proposed scheme to one or more other courses of action”,
by adding “reflecting local conditions” at the end. Why would an assessment not be about reflecting local conditions? I was teasing when I said that he would accept amendment 35, but I cannot see how amendment 34 would not improve the Bill by making it clear that any scheme drawn up should reflect local conditions. The purpose behind that is to ensure that any guidance and regulations are not over-burdensome on a local authority.
Assuming that guidance, regulations and process is to be determined from the centre, amendment 36 says three specific things, which would limit that guidance so that it is not over-burdensome. The first subsection of this amendment, says:
“(5A) In preparing guidance, the Secretary of State must ensure that it is not over-burdensome on the authority”.
What could be wrong with that? There is always a tendency, under any political party, for the centre to put bureaucratic costs on to local government. Actually stating explicitly in the Bill that this is a bad thing should be accepted. The Minister surely cannot think that any regulations should be over-burdensome, to use the opposite argument. I hope, even if he does not accept it now that he will consider it when the guidance is being drafted. I quote the draft consultation in support of this—I realise that this is a draft consultation. If I quote paragraphs 19 and 20 of “Annex N: Franchising Guidance – Assessment of proposed franchising scheme (“Business Case” guidance)”, you will see, Mr Owen, that it is already beginning to get burdensome:
“Identifying realistic options should not be a desk exercise however, and authorities should engage with bus operators in the area and explore whether, for example, there is a realistic partnership proposition or ticketing solution that should be considered and assessed alongside the franchising proposition”.
I could go on forever. I have tried to ameliorate that and I hope that the Minister, when he is looking at this guidance, will take that into account.
The amendment goes on:
“(5B) The guidance shall specify that the authority may decline to assess a potential scheme if the bus operators have previously proved unwilling or unable to implement similar schemes”.
Again, what could be wrong with that? My hon. Friend the Member for Nottingham South quoted Brian Souter, who I think is typical of some in bus companies who, because they have been in a non-competitive, almost monopoly situation on many of the routes, hate this. They have resisted ticketing schemes, in some cases, and other schemes that would have improved bus services, so why should a local authority which has had reluctant and recalcitrant bus companies that have resisted it, have to consider something that has already failed when it has a franchising scheme to improve bus services for residents?
Finally, we come back to our old friend, the question of who takes decisions, the Secretary of State or local people, having gone through whichever process it is—the guidance or whatever. I think it should be stated in the Bill that the ultimate decision to go ahead with a scheme should lie with the franchising authority. I hope that the Minister will accept Amendment 34 because it is relatively straightforward and common-sensical. I hope that on Amendment 36, when the Minister is looking at the guidance and the process for franchising, he will take my comments into account, even if he is not prepared to accept it before. Amendment 35 just rehearses the substantial argument about having real decentralisation and devolution.
Daniel Zeichner
We are consistently arguing the same points here about the relationship between the centre and the localities. My hon. Friend the Member for Blackley and Broughton makes a very strong point about the lengthy nature of the guidance. You need to be a pretty dedicated person to work your way through it—of course, some of those present have done exactly that, I commend them for it and I can say that it is good reading if you can get through it. However, the level of detail that will be required is such that it makes it very hard to imagine, in some cases, that local authorities will want to take on the opportunities that the Minister earlier extolled as being the way forward. That seems to be a curiosity to me.
Despite what I said earlier about the need to centrally lay out some key points, that seems to be the nub of the argument here: set out what it is that the Government want centrally—in our case, it was things like wi-fi, low-emission zones and punctuality—but do not get into these lengthy, endless, detailed, tortuous discussions that try to second-guess every single issue at a local level. I have considerable sympathy with my hon. Friend’s attempt to improve the legislation at this point. Even if the Government are not amenable to agreeing to the amendment today, I rather hope that, as they go away and work on the guidance, they realise that many more volumes of that kind will only make the process slower.
I also reiterate my hon. Friend’s query about the number of officials who will end up administering this process from the centre at the end of it. What does the Minister actually envisage?
Andrew Jones
We are discussing a group of amendments that relate to the assessment or the business case that authorities must prepare before they can implement franchising. The Government’s aim is to ensure that authorities fully consider the benefits, impacts and potential risks of franchising before taking the decision on whether to go forward and implement it in practice.
The Bill requires authorities to conduct an assessment of their proposed franchising scheme, which should include comparing it with one or more other courses of action. Amendment 34 aims to ensure that the different courses of action that should be considered as part of that assessment should reflect local conditions. I entirely agree that authorities should compare their franchising proposal against other realistic courses of action—that just seems good practice—and that those realistic courses of action will be different in each case. The Bill does not set out what other courses of action franchising should be compared against; it will be for local authorities to decide what is appropriate. The draft guidance that we are currently consulting on highlights that further by explaining that the authority should consider which courses of action are likely to meet their objectives. I hope, and I assure the hon. Member for Blackley and Broughton, that amendment 34 is not necessary; he may consider withdrawing it.
Amendment 35 proposes removing the requirement of the Secretary of State to issue guidance for authorities to assist with the preparation of their assessments, while amendment 36 proposes adding new requirements to the contents of such guidance. Our intention has always been to assist authorities in preparing robust assessments by providing guidance. The draft business case guidance is 10 pages long, which is much shorter than that for many other schemes or projects. It has actually been developed in discussion with authorities that may use it in future. It is about seeking to help authorities, particularly by reducing their risk of being challenged for not considering other realistic options, which could save time later on—particularly in any kind of legal matters.
I recognise the point about rail franchising, but I think that actually highlights the scale of the decision to go down a franchising route and how these things have to be considered and planned for carefully. On whether local government or national Government are infallible, the hon. Gentleman and I both know that neither is and can throw up a litany of records to demonstrate that. However, this is about having safeguards in place for decision-making criteria; it is not about national control. He highlighted Rail North, but Rail North is a partnership between the Department for Transport and Transport for the North to manage the north’s two rail franchises—Northern and TransPennine. Rail North was involved in designing the programmes and judging the tenders, and is now involved in managing the franchises; it is actually the first time we have moved to a more devolved management of our railways. The team, which is a joint team of the DFT and Rail North, is based in Leeds and will ultimately become part of Transport for the North. That is quite the opposite of the national control that the hon. Member for Blackley and Broughton highlighted—it is about devolution in rail for the first time. When we look at what has happened with rail in the north—the franchises will offer quite a transformation to services and be much more tuned in to their customers—we see the progress that is made by having more local decision making.
The guidance is intended to help authorities through the process and give them some national guidelines with criteria for consideration; we have no intention of making it onerous. This is more about sharing best practice and stopping reinvention when it comes to routes that are new to authorities. Our intention is to assist authorities in making robust assessments, and we are keen to receive views through the consultation about how the guidance can be further improved. I am pleased to be able to reassure hon. Members that our draft guidance recognises that it is for the Mayor or the authority to decide whether to proceed with franchising—it is not a national decision, and central Government should have no further involvement. I can also confirm that it is not our intention to place any unnecessary burdens on a franchising authority through the guidance.
Our approach is based on the standard approach to decision making in government set out in the Treasury’s Green Book. We actually drew the phrase “compelling case for change” from the Green Book. The assessment that a franchising authority is required to develop is based on the principles of the “five case” model for public sector business cases. The draft guidance on the development of that assessment therefore draws on the associated Treasury guidance material on using the five case model, which states:
“The business case in support of a new policy, new strategy, new programme or new project must evidence: That the intervention is supported by a compelling case for change”.
This is not a question of the Government seeking to impose burdens; we are seeking to assist and streamline decision making while keeping it local. That model is an established mechanism that any authority that has ever brought forward plans for a significant transport project should be well used to, and it seems entirely appropriate to follow a similar proven approach for fundamental change to the delivery of bus services, which of course will affect many thousands of passengers every day.
The hon. Member for Blackley and Broughton asked about the number of officials. I can tell him that there are absolutely no plans to increase the number of officials currently working on this area, except in one section: there will be a small increase in the open data team, because significant work is needed to deliver that project. To put that in context, the headcount of the Department overall has fallen by 17% since the 2010 spending review. I hope that, in the light of my comments, the hon. Gentleman feels able to withdraw his amendments, although I recognise that he may wish to press one of them to a vote.
Graham Stringer
I thank the Minister for his reply. I will withdraw amendments 34 and 35. I take what he says about amendment 34, although I think it really would enhance the Bill.
I will press amendment 36 to a vote. It would not add to the guidance but prescribe that “the Secretary of State should not go here”. The context of this debate is that bus companies are hostile to these proposals. It is likely that bus companies will end up in court—Nexus has recent experience of that under existing legislation—and it would be helpful to say that the guidance should not be over-burdensome. It would also be helpful—the Minister did not really reply to this point—to say that where schemes have been tried and failed, or bus companies have refused to try them, they will not be reconsidered in some future scheme. I take the Minister’s reassurance that the final decision will be made by the Mayor or the authority. In the light of that, I will press amendment 36, but I beg to ask leave to withdraw amendment 34.
Amendment, by leave, withdrawn.
Daniel Zeichner
I beg to move amendment 21, in clause 4, page 16, line 30, at end insert—
‘(3A) 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.”
This amendment would ensure that any new franchise or contract will not be awarded on the basis of estimated labour costs being lower for new employees than the labour cost of workers covered by TUPE protections.
The Chair
With this it will be convenient to discuss the following:
Amendment 25, in clause 4, page 32, line 47, at end insert—
“123Y Employees not covered by TUPE protections
Employees of local bus service providers who are not covered by TUPE protections may not be employed on terms and conditions less favourable than those provided by TUPE.”
This amendment would ensure that employees working under local service contracts not covered by TUPE protections may not be employed on terms and conditions less favourable than those provided by TUPE.
Amendment 26, in clause 4, page 32, line 47, at end insert—
“123Z Effect on employees of introduction of local service contract
(1) Where, either before or after the introduction of a local service contract following an assessment under section 123B, any employee of an operator in the area to which the scheme relates is dismissed, that employee is to be treated for the purposes of Part 10 of the Employment Rights Act 1996 as unfairly dismissed if the sole or principal reason for the dismissal is the introduction of the relevant local service contract.
(2) Subsection (1) applies whether or not the employee in question was part of an organised grouping of employees principally connected with the provision of local services, under section 123X(4).
(3) Where section 123X(4) applies, a new operator may not engage employees or workers on terms and conditions less favourable than those of the employees whose employment transferred from the former operator.”
This amendment would make dismissal of an employee for the sole or principal reason of the introduction of a franchising scheme automatically unfair dismissal.
Amendment 29, in clause 9, page 60, line 16, at end insert—
“138T Employees not covered by TUPE protections
Employees of local bus service providers who are not covered by TUPE protections may not be employed on terms and conditions less favourable than those provided by TUPE.”
This amendment would ensure that employees working under enhanced partnership schemes not covered by TUPE protections may not be employed on terms and conditions less favourable than those provided by TUPE.
Daniel Zeichner
The amendments all relate to employment protection, the first three to franchising and the fourth to enhanced partnerships. We believe this group of amendments would strengthen the employment protections in the Bill.
We are pleased to see that the parts that apply TUPE to franchising largely reflect the concessions that were won in the Local Transport Act 2008 in respect of quality contracts schemes, and are broadly similar regulations to those set out in the Quality Contracts Schemes (Application of TUPE) Regulations 2009. However, we believe changes could be made to ensure that those parts are stronger still. It should be noted that no TUPE transfer ever took place under the terms of the 2008 Act because no quality contracts were ever successfully formed; so this approach is untested and could be subject to further examination.
It has been suggested that operators under the regulated system in London have in the past won contracts by reducing their employees’ terms and conditions. The trade union Unite believes there needs to be a commitment to a minimum rate for bus workers across a franchise and enhanced partnership if members’ pay is to be protected.
That development of what is called a two-tier workforce is something that I hope the Government will consider and address. I believe my amendment will stop the development of that two-tier workforce, as well as the related management and industrial relations problems that that can bring.
The amendment would mandate that the award of a franchise should not be made to a company on the grounds that it intends to pay its future workforce less than the current workforce. We believe it is important to set that out clearly on a statutory basis. By the Department’s own admission, the application of TUPE to either a franchising or enhanced partnership scenario is likely to be complex but I believe these amendments can be simply understood.
The amendments apply to after a franchise contract has been awarded to a bus operator by a local authority. They would ensure that new employees of local bus service providers, who were not covered by TUPE protections, may not be employed on terms and conditions less favourable than those provided by TUPE. That aims to avoid the development of a two-tier workforce: the situation where workers doing identical jobs for the same employer are on different terms and conditions, solely as a consequence of when they started employment.
The amendments would also ensure that any employee dismissed for the sole or principal reason being the introduction of the relevant local service contract will be treated as unfairly dismissed.
I note that recently the Mayor of London, Sadiq Khan, introduced a minimum pay rate for London’s 25,000 bus drivers, with a £23,000 per annum minimum salary. I would welcome the Minister’s comments on the potential of a similar policy being rolled out nationally. At the very least, a minimum salary rate should be a condition of a franchise and enhanced partnership to prevent the undercutting of wages and the risk of a race to the bottom.
I was slightly concerned by the Government’s arguments against similar amendments that were introduced in the other place. They argued that the Bill is devolutionary and gives
“considerable flexibility regarding the nature of the contracts to be awarded by those authorities taking forward franchising and, potentially, enhanced partnership schemes”.
The Minister also said:
“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.”—[Official Report, House of Lords, 24 October 2016; Vol. 776, c. 16.]
Considering a number of factors will not be enough to prevent the race to the bottom that could occur following the initial application of TUPE when employees are transferring. It would not necessarily prevent the two-tier workforce we are warning against but the amendments would, which is why we have brought them forward today.
Andrew Jones
Amendments 21, 25 and 29, tabled by the hon. Members for Cambridge, for Nottingham South and for Scunthorpe, propose to specify the terms and conditions for employees that an authority should include as part of the franchise contracts it enters into with bus operators. It would not be consistent with the rest of the Bill to mandate the basis upon which contracts are procured by local transport authorities or the content of those contracts, as the amendments propose.
The amendments would require local authorities to set out in their contracts that employees hired by the bus operator outside of the TUPE transfer of staff would receive terms and conditions no less favourable than those provided to staff transferred under TUPE. I fully understand the intent behind the amendments. The power to achieve the outcome sought already rests, however, with the franchising authority letting the contracts
The amendments also pose some real practical difficulties. First, employees transferring under TUPE will not all have the same terms and conditions. Some may have been in post for a short period, and others may have been in post longer. There may be different terms and conditions for newer staff. It is not entirely clear which set of terms and conditions the amendments refer to, and I therefore see some difficulties in implementation. In addition, the amendments could place a financial burden on operators and, through them, the local transport authority by requiring them to employ people at something other than the market rate. That could prevent authorities from pursuing franchising schemes.
It is worth noting that the employee protection rights in the Bill replicate those in the Transport Act 2000 for quality contract schemes, introduced by the Labour party. There has been no intention at any point to water down TUPE arrangements. In fact, those were one of the first things we considered when preparing the Bill, and we were committed to ensuring that they were in place right away. I am committed to ensuring that staff affected by franchising are protected. However, I am not sure that it is the job of the Bill to set out the terms and conditions of employment offered to new staff who may join the industry at some point in the future.
On amendment 26, which relates to potential dismissals, I have sympathy with the intention behind the first two subsections concerning redundancies that may be made before or after the introduction of a local service contract. However, employment law already deals with the issue of unfair dismissal of employees. It is simply not appropriate for the Bill to be a vehicle to address such issues, and the Labour party did not include that provision when drafting the existing quality contract scheme legislation. The scenario that the amendment addresses is an unlikely one. I find it hard to imagine that an employer will choose to bear the redundancy costs associated with dismissing an employee if it is able to transfer them to a new operator under TUPE instead.
The hon. Member for Cambridge asked for my opinion on a minimum national salary for bus drivers. That is an interesting idea, but it would very intrusive for a Government to intervene and say that a company has to pay its employees a particular rate. We have done that through the national living wage, to protect some of the more vulnerable workers in our society, but it gets very intrusive indeed into the relationship between a company and its employees if the Government start to direct national minimum wages. It is not the Government’s belief that we should go down that route. I suggest caution would be required in doing so.
I hope that everything I have said confirms the Government’s position and that the hon. Member for Cambridge will feel able to withdraw the amendments.
Daniel Zeichner
I appreciate the Minister’s comments about not seeking to water down the previous arrangements, which we accept. Our worry is that these things have never been tested, and we all now expect this situation to occur very quickly in the near future.
Lilian Greenwood
While we have never tested the TUPE protections in the current Transport Acts, we have experience in the provision of other public services where a two-tier workforce ensues. One group of employees protected by TUPE is working alongside another which has probably been employed on lower terms and conditions to derive more profit from the contracting out.
My concern is twofold and I wonder whether my hon. Friend shares it. First, it is bad news for the employees who are being exploited in that way, but more important is the ability to continue to provide a service. When people are employed on lower terms and conditions, the operator is often unable to fulfil the contract or to recruit and retain people and the quality of provision goes down. I have seen that on many occasions in local authorities and the health service. That is why I share the same concerns about this scenario in relation to buses.
Daniel Zeichner
Once again, my hon. Friend is prescient —I was about to make a similar point. The Minister suggested that it might be difficult to do, because people might well be on different terms and conditions. At the time of the transfer, there will be a going rate for that employer and we would want to establish that as the benchmark. The worry throughout, exactly as my hon. Friend has said, is that, in this situation in other public services, we have seen a race to the bottom.
The Government have rightly identified this as one of the key social challenges that we face, hence their long-overdue conversion to the idea of intervening in the labour market, and hence their support for a national living wage—the Opposition would not call it that, but they have rebadged their proposal as a national living wage—and recognition that workers in the market are vulnerable. We are offering an opportunity to strengthen the current position of this workforce, who are relatively low-paid in much of the country. Some areas, of course, have recruitment issues—in some cases, market forces ought to be working to drive wages up, but clearly that is not always everybody’s experience. We want to ensure that the workers in those situations are properly protected, and we think there is an opportunity. We will not be pressing the amendments to a vote, but we hope the Minister hears what we are saying, engages with those who represent this vulnerable workforce, and ensures that people are not made more vulnerable by the changes.
We have not talked much about the people who are employed in the industry, but there is concern in parts of the country where there is the prospect of franchising. It creates an element of the unknown. People do not know what might happen in the future. While we are very positively explaining the possible benefits of a franchising system, that is not always the way it will necessarily feel to a workforce that are suddenly confronted with change. We want to take those people with us because we think it can produce better outcomes for passengers, but it must also produce secure outcomes for those employed. I can see that the Minister is listening attentively. I suspect we are not that far apart on this and we may be able to explore it further in future. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 36, in clause 4, page 16, line 35, at end insert—
‘(5A) In preparing guidance, the Secretary of State must ensure that it is not over-burdensome on the authority.
(5B) The guidance shall specify that the authority may decline to assess a potential scheme if the bus operators have previously proved unwilling or unable to implement similar schemes.
(5C) The guidance shall specify that the ultimate decision to go ahead with any scheme will rest with the authority.”—(Graham Stringer.)
This amendment would prescribe some of the content of the guidance on preparation of an assessment of a proposed scheme.
Question put, That the amendment be made.
Daniel Zeichner
I beg to move amendment 23, in clause 4, page 20, line 11, leave out “six months” and insert “112 days.”
This amendment states that a scheme may not specify a period of less than 112 days for its start date following the notice that the local service contract has been awarded by the franchising authority.
You will be pleased to hear that this is a briefer introductory speech, Mr Owen. Proposed new section 123H(4) of the Transport Act 2000 states that
“A scheme may not specify…a period of less than six months”
for its start date following a notice that the local service contract has been awarded by the franchising authority.
The draft regulations—pages 77 and 78 relate to the deregistration of local services by operators—state that franchising authorities will have the ability to set a notice period of up to 112 days for operators wishing to deregister their services following the publication of a franchising scheme. Our concern is about the gap between the two periods. For 68 days of a six-month period, there is the potential for services to be deregistered, which we believe will cause unnecessary disruption and uncertainty for passengers. It is more of a point of clarification for the Minister. Will he consider revising the period as per our amendment, and if not why not? What advice and guidance would he be able to offer to passengers, franchising authorities and operators?
Andrew Jones
Amendment 23 proposes to reduce the time that must elapse between a franchise contract being awarded and it coming into force. This part of the Bill was designed with transition in mind to ensure that operators—those that are incumbent and those that would be incoming, having won the franchise contract—have sufficient time to put any necessary plans into place to deal with either of the two circumstances. Our overall aim is to ensure that all parties are ready to respond in the interests of passengers. I am concerned that reducing the time period to a minimum of 112 days —less than four months—could lead to a hurried transition, which would not necessarily benefit passengers. I recognise that there may be concerns about the behaviour of operators during that transitional period.
The Bill and any associated secondary legislation on which we are currently consulting sets out a number of ways in which authorities can help protect passengers during transition, and measures in the Bill directly address that, including enabling the authority to vary the deregistration and variation notice period that operators must observe before cancelling or changing services, and allowing services to be registered at short notice when they are replacing a service that has ceased to operate. This is about ensuring continuity of provision of service for customers. I recognise the point made by many colleagues in the Committee that people rely on services. This is about ensuring continuity during a transitional period. The Bill strikes the right balance in achieving that, and I therefore hope that the hon. Member for Cambridge feels able to withdraw his amendment.
Daniel Zeichner
I thank the Minister for his explanation. I am not sure I am wholly reassured. In some ways, we are moving into unchartered territory, which is why it is important we get this right.
If everybody was working with good intentions—it is almost like I am discussing other things—there would be no problem, but these transitions may not always be entirely as amicable as one might wish. Our concern is that in those circumstances, passengers could be the innocent bystanders stuck at the bus stop and be put at risk, because authorities may not always be able to make this possible if they do not have the resources and access to vehicles, depots and all the rest of it in the meantime.
I hope the Minister and his Department will talk to those who face this very real prospect and ensure that we make it work successfully for everyone involved. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Andrew Jones
I beg to move amendment 10, in clause 4, page 24, line 41, leave out “21” and insert—
“(Bus companies: limitation of powers of authorities in England)”.
This amendment is consequential on amendment NC1.
The Chair
With this it will be convenient to discuss Government new clause 1—Bus companies: limitation of powers of authorities in England—
‘(1) A relevant authority may not, in exercise of any of its powers, form a company for the purpose of providing a local service.
(2) Subsection (1) applies whether the relevant authority is acting alone or with any other person.
(3) In this section—
“company” has the same meaning as in the Companies Acts (see sections 1(1) and 2(1) of the Companies Act 2006);
“form a company” is to be construed in accordance with section 7 of the Companies Act 2006;
“local service” has the same meaning as in the Transport Act 1985 (see section 2 of that Act);
“Passenger Transport Executive”, in relation to an integrated transport area in England or a combined authority area, means the body which is the Executive in relation to that area for the purposes of Part 2 of the Transport Act 1968;
“relevant authority” means—
(a) a county council in England;
(b) a district council in England;
(c) a combined authority established under section 103 of the Local Democracy, Economic Development and Construction Act 2009;
(d) an Integrated Transport Authority for an integrated transport area in England;
(e) a Passenger Transport Executive for—
(i) an integrated transport area in England, or
(ii) a combined authority area.’
This amendment prohibits county and district councils in England, combined and integrated authorities in England and passenger transport executives in England from setting up companies to provide local services.
Andrew Jones
New clause 1, which was tabled by the Government, reinstates the original provision of the Bill, which prohibited authorities from establishing companies for the purposes of operating local bus services. Amendments were made in the other place to remove that provision, which forms a key part of our proposals, from the Bill.
The Bill provides a number of new tools for local authorities to improve their local bus services, and it is important that operators and authorities work together to improve services for the benefit of passengers. We want to ensure that passengers benefit from the strengths of both local authority influence over services and the private sector. We have seen great improvements in services across the country due to private sector innovation and investment. It is also true to say that authorities have a lot to offer, with many around the country working collaboratively with their local operators to ensure that communities are well served and that services and ticketing offers are joined up.
The franchising and enhanced partnership tools in the Bill will provide authorities with more influence over bus services than they currently have. Striking the right balance between local authority influence and the role that private sector bus operators can play is important. Our view is that passengers will see the most benefit where the commissioning and provision of bus services are kept separate. That purchaser-provider split is a frequent feature of our public services, and as such we do not think authorities should be able to set up new bus companies.
Graham Stringer
I understand the Minister’s argument, but does he not see the case for transport authorities having the power to set up a bus company as a last resort, where private sector companies withdraw from the area?
Andrew Jones
The franchising provisions in the Bill detail what powers an authority has should a franchise service fail, as a stopgap measure, to ensure the continuity of service provision for passengers. I recognise the hon. Gentleman’s point about continuity of service, but we are addressing that in the Bill.
Graham Stringer
To press the Minister on that, I take the point about continuity of service where, for instance, a bus company goes bankrupt and can no longer provide a service. However, that was not the question I asked. In circumstances where bus companies withdraw from an area as a point of policy because they are completely hostile to the idea of franchising, should transport authorities not be allowed to set up bus companies?
Andrew Jones
I suggest that the answer is no. If an area has a service withdrawn simply because of some kind of principled objection by a bus company to a regulatory model, those would be very unusual circumstances, with the company turning down business. In that case, others would, I suggest, snap it up.
Lilian Greenwood
If only the situation were as unlikely as the Minister suggests. I invited him earlier to express a view on the remarks made by the chairman of Stagecoach. I will continue his remarks about “unreconstructed Stalinists”. He went on to say:
“The first contract that they put out on my business I’m out of Tyne & Wear completely, and they can buy 500 buses and find four bus depots.”
Is the Minister not saying precisely that Tyne and Wear could not do that? Therefore, it would be subject to the whim of a large private sector operator that knows that it has local authorities over a barrel when it is the large incoming operator.
Andrew Jones
The hon. Lady has been drawing on a very interesting set of quotes. The chairman of Stagecoach was obviously having a very lively day and making some lavish comments. If he wished to withdraw from the marketplace, I am sure there would be plenty of competitors saying, “Thanks very much, Brian, we will snap up that little operation.” I still do not think that changes the position. If people withdraw from a marketplace, I would expect others to pile in. That is what the nature of competition should be about.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
I am grateful to my hon. Friend the Member for Nottingham South for raising the outrageous behaviour of Stagecoach over the years in the north-east. Is it not the case in the rail industry that the Government have sometimes had to step in? It has been necessary to ensure that that safeguard is in place. Were an operator to follow through on such threats—who knows whether it was a mere threat or had any intent behind it?—there should be safeguards and protection for the travelling public.
Andrew Jones
That is a very interesting point from the hon. Lady. Yes, we do have the opportunity in the rail sector for directly operated railways but that is for a short, interim period. That is what happened with the East Coast franchise, which serves both of our constituencies. We have such a provision in proposed new section 123O in clause 4, which allows for an interim stopgap measure.
Stagecoach obviously has a lot of experience in the world of franchises. It is engaged in the rail sector and operates in London. If the opportunity arises in the north-east—it may or may not choose to go down that route—let us see what the company says. Stagecoach has plenty of experience of franchising, should it wish to bring it to bear.
We have had some talk about the merits of the innovation and investment from private sector operators. I highlight the fact that many existing municipal bus companies, such as Reading Buses and Nottingham City Transport, deliver a high standard of service, and I would expect them to continue doing so. Their ability to do that is not affected by this provision. I remind the Committee that those operators have prospered in a competitive market in which many other municipal bus companies have struggled. Only last month, Thamesdown Transport in Swindon was sold to the private sector after what I understand was a prolonged period of losses.
I have seen the good work done by municipal bus companies. They regularly do extremely well in customer feedback. Our intention is to leave them well alone, doing the very good job that they do, but to make the balance right between public and private, which I think the Bill achieves.
Huw Merriman (Bexhill and Battle) (Con)
I recognise that my point is slightly off kilter with the thrust of the Bill. Brighton & Hove bus company is a superb private operator that has taken over the Swindon municipal service the Minister mentioned, and it intends to invest. In my desire to see private as the first option, would there be scope in the Bill to start with a partnership approach but, if that did not work, to cascade down to franchising? I believe the Cornish model shows that the sword of Damocles makes bus companies see sense. If there is to be an absolute fall-back, municipals could well be that fall-back.
Andrew Jones
I have no doubt that municipal bus companies have been delivering for their customers. If they had not been doing so, they would have gone out of business. We can also see the customer response to them in various surveys and the national bus awards.
My hon. Friend’s proposal is interesting, but we have provided for cover in the Bill. We have anticipated the situation in the read-across from the rail sector, where interim services—replacement services—are required. It would be within the powers of the franchising authority to commission services.
Huw Merriman
To clarify, am I correct in saying that the Government or state takeover scenarios are just for franchising and not for partnerships? If so, there is still a gap. If franchising is not applicable because of the type of authority, only partnerships are available, and it cannot go to municipal because there is a prohibition.
Andrew Jones
We have no intention of having authorities setting up bus companies and awarding themselves contracts. The purchaser-provider split is important. Authorities would have the capacity to intervene and directly commission services, but it would be for a short period of time only. They have the capacity to do that already. Our intention is not to have a municipal bus company do that. It would be for a short period of time and authorities would commission from the private sector.
Chris Green (Bolton West) (Con)
With people interested in franchising in Greater Manchester, there is an expectation that there will be a number of different providers of bus services. If any one provider failed, other providers could step in, whether they were already in Manchester or were other ones coming in. There would not be the need for Greater Manchester as an authority to be running the bus services.
Andrew Jones
My hon. Friend makes an interesting point. I anticipate from my conversations with Transport for Greater Manchester that it will be keen to pursue a franchising model. This will be its call, but I would anticipate not a one-size-fits-all model, but different operators providing services in different parts of his area. If one failed, others could come in. I have certainly been contacted by bus companies that see franchising tenders as a way to enter the UK marketplace. It could prove to be a spur to competition. We have powers in the Bill should there be failure, but those should involve private companies under commission, rather than municipal companies.
Amendment 10 relates to new clause 1. It concerns a cross-reference in the Bill and nothing more.
Lilian Greenwood
It is a pleasure to serve under your chairmanship, Mr Owen. I oppose new clause 1, as I am sure the Minister anticipated. I thank him for his recognition of the success of some of the existing municipal operators. Mr Owen, I hope you will indulge me if I explain why this is so important. I represent a constituency with a very successful municipal operator. I do not think the Committee will mind if I remind it that Nottingham City Transport, which is one of the most successful municipal operators in the country, is the only operator to win the UK bus operator of the year title four times. It also won the Route One large operator of the year award in 2016 and the award for customer focus at the European Business Awards in 2015; it had the top national bus driver in 2014 and won the Guide Dogs Award for breaking down barriers in 2014. I could go on, Mr Owen—there are many ways in which it is an exemplary bus operator. As I said on Second Reading, these things are not just being stated by me because I am the local MP—they are backed up by evidence.
When we look at the most recent national bus passenger survey, for 2015, we find that Nottingham City Transport is No. 1 one out of 50 operators for overall satisfaction, with 97% satisfaction. When we look at value for money, it is not No. 1, but it is No. 4 out of 50 operators, with 74% satisfied with its value for money, which is pretty good. On satisfaction with punctuality, again it is No. 1 with 85%, and it is joint second on satisfaction with bus journey times. There is no doubt that it is a really good example of what a good operator should be doing, and not just on those issues that are covered in the passenger survey.
I know we are going to discuss accessibility during the passage of the Bill. The percentage of accessible buses run by Nottingham City Transport’s 330 buses—it is quite a large operation—is 100%. In the other place the provision of audio-visual announcements on buses was raised. Many operators have suggested that it is too costly, but 80% of Nottingham City Transport’s buses already have audio announcement. As has been acknowledged, 100% have free wi-fi. On many levels, that shows what a bus company can do. I found it quite difficult to understand the Minister’s submission, as he acknowledged the value of municipals such as Nottingham City Transport and others—Reading Buses has also been a recent winner of bus operator of the year—which is okay, but why not allow that possibility in other areas?
Graham Stringer
I will be brief, as my hon. Friend the Member for Nottingham South has covered most of the points I wish to make. A reading of proposed sub-sections (1) and (2) shows that new clause 1 is not only disproportionate but authoritarian and ideological. The provision states:
“A relevant authority may not, in exercise of any of its powers, form a company for the purpose of providing a local service.”
That is extraordinary. It goes on to state:
“Subsection (1) applies whether the relevant authority is acting alone or with any other person.”
The assumption behind the proposal is that, in some way, the private sector market is working perfectly and competition is leading to a provision of services everywhere. That is simply not the case. The measure is tying the hands of local authorities that think that they can make a business case to provide a municipal bus company, either on their own or with a private sector partner. That is simply an ideological act. I can see the case that the Minister made, and I would concede that a franchising authority should not be able to award a contract to a bus company that it owns. However transparent the process, that would look strange to anybody outside. I accept that, but there are parts of the country—the shires, for example, and Hartlepool is often mentioned—where bus services are poor and many remote communities do not get a service. Why should the local authorities not get together and provide a municipal bus company where the private sector is failing?
An argument is often used in these cases. If the system we had in this country—and we hope this is the first step in moving away from it—worked so well and provided services efficiently, effectively and economically to people who needed them, why has nobody copied it? Can the Minister show us anywhere in Europe that has said, “Wow! What a wonderful deregulated system you have. We will immediately copy it and we will get rid of all our publicly owned bus companies and invite the private sector in to have a free-for-all. We think that will be a better way to do it.”? I cannot think of anywhere in Europe but perhaps the Minister knows better than I do; that is possible.
There are other arguments in favour, not of telling local authorities they must do it, but of allowing them to do it where there is a need. It would do one other thing: it would provide a benchmark for how bus companies should and could operate, as Directly Operated Railways provided a useful benchmark for the rest of the rail system.
The Minister has praised municipal bus companies. Can he explain why, if something is working so well, we should not replicate it? We probably invent too many different ways of delivering service in this country. When things work, why do we not simply replicate them where there is a need? In debates over the years on franchising, I have argued the case for quality contracts or franchising, and Government Members have said there are excellent bus services in Brighton, Oxford and Norwich, and round the country there are. There are places where the bus service works. There seem to be two factors that make those bus services good while those of us who live in Manchester, Newcastle, Hartlepool and South Yorkshire have seen a dramatic decline in bus services. Those areas are usually historic cities where there has been a restriction on cars, often, but not always, allied with a municipal bus company, so that there has been control and a very good service provided. Will the Government, like any sensible one, allow things that work to happen again?
Daniel Zeichner
It is a pleasure to follow both my hon. Friends, who have made their points very well. The new clause proposal has become the cause célèbre of the Bill, doubtless dropped in to wind up people across the country. To that extent it has been successful. We have had thousands of emails from people who are concerned about it. We have seen many representations from councils. We have had exciting photo opportunities outside the Department for Transport. I am sorry Ministers did not feel about able to join them—they would have been very welcome.
The proposal is a sop to those who cannot abide success in the public sector, to those who cannot get over the fact that, year after year, the municipals demonstrate that they can combine efficiency, good value and top-quality service and regularly walk away with all of the awards. As has been said, the proposal flies in the face of the evidence. It is a mean-spirited proposal that prohibits county and district councils in England, combined and integrated authorities in England, and passenger transport executives in England, from setting up companies to provide local services. In short, it is a ban on new municipal bus companies.
We have made it absolutely clear that we completely disagree with this punitive measure, which also contradicts the Government’s supposed commitment to localism. We have already heard from my hon. Friend the Member for Nottingham South about the fantastic reputation and performance of one of those municipals. We could speak about others, but the point has been well made. Sadly, the Government now plan to take this option for local authorities off the table, despite the fact that in a number of areas they have proved that they are successful.
Lilian Greenwood
My hon. Friend has made the point very clearly in relation to Nottingham City Council and the tram consortium. There is an even more obvious example that I set out on Second Reading. The tendered bus services in Nottingham that provide the Medilink service, the park and ride services and the local link services to some of the district centres are also operated under contract, not with Nottingham City Transport, which was unsuccessful, but with Nottingham Community Transport, which won the contract. That makes it very clear that the council is capable of operating its municipal bus company as an arm’s length contract, and that there is real competition in the market to provide those services.
Further, does my hon. Friend agree that, in many instances in public services, we see in-house bids alongside private sector bids? It is possible to ensure that they are considered alongside each other. Sometimes the in-house bids are successful and sometimes they are not.
Daniel Zeichner
My hon. Friend makes the point very powerfully, and I absolutely agree with her last point. I expect the Minister and I were both local councillors a number of years ago. My hon. Friend the Member for Blackley and Broughton made the point that having an in-house competitor keeps the market honest, as was explained to me early on in my council career in housing. That is the role that municipals can play in this case.
The Government should be a little more confident about the ability of local government, exactly as my hon. Friend the Member for Nottingham South has explained, to get the best for their citizens, as anyone rationally would. If a private bus operator offers a local authority a better service, and if the bid from a private bus operator meets passengers’ needs better, why would a local authority not award it the contract?
It is fair to say that municipals do not always have to please shareholders and are not driven by profits and shares, and that local authorities are far more likely to pick the operator that can genuinely best serve the needs of the passengers. If a local authority considers bids for a contract and finds that its own arm’s length company is the best one to do the job, why should not it award that company the contract?
Contrary to the Conservatives’ belief, we are speaking up for municipal companies not for ideological reasons but for the practical reason that it would make things better. We want local authorities to continue to have the choice to form municipal companies should they want to do so. As we have heard, there is no evidence of a massive rush to form municipals, so to some extent a straw bus company has been set up to be knocked down. There is not a great rush, but why make it impossible for such companies to be set up in future? We want local authorities to continue to have the choice to form municipal companies, partly because there are so many good examples of their being successful.
The Conservative party is supposed to be in favour of the free market and to dislike regulation and impediments to fair competition. That is their long-held proud view, so why are they attempting to impose arbitrary barriers on the market to contrive to stop municipal bus companies competing fair and square? In our view, local authorities should be able to form their own bus companies and have them compete with private bus operators in areas introducing franchising schemes as well as areas without them. The attempt to ban local authorities from forming municipal bus companies suggests that Conservative Members are afraid that the municipals might just do better than the private bus companies they so venerate. Surely they are not afraid of a little competition.
Lilian Greenwood
I am reminded of the example given earlier about Directly Operated Railways. My hon. Friend will remember that, when the contract for the east coast line was awarded, the Opposition argued that the incumbent operator, East Coast, should be allowed to bid. It was prevented from doing so. It is interesting that, since that service has been operated in the private sector, passenger satisfaction scores have gone down. Surely there was an argument for allowing it to compete to show that sometimes the public sector can do better.
Daniel Zeichner
Once again my hon. Friend makes the point strongly. It seems that the evidence is entirely stacked up on our side, and I hope the Minister and his colleagues reflect on it. The question should be about the best interests of passengers and the public, not an ideological obsession with stopping good public services being provided directly, when that can be shown to happen successfully.
The Competition Commission has been mentioned obliquely once or twice in the debate. Its report noted that the fact that municipal operators are not required to deliver commercial rates of return might lead them to take actions that non-municipal operators might not, such as providing services that a non-municipal operator would consider uneconomic. The commission did not see evidence to suggest that that would have any significant distorting effects on competition. In other words, things can be done for the wider public benefit, which of course is also part of the franchising approach.
I suggest that we are moving in a slightly different direction from the ideological experiment with the free market of the past 30 years, and should perhaps move with the times. As my hon. Friends have suggested, perhaps international examples will show us that others have not chosen to follow that experimental path, for good reason.
Bridget Phillipson
To continue with the discussion of differences in approach, in Tyne and Wear the Metro was, until recently, operated by DB Regio. That contract ended—the decision was taken not to extend it. It has now come back under the control of Nexus, which directly operates it. It is working well. It is an option that was available because the contract was not working as well as it could with DB Regio. It seems strange to me that, in the case of the Metro, Nexus can take action to take control where a service is failing, but there is not that backstop with bus franchising.
Daniel Zeichner
Indeed, that point is well made. It has been possible to take back control in that case, and it is working to the benefit of passengers in that area. It seems extraordinary that we should want to close down the options when all the evidence points to the fact that, when transport systems are integrated, it is possible to get a better outcome for everybody.
I am not sure I am allowed to mention European law anymore, but it may be worth noting that, in EU regulation 1370/2007—I am sure Members know it off by heart— article 5.2 allows that:
“any competent local authority, whether or not it is an individual authority or a group of authorities providing integrated public passenger transport services, may decide to provide public passenger transport services itself or to award public service contracts directly to a legally distinct entity over which the competent local authority, or in the case of a group of authorities at least one competent local authority, exercises control similar to that exercised over its own departments.”
In Europe, local authorities are able to award contracts directly to their own company. We simply want new municipals to be able to compete in the process.
As I come to my conclusion I shall quote a further authority. Regarding municipal bus companies, the Institute of Public Policy Research said that
“authorities need to encourage and support the many innovative transport solutions–—such as social enterprises and municipal companies—that have emerged over the years.”
It added that:
“the continued strength of some municipally owned transport schemes…demonstrate that conventional commercial operations are not the only option…Choosing to operate a business without the pressure to deliver profit to shareholders can allow social values to be put at the heart of that business’s activities and deliver considerable benefits for communities.”
Our final problem with the proposal, as touched on by my hon. Friends, is that it seems as if the Department is working without any evidence. I have asked a number of written questions about the plans, and it has been revealed that
“no analysis has been undertaken by the Department for Transport to understand the potential benefits”
of the municipal model for passengers. I was later told that there are no plans to undertake any analysis of those benefits. I asked what evidential basis there is that the commissioning and provision of bus services should be kept separate, and was told:
“Supporting evidence of direct relevance is not available”.
Furthermore, I was told that a ban on municipals was not included in the bus reform workshop discussions because the provisions
“had not yet been drafted when the workshops took place.”
I simply do not understand why the Government persist with this divisive and mean measure when they have absolutely no evidence to back it up. In our view, this is a piece of symbolic, ideological dogma that has no place in an otherwise positive, enabling Bill that is broadly underpinned by consensus. We have every intention of revisiting this issue on Report.
Andrew Jones
I covered much of the ground in my earlier comments. I do not view this matter as the cause célèbre of the Bill, because frankly not a single local authority has contacted me to say that it wishes to start a municipal bus company. I do not think that this is at the heart of the Bill at all. Why do we have it? We have it simply because of the points I mentioned earlier—that commissioning and provision separation could easily deter investment from the private sector should this be reversed. What we have sought to do in the Bill is find the right balance and retain the strengths of private bus companies and the involvement from the public sector to find that proper partnership where we most effectively see the industry making progress for customers.
Lilian Greenwood
I am mindful of the point my hon. Friend the Member for Cambridge made about evidence. When the Minister says that the existence of municipal bus services or an intention to set up a municipal bus service would prevent investment from the private sector, what evidence is he drawing on? My city has a very successful municipal operator, but that does not prevent investment in the private sector. In fact, we have an extremely effective local private operator and, if anything, the competition with the high-quality municipal has driven up its investment in its services. I therefore ask the Minister to set out what evidence he is drawing on in making those remarks.
Andrew Jones
What I said was that it could deter investment. We are talking about projections into the future, and as the future has not yet happened, of course we do not have any evidence for it. I am just looking at what the risks may be.
What we seek to do in the Bill as a whole is to enable bus companies and authorities to work more constructively together on behalf of passengers to deliver better services. I think we have struck the right balance. There is no doubt at all that the municipal companies are, indeed, successful, but we have chosen to highlight a couple that have perhaps been at the high end of success—the Nottingham and Reading companies have quite reasonably had a lot of mentions today. The last company that I visited was the bus company in Reading, and I thought it a very successful and impressive operation, but within a few days of that visit we saw the Thamesdown service sold after many years of making a loss. The idea that it is only municipals that are successful and innovative is not true. Success has come from having the right balance, and that is exactly what we are achieving in the Bill.
On international comparators, I am not an expert on the bus markets of different countries, but I am aware that the successful transformation of our rail services, which was mentioned earlier, has led to ours being the fastest-growing railway in Europe.
Amendment 10 agreed to.
Daniel Zeichner
I beg to move amendment 24, in clause 4, page 32, line 47, at end insert—
“123Y Compensation liability
Where a bus operator brings a successful legal challenge for compensation against a relevant franchising authority, central government shall be liable for any financial penalty imposed by the court on the franchising authority.”
This amendment specifies that central Government shall bear the financial risk of legal challenges brought against franchising authorities by bus operators.
The amendment would ensure that central Government bear the risk for financial penalties where a bus operator brings a successful legal challenge for compensation against a relevant franchising authority. We want to protect local franchising authorities from legal action by operators and ensure that they are not prevented from bringing forward good schemes for fear of potential risk.
We heard reference in earlier debates to the attempt in the north-east—many of us would say the heroic attempt—to achieve a quality contract and how difficult that proved to be. When Nexus, the North East combined authority’s transport arm, attempted to introduce a quality contract scheme for Tyne and Wear under existing legislation, the legal decision made by the quality contract scheme board suggested that local authorities could be liable to compensate bus operators for financial losses they might incur as a result of bus re-regulation. The board concluded:
“Legislation enabling franchising should specifically address the issue of proportionality of financial loss of bus operators. It may be that some form of compensation is considered appropriate.”
It went on to suggest that local authorities could have been liable for payments of between £85 million and £226 million if the scheme had gone ahead. At that time, many of us were astonished by that conclusion, but despite the absurdity of it, that was what the board said. It causes real concern for people who may be thinking of bringing forward what I think we all agree could be the kind of schemes that will really improve bus services in our country.
I asked the Minister what assessment his Department had made of the reference in the quality contract scheme board’s report to bus operators being compensated by the Government for future losses that might be incurred as a result of franchising. The Minister responded that the decision related to existing legislation and was unrelated to the Bill. I do not think that that is good enough. It is important that we protect local authorities from that risk. It is not the case that this situation has not been rehearsed—it is out there.
If we believe that franchising will produce better services for passengers, we cannot have a situation in which authorities are worried about bringing schemes forward because they are intimidated by the financial risk. The Government might feel that that is not relevant, in which case they can demonstrate their confidence in the new system by making it clear that the risk does not lie with the local authority.
Some share the view that was expressed by the board in the Nexus case. The Confederation of Passenger Transport has, indeed, said that bus franchising
“would unquestionably amount to indirect expropriation”,
and that the Bill is “anti-enterprise” and
“silent on the issue of compensation.”
I and many others obviously do not agree. As I have said, franchising moves competition from on the road to off the road, with the system of bidding for service contracts.
More than that, any industry that receives almost 50% of its revenue from the public purse cannot be surprised that the public seek a say in how the services they fund are run. The Transport Committee found:
“We accept that the question of whether incumbent operators would suffer a loss from franchising is a complex one. However, franchising does not mean operators already providing bus services in the market cannot compete; it simply means that they must compete for the market rather than for passengers as they do at present. There is no case for compensation for operators in areas where the local transport authority decides to introduce franchising.”
The Opposition need clarity on this issue, because we fear that if the Government do not provide it, good schemes might not be introduced.
Andrew Jones
Amendment 24, which was tabled by the hon. Members for Cambridge, for Nottingham South and for Scunthorpe, proposes that central Government assume liability for compensation payable as a result of a successful claim against an authority that has implemented franchising. The Bill is about devolution. It gives authorities the ability to decide which model of bus service provision works best for local passengers. It makes it clear that the decision to implement franchising lies with the Mayor or the authority in question and not with central Government
Local accountability is at the very heart of the Bill. Any Mayor or authority that is not able to stand by and take responsibility for their decision should not implement franchising in the first place. Looking to central Government to solve local problems would undermine the accountability required to make a success of franchising in the longer term. Frankly, it would be out of step with the rest of the Bill for central Government to step in and assume responsibility for a local decision in which they have played absolutely no part. The proposal is very strange, and would mean a complete break between accountability and responsibility.
Bridget Phillipson
The Minister will recall that during the process that led to the quality contract scheme decision in Tyne and Wear, the issue was, in part, where responsibility would lie were there to be a legal challenge, not on the grounds of the scheme itself or in respect of whether any compensation would be owed, but concerning where responsibility for the legislation itself would lie. This is Government legislation, so would it not be for the Government to defend, if challenged, its principle and to take on any liabilities that arose from that?
Andrew Jones
In developing the legislation, we have taken into account the views in the quality contract board’s comment on compensation. We are confident that the processes in the Bill are fair and give operators sufficient notice to enable them to plan accordingly. I therefore do not think that what the hon. Lady says will apply, but we have clearly been learning from the problems that the north-east, more than any other area, experienced in the quality contract scheme.
Huw Merriman
The Transport Committee spoke to authorities that might consider franchising about the risks they would have to bear. Surely this is one. If they decide that it is not a risk worth taking, they will not utilise the power. It is not just a question of asking for a central Government bail-out, but a question of asking for a bail-out from my local taxpayers, who will not have the benefits of franchising. I find the proposal outrageous.
Andrew Jones
It is a strange idea to put forward that central Government should be liable for decisions taken in a local council or by an elected Mayor. That break between accountability and responsibility could only lead to bad practice. Any legal challenge by operators against an authority is likely to be based on the way in which the authority has approached the decision-making process. Central Government are not seeking to control that, and we should not be responsible for it. I therefore ask the hon. Member for Cambridge to withdraw the amendment.
Daniel Zeichner
I note that the hon. Member for Bexhill and Battle is outraged by the suggestion, but the crux of the point was made by my hon. Friend the Member for Houghton and Sunderland South and it is an important point. It is clear that some in the industry see the concept as an act of expropriation—that is what the industry body has said. The Government are proposing the legislation and we support them, but the danger, as I have said, is that if local authorities fear that they will be subject to the full force of legal challenge, people might be unable to use this good legislation. We will be back to a situation of spending many years talking about doing absolutely nothing, as the hon. Member for Bexhill and Battle said.
Huw Merriman
Surely the concept of devolving power involves devolving responsibility. It would be an incredibly curious situation to devolve the power and, at the same time, have the local authorities ask for a guarantee all the way back not just from central Government, but from all taxpayers who live in local authorities that do not have the same power.
Daniel Zeichner
Much of the discussion today has been about the balance of responsibility between the centre and the locality. Much has been said about the very prescriptive nature of the rules set out by the Government for allowing franchising authorities to make proposals, particularly those that do not come through the combined authority and mayoral route. The question in the end is where the risk should lie. Our view is that the risk is a consequence of the legislation. That is why the Government should bear it.
Bridget Phillipson
Further to my hon. Friend’s point, there was much talk about what would happen in Tyne and Wear. My hon. Friend the Member for Blackley and Broughton asked whether an infringement of human rights could lead to a challenge under European law if the quality contract board allowed the scheme to proceed. My understanding is that that would have been a matter for the Government to defend, and not a matter for individual local authorities pursuing franchising schemes. There is an important principle here. This is not simply about devolution; it is about the legislation and the Government defending the principles that underpin this important scheme.
Daniel Zeichner
My hon. Friend is absolutely right. That point goes to the crux of whether the legislation will work in practice. We will not press the amendment to a Division, but I hope the Minister takes careful note of what has been said and ensures that, as authorities consider introducing schemes, they feel reassured that they will be able to do so and not face the risks we have described. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4, as amended, ordered to stand part of the Bill.
Clause 5
Power to obtain information about local services
Graham Stringer
I beg to move amendment 33, in clause 5, page 33, line 8, at end insert—
‘(1A) The franchising authority may require the operator to provide information about services run by the operator under existing franchises or in non-franchised markets outside the franchising authority’s area.”
This amendment would ensure that all operator data about operational performance in markets outside the franchising authority’s area is available to them for the purpose of developing a franchising scheme.
The Chair
With this it will be convenient to discuss the following:
Amendment 37, in clause 5, page 33, line 31, at end insert—
“(ea) information about the operator’s pension scheme(s) and information about the number of persons employed by the operator in any individual pension scheme;”
This amendment would require operators to share information and particulars about their staff’s pension scheme with the authority.
Amendment 38, in clause 5, page 33, line 34, at end insert—
“(fa) information about journey speed and reliability for those local bus services;”
This amendment reflects the draft regulations and guidance and includes journey speeds and reliability for authorities to consider when developing a case to franchise services.
Amendment 39, in clause 5, page 34, line 2, at end insert “, which shall be no longer than 56 days.”
This amendment defines reasonable period for the purpose of this subsection as no longer than 56 days.
Graham Stringer
The purpose of the amendment is to allow the transport authority and franchising authority to ask for and get information from operators about how they operate in adjacent areas, and not just the authority area. The clause amends section 143 of the Transport Act 2000, enabling a franchising authority to request certain information from bus operators of local services in its region in order to inform its business case assessment.
If I may return to annexe N of the Department for Transport’s public consultation, from which I read out section 19 previously, paragraphs 29 to 32 state that there is an obligation on local authorities to
“clearly explain the impacts of the options on different groups in society. This should include passengers, the authority, wider society and bus operators, with both the potential impacts on incumbent operators and the potential benefits to new entrants considered.”
What concerns me about is that authorities are being asked to make assumptions about the future private market behaviour of bus operators, exposing those authorities to unnecessary risk. It implies that authorities must make those assumptions as part of their assessments, meaning that the validity of those assessments is in danger of being compromised by an onerous duty to make assumptions on areas lying outside an authority’s direct knowledge. In addition, it is unclear how those assumptions will assist or inform a proposition.
In addition, proposed new section 143A(3) of the Transport Act 2000 does not currently give authorities the ability to require information about bus services in neighbouring areas. As the business case guidance specifically requires franchising authorities to consider the impacts of franchising on neighbouring authorities and services and transport in their areas, the omission is material and should be rectified by adding provision for information about local bus services in neighbouring areas, as the amendment suggests.
It is recommended that the new obligations be deleted in the first instance. However, if they are to remain in the statutory guidance, a corresponding amendment to proposed new section 143A(3) of the Transport Act 2000 could be made to enable a franchising authority to request from bus operators information about their services outside the authority’s area, including franchising services and non-franchising services elsewhere.
Time and again, we find the Government laying down in a Bill guidance and rules that are burdensome on authorities. I followed the Minister’s previous point, and I can see the case that he made: if local authorities take decisions, they should take responsibility and liability for them. But the other side of that coin must be that they are in charge of the rules and regulations within the law as it stands. We will return to this point on Report, but we keep coming back to it: the rules are onerous and burdensome, and will leave any franchising or transport authority open to legal challenge, because they are complicated and derive from elsewhere.
I hope the Minister accepts the amendment, but there is a deeper issue: the guidelines do not protect transport and franchising authorities as well as they could from potential challenge by hostile bus companies that do not want to lose their monopolies.
Daniel Zeichner
I shall speak to amendments 37 to 39. Amendment 37 would allow the franchising authority at an early stage to obtain pensions information from operators so that it can begin to understand the potential scale and impact in relation to historic and future pension liabilities. Currently, proposed new section 143A(3)(e) says:
“Information about persons employed by the operator in the provision of those local services”.
As such, it is not clear whether pensions information would be included. Will the Minister clarify whether the Bill will enable franchising authorities at an early stage to obtain information about pensions and the pension schemes of individuals employed by the operator? Does he agree that the amendment enhances the provisions by ensuring that franchising authorities have access to this relevant information in preparing their assessments?
Amendment 38 would enhance the Bill, better reflecting draft regulations and guidance. The statutory guidance includes a new obligation for authorities to consider journey speeds and reliability when developing an assessment. In order for authorities to be able to satisfy this additional obligation, an amendment to the Bill will be required so that authorities can request the data from incumbent bus operators. A large amount of the information is held only by operators and is not currently available to authorities. Currently, journey speeds and reliability are not provided for in the list of information that authorities may request from bus operators, meaning that authorities are unable to satisfy this additional consideration. Does the Minister agree that including the measure in the Bill will ensure that the Bill and the accompanying guidance are better aligned?
Amendment 39 reflects the fact that “a reasonable period” is not currently defined. Obtaining the information from operators set out at proposed new section 143A is vital to inform the franchising authority’s assessment. Any delay in providing that information will have a significant impact on the timetable for audit, public consultation and the Mayor’s decision. Does the Minister agree that 56 days is a reasonable period? If not, how does he define “a reasonable period” and will he make that definition clear in the accompanying guidance?
Andrew Jones
This group of amendments relates to the information authorities can request from bus operators in connection with their franchising functions. Amendment 33 would require bus operators to provide information to authorities about the services they operate under existing franchises and outside the franchised area. The purpose of clause 5 is to ensure that authorities have the information they need about the services in their area so that they can make an informed decision. I therefore struggle to see the rationale behind requiring them to provide information about services that are unconnected to the scheme they are developing or their area.
Graham Stringer
Business case guidance, as I said, specifically requires the franchising authority to consider the impacts of franchising on neighbouring authorities and services and transport in their areas. Surely that is a reason why the bus companies should hand over information about what they are doing in those areas.
Andrew Jones
The hon. Gentleman is talking about considering developing schemes and the impact on bus provision in neighbouring areas. It does not necessarily suggest that entirely unconnected areas need to have information about franchises beyond the area directly under consideration. I understand where he is coming from, but the information described in the amendment would not be material to an authority’s assessment. I am not convinced that there is any need for the authority to have access to it. I hope he considers withdrawing the amendment.
Amendments 37 and 37, tabled by the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), propose to add new categories to the list of information that can be requested by an authority—in particular information about an operator’s pension schemes, and about journey speeds and reliability. Clause 5 already allows authorities to request information about people employed by operators. That will include information about their pension arrangements. That is clearly a material consideration and will be included. I am not convinced therefore that amendment 37 is necessary.
I agree that an authority may want to consider information about journey speeds and reliability when conducting its assessment, particularly to understand where there are congestion hotspots. Having said that, I would like to think that any authority with the skills and abilities necessary to implement a franchising model already has a clear view of where congestion problems are in its network. There are other ways that the authority could access that sort of data without placing burdens on operators, such as through existing punctuality and timetable information and roadside monitoring equipment.
We are currently consulting on draft regulations under the clause that set out further categories of information that can be requested by authorities. If a clear case is made through our consultation that journey speed information would be a valuable addition to that secondary legislation, we will certainly be happy to consider it, but I am not convinced today that we should place it on the face of the Bill. I hope I have provided the hon. Member for Cambridge with reassurance that the issue will be addressed and that he will therefore not press amendments 37 and 38 to a vote.
Amendment 39 would require operators to provide the requested information within 56 days rather than at the end of a reasonable period that the authority may specify. We want to ensure that we leave as much flexibility as possible to allow authorities to work with operators on a local level. In some cases, the information requested will be very limited and could be provided in a shorter timescale. We also have to consider the full range of possibilities and give due consideration to smaller operators, which may have more difficulty collating and sharing information when their limited resources are focused on doing the day job and running their existing services.
The Bill will allow authorities to take local circumstances into account and set realistic and appropriate timescales for delivery, without an arbitrary cap. If an operator fails to take all reasonable steps to respond to a request, the Bill requires the franchising authority to report it to the traffic commissioner, who then has the ability to impose sanctions on operators that contravene that requirement, provided that the commissioner agrees with the authority that the operator has not taken all reasonable steps to respond. Given that flexible approach, which I believe will work well in practice, I ask the hon. Member for Cambridge to withdraw amendment 39.
Graham Stringer
I may return to amendment 33 on Report, along with a number of other items. I beg to ask leave to withdraw the amendment.
Daniel Zeichner
I am reassured by the Minister’s comments on amendment 37, about pensions. That is helpful and clarifies the situation.
I am less reassured on the other two amendments. It is not my experience that authorities have this information. A lot of this information is held by the operators. They are running their businesses and quite clearly need it to run their day-to-day operations. Potential franchising authorities do not necessarily have that information. As I suggested earlier, my visit to my local traffic commissioner confirmed what I already rather suspected—that the responsibilities of traffic commissioners are not matched by the resources at their disposal. I am certainly led to understand that the old system whereby people used to be sent out to check on reliability and so on are long gone. I will not press the amendments any further, but I am not convinced on that point.
Finally, I think the Minister is being a touch naive to think that all the major operators will necessarily want to co-operate in that way. Having a fixed timeframe is absolutely right, possibly with an exemption for smaller operators. We should not be under any illusions: some of these processes will not be as smooth and amicable as we would all wish.
Amendment, by leave, withdrawn.
Clause 5 ordered to stand part of the Bill.
Clause 6 ordered to stand part of the Bill.
Schedule 2
Further amendments: franchising schemes
Andrew Jones
The clause introduces new provisions for advanced ticketing schemes in England, which improve the existing ticketing powers in the Transport Act 2000 in a number of ways. First, the clause future-proofs the legislation by ensuring that new or future developments in technology can be accommodated within its framework. Secondly, the clause contains new duties for local authorities to consider linkages and compatibility with other multi-operator ticketing schemes. I must emphasise, however, that this is not about price. There is no ability for ticket schemes to set ticket pricing. An advanced ticketing scheme may only be made by local transport authorities in England. The existing ticketing scheme provisions will continue to apply in Wales and to schemes made by an English authority in conjunction with a Welsh one. This part of the Bill has been widely welcomed in our discussions and has not proved at all controversial.
Question put and agreed to.
Clause 7 accordingly ordered to stand part of the Bill.
Clause 8 ordered to stand part of the Bill.
Schedule 3 agreed to.
Clause 9
Enhanced partnership plans and schemes
Amendment made: 11, in clause 9, page 42, leave out lines 15 to 20.—(Andrew Jones.)
This amendment removes a requirement that, under an enhanced partnership scheme, new buses providing local services must meet eligibility requirements contained in the “Low Emission Bus Scheme” (a programme of grants to support the use of low and ultra-low emission vehicles), where the vehicle comes into service after 1 April 2019.
Question proposed, That the clause, as amended, stand part of the Bill.
Andrew Jones
The clause will introduce enhanced partnerships in England. They go further than the advanced quality partnership schemes provided for in clause 1, which we discussed this morning. In particular, enhanced partnerships may include a broader range of requirements. They are designed to be easier to apply to a wider geographical area, and provide for the involvement of operators from the outset. They do not require every single objection from operators to be resolved.
The clause provides for enhanced partnership plans and enhanced partnership schemes. The plan provides the context for the partnership and sets out the bus improvement objectives, which are relevant to all parties. Detailed actions to be taken by the authority and bus operators on the ground locally are set out in the associated scheme or schemes. Both the plan and schemes are made by the local transport authority but are developed in partnership with any relevant operators that wish to participate. To ensure that operators remain involved and supportive, the authority can proceed at certain key points only if it has sufficient support for its plans from the relevant operators. The mechanism by which that will be judged will be set out in secondary legislation, on which we are currently consulting.
Under an enhanced partnership, competition remains generally on the road, and services continue to be provided on a commercial basis. All operators in the scheme area, whether a new entrant or an incumbent, must comply with any of the requirements set out by the scheme. Those requirements fall into two broad categories. Operational requirements can include vehicle standards—including emissions standards, as we discussed this morning—branding, payment methods, ticketing structures, the price of multi-operator tickets and information to be provided to passengers. Route requirements address the frequency and timing of particular services.
There is a menu of options so that authorities can work with operators and passenger representatives, among others, to find the best solutions for their area. That is the essence of an enhanced partnership. It is a flexible set of powers that can be adapted to local circumstances. The provisions have been welcomed by passenger groups, bus operators and local transport authorities. I think that these provisions are at the heart of the Bill.
Question put and agreed to.
Clause 9, as amended, accordingly ordered to stand part of the Bill.
Clauses 10 to 13 ordered to stand part of the Bill.
Clause 14
Traffic commissioner functions
Daniel Zeichner (Cambridge) (Lab)
I beg to move amendment 30, in clause 14, page 69, line 22, at end insert—
“(5) After section 6I insert—
‘6J Community bus routes
(1) Traffic Commissioners must keep a list of bus routes in their area which are of community value.
(2) For the purpose of this section, a bus route of community value is one that has been designated by the traffic commissioner as furthering the social well-being or social interests of the local community.
(3) Bus routes may only be designated by a traffic commissioner as being of community value in response to a community nomination.
(4) A community nomination must be made by a community group which is based in, or has a strong connection with, an area through which the bus route passes, and on which community the bus route has a direct social impact.
(5) A community group may be, for example—
(a) a local or parish council;
(b) a voluntary or community body with a local connection;
(c) a bus user group;
(d) a group formed for the specific purpose of maintaining the bus route;
(e) a church or other religious group, or
(f) a parent teacher group associated with a particular school or schools.
(6) The traffic commissioner must consider the community nomination, and if—
(a) the nomination is successful, the commissioner must notify the relevant parties of this decision in writing; or
(b) the nomination is unsuccessful, the commissioner must notify the relevant parties of this decision in writing and give reasons why the decision was made.
(7) An operator of a bus route which is designated as being of community value must give a minimum of six months’ notice of an intention to terminate the service, in order for the community to—
(a) work with relevant authorities to find an alternative operator;
(b) set up a community transport group in order to run the service; or
(c) partner with an existing not-for-profit operator to run the route.
(8) The community may apply to the Secretary of State for financial assistance, training or advice during the notice period in order to achieve any of the aims set out in subsection (7).’”
This amendment would give Traffic Commissioners the power to designate bus routes assets of community value.
I apologise, Mr Owen, but this bus is moving rather more quickly than I had anticipated. We are doing very well.
The notion of defining a bus route or a bus service as a community asset may come as something of a surprise to people, as it did when it was first raised with me. However, the more I have thought about it, the more significant it seems it could be. Although much of the discussion today, with our comments about Nottingham, and on Second Reading has been about urban areas, the problems facing buses in rural areas are dear to many people’s hearts. Many of us would agree that the local bus service is a key aspect of everyday life in many parts of the country.
Without rehearsing the figures, which I suspect are familiar to all of us, bus services are disappearing from many parts of the country for a whole range of reasons. As was explained by my hon. Friend the Member for Ashfield, there is quite often a feeling of powerlessness when there is a sudden change to what may be a lifeline—sometimes that is for relatively few people, but it is crucial to them none the less. Whether from urban or rural areas, I suspect all of us, as Members of Parliament, have found ourselves in the difficult situation of responding to local people who come to us and say, “The bus service is going or changing; what can you do to help?” That has been a part of the discussions we have had throughout the day.
I suspect that a discussion about advanced quality partnerships, franchising, net costs, gross costs, contracts and all the rest of it will not greatly reassure many people. They want to know what can be done about their bus service; that is what matters to them. What we suggest is that those means of communication—those routes—are seen as a community asset and put on the same legislative footing as community assets such as pubs, community buildings and land. That is not to say that something can be preserved forever—that is impossible—but the measure would slow down the process, just as we do with a potential pub closure, to give the community the chance to build the capacity and support to put something else in place. I am not sure that the big society is still with us—
Daniel Zeichner
In which case, this is the big society revisited. I am sure the Minister will be commended for defending it.
The community asset legislation sits comfortably within the Conservative Government’s Localism Act 2011. It rightly recognises that community assets should be protected and given elevated status so that communities can come together and help to save or run things that they judge they cannot do without. The proposition is to establish a new class of assets of community value—bus route assets of community value—based on the route of the bus, as designated and held by the relevant traffic commissioners. It is notable that currently, bus stops can be an asset of community value. Indeed, some have been designated as such, which shows the importance that local communities place on such services.
The amendment would allow communities to come together to apply to the relevant traffic commissioner to designate the service they hold dear as a bus route of community value. The route would then be subject to a six-month moratorium should there be a threat of its being cut, which would allow precious time for the community, as defined by the Localism Act, to work with the relevant authorities to find an alternative operator, set up a community transport group to run the service, or partner with an existing not-for-profit operator. The powers mirror those in the Localism Act, and would change rural passengers’ influence over how bus services are delivered to them.
The nomination would be made by a community based in, or with a strong connection to, an area through which the bus route passes and on which the route has a direct social impact. Community groups could include a local or parish council, a voluntary or community body with a local connection, a bus user group, a group formed for the specific purpose of maintaining the bus route, a church or other religious group, or a parent-teacher group associated with a particular school or schools.
Huw Merriman
Having been involved with pubs in this way, I found the proposal, on the face of it, quite attractive. However, given that the Bill provides more data and therefore a greater ability to see whether it would be worthwhile to take a route on, and the fact that anyone can apply to run a bus service, does the hon. Gentleman not agree that, on balance, the amendment would put operators off starting a route in the first place and could, therefore, be counterproductive?
Daniel Zeichner
There is a risk of that, of course. Equally, if we ask ourselves, “What are we going to do to help protect local communities?”, we have to make a judgment on the balance of the risk. In most areas, our biggest problem is not lots of new services being suppressed by the threat of their being declared an asset of community value. Generally, the threat is the other way around, with services gradually being eroded.
I certainly do not suggest that the proposal is a panacea or an answer. My concern is that, all too often, by the time people have got together and responded to the possibility of a change, it is too late, and once the service has gone people basically give up—we are often dealing with relatively small numbers—and do what people have always had to do, which is turn to an alternative, whether that be buying a motorbike or forking out for a car, even though that might be difficult. That is what, in the spirit of this discussion, we are trying to prevent. The scale is obviously different from that of the problems in our major conurbations, which have rightly occupied much of our discussion today, but the amendment would be a positive contribution that would help people in other parts of the country.
Lilian Greenwood
I listened to the concern voiced by the hon. Member for Bexhill and Battle, but surely, where a new route had been set up, the traffic commissioner would not be minded to allow it to be designated as an asset of community value, because it would not be sufficiently long standing for that to be appropriate. Much as I understand his concerns, I do not think that they are well placed in this context.
Daniel Zeichner
Yet again, my hon. Friend is absolutely right. This is about trying to find ways of tackling the relentless erosion of services that have been a key part of the fabric of many communities.
Happily, I have been provided with a particularly good example from the constituency of Witney, which I am sure a number of us have had cause to visit in the last year—well, we should have, anyway. I did. I am not sure why, in retrospect—[Laughter.] It was because I was a good friend of the unsuccessful Labour candidate. Anyway, in the face of vital service withdrawals, the local Labour and Co-operative councillors in Witney—I think it was the Labour candidate, in fact—have helped to save local bus services for the community.
The West Oxfordshire Community Transport benefit society was formed, and its people’s bus service has begun to carry passengers. It has managed to maintain timetables, fares and the routes that people in the area rely on, but one thing is different about that new service—it belongs to the community itself and will be run not for profit. As it is a community benefit society, anyone is able to join, which has an additional effect in terms of community development and bringing people together. That is a good example of the types of organisations and communities that would benefit from the amendment.
The amendment would go one step further than the existing Localism Act powers and place a duty on the Secretary of State to provide financial assistance, training and advice to communities working to save routes through the new moratorium period. We think it is an innovative proposal that could be built on by a Government that wished to join the hundreds of communities around the country that will meet today or this week to discuss ways in which they can maintain their area’s bus service.
Andrew Jones
Amendment 30 would reinforce the local importance of certain bus services by enabling them to be designated as routes of community value. I am fully aware of the issues that many people experience with bus services that are under threat or have been reduced, and there is no doubt that many local authorities face funding issues and therefore difficult decisions about the services that they wish to subsidise. However, in several areas of the country we are seeing innovative solutions, from the community transport sector stepping in to the provision of more integrated services and the Total Transport pilot schemes that my Department is supporting. It is encouraging to hear the story from Witney. Interestingly, that is not an area that I have been to for quite a long time. I hope that my hon. Friend the Member for Sherwood is not listening. [Laughter.] Well, it was never in doubt, was it?
The amendment would resolve issues relating to the continued provision of services on routes that are deemed to be of community value. I agree that where services are to be cut or their frequency is to be significantly reduced, commercial operators—or, in the case of subsidised services, local authorities—must do all they can to keep people informed, consult them and seek to pass on a service in some form. That is part of the thinking behind clause 19, which provides for greater information to be provided to local authorities when a service is reduced or cancelled.
However, I do not think that it is reasonable or sensible to force operators to continue to operate a service, potentially at significant financial detriment, for six months rather than the 56 days currently required. Doing so could act as a disincentive for operators to trial new services, step in to see whether they can make a service viable or operate services commercially where local authority funding is precarious and can be kept going for only a short time. The unintended consequences could easily outweigh the benefits that the Opposition wish to see. I hope that, in the light of those considerations, the hon. Member for Cambridge feels able to withdraw his amendment.
Daniel Zeichner
I will withdraw the amendment, but I will make one observation. I am not entirely sure why this is different from declaring the last pub in a village an asset of community value. As far as I can see, exactly the same considerations apply. If it is good enough for the pub, why is it not good enough for the bus service?
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 14 ordered to stand part of the Bill.
Clause 15 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned.— (Mark Spencer.)
Vehicle Technology and Aviation Bill (First sitting)
(7 years, 1 month ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Before we start the formal business, I welcome you all to the first sitting of the Vehicle Technology and Aviation Bill Committee. I want to establish a few ground rules. First, I tend towards the more traditional form of chairing, so anyone seen drinking coffee or speaking into the telephone will be ticked off roundly. I do not really mean it; I sound more ferocious than I really am, but none the less I will be ferocious about it all and take such things incredibly seriously.
We have two or three formal matters to consider, and then we will go into the business of allocating questions before we bring the public in. Technically speaking, we have to bring the public in and throw them out again, but that seems to me to be a bit back to front, so we will try to avoid that. Let us crack on with the formal motions.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 14 March) meet—
(a) at 2.00 pm on Tuesday 14 March;
(b) at 11.30 am and 2.00 pm on Thursday 16 March;
(c) at 9.25 am and 2.00 pm on Tuesday 21 March;
(d) at 11.30 am and 2.00 pm on Thursday 23 March;
(2) the Committee shall hear oral evidence on Tuesday 14 March in accordance with the following Table:
Time | Witness |
|---|---|
Until no later than 10.25 am | Automated Driving Insurers Group; Society of Motor Manufacturers and Traders; RAC Foundation; TRL |
Until no later than 11.25 am | National Grid; UK Electric Vehicle Supply Equipment Association; Quentin Willson, motoring journalist |
Until no later than 3.00 pm | The Institute of the Motor Industry; Downstream Fuel Association; Association of Convenience Stores |
Until no later than 3.45 pm | Association of British Insurers; Centre for Connected and Autonomous Vehicles |
Until no later than 4.30 pm | Civil Aviation Authority; Association of British Travel Agents |
Until no later than 5.30 pm | British Airlines Pilots Association; Metropolitan Police; National Police Air Services; UK Flight Safety Committee |
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 16; Schedules 1 and 2; Clause 17; Schedules 3 and 4; Clauses 18 to 24; Schedule 5; Clauses 25 to 27; new Clauses; new Schedules; remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 23 March.— (Mr John Hayes.)
The Chair
The deadline for amendments to be considered for the first sitting where the Bill will be scrutinised line by line was rise of the House yesterday. The next deadline will be rise of the House on Thursday for amendments to be considered in the Committee’s sittings next Tuesday.
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Mr John Hayes.)
The Chair
Copies of written evidence that the Committee has received are available in the room.
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Mr John Hayes.)
The Chair
Q Let me welcome and thank our four witnesses for the first panel. I will let you know that the first panel must end at precisely 10.25 of the clock, and if you are in the middle of a sentence you will stop talking at precisely 10.25, because those are the rules of engagement.
I remind members of the Committee that they may ask questions on any subject, so long as they are within the context of the Bill; they will not be allowed to ask any questions outside that context.
First, I ask our four witnesses to introduce themselves briefly for the record, starting with Mr Wong.
David Wong: I am David Wong. I run the technology and innovation portfolio at the Society of Motor Manufacturers and Traders, the UK automotive industry trade body. I cover areas such as connecting autonomous vehicles, ultra low emission vehicles, and digital innovation and mobility innovation in design engineering.
Denis Naberezhnykh: I am Denis Naberezhnykh. I am head of ultra low emission vehicles and energy at Transport Research Laboratory, and I oversee all our work on electric vehicles, low-emission vehicles, charging infrastructure and related topics.
Steve Gooding: I am Steve Gooding. I am the director of the Royal Automobile Club Foundation for Motoring, which is a small think-tank devoted to research into motoring and motoring issues, as well as into roads and road use. Some Committee members will have come across me in my guise two years ago as a member of the board of the Department for Transport.
David Williams: I am David Williams. I am technical director for Axa Insurance. We are involved in three of the Government-backed consortia looking into driverless cars: Venturer, Flourish and UK Autodrive. I am also chair of the Association of British Insurers autonomous driving insurance group.
The Chair
Many thanks to all of you. We have quite a lot of business to get through, so may I ask that both questions and answers be relatively brief and coherent? Perhaps “coherent” is going too far, but they should be brief and to the point.
Richard Burden (Birmingham, Northfield) (Lab)
Q Welcome. The Bill was originally being talked about colloquially as the modern transport Bill—a Bill to look at the challenges facing particularly, but not exclusively, road transport in the decades to come. Parts 1 and 2— those dealing with road transport—focus on two main issues: the insurance liability of automated vehicles and the provision of electric charging infrastructure by big retailers. Do you think those are the right things for the Bill to cover, and are there things that should be in the Bill that are not included?
The Chair
Who wants to go first? Not everyone has to answer each question, so please do not feel that the whole panel has to answer.
Steve Gooding: We are pleased to see the inclusion of the provisions relating to autonomous driving insurance, an issue that needs to be gripped. We are also pleased to see that the Government are taking steps to do something about the rather confusing world of recharging electric vehicles—no doubt we will talk about that later. The RAC Foundation would have liked to have seen provisions relating to the creation of the roads fund—a Government commitment that the Chancellor mentioned and that was included in the Budget papers but that is not currently coming into statute. We also support the direction of travel on speed awareness courses and bringing more scrutiny to an area where some of us suspect a bit of an industry has grown up around a bright idea in a way that might have gone slightly too far.
David Williams: From an insurance perspective, we are very pleased to see the Bill. It is essential to have clarity, at this early stage, about the compensation process and about who is going to be responsible in the first instance, so that insurers and motor manufacturers can design their systems, business models and processes ready for it; so we are very pleased. Without that clarity, there is a danger that the public will lack confidence with regards to compensation being available when an autonomous vehicle is involved in an accident. Also, with road transport being a truly global element of our lives, it is good that the UK Government have come up with something at an early stage that hopefully will influence certainly Europe and maybe the US as well.
Denis Naberezhnykh: From TRL’s perspective, we are very supportive of the Bill as it stands, in particular the focus on electric vehicle consumers and users—that is very welcome. Taking steps towards introducing smart charging and managed charging is also very appropriate and timely. Given the forward-looking nature of the Bill, we would like to have seen more consideration for future technologies with regards to charging and vehicles themselves.
David Wong: The SMMT supports the principles underpinning the Bill, and we welcome its provisions. In particular, we think this is the right time for the Government to further encourage the take-up of ultra low emissions vehicles and pave the way towards the deployment of autonomous vehicles. This relates to the insurance framework that is set out in the Bill.
What we would like to see more of in the Bill is greater clarity—perhaps going forward in secondary legislation—particularly on smart charging of electric vehicles. In the area of connected and autonomous vehicles, certainly something on infrastructure and connectivity would have been marvellous, particularly with regards to deployment of connected vehicles.
Richard Burden
Q Thank you. That is very useful.
The Government’s target is that all new vehicles on the road should be ultra low emission vehicles—zero-emissions, in fact—by 2050. How far do you think this Bill will contribute to that target? On current trends, we are a long way off that target at the moment. What do you think are the other barriers to the take-up of ultra low emission vehicles, or we could also say—more broadly—connected vehicles? There is quite a crossover between those two agendas. How do you think these other barriers can be best overcome?
David Wong: Let me first deal with ultra low emission vehicles and electric vehicles. The Bill is a step in the right direction. Whether or not the targets are achieved depends on the extent to which we can solve what we call the three As. The first A is range anxiety; the second A is infrastructure accessibility; and the third A is vehicle affordability. Insofar as what the Bill is trying to do, it is crucial to address infrastructure issues, to support research and development and to provide continuing support for consumer incentives to create an enabling environment that will see a greater take-up of electric vehicles. If you look at range anxiety, a lot of it is due to the fact that technology has not evolved today to a point at which the electric vehicle can travel as far on a single charge as can a petrol or diesel vehicle. With greater research and development and Government support—not least in terms of, for example, battery technology—that may be an area that should be addressed for the future.
As for consumer incentives, this is particularly crucial in helping to address some of the issues regarding affordability, which is the second A. The technology itself is still very much in its infancy relative to other technologies, so we need to see continued support from the Government, as well as Government and industry working together closely on this.
The third A relates to infrastructure accessibility. From what we can see, this is a pivotal part of this Bill, and this, again, is a step in the right direction. Accessibility to infrastructure has been a key issue. It is the perception of most motorists that it is already not as convenient for people to charge an electric vehicle, which would take at least 30 minutes using a 43 to 50 kW rapid charger unit, compared to filling up a petrol or diesel vehicle at a petrol forecourt. We need to make it far easier for motorists to charge the vehicles. One of the things we need to do is to address the issue of interoperability of charge points. We are pleased to see that there is a provision for this in the Bill. When we consider the infrastructure from the perspective of the standardisation of multiple connectors and sockets that are available out there, it makes it confusing for motorists. We must not assume that every electric vehicle owner is a tech geek. We want to make electric vehicles as appealing as possible to the mass public. Standardisation is therefore important in making it easy for the average motorist to understand the plethora of technologies available.
The Chair
Thank you, Mr Wong. Could I appeal to all witnesses to do two things? The first thing is to be as brief as possible, as we have a lot of business to get through in an hour. Secondly, Mr Williams led the way in demonstrating how one can speak loudly and clearly. It may be my age and decrepitude, but please could you speak as loudly and clearly as you can?
Andrew Selous (South West Bedfordshire) (Con)
Q I want to recognise the progress that we have made in this country, but could I press you on the 2050 date, which is 33 years away? A quarter of all of Norway’s vehicles are either electric or hybrid. China has, I think, 517,000 new energy vehicles, as they call them, on the road, and last year there were 800,000 charging points, notwithstanding the fact that it is a larger country. Thirty-three years is quite a long way off. I would like to press both Mr Wong and Mr Naberezhnykh on how we might turbo-charge this, perhaps adding a bit more to the three As that Mr Wong has told us about.
Denis Naberezhnykh: It is important to consider vehicles more broadly in the separate categories of vehicle types and vehicle users. When we think about the 2050 target for almost decarbonising the transport sector, we have to not treat private car owners in the same way as fleet and commercial vehicles. That is missing a little from the Bill at the moment. It focuses on overcoming short-term barriers—the problems and challenges that private car owners experience when attempting to use electric vehicles, such as clarity of data available on charging points, accessibility and the availability across the motorway network. However, what needs to happen to achieve the 2050 target is consideration of a broader picture, and recognition that there are other vehicle types—not just cars, but vans, trucks and buses—so what do we need to do to encourage those? They could create a growing proportion of the vehicle population as vehicle trends change over time anyway.
There is also a danger in comparing the UK situation to that of Norway and China, because the two have taken very different approaches in reaching their success. In Norway they have employed subsidy schemes and taxation schemes that I do not think we would find appropriate in the UK. In China they have taken the approach of simply saying, “You must buy these vehicles under any conditions,” and “You must install these charging points.” Unless we are willing to take steps like that, we have to be much more aware of what the market needs, or what the users need, and then tailor the products to suit those needs. That is where the transport sector needs to pay more attention: to focusing this Bill and future activities not only on targeting the near-term shortcomings, but on what we think might be the challenges in 10, 15 or 20 years from now, and preparing for those.
Tom Tugendhat (Tonbridge and Malling) (Con)
Q I will move on to the mixed use of roadways in the intervening period. Clearly one of the challenges is the new technology coming on to the roadways while the old technology is still using them. Has anybody done any thinking about the regulatory implications of that?
David Williams: We think it is less complicated than it first appears. The Bill means that somebody involved in a road accident does not need to establish which insurance regime is in place; we are going to have the Road Traffic Act, and insurers are going to be dealing with claims in the first instance. Regardless of the fact that it will take a long time for manual vehicles to be replaced with safer vehicles, we also think, from looking at the modelling we are doing, that statistically the roads will become safer. Some people have expressed concerns that manual vehicle insurance might become incredibly expensive as the prices for autonomous vehicles plummet, but the reality is that if, say, 50% of the vehicles on the road are autonomous and much better at avoiding accidents, that makes driving in a manual vehicle safer. We are confident that the way the Bill sets things out means that establishing the claims process will be relatively straightforward, and that roads will become safer.
The Minister of State, Department for Transport (Mr John Hayes)
Q A couple of things have arisen from what witnesses have said. If I can call you David 1 and David 2, on insurance, David 1 helpfully used the word “compensation”. Presumably the key is to make sure that any injured party enjoys the same circumstances as they do now, and then anything else that happens does so invisibly to them. The injured party in any circumstance essentially gets what they get now; is that right?
David Williams: Absolutely. We are very pleased with the way that discussions developed and the Bill came out, because initially the conversations were that liability would move from RTA motor to products liability. You can imagine a situation where an individual was involved in a little accident—a small dent or something like that—and then, because people are talking about products liability, you get a motor manufacturer’s high-powered lawyers arguing for two years about a little dent, just because they are concerned about creating a precedent. What will now happen is that an insurer will deal with the claim in the first instance, as is the current state of affairs. Yes, there will be circumstances where the motor manufacturers are held responsible, but that can take three or four years; it does not matter.
The other advantage we have is that it will be based on existing legislation, case law and precedent. The rules of negligence and defences available to motor manufacturers are still there unless the Government choose to amend them at a later stage. I really welcome the Bill, because it focuses on continuing to protect road users.
Mr Hayes
Q Quite. So, the delayed dispute disadvantage that you described, which might affect the ordinary motorist, pedestrian or whoever is involved in the incident, will effectively be invisible. My next question is to the other David. We have been talking about charging infrastructure. Should we have included powers for refuelling points for other low-carbon infrastructure? That came up in earlier consideration of the Bill. The technology is still developing and emerging. There are several competing low-emission technologies. What do you think about that?
David Wong: Certainly, there should be a positive mix of technologies taken into consideration, particularly if we are looking at co-location within certain infrastructure environments. For example, last month there was the launch of the first co-location of a petrol forecourt and hydrogen refuelling station in Cobham, on the Shell site. That was very much welcomed by industry. Looking at the provisions in the Bill, we could do the same for electric vehicles, with charging points being installed—or co-located, to use the industry parlance—at large petrol forecourts or motorway service stations. One must not forget, in terms of the wider energy mix, that hydrogen may also come into the picture.
Kit Malthouse (North West Hampshire) (Con)
Q I want to ask about that specific point. There are obviously at the moment two competing power vectors for electric vehicles—hydrogen and batteries—and the Government are rightly saying that they are agnostic. Much of the Bill is agnostic, with much of the emphasis on battery-charging points. Is there a danger that industry could be compelled to spend a lot of money plastering the country with battery-charging points only to realise that battery vehicles are the equivalent of the fax machine—a temporary technology—and that fuel cells will overtake them within a fairly short period and the infrastructure will become redundant?
David Wong: I think it is fair for the Bill to take into account the reality, which is basically what is proportionate to the number of fuel-cell electric vehicles on the road. The number of fuel-cell electric vehicles on the road is very small but growing. We certainly need consideration of how the two can be factored in, because hydrogen not only is a fuel for transport but could be a medium of energy storage, particularly for the sort of energy that is being generated during off-peak hours and not used. Rather than wasting energy that is being generated and not used, it could be stored in the form of hydrogen and used for various purposes, including transport.
Kit Malthouse
Q As the owner and driver of a semi-autonomous plug-in hybrid, I get incredibly frustrated at the lack of a battery-charging network. It strikes me that the hydrogen fuel cell requires the minimum of behavioural change from the consumer. I would fill up my fuel-cell car the same as I would fill up my current car. A hydrogen nozzle would just be another nozzle on the fuel dispenser. Is the development of that technology accelerating? Some countries are way ahead of us, right? On that basis, is your view that the slow uptake of fuel cell vehicles in this country is because of the lack of technology or because of the lack of fuel? If there was a fuelling infrastructure across the UK, would it be the natural uptake for the consumer, given the lack of behavioural change required?
David Wong: As with most technologies, it is a chicken and egg issue. In economic parlance, you would call it a network effect. Should you have hydrogen refuelling stations or vehicles first? Obviously, the gas companies that are building hydrogen refuelling stations will need to be confident that there are cars on the road, but vehicle manufacturers will want to be confident that there are hydrogen refuelling stations so customers can refuel. We are seeing a collaboration between industry and the Government in that regard. The Society of Motor Manufacturers and Traders, our vehicle manufacturer members, the British Compressed Gases Association and its gas company members are working hand in hand with the Office for Low Emission Vehicles through the UK H2Mobility consortium to chart a road map. We need to accelerate that collaboration, and the Government need to provide continued support for the building of more hydrogen refuelling stations.
Kit Malthouse
Q I get that chicken and egg point. For the Committee’s information, I used to be the chairman of the London Hydrogen Partnership, preparing the capital for this economy in the future. The same assumption does not seem to apply to battery electric vehicles. The Government are willing to put in the recharging network for battery electric vehicles, but not, seemingly, for hydrogen.
Denis Naberezhnykh: We should not think of them as competing technologies, because they are not. They are both technologies that electrify decarbonised transport. I do not think it helps to think about the solution from a technology point of view. We should think about what we are trying to achieve, which is reducing CO2 emissions, and then look at the facts. The fact is that, right now, battery electric vehicle technology is far more market-ready than fuel cell technology, in terms of cost, availability and production capacity. If we are trying to identify measures for accelerating our progress to the 2050 target, we need to pick technologies that we are already confident can achieve the result.
The other point is about infrastructure and fuel. From a fuel and energy perspective, a fuel cell vehicle is far less energy efficient than an electric vehicle because you have to take it through more conversion steps from generating hydrogen to converting the hydrogen to electricity. Very few pathways exist in the world right now for producing a low-emission fuel cell electric vehicle that is anywhere near comparable, in energy efficiency terms, to an electric vehicle.
Kit Malthouse
Q I understand that viewpoint. There are obviously large original equipment manufacturers that have made a decision about batteries and are therefore lobbying heavily on that, but some large ones—Toyota and Hyundai—have made a decision to go down the route of fuel cells. Given that the Government should be agnostic on these issues, should they also be agnostic about the regulations in the Bill for taking the power to compel providers of charging points, for instance at motorway service stations? In other words, when they compel someone to provide a fast charging point for a battery, should they at the same time compel them to provide hydrogen refuelling? If they just compel a battery recharging network, it will be a VHS or Betamax situation.
Denis Naberezhnykh: That goes back to my earlier point. We need to take the end use into consideration, and we need to think about which types of vehicles and users are likely to be using electric vehicles and where the infrastructure is required to support them.
Kit Malthouse
Q So you think the Government should predict and provide, rather than be agnostic about technology.
Denis Naberezhnykh: Yes. I do not think being agnostic, in the sense of saying, “We don’t care which technology it is. We just need to invest in putting all of it up” is particularly helpful to the industry and the users. We need to recognise that some technology can achieve things that other bits of technology cannot. Some have strengths and weaknesses, and we need to pick out those strengths and weaknesses and emphasise them for implementation in infrastructure appropriately.
Rob Marris (Wolverhampton South West) (Lab)
Q I cannot see anything in the Bill that would change who is licenced to drive a vehicle. In terms of future-proofing, one can envisage that people under the age of 17 or people with significant visual impairment could be, to use the current verb, “driving” automated vehicles. Should that future-proofing be provided for in the Bill, Mr Williams, and if so, what insurance issues would there be, say, for a seven-year-old alone in an automated vehicle?
David Williams: A major benefit of autonomous vehicles will be bringing mobility to people who currently do not have that benefit. We are very much looking forward to that. In Flourish—one of the Government-backed consortiums—we have Age UK as one of the critical partners to make sure that we understand the implications. I am not sure whether it needs to be in the Bill, because that establishes the insurance regime among other things. It will be complex for some vehicles. With the pods that UK Autodrive is going to put in Milton Keynes, there will be no way that you can intervene, so I see no reason why somebody in one of those vehicles would need to comply with any test or have any form of licence.
The majority of vehicles in the early stages of market development will probably be ones—for example, a level 4 vehicle—that you can switch from manual to automatic. You then get to the situation where people think, “An autonomous vehicle can bring me home when I’m drunk from a party, so I won’t need a taxi.” My thought is that you will not be able to do that if you have a vehicle that you can switch between the two modes, because you would still be in charge of a vehicle that could be driven manually.
At some point work needs to be done on licensing and testing, but for fully autonomous level 5 vehicles, the insurance aspects are covered in the Bill and we have no concerns there. We want to see the adoption of these vehicles because we think that they will make the roads generally safer and we therefore want them to be available appropriately, as widely as possible.
Rob Marris
Q The insurance provisions in the Bill would be sufficient to cover what I think you call a level 5 vehicle, which could be carrying a seven-year-old on their own.
David Williams: Absolutely.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Q I want to explore some issues of public confidence in the potential uptake of autonomous vehicles and get your views on whether the Bill goes far enough to set the scene. Given that the technology is available, what measures are required to make the public accept it and want to take it up? We have heard about the confusion and resistance, perhaps, because of the different approach to electric vehicles, but what do you think is required for the future in the Bill?
Steve Gooding: First, the Government are right to focus on the insurance angle, because that strikes me and the foundation as the first thing that needs sorting for all the reasons that the Committee is thinking about. Following that, what will affect the public’s willingness to accept the technology is their sense that it is genuinely safe. It is understandable that the Bill is silent on such things as construction and use standards, because they will need to be negotiated in an international forum. That is definitely something—the Minister knows we have flagged this up—to get on with thinking about. How you move away from a construction and use safety regulation system that is very much based on traditional mechanical engineering to one that is based far more closely on one that we apply to human drivers, because we are dealing with artificial intelligence, needs a bit of a boost.
David Williams: I think that we need to be vocal about the capability of the technology. We often quote statistics: for instance, automated emergency braking systems reduce accidents by 15% and injuries by 18%, so even if they do not avoid the accident completely, they slow the vehicle faster than a human would and reduce injuries. That is one small component of what will be the driverless cars of the future.
We need to show people the testing regime that these vehicles will undergo before they are let loose on the road, but it is natural to expect some nervousness and resistance. I do not know if any of you have seen the trailer for the new “Fast and Furious” movie, “The Fate of the Furious”, where robot cars get taken over. That will not help and, therefore, we need to be particularly vocal about the positive benefits. I fundamentally believe that we will see fewer deaths on the roads and much safer roads and, therefore, we need to do whatever we can to encourage adoption.
There is also a massively positive business case in the haulage industry for the adoption of connected and autonomous vehicles. I think we may see more rapid adoption in the commercial vehicle space. People will then get used to being around autonomous vehicles, even if they are commercial vehicles and that will make the adoption at a personal level easier.
Denis Naberezhnykh: I would add that some excellent work is happening in the UK now. A project called MOVE-UK compares and contrasts the different styles of vehicle automation and how an autonomous vehicle would perform in the same situation that a human driver performs in. That kind of comparison and learning will enable those automated vehicles and semi-autonomous functionalities to be as palatable to users as possible, so that there is the least amount of discomfort or worrying about the functionality when they try those vehicles out for the first time. It will be the first early adopters—early users—who will form an opinion and then spread the word about whether it works or whether they feel comfortable or not. Getting that right is important and some great work is already happening in the UK to try to do that.
David Wong: I have four brief points on increasing acceptance. One is on messaging. In addition to what Steve has just mentioned about showing the public that the technology is genuinely safe, we have to be very careful, particularly with regard to the Bill, with public messaging in relation to insurance, to assure the public that this will not result in a hike in insurance. The public will rightly expect that the lowering of risks and fewer accidents will mean that insurance premiums should come down.
The second point is about convincing the public through public demonstration projects. We are pleased that the Government are backing a number of these collaborative R and D and demonstration in live trial projects. We would like to see some of the learning coming out of these projects on how the public might interact with autonomous vehicles.
Thirdly, on public demonstration projects, going forward, perhaps the consumer can pay, not unlike the very successful Go Ultra Low campaign for ultra low emission vehicles. It may be useful for connected autonomous vehicles at the right point in time, and particularly at the point when vehicle manufacturers are ready to deploy these vehicles on UK roads.
Lastly, we think as an industry that the gradual escalation of the levels of automation can perhaps help Joe Public to be more comfortable with the technology, as opposed to asking Joe Public to jump straight into a vehicle with no steering wheel from day one.
Drew Hendry
Q Very briefly, in terms of public confidence and liability issues, you mentioned safety. Do you feel the Bill should address public confidence in the maintenance of vehicles? How will that be conducted across the different standards?
Steve Gooding: We need the construction of new standards for whether a vehicle is judged road-worthy in the first place, to the subsequent—as we call it—MOT system, which continues to verify over time that that road-worthiness is being maintained. We need both systems to cope with the new technology.
Mr Steve Baker (Wycombe) (Con)
Q I am conscious that cars can be converted to use LPG if they are petrol. It seems to me that potentially they could be converted to use hydrogen, as well. Mr Wong, is that something that the industry has considered?
David Wong: It is certainly in the mix. Cars today are being retrofitted as dual fuel vehicles, so, hydrogen in an internal combustion engine. For example, a company in the north-west called ULEMCo is doing that with a good degree of success. It is important to look at the outcome from such a conversion. Will it help to achieve the targets? Will it be below 75 grams of carbon dioxide per kilometre? The jury is still out on that, to be honest. We need to see whether technologies can help over a period of time to decarbonise road transport, not simply the conversion of any sort of technologies or even the hybridisation of any of these fuels.
Mr Baker
Q To be clear, can you explain why we cannot get carbon below 75 grams when we are burning hydrogen? If we burn hydrogen, we get water. Where does the carbon come in?
David Wong: For a fuel cell electric vehicle, you get zero tail pipe emission, but for a dual fuel vehicle, it depends on the dual fuel.
Mr Baker
Q I did not mean fuel cell, but an internal combustion engine running exclusively on hydrogen. Why could you not do that?
David Wong: You can probably use the fuel cell as a range extender for electric vehicles, but to have an internal combustion engine that basically burns fossil fuels and then you have hydrogen—
Mr Baker
Q The point I am making is that a car with an internal combustion engine could be converted to run on hydrogen as an internal combustion engine, could it not?
David Wong: In principle, yes, but I hesitate to give a straightforward answer because we do not describe a hydrogen vehicle as an internal combustion engine. That is the parlance we use for combustion, which, at the moment, is petrol or diesel. We like to frame hydrogen in the context of clean energy.
Mr Baker
Q Okay. I’ll move on from hydrogen in the interests of time. My other point is security. I am a former software engineer. I have got two points about software. First, have you considered cybersecurity and the risks of cars being hacked and people finding themselves driving to destinations they did not intend to go to?
David Williams: Absolutely. In the Flourish consortium there is a specific focus on cyber. Also, in the Venturer consortium, BAE Systems is involved and does military-grade cybersecurity. We should be worried about cyber risks, but we should be worried about those generally, not just with regard to vehicles. There are ways to make things safer. It will be a key element of the communication programme and the technological development of these vehicles in making sure that they are as safe as they can be.
Mr Baker
Q So is there a provision missing from the Bill in relation to cybersecurity?
David Williams: The only area that we think needs further debate is whether insurers will pay for claims in the first instance where there is an incident, but what if there was a massive terrorist incident that caused a problem with a huge number of vehicles globally? That may need separate consideration. The problem is, even in saying that, it is almost scaremongering about that risk. Clearly, we would rather focus on protecting vehicles. You are used to virus protection and those sorts of things. We are talking about new technology. We need to get to the same state where people have confidence.
Steve Gooding: The Bill recognises the risk of tampering, which is a version of cyber-hacking. The construction and use regime, which says a vehicle is roadworthy, must take into account that it is roadworthy and protected from the risk of cybercrime.
Mr Baker
Q Finally, on tampering, the point I made on Second Reading was that that section of the Bill that can exclude or limit an insurance liability after alterations to the vehicle’s operating system, or a failure to install software updates to the vehicle’s operating system, is a drafting point. The provision should simply state “software” rather than “operating system”, because there is firmware and there will be application software. You are nodding, Mr Naberezhnykh. Can I ask you to put on the record whether that is correct and the Bill should be drafted in terms of software and not only the operating system?
Denis Naberezhnykh: My concern is that, were it to be tested in court, the Bill would not achieve its intended aim if, for example, application software had been tampered with or firmware had not been updated. I appreciate it is a technical point.
Steve Gooding: I think you need to ensure that the breadth that you are describing is covered. I suspect that is a question you need to put to the drafting counsel rather than us.
Andy McDonald (Middlesbrough) (Lab)
Q I will be very brief. The Bill introduces the new concept we are moving to—the exposure to manufacturers’ liability. Has the Bill got it right in terms of the balance between insurers’ and manufacturers’ liability? Secondly, Mr Wong talked about accessibility cost. The cost of insurance will be key. Is the insurance industry ready for this? Clearly, premiums should be cheaper if we are getting errorless driving, but is the insurance industry sophisticated enough and ready enough to make that offer to consumers in the first instance? Lastly, on the issue of updates, does that present fresh exposures to manufacturers for the duration of the life of that vehicle on every software update iteration? Have you given any thought to how that plays in the context of current consumer protection legislation and issues of limitation? Does that now cause us to revolutionise the way we look at people purchasing vehicles? Are they going to be out there forever with software with little or no control? Any thoughts or comments?
David Williams: I think the Bill does have the balance right. It focuses on the road user. That is why we have got the Road Traffic Act 1988. Therefore the Bill has to focus on the safety of road users rather than insurers and manufacturers. As an insurer, we can price for anything. You have a balance with regard to how much liability finally rests with the motor manufacturer. That can develop over time, and they have definitely got some skin in the game. If they are negligent they will be called to account and will need to indemnify the insurer; so I think the balance is right.
With regard to whether the insurance industry is ready, in the past I do not think we have been, for things like this, but the fact that we already have the Autonomous Driving Insurance Group, which meets regularly and is very well attended, that the Thatcham motor vehicle research institute is all over it, and that AXA alone is involved with three of the Government-backed consortia means we are ready—we will be ready.
David Wong: On software updates, we believe that the “state of the art” defence principle applies here, which means at the point when the vehicle, together with the systems, including software and firmware, are being developed, the manufacturer has done its utmost to ensure that it is completely secure and, based on the scientific knowledge and the technology at that point in time, has done its very best. Of course, software updates are always, basically, a moving target; it changes every hour—but the “state of the art” defence applies in this case.
Steve Gooding: I think the motor industry will have to answer for this, because if you think of your home computer, every now and then you get a message saying “Your software is going out of support”. I think we need a bit of reassurance from the auto sector that we are not going to find that a vehicle we buy next year, and then in seven or eight years’ time is in the second-hand market, gets the message that “this vehicle is going out of support” and is therefore judged in some sense to be no longer roadworthy.
David Wong: It is reasonable to expect that vehicle manufacturers will continue updating, upgrading and patching the software, as do computer manufacturers and software manufacturers. However, even as Microsoft has decided, after a while, to discontinue the support for Windows XP and Windows Vista, one must not expect vehicle manufacturers to continue supporting particular software 20 years’ down the road, even if the vehicle is still roadworthy.
Richard Fuller (Bedford) (Con)
Q Within its scope, does this Bill do enough to position the UK as a global leader in vehicle technology? If not, what is missing? If you do not have the time to answer, maybe you can email me.
The Chair
Two minutes to cover that favourable topic.
David Williams: From an insurance perspective, yes.
Denis Naberezhnykh: From a research angle on this, no, not entirely, but that is because, as I said at the beginning, we think it could be further-looking, as with what some countries are doing; but it is adequate at addressing the near-term goals.
David Wong: From the vehicle manufacturers’ perspective, I think more can be done, particularly with regard to connected autonomous vehicles. The particular area of connectivity and infrastructure is clearly missing in this Bill.
Drew Hendry
Q I wanted to cover the issues of liability a little bit further, but I suspect we are going to run out of time before I can get an answer to those—in particular situations where there might be, for example, someone who is incapacitated in the vehicle. If they are incapacitated because of ill health, or for other reasons such as alcohol consumption, where would the liability sit, with such issues? Does the legislation need to go into more detail about some of those other causes? You mentioned the maintenance regime earlier.
The Chair
Order. Drew, those remarks will form part of the record and part of your contribution to the discussion of the Bill, but we are now at 10.25 am and the rules stipulate that we must stop at precisely 10.25 am. I thank our four witnesses very much for their useful contributions. We got through most of what we wanted to ask you and you have certainly given us some very good thinking points for our further discussions on the Bill. Thank you very much indeed.
Examination of Witnesses
Marcus Stewart, Robert Evans and Quentin Willson gave evidence.
The Chair
Q We are now going to hear witness evidence from the National Grid, the UK Electric Vehicle Supply Equipment Association and Quentin Willson, who is a motoring journalist. We have until precisely 11.25 am—one hour from now—for this session. Perhaps the witnesses would kindly introduce themselves for the record.
Quentin Willson: I am Quentin Willson, a motoring journalist and broadcaster and an electric vehicle advocate. I have been ploughing a lonely furrow, driving EVs and supporting them for the last five years.
Robert Evans: I am Robert Evans. I am chief executive officer of Cenex, which is a specialist research and technology organisation that has been active for ten years in developing supply chain and markets for low-carbon vehicle technologies, including hybrid, electric, hydrogen and gas. Today, I am also representing the UK Electric Vehicle Supply Equipment Association, which is the association of suppliers of charge points and charge point network operators for the UK.
Marcus Stewart: I am Marcus Stewart. I am head of energy insights at National Grid, the system operator. My role is looking out into the future to determine what the energy future will look like in terms of electricity and gas, how people will use their energy and what capacity on the system is needed to support that energy. Electric vehicles are a big part of the future from where we can see it.
The Chair
As we discovered in the last session, time disappears very quickly. I ask my colleagues on the Committee, and yourselves, the witnesses, to be brief, to the point, sharp and all those things, to try to get through the quite large number of questions we want to ask you in the hour. I apologise: whoever is speaking at 11.25 am will be told to shut up mid-sentence, if necessary, because we have to stop at 11.25 am sharp. [Interruption.] It is unlikely to be me because I can’t tell myself to shut up.
Kit Malthouse
Q Good morning. Do you think there is too much emphasis in the Bill on the battery as a vector for powering electric cars, as opposed to the hydrogen fuel cell? Should there be equivalence in the Bill from the Government, so that every time they compel, for instance, a motorway service station provider to provide a plug-in charge point, they should also compel them to provide hydrogen?
Quentin Willson: I believe hydrogen is too far away yet to get consumers interested in or excited about it. The costs are always going to be higher as a fuel—it would probably have parity with petrol. I believe for consumers to be interested and to take up wider EV adoption, there has to be a fiscal advantage for them. At the moment, you are asking them for too much concentration. If you put hydrogen as a parallel technology now, I think we might disrupt the really good emphasis we have got on EVs at the moment.
Robert Evans: Our view is that the UK has not been very successful in introducing alternative fuels into the transport sector; we need to be extremely successful with electricity and that will pave the way for the introduction of hydrogen. We need to make this transition phase work successfully. My own organisation is involved in hydrogen fuel cell trial activities. It is a pre-commercial phase. It is a strategic insurance option for the motor industry and the energy sector, where we are looking at the decarbonisation pathway. We need to have hydrogen, but it is going to proceed through strategic niche markets, and that is going to take a short while yet. The Bill does at least outline the same basis for the treatment of hydrogen as it does for electricity in terms of reserving the right to take powers, should that be necessary.
Marcus Stewart: Where technology is today, electric vehicles are progressing rapidly, and the focus should be on electric vehicles at this time, including the impact they have on the system and how people get access. We can take advantage of that. The technology in some respects is leading the legislation, so we should tackle it from that point of view. As an organisation, we are fuel-agnostic, so hydrogen, compressed natural gas and other sources of renewable fuels should be part of the long-term mix, but electric vehicles are happening now and there is more choice for consumers in that area, so we should be dealing with that at this point.
Kit Malthouse
Q So all three of you believe that the Government should pick a winner at this stage and put their muscle behind that. Does that not run the risk that in time—as you say, this is a pathway to a fuel cell—we will end up with tonnes of useless copper in the ground within a relatively short space of time as people switch to hydrogen refuelling?
Quentin Willson: I think you can have parallel technologies. The developments that the OEMs—the car manufacturers—are doing on hydrogen and fuel cells, particularly Mercedes, are good, but everyone in the industry concurs that it is possibly 10 years before we get anything like mass production. The speed of electricity is so fast now. The Government should be aware of developments and track them, and they need to understand that there is a parallel technology, but if I was asked to bet on the two horses, I would say that electric is likely to be the mainstream propulsion force over the next 20 years.
Kit Malthouse
Q Hydrogen cars are of course electric—it is about the storage of the electricity.
Quentin Willson: Yes.
Robert Evans: That is a very good point. Hydrogen fuel cell vehicles are electric vehicles—they just have a different, alternative powertrain as part of the configuration—so progress with electric vehicles is an aid to progress with hydrogen fuel cell vehicles. I do not believe that the Government are picking winners per se. I think that the industry is taking a view that electric vehicles are the future. You see that in all of their announcements. They are bringing these vehicles to market, so the job of the Government is to help facilitate the introduction of that technology for the benefit of motorists.
Kit Malthouse
Q It is not the entire industry. Toyota are not doing that.
Robert Evans: Toyota are involved in electric vehicles such as hybrid electric vehicles. They are just not necessarily bringing pure battery electric to the market at the moment.
Kit Malthouse
Q The Mirai is a fuel cell car.
Marcus Stewart: Hydrogen has its place. From our point of view, when we look at hydrogen, we see that as a very long-term play. We are talking about it being 20 years, 30 years and beyond when hydrogen can have any impact on the whole energy mix. Also, you have got to get your hydrogen from somewhere.
Kit Malthouse
Q This is my final question. There are some countries who disagree with that. The Dutch are spending a lot of money on a hydrogen fuel network across their whole country, as are the Germans.
Robert Evans: The Dutch are not spending as much on hydrogen as they are on electric vehicle infrastructure.
The Chair
Can I ask you to speak up just a shade? I am having trouble hearing you.
Robert Evans: The Dutch are spending considerably more on battery electric vehicles than they are on hydrogen fuel cell vehicles. Governments are spending money on hydrogen fuel cells, but they view it really as a strategic option play. In order to have it available for you in the system, you cannot just start from a standing start. You have to have a level of activity, a level of supply chain development and a level of familiarisation, but that is not to be confused with it being something that will make a significant impact within the next five years, for example. We should track international trends and watch what is going on in projects. We should be supportive, but right now there are some bigger issues to be addressed with electric vehicles. I think we are in good health with hydrogen.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
Q Thank you, Chair. If the Government were to pick a winner at this stage, do we not run the risk of skewing future research and development investment by saying to developers, “The traditional battery is the route we are going down”? If hydrogen is 10 years away, we run the risk of it becoming further away because we are not putting the investment into it now to ensure that technology is comparable in the future.
Quentin Willson: That is a hard question to answer. If you look at the price of the Toyota Mirai, which is a hydrogen car, it is £60,000. Volume and economies of scale make it an enormously difficult task to get that to a consumer level of £15,000. I think the OEMs will find it very tough to find this fuel technology at a cheap enough price point to make it viable. In terms of commercial vehicles and buses, I think it has a greater resonance, but in terms of consumers, if I were sitting at the board table of BMW, Mercedes, Audi or VW, I would be looking at electrification rather than putting all my eggs on hydrogen.
Mr Baker
Q I think that you just hit on the nub of the matter. A board director has major capital investments to protect, which means that they are inclined to stay within trammels once a technology is established. That is very much the point that my hon. Friend the Member for North West Hampshire has been making: there is a danger that we could end up choosing the wrong technology because a whole system of incentives sets up people to stick with electric.
Quentin Willson: The brutal fact of the matter is that getting hydrogen from point A to point B requires pipework. You can have static hydrogen stations that manufacture it, but they will be the size of shipping containers. If you look down the road, creating infrastructure and points, keeping it cheap and making it not a by-product of refining chlorine are all barriers to entry that are much greater than for electrification, which is simple and understandable; it is a currency that we are familiar with now, and we have the electric network. These are the major barriers to hydrogen uptake.
Robert Evans: To follow up on that point, Innovate UK and the Advanced Propulsion Centre are funding research and development projects involving hydrogen fuel cells, and they have done so throughout the period of the low-carbon vehicle innovation platform. The Office for Low Emission Vehicles recently put forward funding for both hydrogen stations and vehicles in deployment.
I think the challenge at the moment is that you could put a very large amount of money on the table and say, “Here’s the money; will you bring the vehicles?”, but the supply of vehicles is very limited. Quantities are still small, as has been explained, and they are very expensive, so the car industry is not looking to flood the market with these vehicles. What we are doing in the UK is being ready for the time when the vehicles will come in larger volumes. We will have a receptive market, and we have infrastructure here in London. What London has done is really positive progress that is viewed as a beacon for how the rest of the UK could be ready to deploy hydrogen fuel cell vehicles when they are ready and cost-effective, and when the supply comes to the UK.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Q I have a few questions from a pre-selected list. It is probably best to ask about electric charging, to follow on from the discussion. The Government say that electric charging infrastructure makes more sense just now, and that hydrogen is still a wee way off. Can the panel advise what has been learnt today about the required structure of the charging network needed? Will the Bill and the current regime ensure that there will be adequate numbers of charging points in each part of the country?
On Second Reading we heard about the gathering of statistics on the current variance in the number of charging points. Orkney, for example, has many more charging points than some big towns in England. Also, is there a need for a uniform way to access charging points? Is the legislation as proposed sufficient for that? I rolled quite a few questions into one.
The Chair
I am sure that our panel will handle it. You do not all have to answer everything.
Robert Evans: I am happy to make a start. The first thing to say is that the UK Electric Vehicle Supply Equipment Association and the industry support the progress of the Bill and believe that it is an appropriate set of powers for the Government to seek. As the industry views it, the Bill effectively says that the deployment of electric vehicle infrastructure into the market is progressing. The market is working, and it is likely to deliver the solutions for motorists to access those charge points easily, and for those charge points to become a sustainable asset on which businesses can be built. What the Bill recognises is that there is a stage by which the Government will step away from some of the seeding activities that they have done, in terms of creating different schemes such as Plugged-in Places, national infrastructure programmes and funding that it has put in, and let the market progress.
The Bill gives the Government an insurance policy, which is that they can act if the market does not deliver in any particular important aspect that starts to stall the uptake of electric vehicles. The view is that the market is progressing well, and these are reserve powers that the Government might wish to take later. Therein will lie the detail about what the particular nub of a problem might be on which the Government will need to intervene. At the moment we have 11,000 charge points in the UK; we have a lot of private sector finance investment interested in investing in the commercial operation of charge point networks and the further deployment of charge points. That is to be commended. At this stage the Government just need to have this insurance policy in the Bill so that they can act should they need to, but they should expect that the market will deliver.
Quentin Willson: The critical thing is the availability of rapid chargers. Rapid chargers are the game changer. You can charge your car within 30 minutes to 80% of its battery life. Therefore, you can do multiple charges in a day, bringing the feasible range from this notional 130 miles for a Nissan LEAF to as much as 300 miles. I did a journey from Birmingham to Milton Keynes and back, charged twice at a rapid charger and arrived at Milton Keynes with 90 miles still on my battery range. So the Bill must make sure that these rapid chargers are rolled out much more and we see many more at motorway service stations and at key points within cities, because they will enable people to believe that their range is much wider than they are led to believe.
Drew Hendry
Q I have a follow-up question on the infrastructure for charging points. Does more consideration need to be given in the Bill to connecting with different modes of transport—an intermodal approach? Or is it sufficient just to say, “There shall be charging points”?
Quentin Willson: What do you mean by “different modes of transport”?
Drew Hendry
For example, electric vehicles being able to connect with hubs at airports, railways, ports and so forth. Is enough thought being given to how the network will develop?
Quentin Willson: We need some intelligence on where these peak points are likely to be. It needs to be spread as widely as possible. Ultimately, the superordinate goal is wireless charging in the roads and as you park. The Bill needs to be aware of that as well. That is a technology that would revolutionise the whole EV market, but it is still some time away. There needs to be a charger in as many places as possible where there is public access—supermarkets, schools, businesses—especially in rural areas.
Marcus Stewart: The evidence we submitted focused on the impact on the electricity system, in terms of capacity and the role of smart charging, and rapid chargers help in that because they help people charge away from peak times. If you have rapid chargers at motorway service stations or supermarkets, where people can charge during the day, rather than charging in the evening at home, that smooths out the impact of the demand for energy. It makes for much more efficient usage of the energy system that we already have and allows us to accommodate more electrical vehicles.
Robert Evans: Charging at train stations is a very good idea, because the vehicle is parked there and they can start to be used for managed charging applications—vehicle to grid and the like. That is a very positive trend. There has been national infrastructure funding for railway stations, and that is an appropriate use. With airports, it depends. For long duration, if you are parked for two weeks while away on holiday, it is less of an issue. The rapid charger becomes a more useful item when you pick up your car, quickly fill with electricity and then move on. So more charge points in motorway service areas is definitely a good thing, and more dwell points that aid intermodal transport, so you take your electric vehicle and get on the train, for example, rather than adding to congestion in a city centre.
Mr Hayes
Q I want to ask about the effect of demand on the grid. You dealt with it after I signalled my intention to ask the question, but further to that, does the industry need to think a bit about how it could incentivise people charging at different points? There is a history of this, with Economy 7 and all kinds of other things. Are there ways in which the industry could respond by encouraging people to charge in the way you describe? On the point about the distribution of infrastructure, what about rural areas? The Bill provides powers for the Government to do more. Have we done enough or could we do more to ensure the spread of infrastructure? It is fine to have these things in supermarkets and at motorway service stations, but that does not really help my constituents in Surfleet Seas End or Gedney Drove End, who are a very long way from either. What do you think?
Quentin Willson: Rural charging is an issue that we should look at very hard, because otherwise we will have a disconnected electric community and there will be the connected and the unconnected. Scotland has been extremely good at this—Scottish Enterprise has financed quite a bit of it. We need to look at these rural areas, decide what the best place is and give a concerted route through rural areas where you have rapid chargers so that those communities can run electric cars with the same benefits as people in conurbations.
Marcus Stewart: Going back to the point about how the energy industry can respond, the industry has experience. I am a system operator, but the supply side can offer different tariffs for charging at different times. That is quite a popular approach. You mentioned Economy 7. I know people who have electric vehicles who use the Economy 7 meter to get a cheaper charge by charging their vehicle at a time when the system is under less stress. There are options like that.
Looking further into the future, when you have many more people using electric vehicles, there will be an opportunity for electric vehicles themselves, through some sort of consolidation, to provide services back to the system to enable balancing—“vehicle to grid” is a term that is used. There could be opportunities for suppliers to offer different tariffs to allow people to participate. There are lots of options there. We would say that the technology in the chargers needs to be smart enough to be able to do that. That allows you to optimise the value of the charging system and the car to the consumer, and also the overall cost to the total energy system. If you can optimise that, the total cost will be lower than it would be if you had effectively unabated charging.
Robert Evans: You raised two points. The first was about rural areas. At this stage, infrastructure follows the deployment of vehicles. The more vehicles there are, the more there is a case to deploy electric vehicle infrastructure to support them. In rural areas, we have a situation where you often have to travel a long distance to get to a petrol station, because there are fewer and fewer in those areas. That is an example of how charging your electric vehicle at home and occasionally using public charging makes an electric vehicle quite a virtuous vehicle to drive.
On your point about incentivisation on the grid management side—smart charging—we have a progression: the benefit of smart and managed charging is that it mitigates investments that the distribution network operator has to make in copper in the ground, for example. We need to work out how the incentives travel from the beneficiary—the reduced investment on the part of the DNO—through tariffs to the EV driver so that the EV driver is effectively part of the smart charging proposition and we do not have a situation where the smart charging proposition occurs without them being involved in the loop.
Mr Hayes
Q The essence of your point is that the Bill and the debate that it stimulates will encourage innovation and catalyse the demand management tools that you describe.
Robert Evans: The Bill gives the Office for Low Emission Vehicles and other parts of the Government the ability to keep pushing forward discussion and dialogue between the motor industry and the energy sector to ensure that smart charging is part of our future, because it explicitly expresses a desire to regulate should smart charging not proceed. There is a desire to explore this, but the Bill gives the Government powers to help set an agenda that brings the groups together and moves forward the smart charging agenda.
Quentin Willson: Work is being done in America, notably by Tesla, where consumers charge their cars at smart times and then, when the grid is out of balance, that electricity is sold back to the power companies. These millions of electric cars become energy storage devices. This is another very important cycle of change that we need to look at. Any imbalance would be negated. Also, a lot of electricity is produced by renewables—wind and solar. In the UK, 41% of the electricity dragged from the grid on Christmas day was from renewables.
Rob Marris
Q If, over the next five years, 10% of new vehicles were electric and each of them, on average, did 10,000 km a year, 10,000,000 km per year would be driven in electric vehicles. This is a question for Mr Stewart. What is that as a percentage of UK electricity generation at the moment? You may not be able to reply today, but perhaps you will tell us. I am a bit worried that you will encourage all these electric vehicles and then the grid falls over, so I need to get some idea of proportionality.
Marcus Stewart: I will give you an example. If you have 1 million electric vehicles—you don’t need to worry too much about how many miles they are doing; when they are charging is what is really important, because that is what impacts on the supply and demand balance—and you charge them on a 7 kW charger, in theory that could give you 7 GW of demand, and 7 GW is two and a bit very large nuclear power stations.
Rob Marris
Q What percentage is that of total UK demand?
Marcus Stewart: Total UK demand today is about 50 or 55 GW.
Rob Marris
Q That is 12% or 13% of total electricity generation.
Marcus Stewart: If everyone charged at exactly the same time. Studies have shown that behaviours are such that around about 20% charge at the same time. You immediately, without incentivising people, just with normal behaviour, reduce that down to 1.5 GW. If you then apply smart charging incentives, you can reduce that by a further 84%, and that—
Rob Marris
Q Hang on—but we still have to generate the electricity. For shorthand, this is just a kind of Economy 7 approach to the issue.
Marcus Stewart: Let’s just look at peak for the moment, and then I will talk about annuals. So you move from 7 GW down to 1.5 GW and to around 400. You can see that, very rapidly, the total system has to deliver a lot less when it is under stress, if you move to a smart world. The system is designed to meet those peaks, so you end up with generation outside those peaks being available. That generation is there to meet the demand you have moved from 6 o’clock in the evening to 8 o’clock in the evening, 10 o’clock or whenever. The electricity system from a pipes point of view and a capacity point of view is designed to meet those very high peaks.
By applying smart charging, you can accommodate a lot of electrical vehicles without necessarily having to increase that overall total capacity at a total system level. If you have clusters of demand at a local level, you would expect there to be local reinforcement to accommodate that—fast charging, for example, can provide heavy loads at certain points on a system, but you would connect that to a slightly higher voltage tier to ensure sufficient capacity. The system has the capability to deal with it if the type of charging is smart. The provisions put forward in the Bill make total sense to us.
Rob Marris
Q Do you think that the market will handle it, in terms of a tariff regime that incentivises midnight charging, or do you think that there needs to be regulatory intervention by the legislator—to spread that load, literally?
Marcus Stewart: We have seen in the past that people respond to the incentives of charging tariffs—these natural behaviours where people would plug in—but in the first instance the capability needs to be there. The market then has the opportunity to provide the incentives to do that. I do not think it needs to be fully legislated that you must plug in—
Rob Marris
Q No, it is not that. I am saying that one way of doing it is regulation over the power supply and to say that you have got to make these incentives available for midnight charging. Should that be regulatory, to bring it about, or do you think the market will do that?
Marcus Stewart: I think the market will do that. Suppliers would look at the cost to them of securing more energy and they would look at the opportunities to trade that off against their portfolios. The market should provide that.
Richard Burden
Q Mr Evans in an earlier answer described the purpose of the Bill being to take reserve powers to allow stepping in to stimulate the right kind of infrastructure where the market does not provide it already. May I press you a little more on what that is, and on whether the Bill is hitting the right target? The stress within the Bill is on the provision of charging infrastructure by what it describes as “large fuel retailers.”
A lot of the discussion we have had so far has been about the importance of having rapid availability of charging points, and sometimes smart charging points, in a much more dispersed area than what might be described as large fuel retailers—typically, the motorway service areas. Is the emphasis on that right? If it is not the right emphasis, do those powers need to be applied more broadly? If those reserved powers are applied more broadly, what safeguards need to be in the Bill to ensure that unreasonable regulatory requirements are not put on a whole dispersed range of potential electricity suppliers?
Robert Evans: That is a good point. The powers that we are looking at are primarily around the provision of information to the user, the ability to have smart charging should you need it, and the interoperability. Those sorts of questions are dealt with in the Bill and are key topic areas for the industry. On the question of where infrastructure is located, supermarkets are an interesting one. We have a situation in which not everybody has off-street parking. When one comes to a place such as London, it is not practical to put charging all down London streets. Supermarkets become an extremely practical, pragmatic place for charging to be accessible, along with retail shopping centres, in a crowded city such as London. The consideration of that, along with motorway service areas, which is about allowing people to travel distances across the UK, are two strategic priorities. That is not to say that there are not other areas. The Government have provided incentives for the deployment of infrastructure in other locations and have obviously taken a view that maybe the market can deliver in those locations.
Quentin Willson: However, technology does exist that would allow you to charge at a street lamp post, although admittedly that could be for slow charging at night. For people who do not have parking within their house and have to rely on the street, this facility could be available on every single lamp post in the UK.
Andy McDonald
The whole discussion has been predicated on the basis of saving the planet. What about reducing emissions? In the context of automated vehicles and vehicles generally, it is all about their obsolescence, not about sustainability. Given that we have talked about the updating of automated vehicles and the relationship of manufacturers with the end user throughout the duration, are we missing a trick here? Though there is nothing in the Bill that requires software updates, necessarily there will be that relationship.
Should we not be thinking about a new way of using automated and electric vehicles across the piece? Should we be having people owning vehicles, or should we be making the offer for that relationship to be maintained so that it is a sustainable product that can be revisited? At the moment there is going to be an obligation to keep in touch with these automated vehicles for their lifetime. We heard in earlier evidence that there will come a point where that is cut off. Are we talking about an opportunity for a whole new way of using the services provided by an independent, personal mode of transport?
Quentin Willson: This is the big cycle of change now, like televisions, aeroplanes and the internet. We will see car ownership decline and will be buying or leasing vehicles as a service, not a product. The long-term vision is that this is going to be based largely on electricity and some on fuel cell, and that we will be calling driverless vehicles on our phones to come and collect us. They will then drive to our destinations in what is known as a green wav; they will be hooked up and connected to junctions, to the road system and to traffic lights. These zero-emission, automated, self-driving cars will drive in platoons and, it is hoped, eliminate congestion and pollution. That is the superordinate goal, which perhaps is as near as 2040. But it will always be powered by electricity. The whole structure of who owns what is changing. As we are seeing with consumer habits now, they are buying cars on personal contract plans; they do not own things anymore. That is what the long-term future looks like.
Andrew Selous
Beginning with Quentin Willson, we are aware of the 2050 date that the Government have for all cars and vans to be zero-emission. My understanding for why that date was picked is that it is linked to the need to decarbonise the UK. To what extent do you think the legal issues that the United Kingdom is having with air quality at the moment mean that there might be a case for revisiting the speed with which we try to electrify the market? At the same time, I would be interested in your comments on what is happening internationally. I mentioned Norway and China earlier. There are different models and approaches that may not be suitable for the United Kingdom, but I would be interested if you could speak to air quality and the international perspective on these issues.
Quentin Willson: I had a meeting with the Secretary of State for Transport in January to tell him exactly this. The brutal fact of the matter is that possibly only 10% of consumers in the UK have driven an electric car; the vast majority are still hanging on to what I call the Clarkson effect—all that baggage about electric cars being slow, hopeless and driven by people who read The Guardian and hug trees. That has set the whole electrification of UK roads back enormously. We do not have a way of connecting with consumers when it comes to electric cars. We are informed, and the respondents to the consultation are informed, but I have been talking to groups of consumers for the past five years at test-drive events, and you would be surprised how few of them have actually even sat in an electric car.
I believe that there is potential here for the Government, and that is what I told Chris Grayling. I believe that there is potential for us to have national test-drive events whereby people can go to supermarkets, drive electric cars and undergo what I call the transformational moment, the damascene moment, when they get into the car with all their accumulated baggage about how bad it is and how unfeasible for their lifestyle, and then they come out as a completely converted person, who goes on to convert other people. It must be an extremely important part of the Government’s strategy to talk to the consumers out there who have little or no faith in the electric car industry and obsess about charging and infrastructure, when actually 90% of all EV drivers charge at home. We must not miss this essential point to move forward and to engage people with the process of electric cars.
Andrew Selous
Q I think your thesis is a sound one, but may I press you first on the date and secondly on the international question?
Quentin Willson: We will probably make 2050 if we really pull our finger out. Norway has put incentives behind this and really pushed, but there is a different culture there—there is a culture that embraces change and environmental issues more than we have. Selling electric cars on the basis of environmental issues has not worked in the UK—people are interested only in fiscal benefits. Ours is a different model, and we really need to bring the public with us. If we do that and we make special provision to do this, we will make 2050. If we don’t, we won’t.
Andrew Selous
Q Mr Stewart, did you want to come in?
Marcus Stewart: You talked about carbon emissions, but the other benefit of electric vehicles is in relation to NOx emissions, which have moved much higher up the public agenda. These vehicles offer a solution for cities. That is something that in my mind would accelerate the deployment of electric vehicles, particularly with city Mayors taking a view about what transport should or should not be in their city. We could see 1 million vehicles by the early 2020s, according to our latest set of scenarios, and about 10 million by 2040, if there is the support and the infrastructure and if, as Quentin said, the value proposition for the consumer continues in the direction it is going. I think it is continuing—
Andrew Selous
Q May I just press you on the numbers? I am very interested that you refer to 1 million vehicles by the early 2020s. Last September, we had 87,000 ultra low electric vehicles on our roads, so it is quite a leap to 1 million in four or five years’ time.
Marcus Stewart: But every manufacturer has an electric vehicle on their plan. Hybrids are bridging the gap. Company car drivers are being incentivised to drive hybrid vehicles because of the tax benefits. A market is developing for these vehicles. They are there or thereabouts from a proposition.
Robert Evans: There are two points I would like to make. The first one is from an industry perspective. We have been pressing the Government to have near-term targets for the increased deployment of electric vehicles. In business, we all work to having three-year plans and having an idea about what happens in the short term—about what is a good aspiration for electric vehicle roll-out. Our infrastructure follows the vehicles at this stage, so we are particularly keen that the Government should set near-term targets for electric vehicle roll-out.
Andrew Selous
Q What is your near-term target for, say, 2020?
Robert Evans: We want to cross the 5% mark in terms of total vehicle sales and head towards 10%, but I cannot translate that immediately into numbers.
Andrew Selous
Q It is quite confusing to talk about percentages of new car sales. What is that in numbers of vehicles on the roads?
Robert Evans: There are two points here. First, it is easier to set targets for new vehicle sales. Secondly, to return to the air quality point, we want to have electric vehicles in our city centres—be they hydrogen fuel cell or battery electric—because they are zero emissions at point of source. We also need to do something about the vehicles that are already out there with petrol and diesel engines.
There is a subtlety in the Bill, which I would be keen to explore, that relates to vehicle testing. At the moment in the UK we have a regime where vehicles are tested thoroughly and certified to initial standards, but thereafter our inspection and maintenance regime is quite lax, in that it is of a static vehicle with an engine probe up the exhaust.
Quentin Willson: And there is no particulates test whatsoever.
Robert Evans: No particulates. In other countries, such as Australia and the US, they have a much tighter regime on inspection and maintenance. They have particular tests where the vehicle is put under dynamic load and its emissions are measured—one test is called the I/M 240. I want to be sure that in the testing section there is carry-over, so that you retain the power, perhaps under proposed section 65B(3) in part 4 of the Bill, to revisit the nature of emissions testing in service, inspection and maintenance in the UK. You should also look at the MOT for electric vehicles, because what happens as the vehicles get a bit older has yet to be fully formalised. That is a request to the Committee to consider those two points.
Quentin Willson: In the MOT test, the MOT inspector will tell you that, for a car to fail on particulate emissions, it must be impossible to see out of the back window because of the smoke—I am not kidding. This is something that we could really do to help to clean the roads of these very, very smoky old cars.
Richard Burden
Q To try to get a more rapid pace of development towards meeting the 2050 target, we have talked about infrastructure as part of that mix and about tackling anxiety—Quentin referred to that—and trying to ensure that consumers are not scared about electric vehicles, which can be good to drive. The third element is, in a sense, disincentives to drive anything other than ultra low or zero emissions vehicles through beefing up the MOT test and whatever.
The other thing is the carrot that goes with that stick. What are the right consumer incentives that could be put in place to encourage the take-up of electric vehicles? Let us face it: at the moment, they are pricey, so many buyers—certainly private buyers—will not be able to afford an electric or other ultra low emissions vehicle. What do you think about the changes there have been in Government policy on that, where measures such as the plug-in car grant have come down rather than gone up?
Quentin Willson: On pricing, the general consensus is that an electric car is probably double the price of a conventional car. That is not broadly the case. What we are not doing enough is incentivising and telling people about used electric cars. Your seven-month-old Nissan LEAF, which started with a list price of £25,000 after the grant, is now available for £13,000. All these electric cars are coming off company fleets and going into the market, and consumers do not realise that that is a really effective way of getting an EV at a low price. If you buy a Nissan LEAF or a Renault ZOE for £6,000, which is possible, that investment is paid back within three years in terms of fuel, maintenance and road tax. It is a really compelling proposition.
Richard Burden
Q Is that not a double-edged one? For the market in new electric vehicles to take off, the fleet market will be important to that, and one thing that will be important to it is some certainty over residual values. Therefore, the low residual values at the moment, which might be an incentive to the private car buyer, are a disincentive to the big take-up of new EVs by fleets. Is that fair?
Quentin Willson: But if we have volume, the manufacturers’ prices will come down, and they are coming down. If you look at a Mitsubishi Outlander plug-in hybrid electric vehicle compared with a diesel hybrid one, they are the same price. Residuals on things like Teslas and Renault ZOEs are quite good. The market is levelling off, and we will find that prices and residual values start to firm up. Price guides and the motor industry still do not value electric cars properly. We will see a strengthening of residuals as demand increases and a lowering of prices as manufacturers get their volume and their supply up.
Richard Burden
Q Perhaps you could answer a question about the idea of Government action on consumer incentives. Is there more that could be done? What should be the targets?
Quentin Willson: There are simple things like free on-street parking everywhere in the UK for electric vehicles, use of bus lanes and some form of priority. The Americans have had huge success with priority lanes for electric vehicles. We need to think about the stuff that you cannot buy, the things that give people an advantage in city centres if they drive an ultra low emission or electric vehicle.
Robert Evans: The other alternative is low emission zones, and we could do that. London’s low emission zone, followed by an ultra low emission zone, is the direction of travel that a lot of cities would like to take. They want to do it in a staged format, working to national guidance as to what constitutes the standards you would set for access, so that a motorist travelling in the UK can know whether they can gain access to the low emission zone and the ultra low emission zone as they move from city to city. That is a particularly important activity. It is not covered in the scope of this Bill as such, but low and ultra low emission zones are one of the key ways of incentivising the right kind of behaviour. The second-hand market is incredibly important, and it makes those vehicles more accessible.
Company car taxation is a particular favourite that helps to drive electric vehicles into a market where others would not. The lightbulb has gone on with fleets. Previously, they would operate a diesel-only policy. “You never got sacked for buying IBM,” was the traditional term, then, “You never got sacked for buying diesel,” and that has now switched. They can see that the motor industry is not going to support that in the long term and that they need to make a change. They are now embracing what they can see is the future that they need to have in their fleet.
Quentin Willson: Any benefits in kind that the Treasury can keep going must be kept going if possible. The plug-in grant has been really significant.
Tom Tugendhat
Q Forgive me; in relation to the cycles that we are talking about in introducing new technology, as you correctly identified, Quentin, the way we are going is towards transport as a service rather than as an item. If that is so, then presumably automatic vehicles will, rather like those vacuum cleaners you get in homes, be able to drive themselves to a car park somewhere, charge themselves up during the downtime and come back out again, at which point we are talking about investing an enormous amount of public money into an infrastructure system that will, within 20 years—you were referring to 2040—be redundant. That is quite a short timescale for large-scale infrastructure investment to be redundant.
Quentin Willson: But that infrastructure investment will also be used for this new breed of autonomous cars, because they will all be plug-in. They will all be electric.
Tom Tugendhat
Q But presumably they will be plugging themselves in, rather than the current vehicles that require somebody to get up, pick up a wire and stick it into a vehicle.
Quentin Willson: I do not think that is a given at all. You will still have to have manual interference in that process, unless we can get to the stage where we have automatic wireless charging in the roads. To wait for that to come—
Tom Tugendhat
Q I am not sure that is necessarily to come. It is not beyond the wit of man to imagine that a car pulls up into a dock, and a little arm goes out. That is not the structure that we are intending to build right now.
Quentin Willson: That is further away than you think. We would have to have a commonality of autonomous cars, and somebody will own these autonomous cars and there will be charging stations. They will broadly resemble the ones that we are lobbying for now. This vision of the arm that comes out and charges your pod, if you like, is still some way away.
Robert Evans: Inductive charging has been referenced today: charging along the motorway as a form of dynamic inductive charging. Static inductive charging is when you drive over a pad and that pad is then able to charge your vehicle. The groundworks for all the current charge points can potentially be adapted to deploy inductive charging, as that starts to come through into the market. I do not think that is so much of an issue. We do not assume that what we deploy as charge points now will be as is in a 20 or 30-year timeframe; they are going to be updated over time as suits the vehicles coming to market.
Quentin Willson: As we are doing now, in effect.
Robert Evans: As we are doing now, yes.
Tom Tugendhat
Q What would you change in the Bill to make sure that that level of infrastructure change is more active?
Robert Evans: I do not think it is necessary to change the Bill, in the sense that as the vehicles start to come forward, the charge point infrastructure suppliers will start to bring forward commercially available inductor charging. At the moment, we talk about people having that in their garage for particular vehicles, but at the moment those are not inductive vehicles, other than, say, for some bus operations and the like. It is early pre-commercial.
Alan Brown
Q Is the technology used to operate autonomous vehicles safe and reliable at present?
Quentin Willson: That is a difficult question. Where do we begin? There have been some very successful trials of autonomous vehicles in America and Europe, and they have collectively driven many millions of miles with an infinitesimal amount of accidents. Significantly, they have driven in traffic. In Los Angeles, Nissan, Toyota, Lexus and Volvo have had great success in driving autonomous cars in traffic, which have mixed in successfully.
However, it would not be fair of us to say that there is not a great challenge. Ironically, the challenge comes probably not from autonomous cars themselves but other road users, some of whom may just think, “I’m going to have a go here.” All of the insurance legislation needs to be sorted out, but we need to absolutely understand that there will be a period of some pain. More than that I cannot give you.
Robert Evans: It is a tremendous opportunity for the UK motor industry. The industry has sought to progress and be competitive around new technologies, with low-carbon vehicles being one and connecting and autonomous vehicles being another. We have a series of projects in the UK—with both technology development and now with funding set aside in the Budget for demonstration locations—to be able to work through, understand the issues, and test and understand the state of development of the technology. There is something like 1 million lines of software involved in making a vehicle have the artificial intelligence to be able to progress. It is one thing to go down the motorway at high speed with clear lines; it is completely different to go down Fulham Road at 7 o’clock in the evening on a very busy day. There is a lot of work still to be done.
The good thing about the Bill is that it is the first time that automated vehicles have figured in UK legislation. This is the beginning of a process that makes the UK a potential lead market for the deployment of this technology. It will be hugely beneficial for our motor industry if we are able to be receptive and responsive to what we can all see will deliver huge value societally, in terms of reduced accidents or the ability of people to move when they are older or infirm, or younger people who cannot drive vehicles. There could be huge benefits to society, and this at least starts the process of making the UK ecosystem autonomous vehicle-friendly.
Quentin Willson: And to create literally tens of thousands of jobs, bring billions—that is not an exaggeration—of investment to the UK, and a new product cycle and a new consumption and production. We should be the world leader in this stuff.
Alan Brown
Q On roll-out and testing, is further testing suggested? One of the suggestions made on Second Reading was that the vehicles have not been tested in snow conditions yet, and there was a suggestion that different weather variables may need to be looked at. Robert gave the example of a busy Fulham Road at 7 o’clock at night. One example I gave on Second Reading was the single-track roads in Scotland, on which, if two vehicles drive head-on, somebody has to make the decision to back up to the nearest layby. Are there things like that that still need to be robustly looked at?
Quentin Willson: I am afraid I am not an expert in this autonomous technology, but there will have to be algorithms that can solve that and there will certainly have to be a testing regime.
Robert Evans: For connected and autonomous vehicles, there is now funding set aside for a series of demonstrations of different types. Those will reflect the real world as well as the virtual world in which the technology will be speedily developed before being put out into controlled demonstration environments and, ultimately, on to the open road. The UK is well placed, with activities and the announcements in the Budget, to do the preparatory work and the learning to make the UK a receptive environment for these vehicles to be deployed in and to deal with exactly the type of use cases you referenced.
Quentin Willson: However, it is possible to say that with autonomous vehicles you might even reduce the amount of accidents in the UK, because it is 90% human error. The 2,000 fatalities we have in the UK on our roads a year have plateaued and are due entirely to people making mistakes. If we put this technology in, that death toll could conceivably come down significantly.
Mr Hayes
Q It is good to hear you make the case for us being pre-eminent in this field. The Government are certainly determined to make this country a world leader. Returning to the issue of infrastructure, what are your views on on-street charging infrastructure? We spoke a bit about petrol stations, service stations, supermarkets and so on. Other places—Paris is a good example—have done quite a lot of work on spreading on-street charging infrastructure quite evenly across the city. What more could Government do on that?
In that spirit, what about the design of these charging points? Governments have not been entirely hopeless in past decades on that—one thinks of the Gilbert Scott telephone box, the Belisha beacon or the post box. In recent years it has perhaps been not so good, but we can do good things. Should we think more about the design of the charging points and what they look like, to make them instantly recognisable, iconic and widely respected and admired as such?
Quentin Willson: There is a powerful argument for making them iconic as part of this new and very important cycle of change that will make our lives better. In Bordeaux, they have a proliferation of on-street charges because they have a fleet of little electric cars that you can just go up and hire for the day, the hour or the quarter of an hour and then return to a little charging pod. It is a huge investment, but it works extremely well, and of course it limits the amount of traffic coming into cities because those cars are available. It would benefit us hugely if we started to think about urban car club schemes that are just electric cars and the proliferation, as with the Boris bikes, of a recognisable charging pole on the street. It would also help all those people who do not have parking to charge their cars.
Robert Evans: Members of the association take the view that they can produce an iconic charge point that is recognisable as their own brand. They have been in that business and have tried to make the best use of their equipment and make it as attractive as it can be. In the UK, we have quite a dynamic market for the supply of infrastructure. We now are learning that the major US supplier, ChargePoint, is looking to bring its technology into the UK market. We have had BluePoint, which is the Bolloré scheme, and others. They will bring what they view as the norm in their markets into our markets.
Quentin Willson: We could have a competition, could we not?
Robert Evans: We could, but I think there would be a resistance among the industry to effectively move to one standard shape of pole. You have a post and you plug into it, but the innovation is occurring in the way you access it. That is more about people using smartphones to input information and say, for example, “I want to charge for this period. I’m prepared to pay this. I might be prepared, if you incentivise me, to allow my vehicle to have managed charging, as long as it has so many kilowatt-hours in it by the time I come back.” That type of interface is where there will be a lot of innovation. The poles themselves work to pretty standard methodologies, and motorists are used to using them. The clever bit in the design will be about the user interface on the smartphone app that enables smart and managed charging.
The Chair
Mr Baker, I fear we are now running out of time and so cannot get you in. May I thank our three witnesses for their extremely useful and interesting evidence? I am sure it will help to inform Committee members better in their consideration of the Bill later this week.
Vehicle Technology and Aviation Bill (Second sitting)
(7 years, 1 month ago)
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The Chair
Q 65 We will now hear oral evidence from the Institute of the Motor Industry, the Downstream Fuel Association and the Association of Convenience Stores. We have until 3 pm for this session. Could the witnesses please introduce themselves for the record, starting with Mr Woodall?
Edward Woodall: Good afternoon. I am Ed Woodall. I am head of policy and public affairs at the Association of Convenience Stores, which represents 33,500 local shops and 8,000 forecourt retailers across the UK.
Teresa Sayers: I am Teresa Sayers. I am the chief executive of the Downstream Fuel Association. We represent the non-refining companies and major supermarkets.
Steve Nash: I am Steve Nash. I am the chief executive of the Institute of the Motor Industry, which is the professional body for individuals working in the motor industry.
Richard Burden (Birmingham, Northfield) (Lab)
Q Welcome. I have two sets of questions. The first is probably principally to Mr Woodall and Ms Sayers, and the second is principally to Mr Nash. On the Bill’s provisions on electric charging points, I think it is fair to say that your two organisations have been rather more critical of what the Government are suggesting than a number of others. Can you outline why you think they are going in the wrong the direction with the provisions on charging infrastructure?
Teresa Sayers: First, we welcome the opportunity to comment on the Bill and work with the Government on looking at ways to build up the infrastructure for electric vehicles. I represent four major retailers, and my members already have some provision for electric charging points within their infrastructure.
We believe that the emphasis on petrol forecourts is wrong for a number of reasons, not least because the configuration of forecourts does not lend itself to allowing cars to be placed there for in excess of 20 to 30 minutes. We provide electric charging points, as I say, but they are exclusively in the car parks of our stores and at head offices. We are looking closely at how we can further develop provision along those lines, but we are very concerned about the emphasis on placing them in the forecourt.
Edward Woodall: Also, there is the question of how we define “large fuel retailer” in the Bill to determine whether a retailer has the capacity for electric vehicle charging points on their sites. That is quite a difficult task to deliver in regulation, because this is quite a diverse and different sector. That could take into account fuel volumes and number of sites, and it would also have to take into account size of sites, as Teresa was saying, in terms of having the space for people to charge their vehicles on the site.
I suppose there is also a concern about the desire of consumers to charge in those locations. The Government’s own evidence suggests that 95% of vehicle users currently charge at home; 26% then charge their vehicles in workplaces; and only 12% look to charge their vehicles in public spaces. Would they choose to do that on fuel sites? It is a question; I am not sure. Do the fuel sites have the capacity to deliver in this way? Only 11% of our members have seating areas in their forecourt sites, so what does someone do for the 30 minutes if there are rapid charging facilities on those sites?
There are other logistical issues around whether sites have the capacity to deliver that energy. Electric vehicle charging points will need a direct connection with the grid; obviously, that does not cover all sites across the board. So there is a real challenge in how you define in regulations a large fuel retail site, and whether it has capacity to deliver those services.
Richard Burden
Q The Bill refers to “large fuel retailers”. Evidence that we heard this morning rather suggested that what will make or break the expansion of electric charging infrastructure is much broader than motorway service areas. There was a lot of discussion about supermarkets, what to do around on-street parking and smart charging at home. I will press you a bit further on whether your reservations about the parts of the Bill relating to electric charging are concerns about Ministers being given regulation-making powers to mandate others to provide charging points to certain specifications. Or do you basically accept that principle, but think that the provisions are targeted wrongly in focusing on large fuel retailers?
Edward Woodall: The latter. I understand the principle and the objectives, but is it right to focus this purely on fuel sites, when the evidence suggests that consumers are perhaps not looking to go to those sites to charge their vehicles? There is also a concern about whether it matches up with what drivers will do while they are charging their vehicles. It makes sense to have charging points in an area where they might be going to the cinema or the shops, as opposed to having them on a forecourt site, which may not have the space or the retail capacity to deal with that issue.
We also put, in our submission, evidence about ways to incentivise other partners to use this system—for example, changes to the national planning policy framework might give more specific direction on where charging points should go, so that local plans could be informed by that, and capacity could be increased across the board.
Richard Burden
Q Can I come to Mr Nash on a different area? In the written evidence you provided, you put quite a lot of emphasis on the importance of training and accreditation for people working on these charging points and autonomous vehicles in the future. Could you say a little bit more about your concerns?
Steve Nash: Absolutely. I think it is worth understanding a little bit about our sector. Everybody knows we have a franchise sector, and we tend to talk about the independent sector, but that is a catch-all phrase. There are about 40,000 businesses in there, ranging from Halfords and Kwik Fit down to a man working on someone’s drive.
Right now, of all the technicians out there working on cars—there are just under 200,000 people we know of, but there are probably quite a few that we do not know of, because they do not necessarily belong to a trade body or anything else—only about 1% are qualified to work on high-voltage electrics. Let us make no mistake about this: you have to be licensed to work on domestic electrics, and I would venture to suggest that the electrics in an electric car are potentially more lethal than the mains. We are talking about direct current—more than enough to fry you—so you do have to be properly trained and know what you are doing. In this sense, a car is not a car, just because it looks like a car. These are the biggest technical changes we have seen for 100 years. This is not an evolution of old technology—this is new technology.
We know that the manufacturers will do what they need to do to ensure that their franchise dealers can cope. Most of them are already using our accreditation scheme to qualify people at different levels, including knowing what you should not do and how to disable the electrics to work on other non-high-voltage systems safely. The higher level is for working on the high-voltage systems.
If you really want these cars to proliferate, there are a couple of problems. One is that right now it can cost you up to 50% more to insure one of these cars, because the insurance industry is quite aware that there is a limited repair market out there. If your car has been in an accident, you need somebody who knows what they are doing to put the thing back together, and the industry is assuming a higher cost because there is a limited repair market. That will continue unless you find a way of engaging the wider market, and the wider market will not readily make that step because there is cost involved, so it becomes a chicken and egg situation.
As I said, there is a very real health and safety issue. You do not see it now, because there are 32 million cars on the road that do not have this technology, and there is plenty to go round in the service and repair market. There are cars that have been around for a while, such as the Toyota Prius models and so on, but we know from our own experience that a lot of the independent guys do not touch those—they pass them back to the dealers—because they do not need that work to make a living. However, as these cars proliferate—and that is everyone’s intention; if you look at the product plans that all of the manufacturers have at all the motor shows, it is all about plug-in hybrids and electric cars, so these cars will proliferate—if you want a competitive market for servicing these cars, you need the independent sector to engage.
To make that happen, first you need regulations to protect people’s safety, and secondly you have to consider using some of the large fund—I believe it is something like £600 million—that has been put aside to help move us in that direction. Some of that money should be directed towards a training fund to help the independents engage in the training that they need to work on the cars safely.
Richard Burden
Q Could you outline how it would work? In other words, how would the Government, or whoever, define the vehicles that would require licensed people to work on them, and what things they would need to work on? For example, some might say you should not have to be licensed in order to check the tyres; that is different from working on the electrics. There is potential for this to be a difficult area for definition.
Steve Nash: We have worked very closely with manufacturers to define three levels of accreditation. Level 2 says you can work safely on the passive systems of the car, so you are still going to have steering and suspension. I was going to say brakes, but actually a lot of these cars have regenerative brakes, so even that is potentially risky. The second level of accreditation is knowing how to switch off the high-level electronics and knowing what you should not touch, because there are certain systems on the car that have very high residual currents in them, even when the car is turned off.
Level 4 accreditation is for people who are properly trained to work on the high-voltage systems, which include the control systems and the battery packs. Working with manufacturers, we have refined that to understand that it covers the entirety of their own group of technicians working in their franchise.
The Chair
If Members wish to remove their jackets, that would be fine. Let us try to keep questions and answers crisp.
Andrew Selous (South West Bedfordshire) (Con)
Q I have a question for Ms Sayers and Mr Woodall. I understand your concerns, because it is quite a change to your business model, but are you not missing out on future potential? Given that we all expect this to be a growing and significant market, do you not want to be part of it, to capture that revenue? Are you not looking at other ways to make money around this, reimagining your business model a bit?
Teresa Sayers: Absolutely. My members are very keen to engage in the development of alternative fuels infrastructure. As I said earlier, they already have some provision, they are actively exploring how best to develop that and they will happily work with the Government on that, but their considerations as to where it would be appropriate to place these additional electric vehicle sites are around convenience, the identification of strategic corridors, the proximity of the car parks to other retail parks, the duration of time that shoppers typically spend within stores and the size of the car park. All of these considerations are around existing car parks, so there is a willingness for and understanding of the potential growth of this. We are playing our part, but we maintain that the forecourt is not the appropriate place to put this emphasis.
Edward Woodall: I agree. This is about whether the development of the market needs to be regulation-led through the Bill, or whether it needs to be led through making the business case for the fact that this infrastructure is going to grow. The question that comes back to the Office for Low Emission Vehicles is about more research to make a business case for businesses to have these on their forecourts, and about looking at using funding to incentivise the introduction of this new infrastructure, instead of enforcing it. That incentivising might be done through business rates relief for people with very large business rates bills who put these on their forecourt sites, or through direct Government funding to think about how to put these on the sites. There is this question of whether it should be regulation or incentive-led.
Andrew Selous
Q Thank you. I have a final question for Mr Nash. Hearing about the training needs of the industry, what preparation is going on in schools and further education colleges to set up courses so that we have enough skilled technicians to service these vehicles in future?
Steve Nash: There are plenty of places around the country that can train people in the technology. Obviously, over time, the new apprenticeship standards will evolve, but it has to be remembered that an apprenticeship is a start, not a finish—we are talking about lifelong learning here. Apprentices will not come out of their apprenticeships ready and available to work on the high-voltage electrics. That will take time, and that is additional training that will come as they develop their career. We as an organisation, a professional body, work with a network of 600 FE colleges, training companies and manufacturers’ academies around the country, many of which are capable of delivering this kind of training. As I said earlier on, it is a sort of chicken and egg situation—a question of supply and demand. They are ready to offer it once people have moved in that direction, but it will not happen on its own.
Rob Marris (Wolverhampton South West) (Lab)
Q I want Ms Sayers to clarify a bit. The supermarket I go to every week is, I suspect, like quite a lot of them. It has a large car park—it is one of the major multiples—and alongside but distinct from that car park is a petrol station, which is branded by the supermarket but is a Shell station. As my hon. Friend the Member for Birmingham, Northfield (Richard Burden) said, the Bill gives “large fuel retailers” certain responsibilities. Would your members prefer the wording, “large retailers”, to make that clearer? In the supermarket car park, people may typically leave their car for 30 minutes. I am thinking of those old westerns where people hitch up their horse outside the saloon—people hook up their car, grab a trolley, go in to do their 30-minute shop and, when they come out and unplug it, they have had a fast charge. The charging points would therefore be better placed in each parking bay for the supermarket proper, which is not a large fuel retailer at the moment. Is that more consonant with the way in which your members are thinking?
Teresa Sayers: Very much so. Our apprehension about the wording is all about the location of the EV charging point on a forecourt, for the reasons we have discussed.
Rob Marris
Q The word “fuel” in “large fuel retailers” is causing you to scratch your head a bit?
Teresa Sayers: Yes, absolutely.
Rob Marris
Q “Large retailers” would be more palatable for your members. Am I right?
Teresa Sayers: Yes.
The Minister of State, Department for Transport (Mr John Hayes)
Q This is a question for Edward, and then perhaps Steve. Given the need to ensure that we have breadth in the charging infrastructure—not just number, but location—is it not important that we also base charging points in rural places, village shops and small post offices, rather than concentrating them in places that already have charging points? Similarly, is it not also important that we work with small garages, rather than simply the major garages, to avoid creating an uneven distribution of charging points that would be a major barrier to entry to the market for many potential consumers? Would you like to deal with that one before I come on to my second question?
Edward Woodall: Obviously, we do not want to be left behind. The fuel retailers in our membership are looking at this at the minute. They have electronic vehicle charging points, but significant costs are associated with delivering that. Keeping pace with those costs, if we introduce charging points by regulation, would be a challenge. It would be even more of a challenge for village post offices and shops to have charging points on their sites. Obviously, we do not want to be left behind, but I think the industry will naturally fill that space where it is appropriate.
Mr Hayes
Q We would not want to exaggerate or exacerbate the trend towards fewer places at which to buy fuel and food. Steve, on your point about skills, this morning, at a roundtable with the industry, the point was made that this might act as a spur to people who were keen to get into the industry. The excitement of the new technology, and of being part of an important, cathartic change, might attract more recruits. Have you come to any judgment on that and, if not, how can we make that happen, as it is surely a good thing?
Steve Nash: We are like every other industry: we are competing hard for talent, and we are definitely using the massive, incredibly exciting change we are going through to engage young people and show them that this is a cutting-edge, futuristic industry—so, absolutely. As the professional body for the industry, part of our raison d’être is to raise professionalism and bring new talent into the industry, and this a great catalyst for that, yes.
Mr Hayes
Q We heard from a witness this morning who suggested that we should have roadshows—demonstrations of electric vehicles in different localities—and that once people had tasted the fruit, they would want more of it. That might also apply to people who want work in the industry. Is this not about marketing in a sense?
Steve Nash: Yes. We are very much involved in UK skills and world skills. We are at the Skills Show. Last year, in co-operation with some of the manufacturers, we featured electric cars there, and it absolutely does pique interest. I very much go along with what you are saying.
Richard Burden
I should declare an interest. I am an honorary fellow of the Institute of the Motor Industry. It is non-pecuniary, but I thought I had better put that on the record.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Q I want to ask a question similar to that asked by the Minister. Earlier, we were talking about the need to look not just at fuel stations as the only charging point locations. There is an issue of unintended consequences, arising perhaps from a lack of strategy and thinking over the deployment of charging points. Similar to the situation with village shops, in your view, is there a risk if we concentrate, for example, on large retailers, that we could see a further impact on high streets because there would be a disincentive to go there? A follow-up question would be, do you believe that enough work has been done and consideration given to other technologies such as in-road inductive charging as a possible solution to those conundrums?
Edward Woodall: Obviously we do not want further disincentives for people going to high streets. That comes back to the point I made earlier about how we can encourage this more widely. Perhaps we should look at the planning system and the national planning policy framework to ensure that people and planners are thinking about where to put charging points in future. I agree that we do not want to focus too much on one particular area. We should follow where the consumers—the people who have electric vehicles at the moment—are going. They are saying that they want to charge in locations that are convenient for them. It is not necessarily in fuel retailer sites, but in car parks and leisure facilities, on high streets and in other car park areas. That might include village shops and convenience stores.
Teresa Sayers: I support everything that Ed said. It is very much about destination and convenience. When you look at such criteria, a variety of alternatives offer themselves up as being appropriate for the positioning of EV charging points.
Drew Hendry
Q Can I press you for some thoughts on other charging technologies? That was the last part of my question.
Edward Woodall: I do not have a great deal to add on that.
Mr Steve Baker (Wycombe) (Con)
Q Mr Woodall, if I understood correctly—I listened very carefully to the answer about business models, because the same question occurred to me—you said you do not wish to be forced, but you would be happy to be paid one way or another to take charging stations. I am not surprised, but you did not mention profit as an incentive to provide this service to consumers. Can you elaborate? Why did you not mention the potential to make a profit out of charging?
Edward Woodall: Obviously there is a benefit to having charging on a site. I suppose I am focusing, in the context of the Bill, on how it will work in retailers’ thinking about investing in something that is developing in the long term.
Mr Baker
Q Is it just not profitable to provide charging to people?
Edward Woodall: Petrol forecourt sites make their money out of the shop. They do not make their money out of the fuel or the electric charging. That is a very low-margin part of their business. That is why you are seeing so much investment in the sector.
Mr Baker
Q That is what I imagined. To make a profit, you need to get people through as swiftly as possible, get them in the shop spending as much money as possible, and then on they go. Hopefully, they are happy and have had the service they want.
Edward Woodall: It is not quite that simple, but yes.
Mr Baker
Q Suppose you had an energy source that could be changed quickly, instead of over half an hour, would your current business model work? If, for example, we used hydrogen, as we were discussing this morning, your business model would continue to work in the same way, would it not?
Edward Woodall: Yes, but obviously the investment for putting hydrogen on fuel sites is significant. We asked fuel retailers about the cost of putting on electric vehicle charging points, and the estimate was between £50,000 and £60,000 per site, depending on the site. That increases significantly for hydrogen sites, because the infrastructure behind that is much bigger and more expensive, and it is a harder case to make because fewer consumers use that type of fuel source.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Q Earlier, in the discussion with Rob, there was discussion about phraseology—about large fuel retailers or just retailers—and an issue with forecourts. I want to clarify something. I am not sure if forecourts are mentioned in the Bill, so is that a red herring? Is it not going to be up to the retailers to site the charging points where they are most convenient?
Following on from the previous question, if you are not blocking the forecourt, a rapid charger may take 30 minutes, but is that not an opportunity for sales if it is the shops that make all the money? I would have thought that for somebody who is travelling, if it is an intermediate store, it would be an ideal opportunity to park and charge their car, go into the shop, buy a newspaper or a magazine and a few snacks, sit in their car, then move on. Is there not a business opportunity there?
Edward Woodall: Yes, there is. As we said in our submission, only 11% of sites have seating areas for customers, so there might not be the capacity to manage all that. Equally, how big is a forecourt site? Think about your local forecourt site—how many cars can it fit? For some of these electric vehicle charging areas, they will not consider it unless it is an acre or an acre-and-a-half-sized site.
Teresa Sayers: Certainly, the charging sites would have to be on the periphery of a forecourt. The current configuration of estates has very limited space to accommodate any parked vehicles. As was previously mentioned, the business model is a very high throughput of vehicles. The maximum duration on the forecourt is usually below five minutes—they fill up, pay and leave. It is just not built and configured to have additional cars there for a very long period of time.
Kit Malthouse (North West Hampshire) (Con)
Q I want to ask about brevity. Mr Woodall, I have to confess that I cannot ever remember spending more than five or 10 minutes in a convenience store—presumably, that is why they are called convenience stores, because it is convenient and quick—so I cannot quite see the model of me pulling up in my electric car, plugging in for the half an hour or even 15 minutes, and spending that time in the convenience store, particularly when the number of spaces will necessarily be limited. There will not be 15 or 20 spaces; you might perhaps have two, which might therefore be full the whole time. Do your members really see this as a big business opportunity or is there a Government subsidy available so you might as well take it?
Edward Woodall: I agree with all those points. I think it is difficult in our format of retail to deliver electric charging, given that both on forecourts and in convenience stores, there is large throughput and we are usually in areas of small parades where there are limited parking spaces, or they are on forecourts that are likewise limited for parking space.
Kit Malthouse
Q So on your earlier point on the greater investment required for hydrogen, given that hydrogen requires no behavioural charge—you refuel in about the same amount of time as you do a current internal combustion engine—the throughput of people might be greater, so the return on investment could be higher. Rather than having two people sitting there for half an hour, you might have 30 people going through who would therefore spend commensurately more, even though the initial investment might be more.
Edward Woodall: In terms of the hydrogen market, we are a long way off hydrogen being—
Kit Malthouse
Q That is what everybody keeps saying. There is a body of us who do not necessarily buy that, but okay, I understand that.
Edward Woodall: It is hard for me to answer and model that—
Kit Malthouse
Q I understand that. I have one other question, which is about the very high voltage required for fast charging. On an existing petrol or diesel forecourt, you are not even supposed to use your mobile phone because of the possibility of some kind of arc or charging gas. Is there a safety issue with the incredibly high voltage that is required to charge a car in half an hour and the possibility of arcing in an atmosphere of gasoline fumes?
Teresa Sayers: I am not qualified to answer that question. However, that is something that needs careful consideration. There are technically qualified people who can give you a comprehensive answer.
Steve Nash: With current electric cars—no pun intended—and the connections you make, there is very little chance of arcing, but I understand that you are not going to put volatile things next to high electric charges.
I have some experience of hydrogen because I was formerly on the board of BMW in the UK and we were running hydrogen cars around London. To deliver hydrogen as a liquid, it has to be stored at absolute zero. That is very, very complicated. It is also a very small molecule, so it permeates just about everything, so storing it is a real challenge. We are talking about hydrogen fuel cells, which are still kind of in their infancy. It depends on how the hydrogen is required, whether as a gas or a liquid. Either way, there is a long way to go. I think there are only two places in the south-east of England that could deliver hydrogen if you wanted it at the moment.
Kit Malthouse
Q There are six actually.
Steve Nash: Maybe I am out of date but, even so, that is not a lot. It will come, but there are technical complications. The battery electric cars are the ones that are going to proliferate first.
The Chair
Do Members have any further questions for this panel? No? I thank the panel for their time and co-operation.
Examination of Witnesses
Ben Howarth and Iain Forbes gave evidence.
The Chair
Q We will now hear oral evidence from the Association of British Insurers and the Centre for Connected and Autonomous Vehicles. Could the witnesses please introduce themselves for the record, starting with Mr Forbes?
Iain Forbes: My name is Iain Forbes. I am head of a team called the Centre for Connected and Autonomous Vehicles, which is a policy team based in the Department for Transport and the Department for Business, Energy and Industrial Strategy.
Ben Howarth: I am Ben Howarth. I am policy adviser for motor insurance at the ABI. As part of that I have led all our work on the Automated Driving Insurance Group and drafted our response to the CCAV consultation that pre-empted the Bill.
Andy McDonald (Middlesbrough) (Lab)
Q Good afternoon, gentlemen. Thanks for coming. I have a number of questions. At the beginning of the Bill, we are told that automated vehicles are what the Secretary of State says are automated vehicles. Clearly, some thought has gone into the criteria for so-designated vehicles. What are your own thoughts and observations on how we can be sure we are getting that set of criteria correct?
Ben Howarth: From an insurance perspective, that is one of the clauses we particularly welcomed when we saw the Bill. One of our concerns in advance was that it would not be clear to the customer what cars needed this new insurance system, so the clarification that the Government are going to take responsibility for doing that is really welcome. It means basically that we know what cars we need to have this new insurance for, and the customers will know that as well.
In terms of criteria, it is relatively simple. It is more about the user than the technology. I think the technology might not move that much, but it is the point where the user can feel confident that, when the car is in automated mode, it can deal with everything. Thinking about the worst-case scenario of an accident, if the car senses it is going to go into emergency mode, the car is able to do something to deal with that, which does not require the driver to come back in. We feel that if there is any point where the driver needs to come back in, it is not really an automated car. It is that tipping point where the car is completely capable of dealing with every situation. It might not carry on driving, but, at the very least, it would do an emergency stop and get you into a safe stop manoeuvre. That is the tipping point, or distinction, that we see.
Iain Forbes: Just to underline that, the measures in the Bill are designed to deal with the sorts of situations where a vehicle can drive itself in automated mode and not require the oversight of a human when the driving test is being operated. The particular mechanism by which those vehicles are going to be certified is an active topic of discussion at international regulatory forums. We have actively participated in those discussions, but we felt it was important to flag at the outset of the Bill that that would be clear to people in the insurance industry and elsewhere, to make sure they were able to understand which vehicles these measures apply to and which ones they do not.
Ben Howarth: In practice, we would be hoping that, from an insurer’s perspective, it is pretty easy to find that out, just by looking at the licence plate or the VIN number. There would be a clear definition that this is a car with automated functionality.
Andy McDonald
Q Of course, we are now entering a major shift, because we have to have insurers who are going to be picking up the tab for accidents involving automated vehicles. Presumably, as we progress, we will be getting errorless driving in automated vehicles. That is the objective, and incidents will result. Therefore, we should be looking forward to cheaper insurance policies, but that may not automatically be the case, if you pardon the pun. How progressed or how ready is the insurance industry to deliver products that would make fully automated vehicles accessible to people in terms of costings, including the cost of insurance?
Ben Howarth: We are very advanced as an industry, particularly in the UK. Because of the clear message that the Government have given, we are perhaps ahead of our contemporaries in other countries. The two really important criteria in terms of the cost of insurance will be the volume of accidents. We are fairly confident—Thatcham Research has done quite a bit of research that suggests the number of accidents is going to come down a lot once we get automated driving. That will obviously reduce the number of insurance claims, which will inevitably have an impact on the cost of insurance.
One factor that we probably do not know about at this point is the actual cost of the vehicles themselves, and how much they cost to repair. We might have considerably fewer claims, but very high costs associated with repair might have an impact. That said, that is something that is happening already. Vehicle technology is changing a lot already, so it is not a case of a huge tipping point in technology once we switch to fully automated cars. The technological change will happen more steadily, so I am very confident that the insurance industry is ready to deliver competitive insurance products that will be affordable, will help people and will make them want to take up this technology.
Andy McDonald
Q Will you help me on another matter? When an accident is caused by an automated vehicle, we are told in the Bill that the insurer is liable for the damage, but when the automated vehicle is involved but is not insured, it is the owner of the vehicle who is responsible for the damage. I am wondering what your view is on whether that ought that to be the person in charge of the vehicle, rather than the owner. We might have the perverse situation of a stolen vehicle being involved in an accident but, according to this, the owner of the vehicle would be in the frame. Do you understand?
Ben Howarth: I think I know what clauses you are referring to and my understanding of them is that that covers publicly owned vehicles and Crown Estate vehicles. They would not have insurance because they do not need them. In those cases, where it is a publicly owned vehicle, the liability would fall on the public body. It is a separate arrangement for genuinely uninsured driving—private cars that are uninsured.
Andy McDonald
That is really helpful.
Iain Forbes: That is exactly right. That clause covers publicly owned vehicles. We anticipate the situation being similar to the situation at the moment for conventional vehicles. It is often the case that they self-insure, rather than going through an insurance company.
Andy McDonald
Q I do not know what your handle is on this, and that was terrific clarification, but do you not see that it is possible to interpret it in the way I did? A vehicle that has been stolen is not insured, but the owner of the vehicle is picking up the cost, not the person who stole it.
Iain Forbes: Certainly, our legal team has been through the regulations to effect that as the policy aim, but if the Committee has comments, we have to look at it.
Andy McDonald
Q Finally from me, we are in the world of upgrades, which will present opportunities for manufacturers to continue to engage with the vehicle, in effect. I was wondering whether you had applied your minds to any future product liability exposures with the advent of new software. What does that mean in terms of those future liabilities and in terms of limitation, because current liability, once you part with the vehicle, has a 10-year limitation, although we have got some issues around extensions for people with disability insurance and so on? But if it is a product liability issue, there could be a succession of products that could give rise to liability. Is that factored into your thinking? Is it relevant? Have you dismissed it?
Ben Howarth: That is very relevant. When the consultation first came out, one of the questions was, “Do we bolt product liability into the motor insurance policy?” We looked at it in quite a lot of detail, and that was our initial assumption for how it would work. When we thought about it, those issues that you referred to and the fact that product liability lasts for only 10 years made it feel like too much of a change for product liability to be put directly into a Road Traffic Act situation. That is why we came to the conclusion that it should be a primary motor insurance policy, with the option then to recover from manufacturers.
Our conclusion is that you probably do not need to change the product liability, as it is kind of a backstop and it will not affect the original claimant. There might be a case on some occasions, if it is an older vehicle. We do not know quite how the market is going to develop—whether cars will be on the road for 10 years or longer in this situation, or maybe the product liability will renew itself every time there has been an upgrade. Let us assume that it does not, and you do expire at 10 years. My understanding is that there will still potentially be the option for a civil liability claim, so you might be able to argue that the manufacturer is not product liable, but they are in effect acting as the driver, so there is another claim that you might be able to bring.
Andy McDonald
Q You could be caught with a person with a disability, or a child, who is not subject to ordinary limitation; it would be from the date of their majority. There could be an action on the attaining of that majority and your product liability recompense from the manufacturer is effectively null and void.
Ben Howarth: Yes. I think that is factored in. The Bill means that that is a problem for the insurer, rather than the victim. I suppose part of the calculations that insurers will make is how many of those claims they will be likely to face. Are they insuring vehicles that are over 10 years old? That might have an impact. What is important in the Bill is that it makes that a problem for us as an industry. It will not affect, say, a disabled person who is using these vehicles. I think that is the insurance we need at the moment.
Mr Hayes
Q On this insurance issue, there has been quite a lot of speculation about what might happen to the products that the industry offers, which will clearly have to evolve. We were told that again this morning. Is it your estimation that that will affect premiums? One would expect premiums to fall, given the fact that these cars will be safer; many of your claims are related to human error, after all. Is that how you see things developing? However, we are also told that many people who cannot currently drive will now be able to—the infirm, the elderly, some disabled people. In a way, that is the most exciting thing about this development. How would that affect your assessment of premiums?
Ben Howarth: On the first case, I would think of it more in terms of claims costs than actually speculating on what the premiums would be. Obviously, if the number of accidents comes down dramatically, that is going to have a significant impact on the costs that insurers face. Motor insurance is very competitive, and it is inevitable that, if we see a significant reduction in costs, we will see a significant reduction in the premiums charged. So I think we can be pretty confident of that. As far as we know, it is still four or five years before these products will come to market.
Looking ahead to the cars you are referring to, where, say, there is a severely disabled person who possibly cannot drive at all at the moment, we are probably thinking about a level 5 car that can go from A to B in fully autonomous mode. It is fair to say that this legislation is primarily aimed at cars that will be manual for some of the time, automated for the rest: more of a level 4 car. Once you get to level 5, that is probably the point at which the insurance system is going to have to change more significantly.
Where the Bill is really helpful is that it allows us to learn from the first developments, get an insurance function in place and see that that system works. It is probable that we are going to have to evolve further once we get to a fully automated car. David Williams, who was one of your witnesses this morning, is one of the insurers involved in trials of fully automated technology. There is a significant degree of interest from insurers in the next generation of technology as well; but it is probably fair to say that this Bill is more around a level 4 car. I prefer to think of it as a binary distinction between automated and not-automated. I am not completely convinced about the levels and how useful they will be for consumers. It is probably fair to say that we think of it as level 4.
Drew Hendry
Q Public confidence in autonomous vehicles will be critical in terms of how quickly we can take advantage of some of the benefits that are portrayed by the industry. Given that the technology largely exists, do you feel that the Bill is going to go far enough to encourage the uptake of autonomous vehicles? I am specifically interested in whether you feel that the connectivity will allow a truly UK-wide uptake and also in rural areas, given that, as we have heard previously about electric vehicles, range and the ability to get to the destination is one of the limiting factors.
Iain Forbes: The point about confidence is really important. Trust in the technology is going to be a vital factor in seeing some of the benefits we are talking about. It is part of the reason that the Government are investing with industry in demonstration projects, which will involve members of the public trying the technology, understanding what it might mean for them and helping the developers to learn from that in terms of their public messaging and how they take the technology forward.
With regard to connectivity, what is interesting is that different developers are following different development paths for the technology, some of which rely on connectivity and some for which do not. So, from a Government perspective, it is difficult to say exactly what the final technological solution will look like. Some time is needed to work that through, but we are actively trialling this technology with the industrial players to understand, from a Government perspective, what action we need to take to make sure we are prepared for it.
Drew Hendry
Q Just to press that point about the end-to-end availability, is enough being done to ensure that you get truly wide coverage to allow people from outlying areas to get out and back again in the new technology?
Iain Forbes: It is an important bit of work that will need to be done as we develop out the technology. We are investing in connected vehicle test-beds to understand what the requirement is, and certainly one aim of that work is to try to understand how it can benefit everyone, not just people in cities.
Mr Baker
Q I would like to turn to clause 4, which relates to accidents resulting from unauthorised alterations or failure to update software. Hopefully, you have had a chance to look at this section of the Bill. It is all couched in terms of the operating system—interference with and failure to update the operating system. I am concerned that there are other aspects of software in a car that are relevant. Are you satisfied that the Bill is in the right shape, referring to the operating system, or would you prefer to see some other definition, in which case, what?
Iain Forbes: I guess it is my team that has been looking at the Bill, so I will ask Mr Howarth to comment first.
Ben Howarth: From our perspective, my initial reading of it was that it covered what we thought it was, and I am thinking it is the technology. I have to say, I am not a software expert, so if the wording could be clearer—the clause basically says you are not liable if a stupid individual mucks around with the car’s systems and does things that the manufacturer would not permit.
Mr Baker
Q We have a shared understanding of the purpose of this clause. I should say that I am a software engineer—or at least I was before I first came here—and I am slightly concerned that if this was tested in court and somebody had interfered or failed to update their firmware—a low level software—or if the driving was done by application software sitting on top of the operating system, the purpose of the Bill, of which we have a shared understanding, could be defeated. You are saying that you have not formed a view on whether “operating system” is the right definition.
Ben Howarth: To be fair, I do not think we have looked into the wording in that much detail. If the wording needs to be clearer, we would support that. We definitely want the same thing.
Rob Marris
Q I have three quick points for Mr Howarth. First, the Bill talks about the vehicle being insured as opposed to what currently happens, from my understanding, which is that driver is insured. So I have policy motor insurance that enables me to drive certain vehicles, including my principal one. Is the insurance industry happy with what appears to be a change in focus—that is it now on the vehicle rather than the driver?
Ben Howarth: I think it is not a huge change in focus. In practice, the enforcement that industry currently does—via the motor insurance bureau—to check that you have insurance is done via the vehicle. It is done by checking licence plates. The responsibility is on the human driver, but the practical enforcement is to check whether that car, on the road, at that time, is covered by insurance. This Bill is primarily designed for vehicles that will be manually driven some of the time and automated some of the time. It is just the practicality that, once you are switching to an automated car, you need to be thinking about the car rather than the driver.
Rob Marris
Q On that basis, is the industry also happy that the insurer is liable rather than the owner-driver, which is currently the case?
Ben Howarth: Again, it is a practicality that we are essentially stepping to the front. We are coming into the sun.
Rob Marris
Q Yes, you used to be behind the scenes. For these vehicles, you would be up front. That is all right with the industry?
Ben Howarth: The whole purpose of the legislation is, I suppose, to be an enabler and say to people, “You can be confident using this technology, because you will not have to worry about getting into complex battles with your manufacturer.” We do not know for certain that that is what will happen. Some manufacturers have given positive statements about it, but if that does happen, the insurers will step into the front of the system and say, “We are actually going to take these on. We are the first port of call, even in the case where the person to whom we have sold the insurance policy to is not directly liable.”
Rob Marris
Q The third point is on the software updates. From memory, when I bought my car, which has a touch screen on it for the radio and things, it would have cost me an extra £600 to have sat-nav put in. That is just the software because it already has the screen and the buttons and everything. I am thinking about software updates, which we have talked about, and a failure to install software updates could invalidate the insurance policy under clause 4. I understand that, but I am a bit concerned that the Bill appears to have no provisions to cap the charges for software updates. For the sake of argument, I have just spent £15,000 on a two-year-old automated vehicle and then some software update comes in that is £1,000 and a month later they want another £1,000 out of me. If I do not do it, the thing is useless, because it is uninsurable and therefore undriveable. Do you think there should be provision for a cap on software update costs, so that vehicles do not become uninsurable and therefore driven without insurance?
Ben Howarth: I have not really got a view on a cap, per se, but I have got a view that if it is a fundamental safety upgrade and it will change the functionality of the vehicle significantly, there needs to be an arrangement in place to make sure that is not optional. It is probably for other stakeholders to say how we make that affordable to the public. From an insurance perspective, we do not want cars to be unsafe simply because people cannot afford safety upgrades. That is true today, thinking about automated braking: it would be great if that was a standard feature of all new cars because it is proven to be safe. It is optional and it is often not taken up because it is too costly.
Rob Marris
Q This stuff would not be optional, would it? The software update, effectively, would not be optional.
Ben Howarth: No, where it is fundamental to the car’s safety, it needs to be non-optional. We are hoping for a system where it is impossible not to get the safety-critical upgrades. I cannot really comment on how much to charge for them.
Andrew Selous
Q I just want to return to two groups that miss out on the freedom and opportunities of being able to drive. We talked about older people and disabled people but also young drivers, for whom insurance is often prohibitively expensive, running into many thousands of pounds. What analysis have you done of the advantages of connected and autonomous vehicles over and above taxis, private hire vehicles, getting an Uber? What extra benefits do you see those two groups being able to derive once this technology is established and there is widespread take-up? Have you done any analysis or thinking on the social benefits for those two particular groups?
Iain Forbes: We have not done a research project on this, but I am aware that new products enabled by connected systems are opening up the ability to drive to a wider range of people. For example, younger people now have access to a wider range of insurance products enabled by telematics than was the case previously. Certainly, there is innovation within the industry that I am aware of, which is opening up options for accessing insurance to younger people as well as to some other groups as well.
Andrew Selous
Q Has the insurance industry thought about these two groups?
Ben Howarth: The potential limitation is that we do not know when this completely automated technology is going to come to market. We are assuming about 2021, but we cannot be 100% certain. There is quite a gap until then.
Telematics, which Iain mentioned, are not directly linked because it is a plug-in the insurer gives you that is not necessarily built directly into the car, but that is probably the first step towards an insurance policy tailored much more around tracking what you as an individual do, rather than broader risk factors.
Longer term, we are talking about cars that will take away the most common human errors and make the road safer. Increasingly, insurance is going to be tailored around the vehicle rather than how the individual behaves. Where you are talking about younger drivers particularly, their behaviour is going to become less of a factor. So you would not necessarily be thinking about age as a relevant risk factor when you look forward into the future. For older people and people who are vulnerable and do not have access to cars at the moment, this is transformational. We probably have not done any more work than any other witnesses on the evidence of that.
Alan Brown
Q I have a couple of questions. The first one is for Ben. We have conflicting information about insurance cost. Insurance cost could be much higher because of the repair cost and the lack of people qualified to do the repairs, as well as the cost of the car itself, but there are also expectations that insurance costs will come down because there will be fewer accidents. Is it fair to say that at the moment there is just not enough information to do accurate modelling to understand what insurance figures are going to look like?
Ben Howarth: I think that some people have tried to do modelling, but there is that uncertainty between those two things. We don’t actually know what the cars are going to cost on the market, and that is obviously going to be a factor in the insurance premiums as well. That said, our members are really enthusiastic about the technology. I think they all recognise that it is the future of driving. We don’t know exactly when it is going to come to the road, but it is going to happen. I think they are going to be very keen to be involved in it from day one, and to therefore be offering competitive products that people will want. So there is a market incentive to say, “Don’t make this too expensive.”
In terms of really detailed modelling on the exact price, we do not know enough. On the technology side, a lot of that is developing now. We are going to get many more assisted cars. They might not be fully autonomous and self-driven, but that technology is the same kind of technology that will eventually lead to automated driving. We have already started work on resolving the questions around how good the repair network is going to be, so it is not just a question of waiting for automated driving and then it switching over.
Alan Brown
Q Are there any special requirements that insurance companies would need for different testing, for example showing that people are capable of using the software or, with a semi-autonomous vehicle, when the right moment is to take action? We know that some people have trouble switching from a gear stick to manual, so this is another quantum leap. Are there any special requirements that insurance companies would like to see, going forward?
Ben Howarth: I do not think we would have any, other than what interested parties in the road safety world would want. I think we want drivers to be well informed about what they have to do. They have to know how this technology that they are taking on the road works and be confident about when they can and cannot use it. That is probably going to need to be part of the driver testing regime. It is a valid question to ask whether the driving test that you take at 17, which never changes again, is fit for purpose when technology will potentially be upgraded on a regular basis. That is worth further consideration. I am not sure that is for this Bill, but it is definitely something we will need to think about before the cars are commercially available.
Alan Brown
Q I just wonder what input your organisations have in the testing trials that are ongoing. I know that there have been four trials in different parts of England, but I am thinking of the bigger issues. If we look at it from a Scottish perspective, we have rural roads, single-track roads and different weather conditions. There are connectivity issues, which my colleague touched on earlier. What plans are there to review the tests that are ongoing? How much more robust do the tests need to be and how is that going to be rolled out across the rest of the UK?
Iain Forbes: My team actually oversees the research programme that is paying for the tests you mention, the four city driverless car trials. It is really important when taking forward the competitions to have as open a process as possible. We work closely with Innovate UK, the Government’s innovation agency, to design competitions around challenges where we think it is likely that the UK is going to be able to pull through developments in the research base into products that are going to be usable and commercially viable. The initial set of tests were in London, Bristol, Milton Keynes and Coventry. We anticipate having future rounds of competitions that will be open to anyone in the UK to participate in if they want to form consortium bidding.
Mr Hayes
Q You know that the Bill attempts to strike a balance between, on the one hand, doing enough not to constrain future development—indeed, to facilitate it—and, on the other hand, trying to determine what the schedule describes as an “unknowable future”. Have we got that right, or should we have done more? I draw particular attention to the relationship between connection and automation and the issues of privacy and security of data. Should we do more now, or is it enough that we take powers to do things when we know more later?
Iain Forbes: It is a really important question. The advent of automated vehicle technology will in time require changes to different parts of our regulatory system. We have heard about some of those already today. The trick is to try to find ways of targeting the areas where we think action is necessary now in order to unblock barriers, or where we know technology is near to market. We need to make sure that we have the framework in place to enable the safe use of that technology.
To some extent it is a question that different people have different views on, but we certainly consulted last year with a range of different stakeholders on the areas where they thought action was necessary in order to ensure that the UK was doing the right things to set up a framework. The area in the Bill was the one that stakeholders highlighted as the one that was most important to act on first.
In time we will have to have further steps in the process of getting our regulatory framework ready. In doing so, I would hope to follow the same approach of identifying where the barriers are that need action now and which technologies are nearer to market. We need to make sure that we have the framework in place to enable those.
Richard Burden
Q Can I go back to the definition? At the start of the session you said that the thing you welcomed in the Bill was that it would define what an automated vehicle is by whether or not that vehicle was on the list produced by the Secretary of State. Do you think that creating a definition will be simple? Where would autonomous emergency braking come into that? A large number of vehicles might have autonomous emergency braking that one would not normally define as automated vehicles. Nevertheless, autonomous emergency braking, by its nature, will take control of the car and stop it whatever the driver is doing. So would the car fitted with autonomous emergency braking need to appear on that list, because it would
“in at least some circumstances or situations”
be capable of driving itself without having to be monitored by an individual? If it were included, are we saying that this new insurance product that the Bill brings into effect is essentially going to be the norm, not the exception, much more quickly than we thought?
Iain Forbes: Autonomous emergency braking is one of a suite of technologies sometimes referred to as advanced driver assistance systems. The Bill does not seek to set out a regime to manage those systems. It is about automated driving in vehicles where the driver can step out of the loop and does not need to be involved in monitoring the system. The difference between those systems and ADAS systems, as they are sometimes called, is that the driver always has to oversee what is going on in the vehicle. For those sorts of systems we anticipate the current regime being appropriate.
Richard Burden
Q Is the boundary between those two as exact as you say? In a sense, with autonomous emergency braking, the driver has to monitor it. Whether the driver is monitoring it or not, that technology will take control of the vehicle.
Iain Forbes: We anticipate the measures in the Bill interacting with other aspects of law, including type approval requirements for vehicles, which will be looking at how different systems should be approved for safe use on the roads in this country. There is a lot of technical work to do to understand what the particular approval regimes will be for different forms of technology, but we anticipate the higher levels of automation that we are targeting in the Bill being different and distinct in the way they are approved from the ABS system that you were talking about.
Richard Burden
Q What kind of consultation would you expect the Minister to go through before producing his or her list? At the moment, the Minister has complete discretion. There is nothing in the Bill that says he or she has to consult anywhere.
Iain Forbes: I would anticipate quite a lot of work at international level to set the regulatory framework and technical standards that will underpin the safety framework for approving these vehicles. When that happens, there will be a decision for Ministers to take about how they consult with stakeholders in the UK to make sure that people are comfortable with those definitions before they are transferred into UK law.
Tom Tugendhat (Tonbridge and Malling) (Con)
Q May I ask a couple of questions relating to the way that you have looked at the insurance? It seems to me that you are treating the concept of ownership as it is today, rather than as it is likely to become; transport is likely to become a service, rather than a commodity. Is that fair?
Iain Forbes: The policy aim of the Bill was to set up a framework that protected innocent victims of incidents relating to these vehicles in such a way that it felt similar to the current framework. We can have a framework around vehicle sale that is based on current patterns of ownership. In future that might change, as you say, in which case we would have to review the framework to make sure that we were making appropriate provision in law to allow people to operate the system safely.
Tom Tugendhat
Q It will probably become unlikely that car companies will end up selling their cars; they will lease them for shorter and shorter periods, as many car companies already do with their corporate fleets. It would seem sensible to have a look at that.
Perhaps we can go straight on to insurance. The safety systems before full autonomy—what you are calling level 4 cars—
Ben Howarth: I prefer to call them fully automated cars, but level 4 is the definition.
Tom Tugendhat
Q Various cars, while not fully automated, already warn you if you are going to cross a white line or are getting too close to the car in front. As automation levels come up, are insurance companies intending to offer better premiums?
Ben Howarth: I would say that insurers have already done that. Autonomous emergency braking was referred to. Even before we had any claims data to back this up, we set any car that had that technology a lower group rating. If you have that technology in your car as standard, you get a cheaper insurance premium. We now have evidence to back that up; we have pretty robust data that say that that technology works. That is definitely the intention, going forward.
One of the key things that we as an industry need to know is when that technology is in a car. That is a practical challenge that we have. I do not think it will be a problem in four years’ time, when the Bill comes in. We as an industry would really like to know when this technology is in cars, to make sure that we are pricing accurately. It is a data-sharing challenge, because it is often impossible to find out whether we have got it.
Tom Tugendhat
Q As the Bill comes in and starts to make greater provision for understanding who is liable, the question of ownership kicks in: is the driver responsible for upgrading the software, or does Toyota or whoever maintain ownership throughout? As semi-autonomy moves more towards full autonomy, you get an opportunity, but you also get this question: at what point do you start pricing out real drivers of real cars, if you see what I mean?
Ben Howarth: You do, potentially, but bear in mind that there will be a tipping point at which there are so many really safe cars on the road that it will have an overall impact on the number of accidents. The number of accidents will go down across the board. Also, the whole fleet will get safer; there will be a decreasing number of people in cars with no automated function at all, and even they will get the benefits of generally safer roads.
Tom Tugendhat
Q Of course, as the number of incidents goes down, premiums will presumably fall for everybody. Given that car insurance is the most lucrative area of the insurance market, have you done any work on what this will mean for house insurance and various other forms of insurance, on the grounds that it seems unlikely that your members will voluntarily lay profit aside?
Ben Howarth: I am not sure whether it is true that it is the most lucrative part of the insurance market, but we have not looked at the wider impact on the industry.
Tom Tugendhat
It makes up about 50% of insurance profits in the UK.
Ben Howarth: I am sure that individual insurers will look at the potential impact on other parts of the market, but we have not.
Andy McDonald
Q Returning to the issue of software, clause 4 devotes a lot of attention to when insurers will not be picking up the can—something that we are familiar with. Can you say a little bit about how you are expecting software to be updated? What is the process for doing that? We all update our phones; we plug them in and press “install”, and the phone tells us when it is done. What is the current state of knowledge? Where are we, scientifically, on achieving that?
Linked to that, what responsibilities should there be on manufacturers to provide updates and tell the owners or users of vehicles that those updates have to be made? As I read it, there is nothing in the Bill that places any obligations on manufacturers to do that. A lot of time is devoted to when the software has not been updated, but where is the principal obligation for the manufacturer to do it? There are a lot of questions, but I am wondering whether that loops back to the definition and whether that needs attention to ensure that we have addressed the obligation. So how is it done and what are the obligations on the manufacturer?
Iain Forbes: Those are good questions. To answer the second one first, what is important about this Bill is that it is looking just at the insurance regime for these vehicles. It will have to work in concert with other parts of the law, including the system by which vehicles are approved for sale. You might imagine that if vehicles that operated automated systems were to be approved for sale there would be a close look at what would be necessary to ensure that the systems were updated where necessary to take account of any changes that were important to ensure safety.
Andy McDonald
Q Have we got this the wrong way around, then? Surely you have to establish how something happens before you start dealing with its insurance consequences. This is putting the cart before the horse, isn’t it?
Iain Forbes: We are focusing on this now because this is an area where in consultation people told us that it was important to set out a framework now to allow insurers and manufacturers to have those discussions about what might be necessary to inform the products that come to market when these vehicles do in four or five years’ time. In the meantime, we need to be working very hard to ensure that the appropriate approval regime for these vehicles is also in place. The vehicles will not come to market without that, so this will have to work in concert with another part of the law, which will say how these vehicles will be approved for sale.
Ben Howarth: If I can add one other thing, I think that the Bill is intended to do a new thing by protecting someone who is in the driving seat as, because they are not in control of the vehicle at the time of the incident, they are being treated as a victim. If they have done something to the car that means that they are responsible for the accident—perhaps they have not maintained it properly—it is reasonable to put it into their insurance policy that that is not something that they could claim for, as they would not be a victim. That is what these policies are broadly intended to do. I take your point that we absolutely need to define what updates need to be made and who is responsible for them, but if you turn it the other way by insuring the person in the driving seat and ensuring that they can claim if they are injured, the situation changes if they caused their own injuries.
Andy McDonald
Q If we are getting into a discussion on clause 4 about failures to update software, where is your starting point? You are basically telling me, “Ah, we’ll do that somewhere else separately. We will have to get those regulations on board.” All that I am suggesting is that that is out of sync and we should be looking at the processes first, at least for what we are expecting, before we start dealing with the insurance consequences.
Iain Forbes: To answer the first part of your question about how this is done, that is likely to develop over time as new systems come to market. It is already the case that some manufacturers upgrade software systems by asking customers to take their vehicles to a dealer and some do it over the air, in a similar way to how a phone is updated, for example. That is an area that is currently the subject of international discussions, and indeed the UK is co-chairing the international regulatory group that is having a look at how over-the-air updates will function in future.
Andy McDonald
Q Really, what the manufacturer would say is that if a vehicle has not been updated for one reason or another, or if they discover some other technical reason to shut it down, they will make sure that vehicle does not shift. Is it within the contemplation of the industry to take it that far?
Iain Forbes: What we need is systems that are transparent to people who are using them and that provide appropriate protections so that they feel confident using them. That is part of the discussion that we are having internationally at the moment.
Kit Malthouse
Q I have a couple of questions. We have a problem in this country with uninsured cars. Given that these cars are likely to be connected to the matrix in some way, do you think that it would be sensible for the Government to take a power to require that the car has to check whether it is insured before it moves? When I go and buy my tax disc, the system checks that the car is insured before it allows me to do so. Should these cars be required to do the same?
Iain Forbes: We are at too early a stage in the development of the technology to be able to consider that, but it is certainly something we could look at.
Kit Malthouse
Q Why?
Iain Forbes: It is not clear exactly how those systems will interact with a wider data network to enable the system to work.
Kit Malthouse
Q It is technically possible, right?
Iain Forbes: Many things are technically possible, but we do not know exactly how it will come to market and how the systems will operate.
Kit Malthouse
Q You seem to imply, Mr Howarth, that the insurance industry would be indifferent to the characteristics of the passenger, who need not be the driver of a level 5 car.
Ben Howarth: That seems reasonable to assume. As I understand it, a level 5 car will not even have a steering wheel so the driver will have a pretty minimal role in how the car performs.
Kit Malthouse
Q Would it be fair to say that level 5 cars might be the saviour of the rural pub? Can I drink and drive a level 5 car?
Ben Howarth: I am a big fan of the rural pub, but I do not know the answer for certain. That is probably also an infrastructure question: I can see the cars working in certain inner-city areas, but personally, I am not 100% sure whether level 5 is ready for some rural roads yet. I think evangelists for level 5 technology will say that it is.
Rob Marris
Q One for Mr Howarth. What will the industry do about Northern Ireland and automated vehicles? That is not covered in the Bill.
Ben Howarth: Is there any particular aspect of Northern Ireland that you think is not working?
Rob Marris
I do not know. I wondered whether you guys discussed it because the automated vehicle elements of the Bill do not apply to Northern Ireland, yet one would expect people in Northern Ireland, as elsewhere in the United Kingdom, to wish to have automated vehicles available to use.
Ben Howarth: I am not aware of any problem with Northern Ireland.
Rob Marris
From an insurance point of view?
Ben Howarth: I am not aware that we have any particular concerns about Northern Ireland, but I am not sure why it is not in the Bill.
Rob Marris
Okay, but from an insurance point of view, you have no concerns about Northern Ireland?
Ben Howarth: Not that I am aware of.
Tom Tugendhat
Q I assume that you looked at other countries as you prepared for the Bill. Will you say a little bit about how other countries are addressing the insurance and regulatory challenges?
Iain Forbes: The legal frameworks in different countries are often specific to those countries, so it is not possible to do an exact read-across, but we are looking at what people are doing to see whether there are broad lessons that we can learn. For example, in California, if you want to test automated vehicles, you have to put up a surety bond to ensure that there is a provision to cope with any accidents. Looking at that and other systems, we felt that the system in the Bill was appropriate for the UK and how our insurance system operates. It builds on a system that people would recognise, so it would look similar to what people do now, and it targets an important policy, which is to ensure that innocent victims caught up in an incident involving a vehicle in automated mode can get quick access to claims.
Tom Tugendhat
Q What about our European partners?
Ben Howarth: I was going to mention European partners, but from an insurance industry perspective, I think that we are ahead of everyone else in having clarity about how the legislation will work. Obviously there are still things that need to be done before the technology goes to market, but I get the sense that other people are debating the issues, but not with a formal proposal on the table. I genuinely think that we are a step ahead of everybody else.
Tom Tugendhat
Q The reason this matters is that a lot of people will now be thinking about booking their ferry and Eurotunnel tickets. Will we be able to take those cars abroad?
Iain Forbes: Interoperability is important, as you mentioned, and it is frequently discussed.
Tom Tugendhat
Q It does not matter which hand drive a car is, does it?
Iain Forbes: Which is part of the reason why it is important for some of the discussions about the regulatory framework to take place at international level, under the United Nations Economic Commission for Europe or other bodies that regulate how vehicles operate to ensure that, where possible, we have interoperable systems.
Ben Howarth: If you are thinking about cross-border insurance, as long as the broad principles are united—there are already big differences between the UK and other parts of Europe and how they insure vehicles; we have a driver-centric version whereas a lot of other European countries have a vehicle-centric system and a form of strict liability with various definitions—one would hope that we could evolve a system that gives at least minimum cover on a unified basis. We should not therefore have too much of a problem.
Rob Marris
Q Mr Tugendhat made an interesting point. It had not occurred to me, but if I am in my automated vehicle, which I have taken through Eurotunnel, and I am driving down a road in France and a non-automated vehicle is coming at me in the middle of the road, I do not want my British automated vehicle diving off to the left—which is what you would do to take evasive action in this country—
Rob Marris
This is a serious point in the context of Mr Forbes’s discussing interoperability. I presume there has been a discussion about the coding—I would like reassurance about this—so that the evasive action that automated vehicles might take when faced by unsafe manoeuvres by non-automated vehicles is appropriate to the side of the road on which one drives. Otherwise, we will have a big problem, as Mr Baker will know, with software coding and so on.
Iain Forbes: These are the sorts of challenges that you have to work through when you sit down to think about how the system will operate in practice. We are still at the stage of the technology where the developers are making sure that they can get their systems to work in particular locations—particular cities or areas. If the developers want to sell products and services that can be used in more than one country, that is something we will have to bear in mind when taking forward our development programmes. Indeed, if they are going to operate in accordance with the right regulatory framework, they will have to have discussions with regulators about how that will operate in practice.
Rob Marris
Q Do we need legislation now, in the United Kingdom, to assist that process?
Iain Forbes: From my perspective, it feels a bit early to take forward regulation in that space, but we should definitely be involved in the discussions at international level and with developers, to make sure that those issues are dealt with in due course.
The Chair
If there are no further questions, may I thank the witnesses for their evidence, time and co-operation? We will move on to our next panel.
Examination of Witnesses
Richard Moriarty and John de Vial gave evidence.
The Chair
Q We will now hear oral evidence from the Civil Aviation Authority and the Association of British Travel Agents. Welcome. Would the witnesses introduce themselves for the record? Shall we start with Mr Moriarty?
Richard Moriarty: I am Richard Moriarty and I am the group director of consumers and markets at the Civil Aviation Authority.
John de Vial: I am John de Vial and I am director of financial protection at ABTA.
Richard Burden
Q May I begin by exploring some of the Bill provisions relating to the relationship between the CAA and National Air Traffic Services? Perhaps we can come on to the issues relating to the air travel organisers’ licence after that. I understand that the proposed changes have been broadly welcomed by stakeholders. I am struggling to understand how significant they are. They change the procedure through which the CAA can modify regulations under which NATS operates. Do we have any sense of how many of them are likely to happen and how often? The impact assessment says that the scale of the issue with which we are dealing is highly uncertain. Can you give us any guidance on the scale of the changes?
Richard Moriarty: The changes are all aimed at modernising our regime. We change the licence periodically: perhaps once or twice every three or four years we introduce a raft of changes, which are mainly to do with the charges that NATS can pass on to airlines and the service standards that it needs to meet. Of course, all of that needs to be balanced, because we need to ensure that it can finance its businesses.
I think it is worth saying, in order to give you comfort, that these measures are almost precisely similar to measures that were passed in the Civil Aviation Act 2012 in relation to our regulation of airports such as Heathrow and Gatwick. My answer to your question is that they are very helpful and to be welcomed. They modernise what is now quite an outdated regime for NATS, and they put NATS on a very similar footing to other regulated entities.
In terms of NATS’s protection, it is important to say that nothing in these changes takes away our primary duty towards the safe system—safety. We also have a secondary duty to make sure that NATS cannot find it unduly difficult to finance its licence for activities. For those reasons, I strongly welcome these measures.
Richard Burden
Q Looking ahead to the next few years, for the moment we will be part of the single European sky framework. That, presumably, could bring a number of initiatives under it that would be relevant to the provisions in this Bill. Am I right about that? What could the impact of Brexit be on this area of the Bill?
Richard Moriarty: I fear I would be misleading you to be too precise about what some of those impacts would be, but one thing we have made clear in conversation with departmental colleagues is that we can regulate NATS successfully using our domestic legislation under the Transport Act 2000. This is one of the reasons why we are keen to modernise it in this way.
Richard Burden
Q So there should not be any impact at all?
Richard Moriarty: It is too early for me to say whether there would be an impact one way or the other. On the things we most care about—safety—NATS has been able to charge good prices to airlines and provide a good level of service. I am quite comfortable that the regime we would have in the UK based on the Transport Act 2000 would give us sufficient levers, particularly with these modernisation changes.
Richard Burden
Q The impact assessment, again, talks about the likelihood of there being what it describes as a “light-touch” review of these new arrangements after five years and “a full review” after 10. I must confess that I could not see reference to either of those in the Bill. What was your understanding of the review arrangements around these changes?
Richard Moriarty: I cannot speak to that specific review, but I think it makes sense to review the powers that have been introduced after the event. We have done that in other arenas, so it is something we would welcome. We can work with the Department on the timing of that.
Richard Burden
Q But the principle of a review after a period of time would be something—
Richard Moriarty: I do not have a problem with that.
Richard Burden
Q Can we move on to the ATOL questions within the Bill? Can you describe what the changes mean in practice for consumers and holidaymakers?
Richard Moriarty: First, it is worth saying that the changes in the Bill at the moment are enabling provisions, but they are to enable us to implement the package travel directive. There are a number of important and welcome developments from that which will be good for UK consumers. First, the directive makes it much clearer what the definition of a package is. This may seem self-evident to most people but an industry of loopholes has developed over the years. Having clarity on this is a good thing.
Secondly, the package travel directive puts a requirement on member states to have effective regimes in place for insolvency. This is a big step forward compared with where we are today. It is also worth saying—although John may have a better view on this—that this provides a growth opportunity for UK businesses as firms in this country will be able to sell their goods and services into Europe.
John de Vial: We certainly support that view. The provisions in this Bill are necessary and we have no concerns about them as enabling legislation. I agree with Richard’s subsequent points. UK companies can currently sell in other European markets but they are required to license separately and individually in each market to comply with its version and its implementation of the 1990 directive. If we have a regime with the directive to come, which the provisions lay the ground for, and our traders in the UK can use the ATOL system and the Department for Business, Energy and Industrial Strategy arrangements to comply across Europe, that is a clear advantage for them trading across European member states.
Richard Burden
Q Are those companies covered by that protection because they are established in the UK?
John de Vial: By virtue of being established in the UK, you would be entitled to it.
Richard Burden
Q Looking at it the other way round, if there is a company that is established in another part of the European Union but sells into the UK, I understand that the package travel directive would say that the protections that it should offer would be those that would be applicable in that member state, rather than those that would be applicable in the UK.
John de Vial: Yes.
Richard Burden
Q Is there any potential downside to that? For any packages sold into the UK by companies established outside of the UK, could the protection be less than it is now?
John de Vial: Not less than it is now—we have that problem today. The current UK ATOL regulations and package travel regulations exempt companies that are compliant elsewhere. We have seen the problem in recent history. Our view is that, to the extent that this new directive is more robust and should raise the bar of implementation and enforcement in other member states, that can only be a good thing.
Richard Burden
Q Will it raise it to the level of ATOL protection?
John de Vial: No, I don’t believe it will. I think there are a number of aspects where the ATOL position is superior. The most obvious example is repatriation. The directive requires the costs of repatriation to be protected, so all member states should be doing that. The UK is not unique, but is one of a small number of member states, where organised repatriations—where the customer is, as it were, rescued—is the norm. We do have a superior system in the UK in that sense.
Richard Burden
Q A final couple of questions from me, and it is back to Brexit again. A lot of the changes in the Bill arise out of the package travel directive. From what you have said, some of our domestic ATOL protection is superior to what is in the package travel directive anyway, but are there any implications of Brexit for what this Bill brings in?
Richard Moriarty: Regardless of Brexit, this is a set of provisions that we would be supporting. It is worth remembering that 77% of UK consumers choose their holiday in Europe. As John suggested, the position around insolvency protection may not be all the way up to ATOL gold standard, but it will be a lot better, and enhanced by this package travel directive, than it is today. The former directive we fall back on is from the early ’90s, which predates the growth of the internet and people buying their holidays online.
John de Vial: I support that. It is also part of our job, with the ATOL brand and our brand as the Department for Business, Energy and Industrial Strategy’s approved body, to promote the merits of the schemes in the UK with UK businesses, where those exceed the European base level.
Richard Burden
Q The Bill provides for an air travel trust to be set up by the Secretary of State, but also leaves open the possibility that that could be split into a number of trusts if circumstances change. Could you tell us a bit about what that is all about and the kind of circumstances?
Richard Moriarty: If I may, I will declare an interest as a trustee of the current air travel trust. The consultations and discussions that the Department has had with the industry and consumer groups have suggested that the position around how people buy holidays could change. They are very keen to have some flexibility. Rather than have one trust hardwired into legislation, they want to give themselves some more flexibility. For instance, one example that has been talked about a lot is linked travel arrangements, where it is not quite a package, but is two transactions for hotel and travel that are very closely associated. In my view, it would be prudent and sensible for Government to have the flexibility to respond to that. It is my understanding that that is why they are taking the enabling provision at the current time. In implementing that, I hope that they will follow the practice that they have followed today: consult with us, consult the industry, do the impact assessment, and so on.
Richard Burden
Q I would be grateful if I could explore one other area with you briefly. One thing that raised a number of eyebrows when this Bill was published was the fact that it did not say anything about the regulation or safety of drones. How do you see the existing regulatory framework, and if we were going to look to improve that framework, who do you think should be responsible, for example, for bringing in geo-fencing?
Richard Moriarty: Drones are something that we are spending an enormous amount of time on—getting the balance right between effective regulation to prevent aviation-related risks and allowing this new technology and market to grow. There is an existing set of regulations for both commercial and public operators, but it is worth highlighting two important initiatives that we should all take stock of.
First, the Government are consulting on the future regulation of drones at the moment; we are working with them on that. Also, at the European level, the European Aviation Safety Agency, EASA, is doing some important work, which we hope it will publish in April and which may relate to international manufacturing standards, because things like geo-fencing, which effectively prevents drones flying into controlled space, are only really effective if that can be done through international manufacturing standards. That is one of the reasons why we are keen to see that EASA publication, which is mooted for April, before we decide next steps.
Mr Hayes
Q On the issue of penalties in respect of ATOL, you will know that this Bill attempts to amend the Transport Act 2000. In respect of section 225 of the Transport Act 2000, you will also know that there is a responsibility to prepare and publish a policy statement on the use of penalties. How do you envisage these penalties taking shape, and how will you ensure that their use is proportionate?
Richard Moriarty: The first thing I would say is that our having powers to introduce financial penalties for NATS brings us into line with the powers that we have for airports. It also brings us into line with other economic regulatory regimes in energy, water and telecoms, so it brings the regulation of NATS up to the modern standards of the other sectors.
We already have a published policy on how we would go about issuing a financial penalty for the airports. My starting position would be that the policy should be similar for NATS. Financial penalties are rare events in economic regulation: they do not come around too often, and there is a good reason for that. But they are a necessary part of the armoury, if you like, to drive the right behaviours and give a deterrent effect.
We would obviously have a graduated approach to enforcement. That would start off through informal means—conversations with the company, looking to it to put the issue right. If that had failed, we would move on to a more formal footing with them. I tend to think of financial penalties as a bit of a last resort but, as I said, it is important to have them there because it incentivises the right behaviours.
Mr Hayes
Q The other question I was going to ask reflects the point made by the hon. Member for Birmingham, Northfield about the post-Brexit deal on travel. We have been a leading player—one might say a trailblazer—in terms of providing protection for holiday makers, haven’t we? Post-Brexit, it is really important that we retain consumer protection across Europe. What are your views on that?
Richard Moriarty: I completely share that objective. To go back to the point that John made, I think there is a job to be done by the CAA, ABTA and other groups on raising awareness with UK consumers about the level of protection that they get from different types of products. You can imagine a future where we are in a less binary world in package travel than whether something is ATOL-protected or not. There will be a graduation of protections that consumers can get. It is important that we work with consumer bodies to raise the level of awareness.
We start from a solid and good basis. The scores for levels of awareness of ATOL, which is often seen as the gold standard, are about 75% or 80%, so we start in a good position for that work.
Drew Hendry
Q Some UK operators have stated that they feel that passenger rights go too far. Which passenger rights do you feel are most contentious in the industry?
Richard Moriarty: A number of airlines have expressed concern not about the principle of compensating consumers for delays, but about the tariff—the amount that is charged. It is important to get the balance right. It was not so long ago that airlines did not take the issue at all seriously. We saw long delays and a lot of consumer detriment as a result. I hear from a lot of chief execs of airlines that although they would wish for a lower tariff, because it is clearly straight off their bottom line, this is not front and centre of their urgent priorities. I do not know whether John would take a different view.
John de Vial: I think that our members would agree. If you look at the package travel directive—that particular piece of work has been updated to allow for a new directive—there is broad industry support for it. I do not think there are any great concerns about it. The EU regulation 261 regime on denied boarding and flight delays is a different issue. A much smaller number of airlines have concerns about the denied boarding piece, but the concerns are principally around the delay regime whereby, through the European Court of Justice process, the same sort of tariff for delays has been adopted as existed and was intended for denied boarding. That is viewed as a rather blunt and sometimes counter-productive regime. The loudest voices are heard around that and there is considerable merit in it being revisited.
On Richard’s point, it is about the level and proportionality of the tariff, where compensation for a few hours’ delay can be a multiple of the purchase of a low-cost ticket. That is seen to be an injustice—it is not the principle of providing the protection, but the way in which it operates.
Andrew Selous
Q I would like to come to NATS, which I understand expressed concern about economic uncertainty and market volatility following the Brexit vote. It thought that air travel demand and, therefore, its revenues might suffer. Has there been any evidence of that to date?
Richard Moriarty: Not that I can tell from the financial numbers that I look at. Indeed, in terms of the assumptions that we made with it for the last regulatory settlement, traffic has been better than we predicted.
Andrew Selous
Q So that we can have a better understanding of how NATS works, let me ask about the ability to extend the length of its contracts to give them greater financial certainty. What sort of length of contracts do they typically operate with London airports at the moment? What levels of extra investment would you be looking to see NATS make with longer-term contracts, because presumably it is unable to put that in at the moment?
Richard Moriarty: The position is different at different airports and in different regulatory regimes. The issue is the minimum notice period that is required before the Government can terminate the franchise, if you like—for want of a better expression. That minimum notice period counted down. NATS quite rightly, in our view, said, “We need to make long-term investments, and we need to raise debt on the open and private markets.” People looking at a shorter, shorter franchise find it quite difficult.
We did quite a bit of work to look at this. We spoke to financial advisers and looked at other regulatory regimes. Our advice, after looking at the asset price of the business and other regulatory regimes, was that 15 years feels like the right number for NATS. NATS is a slightly different business from some of the asset-intensive industries. It is operational based, rather than capital intensive. Having done the analysis, we very much support the Government provision to move this out from 10 to 15 years.
Andrew Selous
Q To clarify our understanding, can you elaborate a little on how the CAA will take action swiftly to protect passenger and staff safety when there is a serious system failure or when some aspect of NATS’s performance is worrying to you?
Richard Moriarty: One of the most important and significant aspects of the Bill is the provision enabling us to take action on past licence breaches. One feature of NATS is that if the systems have an outage, as they did in December 2013, you do not need a lot of time to create a lot of disruption to passengers. For instance, a 24-hour outage led to disruption for nearly 250,000 passengers, and there were 300 cancelled flights. Of course, you can put the system back very quickly—it is a 24-hour event—but if we do not have the power to look at past breaches, there is a risk, on behalf of consumers, that we are going to look toothless. That is one reason why I support the provisions that the Government are putting forward in this regard. I think that is one of the most important aspects of the package.
Richard Burden
Q Can I ask about rights in the Bill? The big change is that you make the modification and NATS has the right to appeal, as opposed to the co-determination model that we have at the moment. There is also a provision for other parties to appeal, including the owners or operators of aircraft that you consider appropriate and the owners or managers of prescribed aerodromes that you consider appropriate. I am struggling to work out who has got the right to appeal the modifications you make to NATS’s licence. What does prescribed aerodromes mean?
Richard Moriarty: The appeal mechanisms that are being introduced for NATS effectively replicate the same appeal mechanisms that we have for the regulated airports. For instance, an airline can appeal a determination that we make for Heathrow or Gatwick airport. There is an element of consistency across aviation in these provisions. Because NATS provides the London terminal airspace service, it also touches directly on some of the London airports—principally the large ones, but there may be some small London airports in it as well. It is right that the Government has a provision to name those airports, because they will be materially affected by certain decisions that we will take over the settlement that we reach with NATS.
The Chair
If there are no further questions from members of the Committee, I thank our witnesses for their evidence, and for their time and co-operation. It has been most helpful. Thank you very much. We are running a little ahead of schedule, so I propose to suspend the Committee until 4.10 pm, as the witnesses for the next panel have not yet arrived.
The Chair
Q We will now hear oral evidence from the British Airline Pilots Association, the Metropolitan police, the National Police Air Service and the UK Flight Safety Committee.
I welcome our witnesses; thank you for joining us. Could the witnesses please introduce themselves for the record? Shall we start with Mr Moriarty, who has already given evidence to us this afternoon?
Richard Moriarty: I am Richard Moriarty, director of consumers and markets at the Civil Aviation Authority.
Paul Watts: I am Paul Watts, chief pilot of the National Police Air Service.
Richard Goodwin: I am Chief Inspector Richard Goodwin, airport commander at London City airport.
Simon Bray: I am Simon Bray, commander of security at the Met, but I am also the National Police Chiefs Council lead for airport policing.
Steve Landells: I am Steve Landells. I am a flight safety specialist at the British Airline Pilots Association.
Martin Drake: I am Captain Martin Drake. I am a current 747 captain and I am also chairman of the security committee at the British Airline Pilots Association.
Andy McDonald
Q Good afternoon, gentlemen. Could you help me with the issue of shining or directing a laser at a vehicle? The Bill as drafted states that it will be an offence to direct
“a laser beam at a vehicle which is in the course of a journey, and…the laser beam dazzles or distracts a person with control of the vehicle.”
I am concerned about that, because I have never flown a plane and I have never, to my knowledge, had a laser shined at me. I am just thinking the matter through. Is that the totality of the thing that concerns you all, or are there other instances short of being dazzled or distracted that would cause you concern and cause you to think that something ought to be an offence? Also, although such an activity may have taken place, the driver or person in control of the vehicle might have no knowledge whatsoever of it having happened. I do not understand the experience. Does someone who is in control of a vehicle experience it only when their eyes are actually dazzled, or is there another perception of the event having taken place?
Steve Landells: From a British airline pilots’ point of view, our main concern is the distraction as well as the dazzle. As it stands, the dazzle has to be part of the offence. Our view is that it would be better to have the offence being just the pointing of a laser at a vehicle, because from an aviation point of view, if you cannot prove the dazzle and distraction—if it is not reported or the police do not know where the aircraft is going—you may not end up with the second part of that offence.
Andy McDonald
Q Would you even have to know that it has happened for an offence to have taken place?
Steve Landells: From our point of view in BALPA, no. It is about the act of shining a laser at the aircraft. If we see it, it will be reported, but if we do not see it, we would still like to see an offence there. The problem is that as the power of lasers gets greater and greater, there is a higher chance of injury occurring.
Andy McDonald
Q Thank you for that. Does anybody else want to comment on that aspect of this offence?
Paul Watts: From a helicopter perspective, again the dazzle and the distraction are the main concern, especially as helicopters operate in a much lower-level environment than airliners, and we rely on flying visually and visually avoiding other aircraft, buildings and obstructions. We also share the concern about the power of lasers and the frequency range—the fact that it may be possible in the future to have lasers that are not even visible. Again, we would like to see it being about somebody attempting to shine a laser at an aircraft, rather than having to show that it dazzled and distracted the pilot.
Martin Drake: It is possible to sustain an injury from a highly collimated laser—one where the beam is very narrow. It is possible to sustain an injury from that laser without having the dazzle and distract element. If it comes through your aircraft windscreen at a 90° angle, the dazzle and distract can be reduced, but if the pilot were to have that go into his eye, he could get retinal damage without getting the dazzle and distract element. I would say that that was fairly rare at the moment, but as the power of the lasers goes up and the frequency of the lasers changes, that is a concern that we have.
Simon Bray: Obviously the dazzling and distracting is the effect on the driver, pilot or whoever is in the cab. That is where the harm and the potential danger are. As well as having a victim, the legislation enables us to investigate more readily to prove an offence. If it were merely in the general direction of a vehicle, that would be more tricky to prove unless we were at the other end of that particular laser and had an opportunity to get into more of an investigation at that end of it.
Andy McDonald
Q Although we are not specifically restricting this discussion to aviation, because it could be another vessel, I think BALPA has suggested in evidence to the Committee that it is equally important and significant when lasers are shone at air traffic control towers. Have we got a history of that happening? Is it a significant risk? Would you prefer to see the legislation embrace air traffic control towers, rather than just vehicles, as currently described?
Martin Drake: There certainly is history of it in the USA, and I can think of a couple of times in the UK where a laser has been shone at the air traffic control tower. For an air traffic controller working the tower—that is the control bit that does the final approach and the controlling of the aircraft as they depart, so it is within close proximity of the airport—most of that is done visually. If his or her eyes were to be affected, it could reduce their capability of seeing aircraft close to the airport. They would then have to come off duty and be replaced fairly rapidly. It is not as common as shining at aircraft, but it does happen.
Steve Landells: Can I expand on that slightly? It depends on the airport’s procedures, but I know of one airport where, if a laser is shone at the visual control tower, they take the visual controllers out of that tower. You effectively shut down the airfield.
Tom Tugendhat
I am sorry; what did you say?
Steve Landells: They take the visual controllers out of the tower to protect them, and if that happens, the airport is effectively shut down.
Andy McDonald
Q What do you think should be happening to better control the availability of the devices themselves? What restrictions would you prefer to see in place to stop the devices being acquired?
Simon Bray: There have been discussions about whether to deal with some of these items as offensive weapons. Clearly, if there is an intent to shine and to harm someone’s eyesight with one of these devices, you can deal with them in that way, provided you get the evidence behind it that demonstrates possession of an offensive weapon with intent to cause harm; likewise if you assault someone with a laser. The difficulty is investigating and proving those instances.
What the Bill does do is provide blanket legislation that is suitably serious—more so than the different sorts of legislation that we are having to use at the moment. It is an advance on what we have currently got. I definitely take the point that were we to have additional powers restricting sale and possession, it would be easier for us to deal with things before they take place.
Richard Goodwin: Colleagues I have been working with in the Department for Transport are working with colleagues in the Department responsible for business employment, looking at potential import restrictions and some of the issues around how we control the sale of some of these lasers. That work has been going on for seven or eight years, and during that time the availability and power of lasers has increased and the cost has come down. There is a Department looking at that control now, and clearly we support that.
Andy McDonald
Q Finally, changing tack totally, can the police officers help me with an unrelated matter in the Bill about diversionary courses for road traffic offenders? Have you come prepared to speak about that at all? Could you give some indication of your experience of those courses, how effective they are and, just as importantly, the evidence base that you may or may not have on whether they are effective and reduce repeat offending? Are you able to comment on that?
Simon Bray: It is not my area of expertise and I have never had to undergo one of those courses myself. There is a good look at diversionary methods at the moment. There are certainly plans to streamline the various diversionary methods and out-of-court disposals around the country. Clearly, that would fit in that overall picture, but it is not specifically traffic.
Mr Hayes
Q As you know, gentlemen, the CAA says that many of the incidents involving lasers are unreported and it is probable that there are many more than those of which we currently know. Is it your view that it is a growing problem? How do you think the proposed legislation will help with reporting? If you think it does not do enough, what more could it do?
Paul Watts: I am from the National Police Air Service and we saw it as a growing problem, probably about three or four years ago. Over the last three years, we have averaged out at about 100 incidents a year, so it seems to have plateaued somewhat, but it has gone from a low level to a very high level. We would welcome any legislation that makes it easier to catch an offender, but we would also still like to see a reduction in the availability.
We did see a tailing off of offences after the first few prosecutions for endangering an aircraft came into play. Over London, there was a reduction in the number of times a laser was used and less of the casual targeting of an aircraft. That seems to have tailed off and we seem to be back to a level of use that seems fairly stable and fairly high. On average, about 100 offences a year are reported through our safety system.
Simon Bray: I do not know whether Richard wishes to comment on the Met figures.
Richard Goodwin: We took a view that this matter was so serious that, despite the fact that it is not currently a reportable and recordable offence under Home Office counting rules—the legislation will change that—on 1 April last year we started reporting all lasers reported to us as crimes in London. I know that colleagues in Scotland have done the same thing. Across the year, we are averaging around 100 to 120 incidents within London being reported to us. The CAA figures are slightly higher.
Colleagues from BALPA did a survey of their members, which indicates that the figures are drastically underreported. We can get into the reasons for that, but some of it could be the perception that as pilots they were not being treated as victims and the matter was not being taken seriously. The legislation will give the degree of gravity that we think the offence deserves and it will have an impact on the aviation community, pilots and captains. It will show them that we as the police will take it seriously, because we will have a consistent recording of all offences, particularly across aviation.
Richard Moriarty: We at the Civil Aviation Authority would strongly support the measures. Our figures show that laser incidents are at about 1,500 a year. That is probably an underestimate, for reasons that have been suggested by other panel members. To put that in perspective, that is three or four incidents a day in and around UK airports. We have talked before about injury to pilots and often these attacks are during their peak workload—either landing or take off, in and around airports—so there is a real aviation and public safety aspect, which it is very important to get right. We would strongly support it for those reasons.
Beyond the Bill, we are interested in continuing to work with other authorities and Departments on other measures to complement this, whether through import controls or working with the police on offensive weapons. The good news is that the provisions in the Bill will send a very strong signal that we all take this risk very seriously.
Mr Hayes
Q Clearly, the use of these devices in the way you have described is malevolent, but have you made any assessment of how much of this is what might be described as irresponsible, thuggish behaviour, and how much is more serious than that? Potentially, we could be talking about devices that were used by some very serious criminals indeed. What is your assessment of that? How much is this people grabbing hold of these things and causing trouble, and how much of it is planned, plotted and serious?
Simon Bray: The difficulty is that our detection rate of these offences so far has been pretty low. That is partly because of the legislation available to us. There is a range of it for the different areas of transport: the Offences Against the Person Act 1861 goes back many years on the railways, and air navigation orders are used in the policing environment for airports. In truth, the successes that we have had in prosecution have been where the National Police Air Service has been involved—we have our own helicopters, linking with our officers on the ground and so on.
One of the issues with the legislation that we have been able to use around distract and dazzle is that the offence under the air navigation orders has been not only not recordable, but not indictable. We have therefore not been able to use the full range of powers—entering premises in order to arrest someone or, once we have arrested them, going into premises to get evidence—and the proposed new offences will allow us the use of those powers. That is a real advance, which we welcome. We think that we will benefit from a defined power of stop and search around that. I have written to the Minister and had a response, but once the consultation goes live on that aspect we will certainly contribute to that debate, too.
Mr Hayes
Q Okay. But of course you would be able to search on suspicion following arrest.
Simon Bray: Yes, indeed. That would be the case. As regards the type of people involved, we have not got the full range of knowledge because there have been so many offences that we have not been able to get to the bottom of and we have not been able to make those arrests and prosecutions. In some cases it will be malicious; in some cases it will be because people do not understand that it is a big problem. Again, one of the benefits of the legislation will be the opportunity to educate the public and law enforcement officers at the same time.
Drew Hendry
Q I am interested in how we take further action to tackle reckless behaviour. You have said that, because of the previous legislation, it has been very difficult to get the numbers of offences that are actually being committed, but I imagine that, even if anecdotally, there is some evidence of serial offending in these cases of shining lasers at vehicles. Given that is the case, do you feel that there should be consideration within the work we are doing here on the Bill of future repeat offending to have further punishment?
Simon Bray: This legislation will allow the courts to do that in any event. It is an offence triable either way, which can be dealt with with summary powers and at a higher level, potentially, with short terms of imprisonment and so on. The fact that it will be a recordable offence means that we will be able, or required, to record all instances of it, which will give us a greater level of data about patterns and intelligence on where these happenings are taking place.
Martin Drake: The magistrates or judges can be informed by the Ministry of Justice and by the Crown Prosecution Service, which brings these prosecutions, of whether the offender has been prosecuted successfully before and, if they have, whether the case can be heard in the magistrates court or whether it is so serious that it needs to be pushed up to the Crown court. That can be done, given the span of punishments for somebody found guilty of that offence. Of course, there is also the question of the circumstances in which it occurred. If someone was using a laser slightly mischievously, that might be considered a lower offence, whereas if someone was doing that absolutely maliciously, it might be seen as a higher-level offence. The venue for the trial can be decided at the pre-trial hearing.
Drew Hendry
I should say that justice is devolved to Scotland, but I was curious about your views. Thank you.
Mr Baker
Q I want to pick up remarks that I made on Second Reading about the seriousness of the offence. As the Bill is framed, it is an offence only if the person shines or directs a laser beam at a vehicle that is in the course of a journey. As police officers, do you have adequate powers if a person is assaulted with a laser when not in a vehicle? You are nodding.
Richard Goodwin: If we are talking about retinal damage, we are talking about grievous bodily harm.
Mr Baker
Q Could you be clear on why those powers would not be adequate in the case of an aircraft in flight?
Richard Goodwin: It is difficult to prove, over that distance, the person’s intent. They are arguably shining the laser at an object. It is very difficult to be accurate at that point. It may be a reckless consequence, so there is potential for that, but there are various scientific opinions on what damage can be done at certain distances and angles, and depending on the strength of the laser—bits and pieces like that. Having said that, if somebody shines a laser and a plane crashes, there is a lot of injury to a lot of people; the consequences at that end are obviously catastrophic.
Mr Baker
Q You have pre-empted what I was going to ask. Can I ask BALPA whether it is possible that an attack with a laser could cause the loss of an aeroplane?
Martin Drake: Oh yes, absolutely. Most laser strikes happen within 3 miles of the threshold of the runway, when most aircraft are busy completing the due diligence checks that we do: “Are the wheels down? Are the flaps in the right place? Am I lined up with the runway?”—the things that pilots do all the time subconsciously. You approach at about 150 knots at that stage, so you are doing 2.5 miles a minute and are somewhere around the 1,000-foot mark. You are using all the visual cues that you get from the runway. The vast majority of these strikes happen at night, and you are using all lights. Your instruments are lit up. We have mostly cathode ray tube or LED instrumentation on the flight deck; there are very few aircraft still flying around with the old-fashioned dial-type instruments. The potential for a pilot to confuse whether he is looking at the centre line or a side set of lights—particularly in a crosswind, when you are canted over to deal with that—is huge. It is quite conceivable that if both pilots were affected by the dazzle effect at a critical stage of flight, they could attempt to land down the side of the runway, rather than down the centre of it.
Mr Baker
Q With that factor in mind, I have tabled an amendment to probe the Government’s position. It would double the term of imprisonment. The Bill sets out a term not exceeding five years; my amendment would take that to 10 years, because I had this point in mind. I should say that it is a probing amendment to provoke this conversation. What do you think the appropriate term of imprisonment should be for a deliberate attempt to dazzle at that point in the flight?
Martin Drake: You are very much into a catastrophic eventuality. Might I draw your attention to the aircraft that crashed on the threshold of Heathrow during the hours of daylight—the 777 that had the fuel issue? Had that occurred at night, the pilots would have really struggled to make the decisions that they made, and to get the aeroplane where they did. Had the pilots been dazzled or distracted by a laser, I very much doubt that that would have been successful as it was.
Mr Baker
Q In the circumstances—I ask this to the police officers—what is the appropriate maximum punishment?
Simon Bray: I would be reluctant to comment on what an appropriate sentence would be. We would recognise that it is being treated seriously and it is obviously a matter for the courts to determine how sentences given by Parliament should be dealt with on a case-by-case basis. We would not want to put a figure on it, to be honest—[Interruption.] My colleague mentioned that you are potentially talking about something in the region of manslaughter for that type of offence.
Richard Burden
Q Commander Bray, you mentioned that you have written looking for a defined power for stop and search relating to lasers.
Simon Bray: Yes.
Richard Burden
Q For that to work, would it need to be predicated on a redefinition of lasers in some way as an offensive weapon?
Simon Bray: Not necessarily, no, in support of this Act, if we had a power—it would be sparingly used—to search individuals for lasers that had been used for the purposes of the offence under clause 22.
Richard Burden
Q If lasers were going to be defined in some way as offensive weapons, would the kind of laser need to be defined more closely?
Simon Bray: If some of these lasers were to be classified as an offensive weapon as a matter of course, we could use existing legislation to stop and search for them in any event.
Richard Burden
Q But if there were to be a reclassification to make them offensive weapons, would that reclassification somehow need to define the strength of laser involved?
Simon Bray: Yes.
Richard Burden
Q At the moment, there is no need to do that because the action of pointing a laser, however strong it is, at a vehicle is the offence. Presumably, without reclassifying them as offensive weapons, if you got your power of stop and search, that would be because of suspicion that the laser would be used for—or had been used for—that purpose. But if you were simply going to say that the possession of a laser could be the possession of an offensive weapon, would that need to define the strength of the laser?
Simon Bray: You would have to have the definition of what is an offensive weapon clearly in the process of stopping and searching or when trying to work out whether it is of that type. You would not know unless you had the laser tested afterwards to see whether it met the criteria.
Richard Goodwin: I am trying to rack my brains about reasonable excuse and lawful excuse, which is in the current offensive weapons legislation—why someone in a park at 10 o’clock at night has a laser in their pocket. I am slightly reluctant to go down the route of power because that is difficult for an operational officer at the time to understand and define. Some lasers come in as one thing and then turn out, when they are tested, to be something completely different. For me it is more about what that person intends to do with any laser, rather than about some of the more high-powered ones.
Paul Watts: It is not necessarily the power that is causing the threat, but the dazzle and the distraction that we spoke about. That effect would come from a very large power range of lasers.
Tom Tugendhat
Q Given your point that the power is not entirely relevant because the dazzle is so important, can you talk about the other equipment that exists with lasers today? Surveyors use lasers, and presumably there is a risk, so they must be cautious about how they use them. Driverless vehicles are likely to use lasers in different ways and various autonomous measuring equipment is likely to use lasers. Can you talk about the dangers that they pose and how they might be mitigated?
Steve Landells: Public Health England says that lasers under about 20 milliwatts will not cause any eye damage—so, provided that they are not pointing up in the air, they are not going to dazzle and distract, and they will not cause eye damage if they happen to strike your eye. A normal blinking reaction will take into account a 20-milliwatt laser, but the problem is that the ones we are seeing now are 2,500 milliwatts or 4,000 milliwatts. They are the problem. Depending on the uses that they are put to—astronomers use them as well—and providing that they are at the lower end of the power range, if they are not being pointed in the air with driverless cars and things like that, maybe that is not an issue.
Tom Tugendhat
Q Does the Bill affect people such as astronomers using them as you suggest?
Martin Drake: We do not think so. We have done quite a bit of research on the legitimate use of laser technology, and boy, is it useful. Eye surgery uses lasers; you said surveying. There is a whole list of them. The equipment that uses those sorts of laser is designed to use the laser in that way, and it tends to have safety functions, so that if the laser strays, it shuts down, and of course it is used by trained people. The people who have those lasers fully understand their dangers and how to use them, and the Bill does talk about legitimate use. We are not in any way, shape or form saying that there are not really good reasons for using a laser. However, when they are used irresponsibly at the powers of laser that we are seeing, that gives us cause for concern. Most legitimate lasers do not have the powers that we are seeing. I say “most” because some do, but most of them do not have the powers that we are seeing, which people can quite happily buy over the internet and have delivered to their home.
Simon Bray: There is a clear defence within the Bill, and that is something that we have been paying close attention to in terms of our investigations.
Alan Brown
Q We have heard that lasers are becoming more common, and you obviously support the proposed legislation. It is similar with drones, which are becoming more accessible and more common. Would you like to see proposals to ensure better regulation and safety with regard to the use of drones?
Steve Landells: From BALPA’s point of view, we would certainly like to see more regulations and toughening up around drones. We understand that a lot of work is going on at the moment and there is a DFT consultation, but yes, it would be good to see drones in there.
Simon Bray: Likewise, whatever regulation comes out and whatever changes there might be to navigation orders and so on, we would like a simple set of regulations for the police to get involved with enforcing.
Andrew Selous
Q Chief Inspector Goodwin, I think you were expressing some concern about the increase in sales of lasers recently, and the possible need to regulate their sale. Do we have any figures on recent sales of lasers? Has there been a significant increase recently, and do we have any sense of the split in sales between legitimate use—such as for eye surgery, which we just heard about—and illegitimate use?
Richard Goodwin: I think what we are talking about is laser pens in particular. I suspect my colleagues from BALPA are probably better placed to go into the detail, because they have done some of their own market testing.
Martin Drake: Yes, indeed. When we realised that lasers were becoming an issue, we decided to spend some time looking at what was available. In some parts of the world—in fact, just down the road here—you can go into the local market and buy a laser that purports to be 500 milliwatts. We bought three of those and had them tested, and they varied between 280 and 650 milliwatts. They are about $20, give or take, and they are readily available.
At the higher end—you tend not to be able to buy those on the street; you have to go to the internet—a quick search will show you that they are available. The price has fallen considerably. When we started 10 years ago, £700 would be what you would pay for the most powerful laser. You can buy a 5-watt laser today off the internet for around $269. I do not think anyone has done the numbers, but experience tells me they are probably out there and being used.
There are certain countries where you cannot post a laser to over the internet; the USA springs to mind. You can only buy legitimate lasers from legitimate sources in the US. One of the companies we have investigated clearly says on its website: “We cannot post these products to the USA”. They are out there and they are relatively easy to buy. The advertising is up there and if you are of that mind, you can burst balloons, set fire to matches and do all these lovely things, make your cat chase around the room with it. They are up there. The advertising is there, so there is a market.
Andrew Selous
Q As a supplementary, if the legislation before us does not provide the redress that we are all urgently seeking, given the seriousness of this problem outlined by Mr Baker and others, what would be the appropriate follow-on action and within what timescale?
Martin Drake: We would like to see some import control on the recreational lasers, if I can refer to them as recreational lasers rather than legitimate lasers. That is possible; we restrict the importation of all sorts of things, so I think that is doable. We have got the problem of the ones that are here already, but that is something we can address.
Andrew Selous
Q Do I detect there is a slight sense of urgency on this and we probably want to see how this legislation goes and if there is not an improvement, you would be looking to Government to review the situation again, with a view to taking further action? Is that a fair summary?
Martin Drake: Absolutely. We started off with a laser that was about 1,200 milliwatts—we purchased one at 2,500 milliwatts. We sent it up to the University of Manchester and had both the power and collimation checked and it did what it said on the tin. We are seeing lasers today at 3.5 watts, 5 watts, and there is somebody claiming to sell you a 10-watt one. I am not quite sure how legitimate that particular advert is. Every so often, we are seeing the technology double—I am sure there is a rule for that. What gives us cause for concern is that as the power of these lasers goes up, the dazzle and distract effect on my colleagues could be such that you might not only incapacitate one pilot; you might incapacitate both of them. Then you have a problem on your hands.
At the moment, the laser normally comes through a side window and the pilot who happens to be sitting on that side is the one who takes the brunt of it and it is possible to hand over control to the other pilot and put some compensatory measures in place. We have shone the really bright ones at aircraft windows we have in the office—windows that have come off aeroplanes out of service—and it is really impressive to see what you can do even with the power of lasers that we have. We do see some urgency in this and we see the development going in the wrong direction. We would be seeking powers for the Government to do something.
Andrew Selous
Q Can I come to the police and the operational aspect of this? With the extra powers in this Bill, what confidence do you have as police officers in your colleagues’ ability to swiftly apprehend culprits?
Simon Bray: There are limitations, come what may. There are delays between us getting the information from air traffic control through the pilots to being able to identify the people on the ground and the locations of the premises where people might be. It is difficult anyway, if you are in an aircraft coming at that speed and height, to identify specifically where that will be. That is why we have benefited from police helicopters getting involved. This will be a better reactive set of options than is currently the case. However, it does not allow us to be preventive and proactive in the way we would like. That is where we come into not just powers around stop and search—as I say, judiciously used—but also the whole bit about possessing these things and being able to access them in the first instance.
If our police officers come across a group of youths who have got these things, what are they there for? What are they going to be doing with these items? Playing with them, but in what way? There is potential harm among friends, let alone people they do not like. If they have got them, there is the potential use for damage and mischief.
Andrew Selous
Q Are you satisfied that the means you have to influence Government are sufficiently robust and flexible that if you were to speak to Ministers in a few months’ time, or after this legislation has gone through, because it was still a problem, that the system would react with the degree of seriousness that you suggest it should?
Simon Bray: Both the Home Office and the Department for Transport have been keen to engage with us and to listen to what we say. They have worked with us closely on this, so I am confident that they will be listening and asking us questions.
Andrew Selous
Q My final question—I do not know if you have a copy of the Bill in front of you—is on clause 22(2), which is about the defence that could be offered if someone did not intend to commit an offence and was exercising all due diligence. I am struggling a bit to imagine an astrologer near an airport or a surveyor working late at night on some building project. Who do you think clause 22(2) has in mind? It is probably right that it is in the Bill, but I am struggling to see who might legitimately use that defence.
Paul Watts: We have seen lasers used in light displays. I could see a laser being used in a light display and someone not realising that it is in proximity to an aircraft flight path.
Andrew Selous
Q Does that happen often? Are there light displays that are permitted to take place near airports or flight paths?
Paul Watts: Not necessarily near airports, but certainly in cities and large urban areas. You would not expect them on the flight path into a major airport, but you do see lasers used by nightclubs and the like.
Andrew Selous
Q Are light displays a current issue for pilots?
Martin Drake: Generally speaking, no. The laser displays tend to be very broad beam—there is little collimation to the lasers. Displays tend to be licensed if they are close to airports, and we are usually told when they are there, so that is not really the issue. Paris has a laser that spins around the Eiffel tower, and Greenwich has one that goes up the Greenwich meridian at the moment. Those are not a problem to us at all. They tend to be low-level and pointed down across the heads of the crowd rather than up into the air.
One thing the measure would address is search and rescue. They have a thing called a laser flare, which has a fan of laser that, again, is not well collimated. The search and rescue aircraft can see those things for miles, so if someone is bobbing around in a little dinghy or is stuck on the top of a hill it is really useful. Obviously someone would not be intending to dazzle and distract—they would be intending to be rescued. I think there are legitimate uses that would be absolutely fine.
Steve Landells: Airliners tend to be going into a predictable place, whereas helicopter operators tend to operate in areas where you might not normally expect air traffic. It is probably not such a big issue for the airlines.
Simon Bray: But for people who, for example, have a laser and want to shine it on the clouds, the big question is whether they have exercised all due diligence and taken all reasonable precautions. That is going to be the crux of it at court.
Richard Burden
Q May I move on to another subject? In the previous panel I asked Mr Moriarty to comment on the fact that there is nothing in the Bill relating to the regulation of drones. It is an omission from the Bill that has been commented on in a number of quarters. Do the rest of you have any observations on whether the Bill could be usefully extended to say something about drone safety? If so, what?
Steve Landells: From BALPA’s point of view, we would like to see the Bill extended to include drones. The prime thing we would like to see is a mandatory registration process for drones. At the moment, anyone can buy a drone and fly it anywhere, and they do not have to take any responsibility for it. At the moment, if the police find a drone inside the environs of an airport or on the runway, they have no idea who that drone belongs to. We would really like to see a compulsory registration process.
Perhaps before first flight you would have to go online to get an unlock code. During that process we could get exposure to the rules and an online test for a drone operator. That would also mean that the operators would have an idea of what the rules were. A lot of the problems being caused by drones are through ignorance— 17 near-misses were reported between manned aircraft and drones last year—so we need to educate the people flying the drones that there are rules and regulations in place. It is a dangerous thing to do, and we think that a compulsory registration scheme would address a lot of the problems.
Simon Bray: We would not disagree with that. We are mindful that there need to be restrictions around particular locations, as there are currently. However, in the case of aircraft, it matters not hugely where you put in those restrictions; it is the whole bit about the flight paths in and out that we have concerns about.
Kit Malthouse
Q I have a couple of quick questions. I was slightly concerned about the definition of a vehicle. In the Bill it says that it means
“any thing used for travel by land, water or air”.
Do you think it might be sensible to extend that slightly to include vehicles that are not used for travel such as bulldozers and very tall cranes in the scope? Does a police horse used for travel count as a vehicle? If a police horse in a public order situation were to be dazzled by lasers, should it be included? The definition is quite specific, so do you feel it might benefit from being widened a little?
Simon Bray: I think it would be worth looking at. Things like police horses could be dealt with in different ways—cruelty to animals, assault of the police officers riding them and so on. It would be worth looking at that to ensure that the definition is suitably inclusive of some of the things you just mentioned.
Kit Malthouse
Q I do not know if you have had instances of people in tall cranes being dazzled, but tall construction cranes heave tons of stuff and could be quite dangerous. We have seen collapses in the past if someone has been distracted and got the angle wrong. It might seem obscure, but the purpose of the law is sometimes to deal with obscure situations.
Simon Bray: Yes, indeed.
Kit Malthouse
Q It might be worth having a look. The other issue was on the definition of an aircraft being in flight. The Bill defines an aircraft as being in flight from
“the moment when it first moves for the purposes of take-off”.
Presumably that is from push-back and includes taxiing to the runways. However, it then says
“ending with the moment when it next comes to rest after landing.”
There can often be quite a lot of taxiing after it comes to rest. It waits five minutes for its gate to come free and then it taxis for 10 minutes—or 25 minutes if it is the wrong end of Heathrow airport. Do you think that definition is a problem? Obviously taxiing is not as dangerous, but it is a dangerous moment as well.
Martin Drake: We did discuss that. The issue with taxiing is that you tend to taxi aircraft at a maximum speed of 10 to 15 mph and, if you do get dazzled, you can put the brakes on and stop. At that point, you can bring the whole thing to a graceful halt.
The definition of flight is a tricky one. If you look into it, I think there are about seven or eight definitions of flight. The current one that I think the International Civil Aviation Organisation accepts is doors closed for the purposes of a service to doors open at the end of that service. I think that covers all aspects of what you are considering.
Kit Malthouse
Q It might be easier to say “Any vehicle that is moving.”
Martin Drake: It might very well.
Kit Malthouse
Q As you say, with a stationary vehicle there are dangers, but at the moment it moves and there is danger, there is a problem.
Martin Drake: Indeed. I take on board what you said about the cranes. That is something that had not occurred to us, I must confess. In our research we have come across train drivers being lasered—apparently it is great fun to let them go through a red light and watch the brakes come on. The Seacat, coming into Holyhead harbour, was lasered a couple of years ago. Again, I do not know why. They were trying to hit the bridge.
Kit Malthouse
Q Yes, hovercraft are covered as a vessel.
Martin Drake: Yes. These are not in the scope of the Bill, but we have come across goalkeepers being lasered when an important penalty is to be taken, and we have heard of referees being lasered. It is a transport Bill, so it is not within the scope of that, and I know the police have powers to deal with it, but it is a growing problem.
Mr Baker
Q Captain Drake, you mentioned that you have got windows in your office from which you have had spectacular effects when you have shone lasers at them. For the purposes of public education, have you considered letting some videos go out there to wherever to show us what happens?
Martin Drake: We have, yes. There is some nervousness about publicising what happens because countries where that has been done have seen a spike in events. That may be a cost we have to bear: we may have to see a spike in events then to see a contraction. We could do that—it is a very sensible idea.
The Chair
There are no further questions from members of the Committee. I thank the witnesses for their evidence, time and co-operation. That has been most helpful. I ask you to remain seated for just a moment while I invite the Whip to move the Adjournment. Line-by-line consideration of the Bill will begin at 11.30 am on Thursday in Committee Room 10.
Ordered, That further consideration be now adjourned.—(Jackie Doyle-Price.)