Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Lord Young of Cookham) (Con)
My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Bus Services (No. 2) Bill [HL]
Tuesday 28th January 2025
(2 days, 23 hours ago)
Grand CommitteeRead Full debate Bus Services (No. 2) Bill [HL] 2024-26 View all Bus Services (No. 2) Bill [HL] 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 54-I Marshalled list for Grand Committee - (24 Jan 2025)
The Earl of Effingham
“Purpose: improvement of bus passenger services(1) The purpose of this Act is to improve the performance and quality of bus passenger services in Great Britain.(2) The Secretary of State must, in taking any actions under the provisions of this Act, have regard to this purpose.”Member’s explanatory statement
This amendment would place a duty on the Secretary of State to have regard to the purpose of the Act, namely the improved performance and quality of bus passenger services in Great Britain.
The Earl of Effingham (Con)
My Lords, the amendment standing in my name seeks to insert a new clause into the Bus Services (No. 2) Bill explicitly setting out its purpose; namely, improving the performance and quality of bus passenger services in Great Britain. It is imperative that we make this purpose clear, not just for the sake of the Bill’s integrity but because the millions of passengers relying on buses need action in addition to words.
As many noble Lords know, bus services are a vital lifeline for millions of people, connecting communities, supporting local economies and reducing congestion and emissions. However, we also recognise that in many areas the services are not meeting the needs of passengers. The Bill seeks to address those challenges and shortcomings, and this amendment seeks to ensure that the overarching aim of improving bus services remains at the heart of all decisions undertaken in its provisions. By explicitly requiring the Secretary of State to have regard to this purpose, we are embedding into this legislation a commitment to improve bus services. This is not a mere formality; it is about setting a clear duty on the Secretary of State to put the improvement of bus services at the core of any decisions he or she makes under this legislation.
As we consider the purpose of the Bus Services (No. 2) Bill, I draw the attention of the Committee to a recent report prepared by KPMG in conjunction with the Confederation of Passenger Transport. This report underscores the vital economic, social and connectivity benefits that local bus services deliver across the United Kingdom. The findings are compelling. The bus sector contributes a staggering £11.3 billion annually to our economy, supporting 105,000 jobs directly and an additional 53,000 jobs in the supply chain. Beyond this, the ripple effects of bus services are profound, as bus passengers spend nearly £40 billion each year in our high streets, cafes, restaurants and leisure destinations.
For rural communities, which we will discuss in future days in Committee, buses are nothing less than an absolute lifeline. Over 680 million journeys per year begin in rural areas, where buses are often the sole form of public transport, providing critical access to jobs, education and essential services. Those passengers contribute £7.1 billion to local economies, while the availability of bus services supports £1.6 billion in economic benefits through improved connectivity and affordable travel. Please let us not overlook the societal benefits. Reducing social isolation, supporting volunteerism and ensuring access to healthcare generate an additional £500 million in wider societal benefits annually in rural areas alone.
These figures remind us that buses are far more than just a mode of transport. They are an engine for economic growth, a bridge to opportunity and a force for social cohesion. They also underscore why it is essential to ensure that the purpose of this legislation is clear and focused on the improvement of performance and quality in bus services.
However, I am concerned that the Government, in their haste to overhaul the system, are pushing us back to a pre-1980s model without providing any firm evidence that this will actually work in the context of modern Britain. The Government’s proposed measures lack the necessary data, analysis or proof that they will lead to real, tangible improvements in bus services. If this Bill is not a case of “public sector ownership is good versus private sector ownership is bad”, the burden must be on the Government to provide the evidence that their approach will deliver the outcomes that they promise. This is a move that forces a one-size-fits-all approach to our bus services, a model that fails to recognise the nuances of different regions and communities across the country. We cannot simply take the London model, a model for a city of 8 million people, and attempt to shoehorn it into every other part of the country without considering the vastly different needs of those areas. The assumption that what works in one city will work everywhere else must be challenged with a laser focus.
We have to ask why the Government are pushing for this. Why remove the Secretary of State’s oversight and impose a one-size-fits-all solution without taking the time to understand the specific needs of each area? Why assume that regional authorities, some of which, as they have said, have far less experience in managing transport systems, will be able to execute a franchise model as successfully as London?
It is worth noting that, not long ago, we anticipated that this legislation might carry the name “Better Buses Bill”, and while the name has since changed, I do not believe that this reflects any attempt by the Government to shy away from their commitment to improving bus services. On the contrary, I trust that the Minister, like all of us here in the Moses Room and beyond, is firmly committed to the goal of creating an efficient and affordable bus network that meets the needs of passengers across Great Britain, but there is nothing in the Bill that reflects that. That is why we are seeking to insert this unequivocal duty, so that all current and future Ministers put the improvement of bus services first.
Allow me to be crystal clear: this amendment is not about creating unnecessary bureaucracy—far from it. It is about ensuring that the Bill’s intent is explicit from the outset. The amendment would not impose any burdensome process or stand in the way of progress. Rather, it simply sets out the overall purpose of the Bill; namely, improving bus services. By doing so, we will ensure that the focus remains squarely on what matters most: delivering tangible improvements for bus passengers. There is no new red tape, no delays in implementation, just a clear statement that the purpose of the Bill is and always should be the improvement of bus services. I beg to move.
Baroness Jones of Moulsecoomb (GP)
Can I ask the noble Earl whether this is going to be another Bill that the Tories filibuster to the point where the rest of us just want to slit our throats? Is this really going to happen the way it did with the rail Bill? I have had enough; I have other work to do. I have tabled good amendments that I want to see happen sometime soon, so are we going to see a load of nonsense from the Conservatives again? Perhaps the noble Earl can give a clear statement on that.
The Earl of Effingham (Con)
I say to the noble Baroness, Lady Jones, that in the same way that we saw her speaking to other noble Lords on the previous Bill, when she said this was happening in the Chamber, we should continue with the proceedings and listen to what everyone has to say, which is everyone’s right in this Room.
Lord Grayling (Con)
My Lords, I will speak only briefly, but I want to raise a particular point with the Minister on which I would like his clarification. What I would say to the noble Baroness who has just spoken is that, having just arrived in this place from the House of Commons, I find it noticeable that the depth of scrutiny of Bills seems to be rather deeper here. In many ways, as a former MP, I regret that, as it should not be like that. It is important that legislation is scrutinised carefully and questions are asked. I think that this House plays a very important role in ensuring that legislation is as good as it possibly can be.
The issue I have to raise with the Minister is the reason I support the amendment moved by my noble friend. I worry that ideology may sometimes get in the way of good service. I know that it would not happen in his case—I have the highest respect for the Minister—but I can quote one or two other examples in government, the future of academies, for example, where ideology seems to be treading on the toes of what is best for young people. I would not wish that to happen in the area of transport and buses, and I have misgivings about the Government’s plans to allow the setting-up of municipal bus companies. There is no obvious mechanism to ensure that there is a high-quality case for doing so.
I have also been quite worried about a simple principle. One of the things that has always attracted me to deregulation is the ability of an individual or a group of individuals to decide that the firm they work for is not doing a good job, so they will set one up in competition and do a better job themselves. I see no real reason why a simple clause such as this that places a duty on not just the Minister personally but those who work for him to ensure that the decisions they take, the interactions they have and the things that follow through from this legislation deliver high-quality, better bus services and are not just there for ideological reasons.
My noble friend mentioned London and the concern that certainly exists outside London. What makes London distinctive in bus terms is that it is vastly more subsidised than any other part of the country. I remember as Secretary of State being surprised to discover the level of discrepancy. What we all want is the best possible service. That is why I relaxed the franchising rules five years ago. I cannot see the objection to a simple clause that places a duty on the Minister and the teams who work for him to ensure that every decision taken is the best one for the passenger.
Baroness Pidgeon (LD)
As we start our detailed examination of this bus legislation, we should not forget that 1.6 billion passenger journeys were made by bus across England outside London in 2023 and that buses are essential for people to get to school, college, work or appointments and to have access to shops and leisure. A good bus service provides wider economic and social benefits for local communities, businesses and public services. As we start our deliberations today in Committee, we on the Liberal Democrat Benches overall welcome this legislation, which is looking to improve bus services, grow the number of passengers using buses and ensure a more reliable network connecting people and places. Our approach is to make improvements to the Bill to tackle the problem that bus services in many communities across the country fall far short of the required standard and level of service. As I stated at Second Reading, this situation must change. Reliable public transport is not a luxury. It is a necessity, especially for those who are most vulnerable.
Amendment 1 would place a duty on the Secretary of State to have regard to the purpose of the Act, namely, to improve the performance and quality of bus passenger services in Great Britain. It is similar to the amendment tabled by the noble Lord, Lord Gascoigne, to the public ownership of the railways legislation last autumn. At face value, it is impossible to disagree with this statement. It is fundamental to this legislation and the range of areas covered in it that this is about improving bus services across the country, rather like the rail legislation was the Government’s first response to improving our railways. In many parts of the country, our bus services have reached a crisis point and, indeed, are virtually non-existent. Therefore, improved performance and quality of bus passenger services must surely be the clear aim of this legislation. This amendment would make it clear that the primary, but not the only, purpose of the Bill is to improve the performance and quality of services.
My Amendment 52, in the third group, would place a broad duty on authorities to promote bus services in their jurisdiction, with a lot of detail regarding measures to consider. A report every two years covers the point about improvement to services and, in my view, deals with this issue in a more comprehensive and devolved manner, which is much better suited to this legislation.
The comments made by the noble Earl, Lord Effingham, about one size fits all do not reflect the legislation before us today, which provides a range of options for local transport authorities to choose the best option for their area and community. This is not about putting the London bus model across the country; it is about using whichever model suits local areas. I look forward to hearing from the Minister how the Government will respond to this amendment, how they interpret these words and, if they do not support them, whether they have other words that they may bring forward instead.
Lord Woodley (Lab)
My Lords, first, I apologise for not being present at Second Reading and not supplying explanatory statements for my many amendments. It was all finalised at short notice, at the last minute. I rise to speak to Amendments 75 and 76 in my name.
Baroness in Waiting/Government Whip (Baroness Twycross) (Lab)
My Lords, if the noble Lord could wait until that particular group comes up, that would be appreciated. We are currently on the first group, which deals with Amendment 1 only. The noble Lord’s amendments will come up later in our proceedings.
Lord Berkeley (Lab)
My Lords, briefly, in looking at Amendment 1 and hearing the speeches on it, especially from the noble Lord who proposed it, I ask: what is the point of this amendment? It seems to me to be motherhood and apple pie and nothing much else. You can interpret the phrase “performance and quality” however you want—no doubt many noble Lords will link that phrase to some amendments that they will move or speak to later—but I really do not see it. Here is a Bill to improve passenger services and quality, clearly, but the noble Lord wishes to put in an amendment: Amendment 1. We will probably spend half an hour talking about it, but I hope that my noble friend the Minister has an answer as to why he does or does not like it.
Lord Moylan (Con)
My Lords, I was not going to speak on this group after my noble friend Lord Effingham spoke, but I am prompted to do so by an earlier intervention.
It is very important that, when you make a large change, as is proposed here—the Government will claim that this is a significant change, I think, and rightly so—you are clear about what you are trying to achieve. We might assume that everyone wants better buses and so ask why there is a need to say it, but you need to be clear about what you are trying to achieve. Of course everyone wants better buses, but what actually constitutes better buses? When the railways were nationalised, everybody wanted better railways. They did not necessarily imagine that, in the 1960s, that would involve slashing nearly all the branch lines in the country and making a dramatic change to the way in which the railways operated by cutting them back.
I am in some sense trying to help the noble Lord, Lord Berkeley, with his question on the purpose of the amendment. There is also a further question: if you have an objective, who is to be held to account for that objective? This seeks to hold the Secretary of State firmly to account and put him at the centre of the chain of being responsible for this Bill.
It seems to me that there is nothing else in the text of the Bill that explicitly puts passengers, passenger needs and the quality of the service they receive at its heart. I think that there would be great benefit in doing so. We know that the Government and local transport authorities are responsible to multiple stakeholders—not only the users of their services but their workers, trade unions, local electors and so on. They have to balance the large number of needs and demands on them. The amendment says that the requirements of passengers come ahead of those others and that the Secretary of State would be held accountable if the Bill did not work out in improving passenger services. I find it difficult to see, first, why the noble Lord, Lord Berkeley, has difficulty understanding that point and, secondly and perhaps more importantly, why the Minister, should he be moved to resist this amendment, would want to do so.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, the first group of amendments relates to the Bill’s purpose. At Second Reading, I set out the need for this Bill and explained why the Government are taking action to transform bus services across England. The Bill provides new powers for local leaders, so that local communities in England have greater control over bus routes and schedules. I thank the noble Earl, Lord Effingham, and the noble Lord, Lord Moylan, for their amendment and the opportunity to revisit the Government’s objectives.
Amendment 1 would place a direct requirement on the Secretary of State to have regard to improving the performance and quality of bus passenger services in Great Britain—in fact, it would make this the statutory purpose of the Bill. I absolutely support the reasons why noble Lords have drafted this amendment: they, too, want to achieve a better bus network that is more reliable and performs well. That is a shared goal. The reason we are here debating this important legislation is to reform the industry.
I recognise the points made by the noble Earl, Lord Effingham, about the KPMG report, and by the noble Baroness, Lady Pidgeon, about the benefits of buses to individuals and communities, as well as the inadequacies of the current arrangements. However, I am bound to disagree with the assertion that there is no evidence for the Government’s approach. There is plenty of evidence, some of which we have already talked about, such as the improvements in Manchester and elsewhere, including Cornwall, which is not a large conurbation. I also disagree with the assertion that there is public good and private bad in here. This is a very large menu of choices for local transport authorities. It is certainly not one size fits all.
As the noble Baroness, Lady Pidgeon, observed, during the passage of the Passenger Railway Services (Public Ownership) Act 2024, the noble Lords, Lord Moylan and Lord Gascoigne, tabled a very similar amendment. It sought to insert a purpose clause setting out improvement of passenger railway services as the purpose of that Act. At the time, I explained that the Secretary of State’s and the Government’s wider plans and objectives for the rail network included improving performance but noted that this was not the sole purpose. I offer the Committee the same rationale for this Bill. The amendment to the public ownership Bill was not carried.
Of course the objectives of this Bill include improving reliability and performance. They are important aims, but the Bill seeks to do more. It seeks to improve safety and accessibility, to provide local leaders with the powers to make the right decisions for their local areas, to support reaching net zero and to put passengers at the heart of the Government’s reforms. The noble Lord, Lord Grayling, was kind enough to suggest that I would not let ideology triumph over the right solutions. In this case, the Government are not doing that, either.
The Bill contains a range of solutions for local bus issues, which allow local choices for the best solutions and would recognise, in appropriate cases, both the adequate provision of bus services by their existing means, with commercial operators, and the range of solutions, including both large and small operators. To single out one objective would undermine the message that the Government are trying to convey to local authorities, passengers, operators and the wider industry. Thus, I do not support the proposal.
Extending this requirement across Great Britain also presents significant difficulties. The Committee will have noted that most of this Bill extends to England and Wales but applies only in England, with a limited number of clauses that extend and apply to Wales and/or Scotland. In tabling Amendment 1, noble Lords appear to be seeking to apply all the Bill’s measures across the whole of Great Britain. That would raise the potential of cutting across the powers of the Scottish and Welsh Governments to decide how to run their own bus networks and what is best for their local communities. That would not be the right approach. It would mean the UK Government interfering in policy areas where the devolved Administrations categorically do not want that. It also potentially undermines their reform agendas; as some noble Lords will be aware, the Welsh Government are due to introduce their own Bill into the Senedd in the coming months, as they seek to introduce bus franchising.
This amendment would also have significant ramifications on time and resources. Local transport is devolved, so legislative consent Motions would be required. That would potentially slow down the passage of the Bill and the pace of the Government’s reforms, which would be a bad outcome for passengers, who desperately need better bus services now, for the reasons set out by the noble Earl and the noble Baroness earlier. I am sure that noble Lords opposite would not want this outcome and therefore hope that this amendment will be withdrawn.
The Earl of Effingham (Con)
My Lords, I thank the Minister for his response, but I cannot hide the fact that we are disappointed. The former Secretary of State for Transport in the other place, Louise Haigh, stated:
“Reliable, affordable and regular buses are the difference between opportunity and isolation for millions of people across the country”.
She went on to pledge that a Labour Government would empower every community
“to take back control of their bus services, and … support local leaders to deliver better buses, faster”.
Action speaks louder than words and we must see follow- up. That is why we must ensure that the Bill lives up to the expectations of those who rely on bus services every single day.
Promises will do little to help the millions who depend on reliable transport. They need tangible improvements and accountability to be enshrined in this legislation. I believe that placing this explicit duty on the Secretary of State would provide a valuable guiding principle throughout the Bill’s implementation. It would ensure that every step taken under the Bill would be aligned with the objective of improving bus services for all those who rely on them.
I remind all noble Lords that paragraph 1 of the Government’s Explanatory Notes for this Bill states:
“The Bus Services … Bill brings forward primary legislative measures intended to support the government’s commitment to deliver better buses”.
Please may I ask: what better way is there to show commitment to passengers than by committing to this amendment? If the Government do not feel that this purpose clause is necessary for the Bill, can the Minister please explain how they will make clear their wholesale commitment to passengers across the board? On that note, I beg leave to withdraw the amendment standing in my name.
Lord Goddard of Stockport
Member’s explanatory statement
This amendment seeks to probe the Government on whether there is no longer any minimum period from which the provisions proposed by a franchising authority may be mobilised.
Lord Goddard of Stockport (LD)
My Lords, I will speak to my Amendment 2 and support my noble friend Lady Brinton’s Amendment 6, as well as my further amendment in this group, Amendment 12. I am seeking to probe the Government with my amendment as to whether there is no longer a minimum period from which the provisions proposed by a franchising authority may be mobilised.
In layman’s terms, can a local authority vary bus routes quicker than in the provisions for the Bee Network of Greater Manchester? The original term under the law then was six months to vary a bus route. That caused real difficulties for Greater Manchester when it was ready to implement new routes connecting communities, new rural routes, and much needed direct bus routes to, for instance, the specialist cancer hospital in Manchester, The Christie, and Wythenshawe Hospital. This legislation would not allow that to happen, and I seek clarity on whether the Government have acted to remove that anomaly.
Lord Moylan (Con)
My Lords, I rise to speak to my Amendments 3, 5, 14, 15 and 16, which are supported by my noble friend Lord Effingham. With your Lordships’ permission, I will deal with them more logically than numerically, because they form a sort of logical suite.
The dramatic thing at the heart of the Bill is the possibility of the extension of franchising to all local transport authorities without any need for permission from the Secretary of State. It is true that other models are available, but enhanced bus partnerships already exist and simply making them a little more enhanced—although that might be valuable or lead to some sort of change—is not a dramatic intervention. As for the creation of municipal bus companies, that would be dramatic, but it is not what we are focusing on today. This group of amendments—mine in particular, but the whole group—is focused particularly on franchising, which occupies a large part of the text of the Bill, and understandably so because of the importance of it.
Yet I come back to this question all the time: why do the Government believe that franchising is a model—admittedly, one they are not imposing on any LTA; of course, I grant that—that they are willing to see any LTA, possibly every LTA in the country, adopt without any supervision, by-your-leave or check on the part of the Secretary of State? It is perfectly possible that as this Bill becomes law every LTA in the country goes for a franchising model. I am not saying that is going to happen, but theoretically it could, and nothing would prevent it.
So, the question we come back to, and this is what Amendment 3 is related to, is: why franchising? At the heart of franchising is the notion that a single controlling brain—yes, we are back to similar language to that which we used in relation to the railways Bill that we had before Christmas, but I do not apologise for that because a similar form of thinking is going on in this case—can produce a better service, a more rational service and a more socially friendly service than competition generated by the private sector in response to demand. There are arguments of course on both sides. This argument has been going on, as I think I mentioned in the railways Bill, since at least the 1920s. Our first attempts, or rather our success, in this country at regulating bus services go back to the 1920s with the establishment of the traffic commissioners. After they were established, their permission was needed, up until the 1980s, for any private company to run a bus service. They had to agree the routes and the fares. So we had a single controlling brain, and we went for a privatisation model from the 1980s, but the Government have simply failed to produce any evidence that this is a model that will work in all these LTAs and at a cost that the LTAs can afford without the subsidies that, notably, the Government are not promising.
When we ask for evidence, we are constantly pointed simply to Manchester and Cornwall. The noble Lord, Lord Goddard of Stockport, has of course given an eloquent explanation of how successful that model has been in Manchester, and I do not deny that success. It is possible that other noble Lords with roots in Cornwall will want to explain why the model has been such a success there—I do not know—but that is a very slender evidence base, if we are talking about all the LTAs in the country.
Amendment 3, therefore, is a probing amendment. It allows any private bus company to operate a service without a permit and it goes to the heart of the notion—it strikes a dagger at the heart of the notion—that a single controlling brain is necessary for good public service. It would wreck the franchising model that the Government propose—I admit that frankly—but its purpose today is to give the Government an opportunity to explain more fully why they think it is a perfectly acceptable outcome that franchising should be potentially adopted by every LTA in the country, without any regard to their experience, the size of the local transport authority or any other factor that might differentiate them significantly from Manchester and Cornwall.
With Amendment 15, I come to another point. Let us assume that franchising is okay and the case for it has been made—it has not, but let us assume that and move on, so to speak, logically. The amendment says that, before it embarks on an assessment for introducing franchising, the LTA must set out clear objectives as to what it is trying to achieve. At the moment, the Bill does not require it to do so; it is perfectly possible to embark on a franchising model without setting out for the public or for stakeholders what could be achieved and what is intended to be achieved, as well as what alternative structures and approaches might achieve the same objectives. The amendment would be a genuine improvement to the working of this proposed model because it would bring clarity right at the outset.
To move on in what is, I hope, a fairly logical order, Amendment 5 asks for data on performance and passenger numbers to be collected on a standardised basis across LTAs to tell us what subsidy is being expended per passenger in the operation of the franchising model—should they choose to take it up, of course. They might not do so, I grant you; we have discussed that already. The amendment would also require the setting out of the criteria that the auditors—I am calling them “auditors” while appreciating that the name may change as the pool of resource understandably widens—are to use when assessing the plan put forward by the local transport authority. Again, I think that those two things would be really helpful. We will want that data, and we will want to know that the auditors will be applying clear criteria standardised across the country—not the sole criteria that they will be applying but some criteria that will probably be nationally applicable. Those should be set out by the Government.
That brings us to Amendment 14, which takes us on to the point where the franchising model has been established. The franchise is running, but it is not working. In this Bill, there is no step-in power on the part of the Secretary of State in circumstances where bus services are manifestly deteriorating rather than improving as a result of introducing a franchising model. When this point was tangentially made at Second Reading—I think it was then; it cannot have been anywhere else—the Minister said that, because I had spent a long time in local government, I should somehow stick up for the autonomy of local government. I am perfectly happy to do that up to a point but, at the point at which services are manifestly deteriorating, there should be a power for the Secretary of State to step in. It exists in other respects with local authorities generally. We should have something of that order so that passengers and users of bus services can be protected. I would like to hear why the Minister thinks that that is wholly inappropriate, except on rather histrionic grounds around the autonomy of local government and principles of that character.
Finally, Amendment 16 is intended to provide a degree of stability in the local bus market in the event that a franchising assessment has taken place and been audited but, as a result of the audit, either it has been found wanting or the local transport authority has none the less decided not to proceed for whatever reason. At the moment, there is no limitation on the local transport authority starting the whole process again, if it chooses to do so, almost immediately. If that were the case, why would any private bus company continue to invest in or improve services if the axe, so to speak, could be dropped on it at any moment—that is, with them having gone through a process where they were told that they could carry on but the axe then being dropped again? Amendment 16 would put in a five-year ban on local transport authorities recommencing that assessment process to give some stability to the bus operator or operators in their area.
All these amendments, except for Amendment 3, which I admit is completely probing and would seriously damage the Bill, are good, sensible, practical ways of improving the franchising model that the Government are advancing with such enthusiasm. I very much hope that other Members of the Committee and, indeed, the Minister might want to say that they could support them.
Lord Grayling (Con)
My Lords, again I rise briefly to follow my noble friend on these matters and to ask the Minister to give some thought to some of them before we get to Report. I want to return to the issue of ideology. I have never taken an ideological approach to this. That is why we have franchising in Manchester; I legislated for it, and I am very pleased that it has worked. I think that the London model, although it is heavily subsidised, has proved to be very good. I am not convinced that it is viable everywhere in the country. I am very pleased that it works in Cornwall, but I am far from convinced that it would work in Surrey.
The issue is this: the Minister is a respected figure in the transport world, but he is part of a Government who are pretty ideological and part of a party that in local government is pretty ideological. Ultimately, ideology should never take precedence over what is right for the consumer or passenger, but sometimes it does. I shall give him a practical example. I do not believe for a second, outwith being a member of a Labour Government, that he would seriously argue that bringing Chiltern Railways into state control, given how well it has performed over the past 25 years, is genuinely going to lead to a quantum better service for passengers. All I am seeking to do in probing him on this is to ask him, perhaps today or perhaps on Report, to address the question of what the safeguards are if ideology treads on the toes of good service for the passenger. If a decision by a local authority or a mayoral combined authority is genuinely going to provide a negative or uncertain impact for the passenger, there should be at least a duty in the Bill for that franchising authority to have regard to quality and not simply exclude the private sector for ideological reasons because it wants to take buses into a municipal bus company or run it in a particular way. Ultimately, the interests of the passenger should always come first. I seek his reassurance. Perhaps he will give some thought ahead of Report to how he is going to ensure that some of the issues that my noble friend has rightly raised are properly reflected in the legislation so that the customer really will always come first.
Lord Woodley (Lab)
First, I apologise again for my premature interjection earlier. I was given the wrong running order. I should have checked it; I was stupid. I am going to speak to Amendments 7, 17, 18, 19, and 20, which are in my name, and talk about the potential effects on working men and women who run this fantastic service that we all rely on so much.
Although existing legislation extends service notice periods, they are much shorter than the time required to roll out franchising. There is no doubt about that. I believe that procurement of services takes around nine months, followed by a further nine months for mobilisation. Amendment 7 addresses the risk that unsuccessful or unscrupulous operators could run down services prior to new franchises, affecting service continuity and potentially putting members’ jobs at risk. Therefore, will the Minister commit to assessing whether further regulation is needed to ensure service continuity where local transport authorities pursue franchising?
Feedback from those involved in the rollout of franchising in Manchester, the only area outside London yet to implement franchising, is that early and meaningful engagement with trade unions is vital to its success. The Department for Transport has said that it would “expect” all local authorities to engage with trade unions. However, expectations are not enough. Amendment 17 seeks to learn from the experiences of Manchester and ensure that all local authorities take a consultative approach with the unions and have a joint staff forum in place as recommended. This ensures consistency across the country and best possible outcomes for franchising. Will the Minister commit to publishing a code of practice or guidance for local transport authorities to follow as part of the franchise process?
Finally, my Amendments 18, 19 and 20 would strengthen staff protection in areas where local authorities implement franchising. As the Bill reverses the ban on new local authority bus companies, Amendment 18 seeks to ensure that provisions around the transfer of staff apply. There is a risk that bus operators under franchise contracts will seek to drive down pay and conditions in a race to the bottom or employ new starters on inferior pay and conditions.
Amendment 19 proposes that workers’ terms and conditions will be maintained for the duration of the franchise to prevent the creation of a two-tier workforce by ensuring that new staff are not employed on inferior terms. Although TUPE will apply when services transfer to new operators, these regulations need strengthening so that staff are protected not just at the point of transfer but throughout the franchising process.
Amendment 20 would establish that as soon as a local authority launches its franchising consultation, the full coverage of TUPE will apply. Will the Minister commit to bringing forward the regulations or statutory guidance around protections for staff that Amendments 18, 19 and 20 seek to address?
Lord Hampton (CB)
My Lords, I shall speak to my Amendment 61. I was very pleased to hear the Minister say that the Bill is about safety. All my amendments are about safety, but this is the briefest. It is very simple and builds on Amendment 6 tabled by the noble Baroness, Lady Brinton, to make sure that those who make these decisions are qualified to do so. My amendment would simply ensure that franchising authorities responsible for the design have the appropriate IOSH and NEBOSH certificates so that they can judge what is and is not safe.
Baroness Pidgeon (LD)
My Lords, I shall speak first to Amendment 6, which seeks clarification following the debate on changing an “auditor” to an “approved person” in assessing bus franchise schemes. It would ensure that within three months of the Bill becoming an Act, the Government will publish the qualifications required for an approved person under the Act and would also lay a regulation with that information in it prior to the commencement of the clause. This is because Clause 9 amends Section 123D of the Transport Act 2000 to remove “auditor”, a term synonymous with an appropriate level of qualification, registration and probity, with the more generic term “approved person”. An auditor, by contrast, must be a member of the Chartered Institute of Public Finance and Accountancy.
The Minister said in response to my noble friend Lady Brinton’s question at Second Reading:
“The intention is not to deregulate approved persons but to widen the range of them. I completely agree with her that they should have some qualifications. An unqualified person should not be able to make a judgment about whether a franchising scheme is right”.—[Official Report, 8/1/25; col. 790.]
The powers and responsibilities of the approved person are significant. Clause 9(2)(1) states:
“A franchising authority, or two or more franchising authorities acting jointly, may not proceed with a proposed franchising scheme unless they have obtained a report from an independent approved person on the assessment of the proposed scheme (see section 123B)”.
I understand why the Government would like to broaden the scope of those able to provide assurance that an approved person will have, at the very least, a CIPFA qualification or its equivalent. However, one of the problems of loosening very specific language in previous legislation is that without sight of exactly what the new qualifications are some organisations will take advantage of the new scheme. From these Benches, we would want any new franchise proposal to have been assessed and reported on by a qualified person because this is about significant public money and assurance. On that point, I hope that the Minister can clarify today what qualifications the Government would expect for such a person in order to reassure these Benches.
My noble friend Lord Goddard clearly set out Amendments 2 and 12, which aim to ensure that we learn from the Manchester franchising experience and that best practice is shared more widely, making franchising more dynamic and responsive. Clarity is absolutely needed on whether there is a minimum period from which services or changes to services proposed by a franchising authority may be enacted. I hope the Minister can answer this point and provide much-needed clarity today.
Amendment 61 in the name of the noble Lord, Lord Hampton, regarding the qualifications needed for officials working in franchising authorities who will be responsible for designing, negotiating and enforcing any franchising schemes, is welcome, given that it is important that staff have a clear understanding of health and safety issues. The noble Lord, Lord Woodley, raised a number of points linked to employment rights, and I look forward to hearing a response to his specific concerns.
The amendments in this group from the noble Lord, Lord Moylan, are a mixed bag, with many seeming, quite frankly, to be trying to put more obstacles in the way of any local transport authority that wishes to introduce franchising. They feel like an ideological response rather than genuine concern about bus service provision across the country. The noble Lord suddenly does not seem to believe in localism. I am not sure that he would have had the same opinion in his previous life as a local councillor and a deputy mayor of London.
If all local transport authorities want to move towards franchising, so be it. This is about devolution and local authorities deciding what suits their local communities. It is highly unlikely that everywhere will move towards franchising, but they should have that option. To want potential intervention from the Secretary of State feels an unnecessary and bureaucratic top-down approach, whereas this is supposed to be a bottom-up approach to bus services. I look forward to hearing the Minister’s response to the points raised.
Lord Whitty (Lab)
My Lords, I will make a couple of brief points. I apologise to the Committee that I am Boxing and Coxing with another meeting this afternoon and that I did not table my amendment for today’s Committee. Formally, I support Amendment 17 tabled by my noble friend Lord Woodley, but I will put it in a broader context.
The amendment deals with the relationship between franchising companies and franchising authorities and the trade unions, which is vital, but, as I said at Second Reading, we need a provision for planning the workforce of bus services across Britain in the same way that we do in other industries. I say to the Minister and his colleagues that the Government are attempting major reorganisations of several industries—energy, railways, buses—yet in the proposed legislation, there is no clear commitment to forward workforce planning. I would have tabled an amendment to that effect, and I hope that the Government will come forward with that in any of the Bills that I refer to, but particularly this one.
The workforce in buses has declined by 25% over recent years. With all due respect, it is a very skilled but elderly workforce. Not many new people are coming into it. We need a new forward system as part of this Bill and the processes it starts to ensure that there is an adequate workforce-planning dimension. Part of that involves the arrangements with the trade unions, which my noble friend Lord Woodley points out in Amendment 17, but it is broader than that and has to be national as well as local. I hope that before the Bill reaches its final stages it will have a clear strategic commitment to workforce planning for bus services.
Lord Berkeley (Lab)
My Lords, just before the Minister responds, several noble Lords have talked about the bus service in Cornwall, saying how wonderful it is. As many noble Lords know, I live there and I often use the buses. There is nothing particularly special about a service that runs on time, publishes timetables and has bus stops that work. They have managed to persuade somebody—I think the Department of Transport—to enable them to finance a group of double-deck buses for the trunk routes. They are very comfortable and even have conference facilities on the top deck, with tables and things. It is still working very well. I think all that was needed was some officials in Cornwall Council who knew what they were doing, led by a good friend of mine, called Nigel Blackler. He managed to persuade the Government and Ministers at the time that it was a good thing—as Cornwall is geographically long and thin with one railway down the middle and a motorway down the middle and lots of others. It is quite possible to do; it has not cost them an arm and a leg and it is very popular. Why not carry on doing it?
Lord Moylan (Con)
May I ask the noble Lord, briefly, if he believes that the whole success in Cornwall depends on a few people knowing what they are doing and being professional about it—I am sure he is right, he knows his area—would he not want to seek from the Minister the sort of assurances that I am looking for? That is that officers in other local transport authorities that adopt franchising are seen to have similar skills and abilities before they are allowed to do so?
Lord Berkeley (Lab)
If am grateful to the noble Lord. I think it was probably at Second Reading, or sometime, that we discussed the difference in the quality of local authority management between Dorset and Hampshire or somewhere there. It is down to the local authority to make sure that they have the right people. I am sure Ministers will be very keen to ensure that they do have the right people, because otherwise you will get what I found in Dorset. The train goes every hour and stops at a station called Sherborne and, interestingly, the connecting bus departs five minutes before the train arrives. That is just the kind of thing we do not want, but I hope the local authorities will be sensible enough to learn from some of these mistakes.
Lord Hendy of Richmond Hill (Lab)
My Lords, this next group of amendments, as we have heard, relates to bus franchising. I will first turn to Amendment 8 in my name. This amends paragraph 9(3)(a) of the Bill’s Schedule, which sets out the procedure for varying a franchising scheme. It is minor and technical in nature. The amendment inserts the words
“which have one or more stopping places”
into this paragraph. This is the form of wording used elsewhere in the legislation, including elsewhere in the Schedule, to ensure that cross-boundary services are captured. This wording ensures that if a franchising authority reduces its franchising scheme’s area, it must consult all those operating cross-boundary services, as well as those operating local services wholly inside the area. This is an entirely appropriate requirement if a franchising authority is seeking to reduce a franchising area, and it is important that the language is updated to reflect that and to ensure consistency across the Bill.
I am not sure which amendment it would refer to, but I thank my noble friend Lord Berkeley for his intervention about Cornwall. As a matter of fact, I was with the person he referred to, Nigel Blackler, the architect of the Cornwall bus scheme, this morning, and also Councillor Davis from Devon from the south-west. They are so keen on the Cornish experience that they are proposing, after the passage of this Bill, assuming it becomes law, to extend it to the whole of south-west England. This is a testimony to the broad level of support for these measures given, as no doubt noble Lords will know, the political composition of Devon County Council.
As to Mr Blackler’s experience, I think he has devised an extraordinarily good scheme for Cornwall, despite not having worked in either London or Manchester. The heart of that is the understanding of the local need for bus services, not necessarily the technical characteristics of a franchise. I commend him on the success of the scheme, as has been described by the noble Lord, Lord Berkeley.
Moving on to other amendments in this group, I thank the noble Lord, Lord Goddard, for Amendment 2, which seeks to amend Clause 4. I understand that its intent is to test whether the Bill’s removal of the requirement that the mobilisation period be less than six months removes the requirement to have a mobilisation period at all. The mobilisation period is, of course, the time that expires between a franchising authority letting a contract for franchised services and those services coming into effect on the ground.
We want to give franchising authorities the flexibility to set the mobilisation period that suits their needs, so they are better placed to make the right decision for their communities, but I want to clarify that the Bill does not remove the requirement that a franchising authority sets out a minimum mobilisation period. While a franchising authority could make this period as short as it chooses to because of the Bill—for example, a minimum of one day—this determination will be based on the practicalities applying to individual franchising authorities on the ground. It is therefore best left to those authorities’ devolved decision-making. There is also, incidentally, no removal of the requirement for a minimum mobilisation period in the transitional provision in this clause. I hope that this clarification satisfies the noble Lord and allows him to consider withdrawing his amendment.
The noble Lord, Lord Moylan, has tabled Amendment 3 on service permits. He readily admits that this amendment, if it were included in the Bill, would largely wreck the franchising model. Of course, I respect his knowledge of the history of road services licensing from the 1930s, as well as the long and distinguished history of London Transport and its successors. As he is aware, service permits provide franchising authorities with a mechanism to allow bus operators to provide commercial services within franchising scheme areas, including important cross-boundary services. The measures in the Bill add further tests that franchising authorities can use when determining whether to grant a service permit.
I reassure the noble Lord, Lord Moylan, that these new tests allow franchising authorities to consider a wide range of benefits that these commercial services could provide, therefore giving authorities more scope to grant service permits and harness the additionality that the market can provide. The amendment would remove not just the new tests proposed by the Bill but the existing test already in legislation. It would mean that franchising authorities would be required to grant all applications for service permits, including those which compete directly with franchised services, for example. Because this amendment would undermine franchising authorities’ ability to run coherent and affordable schemes, I ask the noble Lord to consider not pressing it, noting that it does allow, in appropriate cases, commercial services to be provided as a matter of additionality.
Amendment 5, also tabled by the noble Lord, Lord Moylan, seeks to include the data and criteria that can be used by an independent assessor when reviewing a franchising assessment. It must be for the local transport authority to decide which data it will use to carry out the franchising assessment and determine its affordability, not the independent assessor. The remit of the independent assessor is limited to ensuring a robust assessment of the information that the franchising authority has used. The local transport authority is best placed to understand the issues it faces, as it did in Cornwall, and how best to assess these from the available datasets. New datasets, fortunately, become available frequently as technology develops. This amendment is therefore unnecessary and I look to the noble Lord not to press it.
The noble Baroness, Lady Pidgeon, spoke to Amendment 6, brought forward by the noble Baroness, Lady Brinton. This proposes a change to Clause 9. As noble Lords know, as part of the Government’s commitment to improve bus services and hand more powers to local leaders, the Bill aims to accelerate and lower the cost of the franchising process. To that end, the Bill will remove the existing requirement that those conducting independent assurance of authorities’ assessments must be auditors. This requirement has significantly restricted the pool of people able to undertake these reports. Instead, qualifications and other experience enabling someone to undertake reports will be set out in secondary legislation.
The amendment seeks to
“inquire whether the Secretary of State intends to issue the criteria for the ‘approved persons’ role in the near future”.
Clause 9 will come into force by regulations at a time the department chooses. The intention is to bring it into force only when secondary legislation is ready. My officials are engaging with a range of stakeholders to identify appropriate qualifications and will work in a collaborative way to bring forward secondary legislation in due course.
The amendment in the name of the noble Baroness, Lady Brinton, also seeks to ensure that any secondary legislation is subject to the affirmative procedure. Because the qualifications that would enable a person to conduct assurance reports are likely to change over time, it is important that the secondary legislation remains agile and responsive to such change. These changes are technical in nature and therefore I do not believe that the affirmative procedure is proportionate.
I hope that reassures the noble Baronesses that the Government seek to work co-operatively with the House to ensure that appropriate secondary legislation is brought forward in a timely manner and that, therefore, the need for appropriate qualifications will be addressed. As a result, I hope they will feel able not to press their amendment.
Amendment 7, from my noble friend Lord Woodley, intends to remove the time limit of 112 days on the notice period for varying or cancelling the registration of an existing bus service in an area that is transitioning to franchising. The existing time limit is essential in ensuring that the franchising process moves forward within a reasonable and predictable timeframe. It serves to maintain momentum in the implementation of franchising schemes, which is essential for creating certainty in the market. The time limit also helps safeguard the interests of passengers by minimising disruption.
Without the time limit, there is a risk that the franchising implementation process could be drawn out unnecessarily, leading to prolonged uncertainty for both operators and passengers. Such delays could cause operational instability and undermine the benefits of a timely transition. I will, however, consider further the point raised by my noble friend Lord Woodley, about the early withdrawal of service. But for the moment, the amendment is unnecessary, so I ask my noble friend not to press it.
I thank the noble Lord, Lord Goddard of Stockport, for Amendment 12. I recognise the history of the determined effort of Manchester—including the efforts of the late, great Sir Howard Bernstein—to take control of its bus services. I am delighted not only with the success of what has been achieved but because a former colleague, Vernon Everitt, who has been mentioned and who is now the transport commissioner for Transport for Greater Manchester, has helped to deliver what is demonstrably a better bus service, with increasing passenger numbers, as the noble Lord observed.
Amendment 12 would require franchising authorities to publish an evaluation report no later than one year after franchised services are first delivered through a scheme and to set out the scheme’s costs and benefits. I point out to noble Lords that a key purpose of the Government’s franchising guidance is to provide authoritative best practice. For instance, the revision to the franchising guidance published in December 2024 includes new content based on feedback from Transport for Greater Manchester and other mayoral combined authorities seeking to adopt that approach. The department will continue to undertake this best practice-focused approach to developing further iterations of the guidance. I therefore hope the noble Lord will consider not moving his amendment and not placing an additional requirement on franchising authorities.
On Amendment 14 in the name of the noble Lord, Lord Moylan, I think this is the right place to directly challenge the noble Lord’s assertion that the permission of the Secretary of State should be needed for local transport authorities to go down this road. He is a distinguished local government politician, as the noble Baroness, Lady Pidgeon, observed, who fiercely—in my time at least—fought undue central influence. I am astonished to now discover that he advocates such interference, not even up to a point. Mind you, he might have been subsequently converted by being a very distinguished deputy chair of Transport for London.
Lord Grayling (Con)
Will the Minister accept a challenge on that point? He will know that, in terms of the current role of local authorities in areas such as mine, if that happens, they will step in and provide a service where the private sector cannot do so. It is not as if there is a total vacuum and the local community is completely exposed to the decisions taken by the bus operator.
Lord Hendy of Richmond Hill (Lab)
I thank the noble Lord for his interjection. In his case, it is true, but there are other cases where the market has shown a considerable inability to respond across the country.
To conclude on Amendment 14, it is for the reasons I gave that I ask the noble Lord, Lord Moylan, not to press his amendment.
Amendment 15 in the name of the noble Lord, Lord Moylan, would require a local transport authority to carry out a preliminary assessment if it was considering franchising its bus services. Much of what the noble Lord has proposed to be included in the preliminary assessment is already included in the current legislation and must be included in the local transport authority’s franchising assessment. An assessment may or may not conclude that franchising is the best option. The assessment would then be published if an independent assessment had been carried out and the decision was that franchising was the best option. This amendment is therefore unnecessary, and I would welcome the noble Lord not pressing it.
Amendment 16 in the name of the noble Lord, Lord Moylan, seeks to impose a five-year moratorium on repeating franchising scheme assessments in the same area if the previous attempt was unsuccessful. The aim of the Bill is to simplify the process for authorities wishing to pursue franchising, ensuring that decisions are made at the appropriate level and in a timely manner. This amendment would introduce unnecessary constraints on local transport authorities by adopting an overly rigid approach. There are many factors that might lead an authority to decide against pursuing franchising initially, only to reconsider this later; indeed, the period of time suggested by the noble Lord would in some cases exceed the cycle of local authority elections, in which a different party that chooses to do something different might be elected. Imposing a blanket restriction limits authorities’ ability to respond flexibly to evolving conditions and opportunities. Assessments are costly and time-consuming so will not be undertaken lightly. This amendment is unnecessary; I hope that the noble Lord will not press it.
Lord Moylan (Con)
My Lords, on that point, the Minister has made in his response no reference whatever to the private sector. We are talking about circumstances in which buses are provided by the private sector in a particular area and the local transport authority, using powers to be created under this Bill, enters a franchising assessment model with a view to terminating the business of that bus operator—not terminating its activities but terminating it as a business and turning it into, simply, an agent of the local transport authority operating to instructions for a fee of some sort. That is one of the potential outcomes.
If you face that threat to your business, so to speak, and if the Government are equanimous in thinking that that is an appropriate threat to impose on the private sector, surely, if the decision at the end of that assessment is not to proceed, that private company deserves a degree of stability. Indeed, without that stability it is very unlikely to invest in any of the things we would like to see happen. Those might concern improved buses or better technology, but also better training for staff, proper recruitment, investment in the workforce and so on. An answer entirely focused on how the public sector might behave totally misses the point of what this amendment is trying to achieve.
Lord Hendy of Richmond Hill (Lab)
Of course I respect the noble Lord’s view, but the needs of local communities as expressed through local transport authorities are continuous and there are many examples across the country, unfortunately, of private sector operators choosing, for legitimate commercial reasons, to significantly vary the bus network in their area with the minimum statutory notice. They are quite adept at changing their business in accordance with market circumstances, whereas I think it is quite right to afford local communities the chance—through their elected local transport authorities—to choose to take a view about whether the bus service they are being offered is good enough to continue in its present model, or whether to choose to do something different. If there is a degree of jeopardy attached to this, that jeopardy can be expressed by the continuous need for commercial operators in those circumstances to continue serving the local area well. That would therefore make it unnecessary for the local transport authority to pursue franchising, when there are already remedies in the Bill and a mixture of measures offered to local areas to achieve their aims.
The next four amendments are from my noble friend Lord Woodley, and Amendment 17 is the first of these. He has been joined by the noble Lord, Lord Whitty, who also spoke about this. It seeks to place a requirement to establish a joint forum between the franchising authority, bus operators and trade union representatives. However, current legislation states that franchised services must be provided under a local service contract between the bus operator and the franchising authority. It is then for an individual bus operator, as an employer, to discuss and determine staffing and employment standards within the bus company, in consultation with staff and their trade union representatives. It is also for the franchising authority to decide what forums it wants to put in place to support the delivery of its bus services.
It should not be for the Government to dictate how a local transport authority should run its services. I know that noble Lords are concerned about driver welfare standards, and I am pleased to tell them that this issue is covered in the current franchising guidance. I will consider further what is said in the guidance about consultation with the workforce, and workforce planning, as a consequence of this discussion. For the moment, I do not believe that this amendment is necessary and I ask my noble friend not to press it.
Amendments 18, 19 and 20 were also tabled by my noble friend Lord Woodley. They raise the important issue of ensuring that employee rights are protected when a local authority bus company is established or during the transfer to franchising. This country already has robust legislation in place to safeguard employees. As noble Lords know, the transfer of undertakings regulations apply to employees of businesses in the United Kingdom. Should a local transport authority choose to establish a bus company, it would be necessary for it to consider the application of TUPE regulations, which are supported by additional guidance to help employers and employees understand their respective responsibilities.
Similar principles apply to franchising. Section 123X of the Transport Act 2000 already provides for the TUPE regulations to apply to staff transfers resulting from the introduction or transfer of a bus franchise, meaning that proposed Amendment 20 would add little or no value beyond what is already in place.
Furthermore, the franchising statutory guidance offers detailed advice on how to determine whether a member of staff is “principally connected” with a service. In line with existing regulations, this guidance advises franchising authorities to work collaboratively with local operators and employee representatives to agree on criteria for determining which staff are principally connected with affected services. For example, such criteria could include the amount of time that an employee spends working on franchised services or whether the employee is part of a specific group assigned to those services. TUPE would then apply to employees identified as being principally connected.
It is of course worth emphasising that, like some other public service employers, existing local authority bus companies often go beyond basic statutory requirements to support their employees. This is particularly true for individuals from protected groups, with many local authority bus companies offering attractive terms and conditions, such as higher rates of pay, flexible working arrangements, and generous holiday and maternity and paternity provisions. However, as I said in respect of the previous amendment, I will consider further what is said in guidance in this respect beyond what is already there. I therefore ask my noble friend not to press these amendments.
The final amendment in this group comes from the noble Lord, Lord Hampton, and I note and welcome his interest in safety on the bus network. He will be aware that some of the most important parts of the Bill for passengers are around disability and addressing crime and safety, which includes provisions on training for front-line and wider bus staff. However, this amendment specifically relates to training for officials from franchising authorities on IOSH, which is about providing managers with the tools to maintain a safe environment, and NEBOSH, which is a qualification in health, safety and environmental management— I refuse to say either of those as an acronym.
The effect of this amendment would be an increase in the cost and time it takes to franchise, if staff had to undertake this specific training before starting the franchising process. We all understand that safety is paramount for bus staff, passengers and the wider public but there are only a small proportion of franchising cases and those involved in franchising where having such qualifications would be relevant. It may also be that some of the training for holders of an operator’s licence, the Driver Certificate of Professional Competence, might be equally appropriate.
Part of the reform is to simplify and speed up franchising and drive down costs. This amendment would disproportionately impact authorities in considering franchising, including those in smaller towns and rural areas. This would disenfranchise local authorities, which goes against some of the core tenets of the Bill. Nevertheless, I will consider further what might be said in guidance about these important qualifications for those involved in this process who should hold them. As a result, I hope the noble Lord will feel able not to move this amendment.
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
Does the noble Lord, Lord Goddard, have any more to say, or does he wish to withdraw his amendment?
Baroness Pinnock
“(A1) Section 123B of the Transport Act 2000 (assessment of proposed scheme) is amended in accordance with subsections (A2) to (A4).(A2) In subsection (2)(a) omit “and”;(A3) After subsection (2)(b) insert “, and(c) assess the adequacy of central government funding to support the provision of bus services under the scheme.(2A) The assessment under subsection (2)(c) must include—(a) an evaluation of whether available funding is sufficient to meet the projected costs of the franchising scheme, and(b) an analysis of the funding required to maintain or improve service levels across all affected communities.”(A4) After subsection (6) insert—“(6A) An assessment under this section must be made publicly available and submitted to the Secretary of State.””
Baroness Pinnock (LD)
My Lords, I remind the Committee of my local government interests as a councillor and a vice-president of the Local Government Association. Extending bus franchising to all of England is a principle that we Liberal Democrats support. The consequences of the deregulation of bus services in the 1980s have been catastrophic for some, particularly rural communities. For those in urban areas like my own, the result has been a relatively good service on main bus routes but a steadily declining one elsewhere. Bus services in the evening are often non-existent, even in small towns, and early morning and weekend services have been steadily curtailed.
Lord Bradshaw (LD)
I rise at this moment to introduce the subject of traffic congestion. That is the biggest enemy of the bus, and traffic speeds are declining throughout the country. They have now reached a stage where the bus is an unattractive alternative even to walking. This, of course, generates expense, in that more buses have to be provided to maintain any sort of frequency of service. I have spent a good deal of my life in the bus industry and have managed large and small bus companies. I worked for a local authority and I know what I am talking about.
The problem of congestion happens in cities and towns throughout the country. It is a problem that will not be solved by building new roads. Even in New York, where they have built roads wider and wider, they have now got to the stage of having to introduce traffic management, because it is the only way to get over the problems of congestion.
There are many forms of traffic management. Some local authorities have not even moved to the first stage of decriminalising parking, and parking on the street is, obviously, a big enemy. However, there are other authorities that have been progressive in introducing bus gates, bus lanes and workplace charging. There are hundreds of different examples. I want the Minister to try to devise a system that would encourage local authorities that are increasing bus speeds by adopting traffic management methods.
Funding comes from two sources: a local authority and central government. The funding of the bus industry is woefully inadequate. I know there is a comprehensive spending review coming along. It is important that it understands the large number of people who are dependent on buses. We spend a lot of money on railways and aeroplanes, yet the bus industry gets very little money. As some of those funding streams are bound to come from central government, there should be a condition linking the money to the speed of buses in the local transport authority or franchising area, so that those that introduce measures to improve bus speeds get rewarded by getting a greater share of the money that is available, which is certainly not enough.
The noble Lord, Lord Burns, said at Second Reading that funding should be available over a long period of time so that you are not living from year to year as to whether you know you will be able to afford a bus service in the next financial year. When the money comes, I hope it comes with a few years’ life in it, so that people can invest in the expense of traffic calming and, of course, in new vehicles and the other things that are so necessary.
Lord Goddard of Stockport (LD)
I support my noble friend Lord Bradshaw. That is part of what we have done with the Bee Network in Manchester. We now have park-and-rides in parts of the borough where you can park your car all day and the bus comes and takes you straight down the very busy routes. We have increased bus lanes and camera alterations mean that as the bus arrives, traffic lights respond to it. It is that certainty, especially for people going to hospital and other places, that they know they can get there if they leave the car, perhaps a mile or a mile and a half away. It stops congestion at peak times throughout the borough. It is that foresight that local authorities have to embrace.
It is a good idea that if money comes from the Government, it comes with a proviso that you are providing evidence that you can reduce traffic and increase productivity by moving people from A to B without, as my noble friend Lady Pinnock said, waiting hours and hours for a bus that could eventually cost you your job. I fully support my noble friend’s amendment.
Lord Moylan (Con)
My Lords, I rise to speak to four amendments in this group, Amendments 30, 31, 32 and 69, although, again, I will speak to them out of numerical order. This week I stand down as chairman of the Built Environment Select Committee, and this morning I chaired my last meeting. It is quite curious that somebody very kindly gave me as a memento and a keepsake an original edition of the government-commissioned report, largely written by Colin Buchanan, Traffic in Towns. It warned that traffic would clog up towns and get in the way and strongly suggested that measures should be introduced. The interesting thing, perhaps, is that the report was published in 1963, 60 years ago. It was a very influential report, but obviously not influential enough if we are still, essentially, making the same claim today. It is possible that there is a political explanation of why the measures that Traffic in Towns proposed have never been implemented as fully as might be wished.
Baroness Pidgeon (LD)
My Lords, first, I want to speak to Amendment 33. It is one that Jenny Randerson had marked up in her paperwork for this Bill, so we felt that it was really important to table it for her.
Although there are many bus operators across the country—as of last October, there were some 367 in England—the reality is that around three-quarters of bus services are run by a handful of large companies. This amendment would enable local transport authorities to prioritise small transport operators when allocating grants, thereby helping to promote diversity in the sector. Some local, smaller operators may know the area and community far better than a large company; we felt that it was important to acknowledge this when looking at the grants that a transport authority may choose to award.
Such operators are also more likely to provide services in rural and less connected areas, including those that will be deemed socially necessary routes. For example, bus routes in Bishop’s Waltham in Hampshire are particularly poor. Despite it being a sizeable town, it lacks adequate bus connections to Winchester and the surrounding area. A small operator may be able to provide this service in a way in which the larger operators are clearly choosing not to do currently. Additionally, such grants may enable small operators to invest in cleaner, more modern vehicles, contributing to environmental goals and improving the overall quality of service. This amendment is designed to support a competitive and dynamic transport market that ultimately benefits passengers.
Amendment 52 would provide a duty on relevant local authorities to promote bus services in their area. With this new focus on improving bus services, it is right that they are properly supported and that their benefits to the local environment, as well as their wider social and economic benefits, are promoted locally. Promoting bus services will help reduce the number of private vehicles on the road, leading to lower greenhouse gas emissions and improved air quality. Reducing congestion can help improve the local economy and ensure a more reliable bus service, thereby facilitating access to jobs, education and other services. Although this is a probing amendment, its aim is to ensure that there is wider thinking about what happens beyond this legislation if we are to have the step change in bus services across the country that all sides of the Committee, I am sure, would support.
With Amendment 4, my noble friend Lady Pinnock has raised the elephant in the room: the adequacy of central government funding to support local bus services. Although this legislation gives local transport authorities a choice of options in providing services, money is needed for that, and this is not just coming from local and regional government. One of the large operators, Stagecoach, has flagged with me that bus services can be successful only if they are properly funded, irrespective of the delivery model. Securing long-term clarity and certainty around funding for this sector will help enhance the benefits delivered to local communities—exactly the point that my noble friend Lord Bradshaw has just made. The noble Lord, Lord Moylan, also touches on funding allocation in his Amendment 31, on which he spoke in great detail.
The Bill also talks about net cost for contracts that are direct awards, which implies that the revenue risk sits with the operators. It is not clear how that sits with control of fares being within the remit of the local transport authorities. Perhaps the Minister can explain the thinking regarding these contracts and funding from government going forward. My noble friend Lady Pinnock has also touched on the enforceability of by-laws, the need for model by-laws and staff training if by-laws are going to work in practice. Operators are concerned about the requirements for training and whether additional funding will be provided to cover this new requirement. Again, we are back to the elephant in the room: funding.
My noble friend Lord Bradshaw has spoken with his extensive experience and knowledge about the need to improve the reliability of bus services and ways to incentivise this through conditions in any financial support.
A wide range of other amendments in this group pick up improving the passenger experience with what we would expect from a modern bus service, whether that is wifi, charging or accessibility improvements. We do not know what we will need in the future. Things will move along. At the moment, we think about plugging things in to charge them up. Technology moves at such pace. I am not sure whether these are needed in the legislation, but perhaps they should be in the guidance. I look forward to hearing from the Minister on that point.
I would like clarity from the Minister, on the record, about demand-responsive bus services. I raised this at Second Reading, and it was made clear in the Minister’s letter in response that this legislation enables demand-responsive bus services. They may well be the solution in some parts of the country, but I want assurance that this legislation enables that rather than prevents it. I look forward to hearing detailed responses from the Minister to these important points.
Lord Hendy of Richmond Hill (Lab)
I will now address the amendments relating to local authorities, specifically the Bill’s grant-making powers, functions and duties. Before I address the amendments tabled by your Lordships, I will talk to the government amendment in my name, Amendment 81. This makes a minor change to Clause 30, providing for the provisions under Clause 21, on local transport authority by-laws, to come into force by regulations. Clause 30 sets out the commencement details for each clause of the Bill. The majority of clauses will come into force on days appointed by the Secretary of State by regulations. The current exceptions are Clause 21, “Local transport authority byelaws”, which is due to come into force two months after Royal Assent, and Clause 23, “Safeguarding duty: drivers of school services”, which comes into force six months after Royal Assent.
Clause 21 empowers local transport authorities to make by-laws addressing anti-social behaviour on their bus networks. It also allows the Secretary of State to issue statutory guidance about the exercise of enforcement functions in relation to local authority by-laws. Bringing Clause 21 into force by regulations, rather than two months after Royal Assent, is imperative to ensure that officials in my department have time to develop meaningful guidance to aid local transport authorities and their officers in undertaking enforcement functions. If the change cannot be made, local transport authorities may make by-laws before the guidance can be issued, or there may be insufficient time to develop comprehensive guidance that will be of the most use to local transport authorities and their enforcement officers. It is therefore an important change to make.
I move next to Amendment 4, tabled by the noble Baroness, Lady Pinnock. I thank her for her recognition that the Government’s recent settlements for local transport authorities are comprehensive for the moment. Her amendment seeks to include further consideration of funding requirements in the scheme assessment that authorities must undertake when developing a franchising scheme. I reassure her that consideration of the affordability of proposed franchising schemes, and therefore funding, is already a central part of the assessment. The existing legislation states that the assessment must include consideration of whether the proposed scheme would be affordable to set up and operate. As for a requirement for a specific analysis of the funding required to maintain or improve services for all communities, I stress that the legislation already requires the proposed franchising scheme to be properly costed and compared to another course of action, such as an enhanced partnership.
Finally, I note that both the franchising assessment and the independent assurance report must be published alongside the consultation. This ensures transparency around the local transport authority’s decision.
The Government have set out their ambitions to consolidate and simplify bus funding streams and to provide the long-term certainty that local transport authorities and bus operators have been calling for. The forthcoming multi-year spending review provides a real opportunity for the department to assess the sector’s funding needs so that bus services are adequately funded to support economic growth and, in particular, to overcome the barriers to the Government’s missions. Of course, any future spending decisions must be subject to the outcome of the spending review process. For all those reasons, and with that statement, I hope that the noble Baroness will feel able to withdraw her amendment.
Lord Moylan (Con)
The Minister makes a very important point there. When the last grant was allocated—in round numbers, of £1 billion, £250 million went to bus operators and £750 million went to local authorities—a new methodology was introduced for allocating it. It was based on three factors; I cannot remember what they were but, in a way, that does not matter, because the important point that I raised was that there was no evidence underlying the choice of these three factors. Although it is true that the Minister answered my point in the Chamber, he offered no rationale or evidence for the choice of those three factors; they will come back to me the moment I sit down.
However, that is not my main point. My main point is not to drag over the coals of what was discussed in the debate we had on that Statement but, rather, to point out that the Minister now appears to be saying that the same unevidenced methodology, with no rationale to explain it—a third this, a third that, a third the other—will be applied when the department comes to distribute whatever funding it has available for buses as a result of the upcoming spending review. That is a very important point, if he is making it. Does he want to confirm that that is what he meant? Or did he, perfectly understandably, fall into a momentary lapse that he would want to withdraw? We really need to know.
Lord Hendy of Richmond Hill (Lab)
I thank the noble Lord for his intervention; my response to him will probably be very similar to what I said at the time. First, the allocation methodology was far more transparent than the previous Government’s allocation methodology: it allocated money to all local transport authorities in England for bus services when, previously, there had been occasions when money was competed for via a long and tedious process not necessarily winding up in success. I, too, am struggling to recall all three of the criteria, only because my mind is currently full of these amendments, but two of them were population and bus mileage, which are self-evidently the sorts of indexes that you would use for this process.
Lord Hendy of Richmond Hill (Lab)
The noble Lord is absolutely right. I thank him for his further intervention; we got there between us, even though neither of us could remember to start with.
Those are pretty central ways of allocating that funding. I will not necessarily commit the department precisely to that methodology in future because, obviously, we have the right to consider the matter further. Equally, we would of course be open to any other proposed indices to consider against population, deprivation and place need, but, in my view, those seem to be pretty good ones; I cannot see that they are obviously wrong. In conclusion to this little excursion into this matter, it is certainly better than partial allocations and competing for money without local transport authorities being certain of success—I am certain of that.
It is important to note that much of the funding to local authorities and local transport authorities is consolidated. That funding is not hypothecated by central government, thus it is for the local transport authority to determine how to apportion its funding. For example, the Ministry of Housing, Communities and Local Government provides local authorities with funding through the local government funding settlement. Money from that can currently be used to support bus services, for example by tendering. In future, it is possible that a local transport authority could choose to put some of that funding towards a bus grant using the powers proposed by Clause 16. The same is true for funding provided through the Department for Transport’s bus service improvement plans. Local transport authorities can decide how to allocate that funding towards a variety of bus initiatives.
Local authorities also have access to other sources of funding, including council tax money and retained business rates. Some of this money could be used to establish a local bus grant without recourse to funding provided by central government. The Government do not wish to tie the hands of local transport authorities by specifying the total funding to be used to carry out the functions under this section. It is for them to work out how much they wish to spend on such grants from within their wider allocations.
The powers proposed under Clause 16 are optional and would be available to local transport authorities if they chose to use them. It is thus hard to see how the statutory guidance—which may be published but its publication is not mandatory—could contain the information that would be required by the noble Lord’s amendment.
Lastly, I fear that the amendment does not fully recognise that the statutory guidance provided for by Clause 16(6) is intended to set out factors that a local transport authority should consider when choosing to design and pay a grant to bus operators. The local transport authorities will be very aware of their financial situation when doing so. The amendment is therefore not needed and I ask the noble Lord not to press it.
Turning to Amendment 32, it is good to see that the noble Lord, Lord Moylan, recognises the important role that demand responsive transport can play in contributing to local public transport provision. The amendment takes a belt-and-braces approach—both proposed subsections would have the same effect by ultimately requiring local transport authorities to think about flexible bus services, a form of demand responsive transport, if they chose to use the powers that would be granted by Clause 16 to design and pay grants to bus operators. I contend that neither the belt nor the braces are needed. There is nothing in Clause 16 to prevent a local transport authority choosing to use the powers therein to have regard to, and to support flexible bus services, to the extent that they meet the definition of “service” in Clause 16(2). I am happy to have that on the record, as the noble Baroness, Lady Pidgeon, requested.
Other types of demand responsive transport—for instance, that provided using private hire vehicles—are not likely to fall within the definition of “service” in this measure. Indeed, in our drafting of Clause 16 we have deliberately made it possible for local transport authorities to support a wider range of bus service types than the Government can through the existing powers available to the Secretary of State under Section 154 of the Transport Act 2000. This is because we want local transport authorities, in line with the devolution agenda, to be able to design grants that best support the outcomes that they see as important. That is key to help ensure that local bus services are able to contribute to economic growth and to breaking down barriers to opportunity.
Noble Lords will also be aware that Clause 16(6) gives the Secretary of State the option to publish the statutory guidance. If we feel that the guidance is needed, we will publish it.
Local transport authorities will be best placed to determine whether demand responsive transport is a viable option for their areas. The Bill and other aspects of our devolution agenda—including building on the devolution deals introduced by the previous Government —are aimed at giving local authorities more freedom and flexibility. However, given that flexible bus services are a key part of the bus offering in some areas, and will continue to be an important option for local authorities when considering the appropriate mix of services, it would seem strange for the statutory guidance, if it were published, not to contain references to flexible bus services. I hope I have demonstrated that the amendment is not needed and I therefore request the noble Lord not to press it.
I thank the noble Baroness, Lady Pidgeon, for Amendment 33. I note with sadness that the late Lady Randerson is not here to be able to debate it herself. It is a terrible shame. As noble Lords will all be aware, economic growth is one of the core missions of this Government, and the amendment rightly highlights the important role small and medium-sized enterprises have to play in delivering growth. The Bill supports the economic growth mission by giving local transport authorities greater freedom in deciding how they support their local bus services to boost economic growth and remove barriers to opportunity.
The amendment is intended to ensure that local transport authorities that choose to use the new powers to design and pay grants to bus operators think about the needs of small bus operators when designing those grants. However, the amendment is not needed because under the grant-making powers given to them by the Bill, there is nothing preventing local transport authorities designing grants that prioritise and support smaller operators of bus services, subject to other competition and subsidy controls. Because most local transport authorities are in enhanced partnerships, they will be best placed to understand the needs of small operators. They will certainly know those in their areas and whether such grants would be appropriate.
As public authorities disbursing funding, local transport authorities will, however, need to ensure that any grants they design, using the powers that would be granted by the Bill, comply with relevant subsidy controls to ensure that they are not distorting their local market or the national market. I hope that assurance allows the noble Baroness, Lady Pidgeon, not to press her amendment.
Lord Snape (Lab)
If I may intervene on my noble friend on that point, the noble Baroness, Lady Pidgeon, painted a picture of small local authorities taking on routes that the major operators do not, to paraphrase her, and filling in gaps that they have left. If that were the case, why did they not do it after the 1986 Act? That Act said that anybody could run a bus service anywhere they liked, provided that it was registered with a traffic commissioner.
The reality was, of course, that these smaller operators used clapped-out vehicles and non-union staff, while providing none of the facilities that the major operators did. One well-known case in the West Midlands, which ended in front of a traffic commissioner, was about one of these smaller operators whose idea of a break for the driver was for him to get out of his cab at the end of the journey and urinate against the front wheel. We had to put up with that sort of smaller operator in the area where I was involved in a bus company, the West Midlands. Can my noble friend point out to the noble Baroness that, sincere though she might be, the reality of life was somewhat different? What would my noble friend put in the legislation to ensure that these smaller operators abide by the normal regulations, treat their staff properly and recognise trade unions?
Lord Hendy of Richmond Hill (Lab)
I thank my noble friend for his intervention. The real security in this—at least for passengers, and indeed for local transport authorities—is actually with the traffic commissioners. We will no doubt come to this later on in another of the amendments from the noble Lord, Lord Moylan. In fact, the process that my noble friend referred to is an elegant example of where the activities of the Driver and Vehicle Standards Agency, if followed up with the traffic commissioners, place a burden on operators to behave properly—to treat their staff properly and offer an adequate and safe service to the public. That mechanism of inspection by the DVSA and subsequent action by the traffic commissioners, should it be necessary, is a very elegant method of regulation. It is, incidentally, also strongly supported by the industry at large.
Amendment 34, tabled by the noble Baroness, Lady Pinnock, would require local transport authorities to publish a review when proposing to create new by-laws under the provisions in Clause 21. The purpose of this clause is to address a current inconsistency that means only some authorities have powers to make bus by-laws. The requirement for a review before exercising these powers would place additional burdens on local transport authorities, increasing costs and slowing down the implementation of by-laws, and that is not desirable. The inclusion of this clause comes from the Government’s engagement with local authorities and an understanding of the tools that they need to best operate safe and inclusive bus networks for their local communities. It is also not necessary because similar powers to those proposed by the Bill are available to some local transport authorities and railway operators in operating their rail and light rail networks, so there is some experience of this.
I draw the noble Baroness’s attention to the engagement with local authorities and existing by-laws in answering her question about whether these by-laws would work. The procedure in Clause 21 draws on and is analogous to that found in existing legislation, including the Railways Act 2005 and the Local Government Act 1972. Neither Act imposes requirements on local transport authorities or operators to undertake a similar review. I undertake to go away and consider with colleagues whether there are, or should be, model by-laws available. I therefore ask the noble Baroness not to press Amendment 34.
On Amendment 50, it is a real pleasure to see the noble Lord, Lord Bradshaw, in his place this afternoon. I understand the point that he is making about his proposal to place a statutory duty on local highway authorities or other authorities to take, create, implement and report on a traffic reduction strategy with the aim of improving bus journey times—I should have said that he is supported by the noble Lord, Lord Goddard. Improving the reliability and frequency of local bus services is a key part of the Government’s plans for buses, and the Bill helps give local transport authorities the right tools and levers to do that.
However, I do not believe that this amendment is the right way to do that. For example, local transport authorities are already obliged under the network management duty, established by Section 16 of the Traffic Management Act 2004, to consider the reduction of congestion and improving traffic flow in how they manage their roads, so this new duty would in effect replicate that. It would also go against the principles of devolution—giving more freedom and fewer obligations —that we have committed to with the Bill. Local transport authorities are already able to effect positive changes in bus reliability through enhanced partnerships with operators of bus services in their areas.
The recent experience in Manchester of franchising has served to illustrate, at least to me, that the power of franchising has very quickly drawn to the attention of the authority—in that case, Transport for Greater Manchester—those elements of the management of the local road network that need to be improved in order to drive a safe and reliable service.
The noble Lord’s amendment links the production of this traffic reduction strategy to any financial support issued by the Government,
“for the provision of bus services”.
This brings a range of funding streams into scope beyond just grants that are intended either to support bus services themselves, such as the bus service operators grant, or to improve infrastructure, such as bus priority schemes that could improve bus journey times through the bus service improvement plans. Some government funding—for example, grants to make buses more accessible—may be caught under the broad wording of this new measure. There is, of course, no obvious link between this kind of grant and traffic reduction, and it would be inappropriate in such cases to produce a corresponding traffic reduction plan. However, I understand the noble Lord’s point, and I will consider further how and in what way we might address the very valuable point that he is making. On that basis, I ask him not to press his amendment.
The noble Baroness, Lady Pidgeon, has brought forward Amendment 52 to place a duty on authorities to promote bus services and publish regular reports detailing progress towards achieving that objective. I firmly believe that all authorities and operators are interested in promoting their bus services in their local areas and that it is not necessary to bring forward an amendment that places a direct requirement on authorities to do so and to report on how they have met their objectives.
The Transport Act 2000 already places a duty on the local transport authority to develop and implement policies which promote and encourage safe, integrated, efficient and economic transport in their area. Buses form part of that duty, and we know through bus service improvement plans that local transport authorities are already doing this. A local transport authority also needs to have wider monitoring and evaluation plans in place to assess the outcome of its policies. It also has to answer to its communities.
The Bill is all about providing choices to local transport authorities and ensuring that decisions are made at the right level ultimately to improve the bus network for their communities. It should therefore be for the local transport authority to decide how it will measure its successes. On that basis, I ask the noble Baroness not to press her amendment.
I turn lastly to Amendment 69, which I thank the noble Lord, Lord Moylan, and the noble Earl, Lord Effingham, for bringing forward. The amendment would require local authorities to promote the adoption of customer-facing technology. The Government remain committed to ensuring services are continuously improved for passengers. I agree with noble Lords that it is important that passengers experience good access to technology, such as free wi-fi and charging facilities. As noble Lords have noted, many operators already seize these opportunities. We would be keen to encourage further adoption, albeit that we can have little control, given that operators would need to assess its cost impacts.
From a passenger-information perspective, the Government are committed to delivering better bus services, and part of this work is working closely with bus operators and local transport authorities to improve the information available to passengers about their bus services. The Bus Open Data Service was launched in 2020 and requires all bus operators of local services in England to provide passengers with high-quality, accurate and up-to-date passenger information including timetables, fares, tickets and vehicle location information. As part of this work, the Government understand the importance of having real-time information widely accessible in a range of spaces that passengers use and are conscious of the need to continually consider new ways to improve access to real-time information, while staying in line with wider government digital and data strategies. I note what the noble Baroness, Lady Pidgeon, says about the continuing progress of technology and the difficulty of specifying now what it might deliver in the future.
I hope that the noble Lord, Lord Moylan, and the noble Earl, Lord Effingham, will understand that I do not wish to cut across the work which is currently underway. On that basis, I would ask them not to press Amendment 69.
Baroness Pinnock (LD)
My Lords, I thank the Minister for his detailed reply and the clarity of his answers to all our amendments. I remind the Committee that my Amendment 4 seeks to encourage the Government to respond positively to the need for funding, such as TfL has enjoyed. I note that Amendment 30 from the noble Lord, Lord Moylan, is using funding to discourage enfranchising. There is quite a world of difference between us.
Baroness Pinnock (LD)
If I may finish my point before the noble Lord can come in, I thank the Minister for his assurance on funding. I am going to wait for the figures to come out of all that, but I am especially disappointed that the ministry has asked him to point towards local government funding as a source, when that funding is under huge stress at the moment. With that, I wish to withdraw Amendment 4 in my name.
Lord Moylan (Con)
I think that the noble Baroness said Amendment 30 when she probably meant Amendment 31, but that is a minor point.
Lord Moylan (Con)
It is complete nonsense to misrepresent my point in the way that she has done. I am really beginning to wonder, as I say, if the purpose of the Liberal Democrats is to use this Committee to attack the Conservatives rather than hold the Government to account. It is very odd indeed and might merit some discussion outside the Committee.
Member's explanatory statement
This amendment brings paragraph 9(3)(a) of new Schedule 9A to the Transport Act 2000 into line with paragraph 5(4)(a) of that Schedule.
Lord Woodley
“(a) either—”
Lord Woodley (Lab)
My Lords, in moving Amendment 9, I will also speak to Amendment 10 in my name. Although the Bill removes the ban on new local authority bus companies, they will still have to operate within the existing framework and compete with commercial bus operators. Amendments 9 and 10 would allow local authorities to directly award the provision of their local bus services to their company instead.
Lord Moylan (Con)
My Lords, I will speak briefly to Amendment 13 standing in my name. I can see the role of direct awards as a matter of principle in certain cases. They have the effect of removing from the process competition between potential bidders for a contract, but there are benefits to competition. I know the Minister wants me to imbibe and regurgitate great chunks of Lord Ashfield’s writings from the 1920s and 1930s, in which he could barely tolerate the word “competition” without using the adjective “wasteful”, but there are some benefits that might arise from competition that even the Minister might admit to.
I am willing to accept, if the Minister gives this assurance, that taking competition out of the process can be consistent with existing procurement legislation. He started to make that argument at Second Reading. I will not challenge him and say that this is contrary to procurement legislation—possibly it can be made compatible with procurement legislation, but he needs to explain how. However, I am concerned, in cases where there is more than one incumbent operator—which may well be the case, especially where local transport is for more geographically dispersed areas—about how a direct-award process might work in a way that was seen to be fair and did not expose the process to potentially awkward, difficult and unpleasant legal challenge and things of that character.
Essentially, I am trying to get more clarity from the Government about how direct awards will work in the more difficult and complex circumstances. I am seeking explicit assurances about the compatibility with procurement legislation, which I suspect the Minister can explain convincingly, but it needs to be put on the record.
Lord Grayling (Con)
My Lords, I support my noble friend’s comments. The difficulty with direct awards is that sometimes they are genuinely necessary. We experienced that on the railways—where circumstances change, a business fails or there is simply a need to take greater control for reasons that come along unexpectedly. The danger is—I go back to what I said earlier about ideology —that the requirement for a direct award caused by circumstance is overtaken by direct award driven by ideology.
I am afraid that that is at the heart of the noble Lord’s amendment. I understand the principle he represents, but it would not be right to have a situation in which a local authority was able, unfettered, to set up its own bus company and make a direct award to it, regardless of whether it was any good or not—there have been many occasions in history where the local municipal bus company has not been good at all.
In the world the Government seek to create, where in my view there is a role for direct award, on occasions, when it is necessary, I too would like to understand how the Minister would ensure that that power is used in a way that is right and proper, and, ultimately, as I said earlier, beneficial to the passenger.
Baroness Pidgeon (LD)
The amendments from the noble Lords, Lord Woodley and Lord Moylan, show both ends of the spectrum in this area—one wanting to make it easier for a local authority bus company to be directly awarded a service, and the other wanting the Secretary of State to be involved and lots of bureaucracy to make it even harder. But I absolutely agree that these amendments throw up some real questions around direct awards, and I hope the Minister can provide some clarity.
Direct awards can be made to existing operators where the post award services are deemed “substantially similar” in the context of direct awards. What criteria will be used to determine that? What is the precise definition of “substantially similar” services? How will the requirement for operators to take on real operational risk be defined and enforced under a direct award? As the noble Lord, Lord Moylan, has just rightly stated, in situations where multiple operators currently run services, what are the criteria for selecting an operator to receive a direct award? Will all existing operators be awarded a direct award? What guidance is going to be provided to local authorities regarding the structure of direct award contracts? What flexibility will they have in negotiating terms?
The bus industry welcomes this legislation but it will want some certainty. I hope the Minister can provide that in his response to this group of amendments.
Lord Hendy of Richmond Hill (Lab)
I will first address Amendments 9 and 10 from my noble friend Lord Woodley. The option of a direct award is designed to support the transition to bus franchising, bringing forward some of the benefits of franchising while delivering service continuity to passengers. Expanding the scope of direct awards to include local authority bus companies under all circumstances would not meet these objectives, which are limited and designed to deliver continuity and would, in the case of his amendments, prevent fair competition with private operators. With respect to my noble friend, these amendments are unnecessary and I would ask him to withdraw Amendment 9 and not press Amendment 10.
I thank the noble Lord, Lord Moylan, and the noble Earl, Lord Effingham, for tabling Amendment 13. It is up to local leaders to determine how to run their bus services best and to assess the effectiveness of the delivery of their franchising contracts. Franchising authorities using direct awards are subject to comprehensive reporting requirements and the Bill does not change this. The additional requirement would create unnecessary additional burdens.
Noble Lords asked whether the clause complies with the Procurement Act 2023. As I said in my letter to all noble Lords, Clause 11 is limited to the direct award of net cost contracts, also called concession contracts, where the operator provides franchise services in return for the fare revenues. These contracts are exempt from the Procurement Act 2023—see paragraphs 21 and 37 of Schedule 2 to that legislation—and instead fall under the Public Service Obligations in Transport Regulations 2023, which the Bill is amending. Therefore, this clause does not impact on the Procurement Act 2023.
On the questions raised about there being more than one operator, this is a transition arrangement in order that the passengers involved, the customers of bus routes, and the operators get more certainty in the transition than might otherwise be the case. Clearly, the provision of direct award can be useful to authorities seeking to move to a franchising model both now and in the future. It also provides flexibility to stagger the full implementation of franchising, for example, tendering competitive franchise contracts at different times. It can be used only for the first franchise contract in an area to support the transition. Direct award contracts will have a maximum duration of five years, and in many cases a shorter duration will be appropriate. Long-term franchising contracts will be competitively tendered in the usual way. For clarity, in areas where there is more than one operator, only the incumbent operator can receive a direct award contract for the same or substantially similar services. It is uniquely placed to provide service continuity to passengers during this transition.
The amendment tabled by the noble Lord, Lord Moylan, and the noble Earl, Lord Effingham, would create unnecessary additional burdens on local and central government to complete the assessment. I therefore ask them not to press their amendment.