Bus Services (No. 2) Bill [HL]

(Limited Text - Ministerial Extracts only)

Report stage
Wednesday 26th March 2025 Lords Chamber

[Baroness Pidgeon (LD)]

My Lords, Amendment 1 would place a duty on the Secretary of State to have regard to the purpose of the Act—namely, the improved performance, quality and accessibility of bus passenger services. I am grateful that His Majesty’s Opposition has taken onboard the amended wording from my noble friend Lady Brinton to include accessibility in the purpose of the Bill.

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 it is about improving bus services across the country. As we heard in Committee, in many parts of the country our bus services have reached a crisis point and are virtually non-existent. Therefore, improved performance, accessibility and quality of bus passenger services must surely be a clear aim of this legislation.

My noble friend Lady Brinton’s Amendment 61 would extend the public service equality duty to cover all aspects of bus services, and it is really important. Whether bus services are run commercially, as is the current situation, or as part of an enhanced partnership or a future LABCo, there is the potential that not all aspects of bus services are fully covered. This will ensure that buses and bus services are covered by the public service equality duty. It is an important amendment.

On the other amendments tabled by the noble Lord, Lord Moylan, regarding service permits, I am not convinced by the arguments put forward and see them as trying to compete with the franchised service in a problematic way. These feel like they are creating unnecessary bureaucracy and diktat from the centre, rather than allowing local transport authorities to provide the best service that suits their local communities and letting local government thrive. It feels at odds with what this Bill is trying to achieve. I look forward to the Minister’s response.

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

My Lords, before I begin to address the amendments, I thank noble Lords for their continued contributions to the Bill. It remains clear to me that we share a common goal to improve bus services for passengers. This is precisely why the Government introduced this Bill: to empower local areas to design the bus services that their communities need, and to reverse decades-long nationwide trends in declining patronage and services.

Contrary to what the noble Lord, Lord Moylan, said earlier, there are real choices in the Bill for local transport authorities, and rightly so. Nor is the Bill a threat to good private sector operators in the way the noble Lord implies. He referred to the entrepreneurial period in my own career. He should note that it was very largely in the provision of contracts for one of these evil public sector authorities—none other than London Transport—that the company I ran made a modest amount of money.

Your Lordships have provided insightful views and challenge throughout the Bill’s passage through this House. As I noted in my letter to all Peers, the Government have taken the time to reflect on the arguments put forward by noble Lords to strengthen the Bill’s measures in detail. I will speak to amendments that have been tabled in my name during this session. It is my view that these amendments would improve the Bill, and I hope they will be welcomed by your Lordships.

I thank the Delegated Powers and Regulatory Reform Committee for the recommendations in its 13th report. I note that the Government have welcomed and taken on board the suggestions therein.

I will take this opportunity, if I might, to briefly update the House following an exchange in Committee about the Driver and Vehicle Standards Agency reporting channel for bus safety incidents and standards in the sector. I noted in Committee, in response to an amendment from the noble Lord, Lord Hampton, that this channel could be more user-friendly. I have since written to the DVSA, which has confirmed that it is in the process of updating all online reporting forms to improve accessibility and streamline the reporting process. Changes will be designed to allow direct reporting to the DVSA intelligence unit, including from the staff of operators, which should enable more timely interventions. Following updates to heavy goods vehicle reporting, the DVSA will be prioritising public service vehicle and coach reporting. This will include carrying out user research, to ensure that the revised forms enable the accurate and timely reporting of issues. I hope this is a helpful update and that it addresses any outstanding concerns about the adequacy of this reporting channel.

I thank the noble Lord for Amendment 1. This would place a direct requirement on the Secretary of State to have regard to improving the performance, accessibility and quality of bus passenger services in Great Britain as the main purpose of the Bill. As I stated in Committee, I understand why the noble Lord has drafted this amendment. I absolutely share the aim to achieve a better bus network that is more reliable, improves accessibility and performs well.

During the passage of what is now the Passenger Railway Services (Public Ownership) Act 2024, the noble Lords, Lord Moylan and Lord Gascoigne, tabled a similar amendment. 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 that this was not the sole purpose. I offer the House the same rationale for this Bill.

The objectives of the Bill of course include improving reliability, accessibility and performance; these are important aims. However, the Bill seeks to improve safety, provides local leaders with the powers to make the right decisions for their local areas, supports reaching net zero and puts passengers at the heart of what we are trying to achieve. To single out a limited number of objectives would undermine the message that the Government are trying to convey to local authorities, passengers, operators and the wider industry. I would not support this idea or place it in the Bill.

Extending this requirement across Great Britain, as the amendment seeks to, would presents significant difficulties with devolution. In tabling the amendment, the noble Lord appears to be seeking to apply all of 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. I am sure noble Lords opposite would not want this outcome. As some noble Lords will be aware, the Welsh Government are due to introduce their own Bill into the Senedd in the coming months. I hope the noble Lord understands the reasons why I do not believe this amendment should stand, and therefore will withdraw it.

I will briefly address Amendments 2 to 8, in the name of the noble Lord, Lord Moylan, on service permits. As the noble Lord knows, the Bill introduces new tests which franchising authorities can use to assess service permit applications. These applications are made by operators seeking to run commercial services in a franchising area, including cross-boundary services. The new tests set out in the Bill give franchising authorities more scope to grant service permits. They do so by allowing authorities to consider a wider range of benefits that the proposed commercial services could provide, and then to weigh these up against any adverse effect on franchised services.

While some of the noble Lord’s amendments would remove these new tests and others would alter them, the impact would be the same: franchising authorities would be significantly restricted in their ability to take into account any adverse impacts on franchised services made by the proposed commercial service. This would open the door to authorities being compelled to grant service permits for commercial services which directly compete with franchised ones, undermining the coherence and financial viability of franchising schemes.

I underline again that I recognise the additionality that commercially operated services can provide and how they can complement franchised networks; that is why the Bill gives authorities more freedom to tap into this provision. However, these amendments would diminish franchising authorities’ ability to control their networks, and they would likely make franchising as a model unviable. This is not in the interests of places with franchising schemes or of providing all local transport authorities with a range of tools to deliver the best possible bus services.

Amendment 61, in the name of the noble Baroness, Lady Brinton, seeks to prevent bus services being provided in a manner which discriminates against disabled people. I hear the noble Baroness’s concern about the barriers that disabled people continue to face when making day-to-day journeys on local services, and I absolutely share her determination that they must be overcome. As she says, we have had several substantial discussions about this topic.

However, as I know the noble Baroness will be aware, Section 15 of the Equality Act 2010 defines the concept of discrimination arising from disability, and Section 29, in turn, places requirements on service providers to not discriminate against users, including where arising from disability. This already applies to operators of local services, as it does to local authorities. Furthermore, requiring authorities to ensure compliance with the duty contained in this amendment could only ever have effect where authorities exercise direct control over the day-to-day operations of bus operators—control which does not exist in relation to the vast majority of services, except in franchising.

Here, it would be helpful to clarify remarks I made in Committee. The Bill permits local transport authorities to decide whether to pursue bus franchising and enhanced partnerships, or to set up new local authority bus companies. No single model is mandated; that is a decision for local leaders to take. This is directly relevant to the points raised by the noble Baroness, Lady Brinton. Schedule 19 to the Equality Act 2010 makes local transport authorities subject to the public sector equality duty. These are listed as public authorities by that Act. That means, for example, that franchising authorities which have assumed responsibility for contracting their bus services are clearly within scope of the public sector equality duty.

Furthermore, noble Lords versed in the provisions of the Equality Act will know that an entity that exercises a public function is subject to the public sector equality duty. Therefore, any bus company that exercises such functions, which includes a local authority bus company, would be captured by the duty. This means that a new local authority bus company, enabled by the Bill, would be expected to consider the public sector equality duty whenever exercising public functions.

The situation is less clear-cut when it comes to enhanced partnerships between LTAs and private operators. As I have explained, bus companies are captured by the public sector equality duty to the extent to which they are exercising public functions—this would include privately owned bus companies. However, enhanced partnerships will include services that are commercial. Ultimately, it is not for me or the Government to determine what constitutes a public function—that is a question for the courts.

Therefore, although I am sympathetic to the noble Baroness’s concerns, I am unable to stand at this Dispatch Box and confirm that all bus operators must comply with public sector equality duty requirements even when not exercising public functions. In fact, to make private entities subject to the duty would be likely to require a substantial rewrite of the Equality Act. I hope that noble Lords would agree that this Bill is not the right place for that.

--- Later in debate ---

18:36

Division 5

Ayes: 238

Noes: 156

--- Later in debate ---

[Baroness Pidgeon (LD)]

My Lords, the variety of amendments in this group from the noble Lord, Lord Moylan, seem to put even more obstacles in the way of any local transport authority which wishes to introduce franchising or any elected representatives who decide to franchise services. It feels to me that it is even more bureaucracy. These amendments feel like an ideological response rather than a genuine concern about bus service provision.

Local government should have the tools to implement what it assesses is suitable for its area and will be judged on whether it is providing the service that local communities need. Ultimately, the electorate will decide what they think of their services through the ballot box. I do not think we need the Secretary of State to intervene. I have confidence in local government to deliver what is needed for its communities. I am sure the Minister may have a similar viewpoint. I am interested to hear whether the Secretary of State does have a power if it is ultimately needed, but I await the response with interest.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, Amendment 9 from the noble Lord, Lord Moylan, requires authorities to publish a statement outlining their objectives, reasons and supporting evidence. My department has established franchising guidance to support authorities through the franchising process. Requiring local authorities to provide an upfront statement is redundant as at that point franchising is still in the exploratory stage, making the statement premature. The franchising scheme assessment provides a robust way to present the evidence and rationale behind a decision to franchise. While local authorities might choose to develop a feasibility assessment to start with, this should remain optional to allow them the flexibility to adopt the approach that best suits their needs. The amendment undermines recent efforts by my department to streamline franchising, making it faster and more cost-effective. I believe the amendment is unnecessary and I hope the noble Lord will withdraw it.

Amendment 12 seeks to impose a five-year moratorium on repeating franchising scheme assessments if the previous attempt was unsuccessful. The aim of this Bill is to simplify the process for authorities wishing to pursue franchising, ensuring decisions are made at the appropriate level and in a timely manner. I would contend that this amendment introduces unnecessary constraints on local transport authorities by proposing and adopting an overly rigid approach. Many factors might lead an authority to initially decide against pursuing franchising, only to reconsider later. Imposing a blanket restriction limits the ability to respond flexibly to evolving conditions and opportunities. Assessments are costly and time-consuming, so they will not be undertaken lightly. The noble Lord referred to a change of control, which might happen more frequently than five years, which is one possibility. Another possibility is that commercial bus services in the area, presumably served by an enhanced partnership, change over time, so that franchising becomes, in the local transport authority’s view, the best way of dealing with bus services in the locality. Since bus operators can give but 42 days’ notice of quite radical changes to bus services, including large-scale withdrawals, it would be extraordinarily unfortunate to have a situation where a commercial bus company had given notice on quite a large number of services and the local transport authority found itself unable to propose a franchising scheme as a consequence in any reasonable time. For those reasons, I would say that the amendment is unnecessary and I hope the noble Lord will not move it.

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, I have only two things to say. First, I look forward to the Minister confirming that the Greater Manchester franchising scheme was carried out without any government subvention at all, as the noble Lord, Lord Goddard, explained to the House was the case. It is something of a revelation to me, but of course I may be wrong and I look to the Minister to say whether he was right.

Secondly, I am surprised and saddened that the noble Lord, Lord Snape, whom I see in his place, has not intervened in this debate because, at Second Reading, he was voluble in explaining what we all know: that this Bill will make no difference at all if a very large amount of government money is not made available throughout the country to support it. Yet one listens to the Chancellor today with some sadness on behalf of the country that she has not been able to announce the growth rates she was hoping for, that inflation is higher, that growth rates are lower and that the tax yield is less. Where is this money to come from in these sad circumstances that we find ourselves in?

I do not know whether “elephant in the room” is the right expression, but the Bill is to some degree bogus, and the House is grateful, I am sure, to the noble Baroness, Lady Pinnock, for pointing that out so acutely.

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Baroness, Lady Pinnock, for this amendment and the noble Lord, Lord Goddard, for his intervention. It is helpful of him to have quoted those figures, which I concur with, if only because, earlier in the process of this Bill, some completely different figures were quoted—very high ones—which were incorrect. One reason why the figure in Manchester is so high is that the franchising process that the Mayor of Greater Manchester has had to go through has been tortuous. That is one of the reasons why this Bill is in front of this House—to make franchising simpler and easier to carry out. It is a great achievement for Transport for Greater Manchester and the mayor to have got to the place that they have. The noble Lord, Lord Goddard, remarked on the success of the bus service in Greater Manchester, with night services, more reliability and greater revenue than anybody expected.

I am sure that noble Lords will recall that I had the pleasure of standing here at the end of last year to announce a settlement of just under £1 billion to every local transport authority in the country. That was the first for some time; previous settlements had been partial and selective between different local transport authorities. Of course, the majority of that money could now be spent rather more economically on a faster franchising scheme, if that is what local transport authorities want to do. Some of them will not want to do that, because it is clear that bus services are a patchwork across England and plenty of towns and cities have adequate local bus services provided through enhanced partnerships. I have no doubt that a local transport authority will see no need to change them in those circumstances. I can name some of those places, but it is probably better if I do not.

In any event, the affordability of the proposed franchising schemes, and therefore funding, is already an integral aspect of franchising assessment, which is hard-wired into this legislation. Assessments’ financial case should include consideration of funding available from government, as set out in the statutory guidance. Indeed, the guidance for franchising schemes allows local transport authorities to choose whether it applies to all or part of their area, or to some small part of their area, for a necessarily much smaller expenditure. The franchising assessment must be published alongside the independent assurance report if an authority decides to proceed to a consultation, and that will ensure transparency about the proposed scheme’s financial viability and impact on communities.

For those reasons, although I absolutely respect the noble Baroness’s regard for the general measures in the Bill, I hope she will feel able to withdraw this amendment.

[Lord Moylan (Con)]

The noble Lord referred to the £1 billion last year. Of course, £250 million of that went to bus companies, and £750 million went to local transport authorities, of which there are roughly 140. A quick back-of-the-envelope calculation shows that it was about a £5 million one-off sum to local transport authorities. I am not sure how far that takes you in terms of franchising and the subsidies that go with it, given that in London the subsidy is closer to £700 million than £7 million. If this Bill is to go forward, can the noble Lord give us any assurance that sums of that order or greater will be offered to local transport authorities in the future—or have we seen the best of it?

[Lord Hendy of Richmond Hill (Lab)]

The noble Lord quotes a subsidy figure for London, which is a world city of 10 million people. A choice is made by the Mayor of London in respect of the balance between fares and subsidy, amounting to the balance of subsidy that needs to be put into the network. The subsidy in Manchester will be nowhere near what the Mayor of Greater Manchester thought it would be, because of the relative growth in patronage after a long period of decline. I cannot promise any particular numbers, as the noble Lord, Lord Moylan, well knows, because that is a matter for the Chancellor, for future years and for a spending review. But I will say that that funding, and the fact that it was universally awarded to every local transport authority, is a clear indication of the Government’s commitment to devolution and local bus services in a way that was not apparent with the previous Government.

[Baroness Pinnock (LD)]

My Lords, I thank the Minister for his response and the positive way that he always responds to our queries and concerns. My concerns are based on the fact that effective, reliable and regular bus services are essential for people to access employment and the growth agenda that the Government are rightly pursuing. They are also essential to help reduce the number of cars on the road and move people to using public transport more often to help our environmental agenda. That is the backdrop to my concerns. I live in West Yorkshire, and we are desperate for a bit of extra funding to support schemes for franchising there. With those remarks, I beg leave to withdraw my amendment.

--- Later in debate ---

Moved by

[Lord Hendy of Richmond Hill]

11: After Clause 9, insert the following new Clause—
“Duty to consult persons with disabilitiesIn section 123E(4) of the Transport Act 2000 (consultation), after paragraph (d) insert—“(da) such persons with disabilities (within the meaning given by section 6 of the Equality Act 2010) who are users or prospective users of local services, or such organisations appearing to the authority or authorities to be representative of such persons, as they think fit;”.”Member's explanatory statement
This amendment requires a franchising authority to consult disabled persons, or organisations representative of disabled persons, before making a franchising scheme.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, I turn to a series of four government amendments which place requirements on franchising authorities relating to accessibility. The first of these amendments, Amendment 11, requires that where an authority gives notice of its intent to make a franchising scheme and begins a consultation, the people and organisations with which it must consult includes disabled people and organisations that represent them.

The remaining three amendments require that, when a franchising scheme is varied, local transport authorities must consult with disabled people or with organisations representing them. The only difference between them is the type of franchising scheme they relate to. Amendment 62 applies the consultation requirement where schemes are varied to add to the existing area that they cover; Amendment 63 applies it to variations affecting the extent of the franchising scheme but not resulting in the addition of new areas; and Amendment 64 applies it to all other forms of variation. For all three categories of franchising scheme variation, the Bill already proposes that organisations representing passengers must be consulted, as the authority sees fit, but Amendment 11 requires specifically that disabled people and organisations representing them be included.

Together, these measures will help to ensure that the voice of disabled people is heard by local transport authorities when franchising schemes are varied, with the aim of ensuring that plans take proper account of the needs of those people. With that in mind, I hope that noble Lords will support this amendment, as well as the wider package of accessibility amendments that I have tabled in my name. Once again, I thank your Lordships for making the interventions that have helped shape the Government’s approach.

[Baroness Brinton (LD)]

I am grateful to the Minister for his Amendments 11, 62, 63 and 64, all of which add to the Bill a duty to consult local disabled people and disabled people’s organisations. Will that cover not just the geographic area of the local transport authority but the range of disabilities? In particular, will it ensure that a range of local disabled people’s organisations are consulted. There is a real frustration when, for example, only one particular disabled organisation is talked to.

On my train this morning, I talked to a woman with vision impairment who said that she has real frustrations in this regard. She is on the co-production committee in Hertfordshire, and she said that too often, one organisation for disabled people is gone to, and it is assumed that it understands all the different needs of, say, blind people, deaf people, people in wheelchairs, people with autism—I could go on. I would be grateful for an answer to that question, but on balance I am grateful that these measures are here. They are helpful, but they are not what I was seeking in my earlier amendment, which I shall not go over again.

Amendment 18 covers enhanced partnership schemes requirements enabling travel by persons with disabilities. I note that new subsections (1) and (2), relating to the enhanced partnership schemes, use the word “may”, not “must”. If an enhanced partnership does not specify, for example, how safe a bus stop area is, or that bus stop areas must be safe, will it still have that responsibility, given that Section 174(1)(a) of the Equality Act states:

“The Secretary of State may make regulations … for securing that it is possible for disabled persons … to get on to and off regulated public service vehicles in safety and without unreasonable difficulty”?


It says, “may make regulations”, but the point is that there is a duty to ensure that disabled people can get on and off buses easily. If one of the enhanced partnerships decided not to check in a rural area, for example, whether there was street lighting or a pavement wide enough for a wheelchair to 2get off, would that be regarded as acceptable by the Government? There is no compulsion on the enhanced partnership to consult on that.

Amendment 19 says that local transport authorities in England must make a bus network accessibility plan. We on these Benches think that is helpful. It is a shame, though, that there is no common framework. It also means that the background behind a plan, who they consulted and what the details were, can continue to remain private.

My Amendment 37 is slightly different, in that it proposes an annual report with a common framework, according to which all LTAs would have to compile that report, using certain types of data and looking at certain types of accessibility issues. I said in Committee and I say again now that sometimes, there is nothing like an authority being required to consult, create and publish a plan with its results every year, in order to make the change we were talking about in group 1. We have heard from the House of Commons Transport Select Committee that there is much to do in practice, not just on buses themselves but on LTAs enforcing proper accessibility. I wonder whether the Minister could comment on that.

On balance, I am grateful for these amendments, but they are not the legislative sureties that I was looking for in the earlier group.

--- Later in debate ---

[Lord Hendy of Richmond Hill (Lab)]

My Lords, I am grateful to noble Lords for their comments on the Government’s amendments. I listened carefully to what the noble Baroness, Lady Brinton, had to say and her comparison of Amendment 37 with government Amendments 18 and 19. The Government believe that tabling these makes a real difference to the provision of services for disabled people. Amendment 19 in particular, which relates to the bus network accessibility plan, will enable local transport authorities to provide properly for people with disabilities.

The noble Baroness, Lady Brinton, referred to the range of organisations in areas, and I am very comfortable with reassuring her that the intention here is that there should be such a range; it is not that local transport authorities should choose only one or two organisations, which does not seem right to me. I need to think about what she said on the wider duties to ensure that disabled people have access to all places. We will come on to accessible bus stops and how they should be dealt with in this legislation. I look forward to the opportunity—probably not on this day of Report, but the following day—to debate that, and I shall respond very carefully when we get there.

In the meantime, I thank noble Lords for their contributions to this worthwhile debate. I hope that the noble Baroness, Lady Brinton, still feels able to withdraw her Amendment 37 in favour of government Amendment 19, so that we can have a package of measures for people with disabilities that covers the whole range of solutions for local transport. I hope that noble Lords can accept the amendments in my name.

Amendment 11 agreed.

--- Later in debate ---

19:31

Division 6

Ayes: 133

Noes: 185

--- Later in debate ---

19:45

Division 7

Ayes: 129

Noes: 185

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, the noble Baroness, Lady Pidgeon, has put her finger on what might be described as the other elephant in the room. The whole purpose of this Bill is defeated if it does not result in uncommercial services being run on the basis of subsidy. We have discussed in a previous group the complete absence of any information from the Government about where those subsidies are coming from. In this amendment, the noble Baroness draws attention to the types of routes that should be included and what a socially necessary service is.

To the noble Baroness, Lady Jones of Moulsecoomb, I say that no party cares for villages more than the Conservative Party. While I cannot sympathise with her attempt to resurrect bus routes as old as 15 years, I have great sympathy with what she has to say about villages. I hope that the Minister shares that and can reach out to her to achieve the sort of compromise that she is offering—and which can only improve the Bill.

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Baroness, Lady Pidgeon, for Amendment 14. I know through discussions with her that she has a keen interest in protecting vital services, especially those outside large towns and cities. The Bill sets out that a socially necessary local service is a local bus service which

“enables passengers to access—essential goods and services … economic opportunities (including employment), or … social activities”

and which

“if cancelled, is likely to have a material adverse effect on the ability of passengers to access those goods, services, opportunities or activities”.

However, as there has been concern that not all essential services are covered by this definition, particularly healthcare and schools, I want to confirm through this statement to the House that “essential goods and services” includes healthcare, schools and other educational institutions. Therefore, a socially necessary local service may include a bus service which enables passengers to access healthcare and schools. The Government intend to produce detailed guidance to assist in the interpretation and application of this measure. For these reasons, I hope that the noble Baroness can withdraw her amendment.

I thank the noble Baroness also for Amendment 16 and want to reassure her that under Clause 12, when an operator wishes to cancel or amend a service, the operator and the local transport authority will need to give due consideration to the benefits that a bus service provides to the local community. LTAs will also need to consider alternatives to mitigate any adverse effects of changes to such services. Under the Transport Act 1985 and the Transport Act 1968, local authorities are already under a duty to secure public passenger transport services that they consider appropriate to secure to meet the requirements of the area and which would not otherwise be met. This is likely to include services that have been identified as socially necessary.

Clause 12 should result in additional transparency by identifying the number of socially necessary local services in an area where an enhanced partnership is in place. This in turn will provide government with additional information which can be used to inform the decision-making around funding for local bus services. Local transport authorities have the best understanding of the needs of their local communities. Any additional obligations introduced through legislation would place an undue burden on local authorities and undermine their independence. They should be able to consider all the possible options to deliver the best outcome for passengers.

On Amendment 15 tabled by the noble Baroness, Lady Jones, there was a similar amendment in Committee. I reaffirm that this Government recognise that local transport authorities are best placed to understand and address the needs of the communities that they serve. This Bill is about giving them real powers to decide what is best for their local area. We can recognise that a service that has been cancelled within the last 15 years may no longer be a service that would meet the current needs of the community given that these will inevitably change over time, but I also recognise that some might still be relevant to the needs of the community. As local transport authorities address need for their communities, they can of course consider former routes if they believe that they would represent a contribution to socially necessary local services. In that, I recognise the rather unfortunate nature of some of the funding for rural bus services in recent years, which has provoked new services, cancelled old ones, had the new services withdrawn and had the old ones brought back. She is right in her assumption that local transport authorities should look at the recent past in considering the best pattern of socially necessary services.

I also recognise the need to serve villages just like the rest of the communities in a local transport authority area, and I am grateful to the noble Baroness for pointing out that this is rather more about making sure that the socially necessary services chosen by local transport authorities serve the complete community, including villages, and rather less about a review which, as she said, generally costs time and money—almost certainly, such reviews do. In terms of this Bill, however, it will take up to five years for local transport authorities either to transition to a franchise network or to form a bus company, with a period for the review itself. I agree that it is much better for local transport authorities to consider the needs of villages in their areas and the right options of routes to serve their local communities. I hope therefore that she will not press her amendments.

[Baroness Pidgeon (LD)]

I thank the Minister for his clarification on socially necessary bus services and his confirmation that healthcare, schools and education institutions are covered by this. On that basis, I beg leave to withdraw my amendment.

--- Later in debate ---

[Lord Snape (Lab)]

My Lords, I rise to speak briefly to this amendment. The noble Lord, Lord Moylan, said that he deplored the fact that the £2 bus fare had been increased to £3. This is, even for him, an act of great cynicism. The £2 maximum bus fare was introduced by the last Conservative Government on 1 January 2023 —coincidentally, of course, in the run-up to the next election. It was initially introduced for three months. There is nothing that makes the bus industry despair more than this sort of short-termism. You cannot plan ahead for three months so far as bus services are concerned.

That £2 limit was increased on numerous occasions in the run-up to the election, and if the Opposition spokesperson is going to tell us that it would have remained at £2 in the foreseeable future, I would be more than impressed. I suspect that this is a plot that has succeeded in luring the Liberal Democrats into the same Lobby. The House would be better served if we waited for the actual debate on the Liberal Democrat amendment rather than suffered what is, I repeat, a cynical operation on the part of the party opposite.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, I will make just a few points about the former £2 national bus fare cap. The first is quite obvious. The previous Government left no forward funding for that scheme at the time of the election and, indeed, left a rather large hole in the public finances, which, in effect, prevented its continuation.

The second point is that it is very easy to assume that somehow the maximum cap of £3 meant that all fares went up by 50%. The vast majority of travellers on bus services travel for a short distance and many of them paid less than £2 in any event. Fares between £2 and £3 went up only by inflation, and the cap still applies to longer-distance journeys that would cost more than £3.

In any event, in February, the Government published an evaluation of the first 10 months of the £2 fare cap. Evidence from that suggests that the scheme had a relatively greater impact on leisure trips compared with those for education and employment and was, in fact, rather poor value for money. So I believe that a legislative requirement for further evaluation is unnecessary and, on that basis, I would ask for the amendment to be withdrawn.

[Lord Moylan (Con)]

My Lords, I hesitate to be drawn by the noble Lord, Lord Snape, who intends only to provoke me. But I am to some extent provoked. I am provoked to the extent of pointing out that there was a solemn pledge by the Conservative Party in its manifesto to continue the £2 bus cap and that the Conservative Party keeps its pledges. He should not find that astounding.

As far as the Minister is concerned, we suddenly discover that leisure trips on buses are of no account and no real value. “It is much better if people use their cars for leisure trips”. I mean, really, this an astonishing convolution of his arguments: “Now we don’t value leisure trips”. Of course we want people to use buses for leisure trips—and not merely people who are economically active. This is something the Government should understand properly. They should look into the effects of their own policy. I wish to test the opinion of the House.

--- Later in debate ---

20:15

Division 8

Ayes: 155

Noes: 127

--- Later in debate ---

[Lord Hendy of Richmond Hill (Lab)]

My Lords, Amendment 17A concerns the impact that the increase in employer national insurance contributions will have on socially necessary bus services, including those for children with special educational needs and disabilities. The Government do not expect the changes to national insurance to have a significant effect on home-to-school travel for children with special educational needs and disabilities, so it would not be proportionate to conduct the assessment that this amendment suggests.

Local authorities are responsible for arranging home-to-school travel and delivering this through a range of providers. Department for Education officials engage regularly with local authorities to understand the challenges that they face and will continue to monitor this situation. It is expected that private sector organisations that contract with local authorities will take the impact of national insurance changes into account, along with other changes to their cost base, in the usual way through contract negotiations.

The Government have already announced £2 billion of new grant funding for local government in 2025-26, which includes £515 million to support councils with the increase in employer national insurance contributions. This is not ring-fenced funding, and could therefore be used to fund contracted services should a local authority wish to. Moreover, I understand that a large proportion of special educational needs and disabilities transport operators are self-employed and therefore exempt from this charge. The Government are protecting the smallest businesses and charities by increasing the employment allowance to £10,500. Next year, 865,000 employers will pay no national insurance contributions at all, more than half of employers will see no change or will gain overall from this package, and employers will be able to employ up to four full-time workers on the national living wage and pay no employer national insurance contributions.

On socially necessary services more broadly, excluding special educational needs and disabilities transport, the Government have already confirmed, as I said, an additional £925 million for the 2025-26 financial year to support and improve bus services in England outside London. The Government recognise that local transport authorities are best placed to understand the needs of their communities and can use the £925 million to introduce new bus routes, make services more frequent and protect crucial bus routes, ensuring passenger access to essential goods and services. I contend that this amendment is not required.

[Lord Moylan (Con)]

My Lords, it is a sorry reply from the Minister. The modest amounts of money he splashes around seem to have an awful lot of work to do, since they are the response to nearly every group of amendments we have discussed. It is very sad that he does not want to accept this amendment, and, in that light, I feel I am obliged to test the opinion of the House.

--- Later in debate ---

20:33

Division 9

Ayes: 150

Noes: 126

--- Later in debate ---

Moved by

[Lord Hendy of Richmond Hill]

18: After Clause 15, insert the following new Clause—
“Requirements enabling travel by persons with disabilities(1) The Transport Act 2000 is amended as follows.(2) After section 138C (requirements in respect of local services) insert—“138CA Requirements enabling travel by persons with disabilities(1) An enhanced partnership scheme may specify under section 138A(5)(b) requirements about enabling persons with disabilities to travel on local services independently, and in safety and reasonable comfort.(2) The requirements may include requirements about securing alternative means for the carriage of a person with a disability where—(a) the person cannot travel on a public service vehicle being used to provide a local service because the vehicle’s wheelchair space is occupied and cannot be vacated readily, and(b) it is possible for the person, together with any wheelchair, mobility aid or assistance dog which the person has with them, to be carried in safety and reasonable comfort to the person’s intended destination by a taxi or private hire vehicle.(3) Before making an enhanced partnership scheme, a local transport authority must consider whether the requirements proposed to be specified in the scheme will enable persons with disabilities to travel independently, and in safety and reasonable comfort, on local services that have one or more stopping places in the area to which the scheme relates.(4) In this section—“assistance dog” has the meaning given by section 173(1) of the Equality Act 2010;“mobility aid” has the meaning given by section 164A(6) of that Act;“persons with disabilities” means persons who have a disability within the meaning given by section 6 of that Act.” (3) In section 138F(6) (consultation), after paragraph (b) insert—“(ba) such persons with disabilities (within the meaning given by section 6 of the Equality Act 2010) who are users or prospective users of local services, or such organisations appearing to the authority or authorities to be representative of such persons, as they think fit;”(4) In section 138K (variation), after subsection (8) insert—“(9) Before varying an enhanced partnership scheme, a local transport authority must consider whether the requirements proposed to be specified in the scheme as varied will enable persons with disabilities to travel independently, and in safety and reasonable comfort, on local services that have one or more stopping places in the area to which the scheme as proposed to be varied relates.(10) In this section, “persons with disabilities” means persons who have a disability within the meaning given by section 6 of the Equality Act 2010.”(5) In section 138A(5)(b) (requirements which may be specified in enhanced partnership schemes), for “section 138C” substitute “sections 138C and 138CA”.”Member’s explanatory statement
This amendment requires a local transport authority to consult disabled persons before making an enhanced partnership scheme, and to impose requirements to enable travel by disabled persons on local services independently and in safety and reasonable comfort.

--- Later in debate ---

[Baroness Pidgeon (LD)]

This is a rather technical amendment, as the noble Lord, Lord Moylan, stated, and one about which I have received several pieces of correspondence in the last 24 hours. Although I understand the intent of the amendment, I am not sure that it is actually necessary. I find it hard to imagine that local authorities, which often struggle with capacity and the financial means to deliver, will want to suddenly introduce their own bus company just ahead of awarding contracts directly to this new company. I hope the Minister can clarify the situation and allay any fears.

[Lord Hendy of Richmond Hill (Lab)]

Amendment 20, as the noble Lord, Lord Moylan, said, seeks to prevent new local authority bus companies—I will not say LABCos; I cannot make that work—from being able to directly award franchising contracts using what he described correctly as the Teckal-style exemption in the Procurement Act 2023.

Clause 18 will help to support public ownership where desired by repealing the ban on new local authority bus companies, but the Bill is not prescriptive about the structure of any of those new companies. Local authorities can consider a range of options for structuring a new bus company. One of these options could be to establish a new company as a Teckal company, which would, as he says, allow a local authority to directly award service contracts to that company without the requirement for a competitive procurement exercise at any time.

The noble Lord referred to Teckal as a loophole, but it is part of a much wider landscape of public procurement law, which, as he says, was enacted in the Procurement Act 2023 by the previous Government. Use of the Teckal exemption is complex and subject to challenge, given that it allows contract awards outside the usual controls imposed by the public procurement regime, and specific and rigorous tests are required to use the exemption. Local authorities must be careful to ensure that these companies are within the Teckal parameters if they pursue this option, which would likely require significant funding and investment in organisational capacity and capability, as the noble Baroness referred to. All this means that any local authority looking at Teckal would need to consider very carefully whether this is appropriate for its local context.

Existing precedent for Teckal local authority bus companies in the UK, while limited, is that Teckal has been used only in scenarios where private operators are not interested or fail—for example, as an operator of last resort. For existing Teckal companies, the exemption is utilised only in the event of private operators being unable to do so, rather than as the default option for providing local bus services. Teckal is open to all public bodies that own any type of commercial company; it does not apply only to local authorities, only to local authority bus companies, or only to transport companies. Removing Teckal as an option only for new local authority bus companies would be an unusual—and, I believe, unnecessary—departure from the status quo around existing procurement legislation. As it stands, there does not appear to be a compelling reason to isolate new local authority bus companies as the only type of public company that cannot use Teckal, and no evidence has been provided to support what would be an extraordinary diversion from established procurement rules.

My department plans to publish guidance on local authority bus companies after the Bill comes into force, which will address the use of the Teckal exemption. We will of course work very closely with stakeholders when developing and drafting the guidance to help ensure that the exemption, if used, will not be about local authority bus companies having the upper hand over the private sector but about genuinely improving bus services for local passengers in that area. I therefore hope that the noble Lord can withdraw his amendment.

It might be convenient if I briefly move on to Amendments 21, 22 and 23, tabled in my name, which are also about helping to provide a level playing field between new and existing local authority bus companies. Clause 18 gives all local authorities the freedom to set up a new bus company if they choose to. Under this clause, new companies are not subject to restrictions regarding how they might secure funding or financing. This is at odds with the five existing local authority bus companies that are. Restrictions, as set out in the Transport Act 1985, mean that the existing local authority bus companies are unable to access private finance, which creates inconsistencies. My department has engaged extensively with stakeholders while developing the measures for this Bill and feedback has been strongly in favour of greater parity between how new and existing local authority bus companies can finance their operations.

The amendment will remove restrictions on existing local authority bus companies accessing private borrowing, if they are doing so for the purposes of, or in connection with, providing local services. As I have mentioned, this will help to provide a level playing field for both new and existing local authority bus companies. It will provide greater choice for local authorities in how they potentially fund a local authority bus company, which will give them more freedom to achieve ambitious and far-reaching improvements to local bus services. Amendments 21 and 22 are consequential to Amendment 23.

I finish by saying that I do not believe that there is likely to be a large-scale establishment of new local authority bus companies, but the powers contained in this Bill are necessary because, frankly, the bus market is not what it was. There is not much competition in some areas, and in others there is none. In those cases, a new local authority bus company might well be the way in which a local transport authority seeks to provide bus services in the future. It would be, as a postscript, a fitting riposte to some of the excesses of previous eras of competition in bus companies. I will not repeat it now, but if noble Lords were to look at the sorry story of the Darlington bus wars, where a perfectly satisfactory municipal bus company was reduced to being put into liquidation by the predatory activities of private companies, they would see why there might be some interest in local authorities to set up new local bus companies in the future. There might even be a little interest in using Teckal to do so.

[Lord Moylan (Con)]

My Lords, I apologise for not addressing in my opening remarks the government amendments in this group, which I am happy to say I am content with. I mean, if one is as short of money as the Minister and his department probably are then giving local transport authorities the power to borrow money is probably the best that you can hope to get away with. We have no objection to those amendments.

I am disappointed—well, not entirely disappointed; I am rather thrilled—that the Minister has more or less agreed that I got the complex legal position right, but I am disappointed that he feels that the loophole should stay open. It should not. One of the purposes that the Government have set out is to encourage competition, where it can be stimulated, between bus service providers. To allow those two provisions to operate together in a way that would exclude competition would be an abuse. The abuse should be closed down. It is simple to do so: they could just say it was not going to be allowed. It would not upend procurement law. It would not overturn the sacred rules of procurement. It would simply say, in this specific case, because of the way these two statutes will interact, you cannot actually do the thing that would be an abuse. So I am sorry to say, because I know it is getting on—actually, we have made good progress and there is time—that I am afraid I am going to have to ask the House’s opinion on this matter, because I do not think the Government should be allowed to take this lackadaisical approach.

--- Later in debate ---

21:01

Division 10

Ayes: 54

Noes: 125

--- Later in debate ---

Moved by

[Lord Hendy of Richmond Hill]

21: Clause 18, page 14, line 23, leave out “73(5) (activities” and insert “73 (control over constitution and activities”
Member's explanatory statement
This amendment is consequential on my amendment to clause 18, page 14, line 27.

--- Later in debate ---

Moved by

[Lord Hendy of Richmond Hill]

24: Clause 20, page 15, line 36, leave out “as follows” and insert “in accordance with subsections (2) and (3)”
Member's explanatory statement
This amendment is consequential on my amendment to clause 20, page 17, line 9.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, this group covers data provisions. Before I speak to the amendments in my name, I note that there have been questions from stakeholders about releasing commercially sensitive information. I reassure noble Lords that the department will be mindful of publishing information that could be seen as commercially sensitive under the powers in Clauses 21 and 22. Officials will engage with industry on the Government’s intentions for and the use of this data before exercising the power. I will be as brief as I can on the other amendments in this group—Amendments 24, 25, 26 and 29.

Amendments 25 and 26 are necessary to clarify that regulations made under Section 6 of the Transport Act 1985 that may involve the processing of personal data do not operate in contravention of data protection legislation. This is engaged due to the potential for information being processed under these provisions to contain personal data. Amendment 24 is consequential on Amendment 26. Amendment 29 does the same job as Amendments 25 and 26, and for the same reasons, in respect of regulations made under Section 141A of the Transport Act 2000.

Amendment 27 enables the traffic commissioners to share existing registration information with the Secretary of State and enables it to be uploaded to the new registration database. It enables registration, variation and cancellation applications which are pending when this clause enters into force to be uploaded to the new database once they have been processed. Like Amendment 28, which I will turn to next, it supports our ambition to provide the public with the right information to help them make better-informed travel decisions.

Amendment 28 has been tabled to ensure that the Secretary of State can receive the same information about franchised services as other registered bus services are required to provide. In essence, the amendment creates consistency in the data provided by franchised and non-franchised services, enabling the public, via a new registration database, to make better decisions regarding their journeys. It also future-proofs the power in Clause 21, ensuring that, if changes are made to the information gathered under the 1986 regulations, this is reflected in what can be gathered for franchised services under Clause 21.

Amendment 33 is a further minor and technical amendment. It is necessary to ensure that Clause 24 functions in a manner consistent with the provisions in the Data Protection Act 2018. Amendment 24 is consequential to this amendment.

Amendment 43 to Clause 27 clarifies that provisions made under the powers in new Section 144F of the Transport Act 2000 that may involve the processing of personal data do not operate in contravention of data protection legislation. That is necessary due to the potential for information being processed under Clause 27 to contain personal data, given that it includes requirements to keep records about staff who have undertaken training in relation to crime and anti-social behaviour.

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, we have no objection to these amendments.

[Lord Hendy of Richmond Hill (Lab)]

I commend these amendments to the House.

Amendment 24 agreed.

Moved by

[Lord Hendy of Richmond Hill]

25: Clause 20, page 16, line 43, at end insert—
“(13) Where regulations under this section impose a duty or confer a power to process personal data, the duty or power does not operate to require or authorise the data to be processed in a way which contravenes the data protection legislation (but the duty or power is to be taken into account in determining whether the processing contravenes that legislation).(14) In this section “the data protection legislation”, “personal data” and “processing” have the same meanings as in the Data Protection Act 2018 (see section 3 of that Act), and “process” and “processed” are to be construed accordingly.”Member’s explanatory statement
This amendment clarifies that provision contained in regulations under section 6 of the Transport Act 1985 in relation to the processing of personal data does not operate in contravention of the data protection legislation.

--- Later in debate ---

Moved by

[Lord Hendy of Richmond Hill]

28: Clause 21, page 17, line 31, at end insert—
“(g) any other information which may be prescribed under section 6(2)(a) of the Transport Act 1985 in relation to the registration of a local service under that section.”Member’s explanatory statement
This amendment enables the Secretary of State to obtain the same information under section 141A of the Transport Act 2000 as may be obtained under section 6(2)(a) of the Transport Act 1985 in relation to local services which are required to be registered under that section.

--- Later in debate ---

Moved by

[Lord Hendy of Richmond Hill]

30: Clause 24, page 20, line 2, leave out “after section 144” and insert “before the italic heading preceding section 145A”
Member’s explanatory statement
This amendment ensures that new section 144A is inserted in the correct place in Part 2 of the Transport Act 2000.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, Amendment 35, tabled in my name, seeks to apply the local transport authority by-laws powers contained in the Bill to London. Clause 24 will enable local transport authorities to introduce by-laws to tackle anti-social behaviour on vehicles, as well as within and at bus-related infrastructure. Giving these powers to all local transport authorities is intended to give them the flexibility they need to effectively enforce against anti-social behaviour on the transport network and ensure that there is greater consistency across England.

When I first introduced the Bill, these powers did not apply to London. However, after engagement with Transport for London, it asked to be included in these provisions. This is because, while its officers can deal with anti-social behaviour at bus stops and bus stations under existing by-laws, it cannot easily enforce against anti-social behaviour on buses themselves. Closing this loophole will give TfL the same powers as other local transport authorities in England, and it will help make buses in London safer for passengers and staff.

While on the subject of bus by-laws, I will speak briefly to three further amendments tabled in my name. Amendment 30 is minor and technical. Its purpose is to ensure that the powers being granted to local authorities to make bus by-laws are inserted correctly into the right part of the Transport Act 2000. Amendment 31 intends to ensure parity between by-laws powers being granted to LTAs and London. In expanding the application of the local transport authority by-laws measure in Clause 24 to London, it was necessary to take account of the prevalence of smart card payments. This is reflected in the drafting of Amendment 31. However, the Government have also identified the need to allow local transport authorities outside London to deal similarly with smart card payments on bus services in drafting bus by-laws. That is what this amendment achieves. Amendment 32 is consequential on this amendment. I beg to move Amendment 30.

[Baroness Pidgeon (LD)]

My Lords, this Bill has been about bus services outside the capital, yet at this stage there is suddenly a lengthy amendment about London and giving Transport for London the powers it needs more easily and effectively to support by-laws on London buses. The Minister has provided clarity on this and the other government amendments in this group; they have provided the assurance needed, and we are content with them.

--- Later in debate ---

Moved by

[Lord Hendy of Richmond Hill]

31: Clause 24, page 20, line 15, at end insert—
“(za) with respect to tickets and other things (whether in physical or electronic form) which authorise a person to enter and travel on local services;”Member's explanatory statement
This amendment ensures that byelaws made by local transport authorities can allow for the use of smart card tickets on local bus services.