Bus Services Bill [HL]

Lord Ahmad of Wimbledon Excerpts

Monday 4th July 2016 Lords Chamber

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

My Lords, I thank all noble Lords who have taken part in the discussions. Several times in his contribution the noble Lord, Lord Woolmer, referred to me—I am flattered by the suggestion—as the Secretary of State. I know that there are certain unpredictabilities in government as we move forward into what I said earlier today in answer to a PQ are unpredictable times, but perhaps he is party to something I am not.

I shall respond to a number of issues which noble Lords have raised. I thank the noble Baroness for laying down a series of amendments. As she illustrated, her amendment would enable all authorities listed at proposed new Section 123A(4), rather than just mayoral combined authorities, to access franchising powers without the need for regulations or for the Secretary of State’s consent to be given. Several noble Lords spoke in favour of this, but I also recognise that some voices were not in favour of the amendment. I know from previous meetings with noble Lords that queries have been raised regarding the Government’s stance on mayoral combined authorities and the policy that such authorities should be given automatic access to franchising powers while others would require regulations and the consent of the Secretary of State. It may be helpful if I say a bit more about the Government’s rationale for favouring the mayoral combined authority model, then I will answer some of the specific questions and issues that have been raised.

As I have said before, moving to a model of franchising is a big decision which is likely to have implications for passengers, bus operators and the local authority itself. Our view is that strong governance and accountability are key to making franchising a success, together with a commitment to improving transport and a coherent economic geography. Mayoral combined authorities, when established, will provide centralised decision-making for transport across a relatively wide local geography, be that city areas such as Greater Manchester and Sheffield or regions such as East Anglia. The mayor will be the individual responsible for deciding whether to implement franchising and can be held accountable for that decision. Those factors, together with the fact that transport will be considered at a strategic level, mean that the mayoral combined authority model is well suited to making franchising a success.

However, as the noble Baroness, Lady Jones, noted at Second Reading, the Government do not want to preclude other types of authority becoming franchising authorities in future if there is a compelling case for doing so—I will come on to Cornwall in a moment. The Bill enables other authorities to access franchising powers if regulations so provide and the Secretary of State provides his consent.

The noble Lord, Lord Snape, rightly raised the impact on the bus industry. We are concerned about the impact of uncertainty on the bus industry and want to ensure that bus operators continue to invest and develop services to the benefit of passengers. There were some suggestions during the debate that by establishing the mayoral combined authority model as the preferred model and limiting access in the first instance—I stress that—somehow we are excluding all other authorities. We are not. By limiting access in the first instance to the category of authorities, the bus industry will have greater certainty as to the areas that will have access to franchising powers and will be able to take commercial decisions accordingly.

In addition, as noble Lords have noted, the Secretary of State will also need to provide his consent before any individual authority can access franchising powers. Franchising is a big step which will have implications for local passengers, bus operators and the authority itself, so we want to ensure that franchising is pursued only where it makes sense to do so.

I shall answer some of the specific questions and then come back to any other issues I wish to raise at this juncture.

[Baroness Scott of Needham Market (LD)]

Before the Minister moves on, will he clarify something for me? I am struggling to understand why the question of certainty for the bus industry has been raised in this context. It seems to me that if we have the situation as pertains in this Bill there will be a raft of local authorities around the country which may at some point have access to these powers, but only if the Secretary of State says so. I am not sure how that adds to certainty. Would it not be more certain if all local authorities had the potential powers to bring this in?

[Lord Ahmad of Wimbledon]

It is not just about local authorities. I have already alluded to other factors. I state again that the geographical nature of the authority applying for franchising powers is important. The noble Baroness’s important point about the Secretary of State approving access to the powers was perhaps not covered in the debate. There would, of course, be instruments introduced in both Houses to allow for discussions on the particular models. I stress that this is an enabling Bill that allows all authorities to have access. It is the Government’s view—noble Lords have expressed views to the contrary—that mayoral authorities are best suited in terms of their governance models and their geography for franchising, which, as I have said, is a big step. At the same time, we have to balance that with the nature of the bus operators. That is the Government’s view. I am not saying that all noble Lords will immediately subscribe to it. That is why we are pursuing the mayoral combined authorities model, but not to the exclusion of others.

The noble Baroness, Lady Jones, raised the response to the Delegated Powers Committee. It is fresh off the press. I know my honourable friend in the other place has today written to the committee outlining the Government’s proposals and I will ensure that full details are made available to all noble Lords. To avoid prolonging this debate if there are specific questions on the letter, I will be pleased to answer either later in Committee or through correspondence, but I think that what I will say will deal with some of the issues and concerns that the DPRRC’s letter raised. The Government’s response from my honourable friend sets out the issues around access to franchising. It also goes further and mentions that the Government are looking to accept the proposals raised by the committee on open data. I am sure the detail is in the letter.

The noble Baroness, Lady Randerson, also mentioned the memo about mayoral combined authorities and said that they have expressed interest. She raised a very valid point about whether they actually exist. The noble Baroness and the Committee were right to pick this up, but I am sure that she will accept that we have been referring to areas which have agreed deals—I referred to Manchester and Liverpool as two examples. We have made it clear in response to previous questions raised by the noble Lord that the deals would be issued in time for those new governance procedures to come on board. Cornwall, where devolution deals are being discussed, illustrates the Government’s willingness to allow the devolution debate to take account of what we are looking to do in terms of bus services. In our discussions to date with Cornwall, franchising is something that it has indicated it would seek to pursue. That is why the Cornwall example has come to the fore, although it would still need to go through the same process that we have illustrated for non-mayoral authorities.

The noble Baroness, Lady Jones, referred to London. As several noble Lords acknowledged, London is very different, and the local government role has been defined for the past 30 years in terms of devolution of powers and financial and investment risks. These have been the major differences between London and other parts of the country.

The noble Baroness talked about the concerns raised by the LGA about the franchising model and whether it makes sense locally. As I have already said, we need to address the concerns. This is about providing access to all authorities, but we need to balance that against the need to provide certainty to the bus industry and to ensure continued investment. I stress again that the Bill provides the ability for other local authorities to access the powers if there is a strong case for doing so.

I have already said that we are in discussions with Cornwall on its devolution deal. The noble Lords, Lord Woolmer and Lord Berkeley, both raised issues pertaining to Cornwall. Cornwall is committed to improve local transport in the wider area, and it has made a strong case for having access to franchising powers. If Cornwall decides that it wishes to pursue franchising, the regulations will be brought forward for discussion via the affirmative procedure. As I have already said in response to the noble Baroness, Lady Scott, it is important to note that in laying out the intent behind the proposals in the Bill the Government have been very clear that they believe that mayoral combined authorities provide a model which is able to take forward the proposals around franchising. However, that does not preclude others doing so. By making the provisions subject to the affirmative procedure, with applications subsequently made to the Secretary of State, we are providing the locks, the vehicles and the necessary checks and balances to ensure that the best deal is done for all local authorities. I shall respond shortly to questions relating to specific procedures relating to the Secretary of State.

My noble friend Lord True asked why competent authorities cannot come together when they have franchising powers. I assure him that nothing in the Bill prevents this. They can make their case, and the Government will listen. Whether it is me or Ministers at a more senior level, we want to ensure that the competence powers needed are in place to make franchising accessible to whatever type of authority. I stress again that the economic geography of the authorities coming together is an important and attractive part of this. I assure noble Lords that we have no intention of excluding any particular local authority in this respect.

The noble Lord, Lord Snape, asked what would happen to investment under franchising. I have already talked about the concerns of bus companies. When franchising is implemented, authorities will be able to specify things such as vehicle age, but they will need to ensure that a scheme remains affordable. The noble Lord also asked about the Competition and Markets Authority. We have received several recommendations from the CMA. We are considering them and will respond shortly.

The noble Lord, Lord Woolmer, asked about the regulations to allow certain categories of authority. I have answered this in part already. We want to make franchising powers available only where there is a real desire to use them. Regulations will be made only if at least one authority from that category makes its case to government. The Secretary of State will then need to give consent to individual authorities which want to use the powers.

We have talked, to some degree, about criteria, and I am conscious that in response, to the noble Baroness’s question, and I think, to the noble Lord, Lord Woolmer, who also asked about this, I gave a commitment at Second Reading to publish the criteria which the Government and the Secretary of State will use. We will make the detailed criteria available before Report. At this juncture, I can share some of the headlines. There will be, in essence, four key factors that the Secretary of State will consider: first, the powers the authority has; secondly, the governance arrangements which are in place; thirdly, the economic geography of the area; and fourthly, the track record and ability of the area to deliver upon this. There is further detail to follow and, as I have said, I will seek to ensure that that is published before Report.

During this debate, I have talked about a number of factors, including the importance of powers of governance, the arrangements the authority has in place, the economic geography of the area and the track record which I have just alluded to. I hope that, in part, this has helped reassure noble Lords that the Government’s policy has been determined with the interests of passengers and the continued health of the bus industry in mind. It is about balancing and ensuring that local authorities that we believe have the governance arrangements in place and are able to take forward franchising are able to do so, but not to the exclusion of others. I believe that with the measures we have in place, the affirmative procedures of debate in this House about other authorities that seek to apply and the criteria that the Secretary of State will apply in decisions, I have been able to reassure some noble Lords that the Government’s policy has been determined with the interests of passengers in mind. With those reassurances, I hope the noble Baroness will withdraw her amendment.

[Lord True]

My Lords, I am, of course, grateful for what my noble friend has said about competent authorities. I know that he has a great knowledge of, and esteem for, local government. My problem remains, although I have studied carefully what he said. I should say to the noble Lord, Lord Snape, that I have no vested interest in this, because my council is a London area council and we come within the London arrangements, although I will have some points to make on Clause 21. In his opening remarks, my noble friend talked about the advantage of mayoral arrangements; there is a centralised decision-making element—I think that probably came in guidance or advice he had received. This is the problem, because, as I said in my previous intervention, this is a small part of a wider policy; there are certain people inside government who wish to create centralising models. It is an idea of managing the country by larger functions, which are responsible to, and look upwards to the Treasury and the Government for guidance—we see it in education, with the emergence of regional schools commissioners. That is not the philosophy I believe in, as a Conservative; I believe, as I said earlier, that we need more dispersed authority.

My noble friend is right that it is clearly open to any sort of authority to go ahead; however, there are more obstacles put it in the way of other authorities, whereas the mayoral authority can leap forward. My noble friend Lord Horam must be right: the Government cannot keep taking on these functions to take all these decisions. I do not want to stray into education, I know we are in Committee, but can the Government and their institutions make every decision for every school or group of academies around the country? We do not have enough civil servants to do that. We do not have enough civil servants with the competence to take decisions about transport in different counties all over the country. Devolution is a marvellous idea, which I strongly support, but what creeps into legislation time and again is not devolution but control masquerading as devolution. So when I hear talk of centralised decision-making, I believe that I am looking at the tip of the iceberg of a philosophy of government which is not one I share.

Although I am extremely grateful for what are in many ways the reassuring and typically courteous remarks of my noble friend, I would still find it very difficult to support any legislation that gives an advantage to a putative mayoral authority, not just an existing one, above any other form of authority. It would mean that someone in a department somewhere can say, “Look, you guys. You can have what you want if you do what we say”. Power should come from the people through local government and through local authorities coming together. I give notice to my noble friend that I am still uneasy about these proposals.

[Lord Ahmad of Wimbledon]

Of course I will reflect on the thoughtful remarks made by my noble friend, but let me reassure him that from my perspective and indeed of those within the Department for Transport, the view is very much based on all authorities having access if they have not only the governance models but, as I said, the other criteria on geographical coverage as well to ensure that they can make franchising a success. Ultimately the Government’s intent behind this enabling Bill is to ensure that bus services work for local people.

[Lord Woolmer of Leeds]

Let me give a specific example. If West Yorkshire Combined Authority agreed tomorrow to have a mayoral structure, presumably that would immediately parachute it from one part of this Bill into another. I agree with the noble Lord in his remarks that that is bizarre. It would be very welcome, but as I say it is bizarre. That is not transport policy, it is a political policy on mayoral authorities.

[Lord Ahmad of Wimbledon]

Perhaps I may respond to that. As I am sure the noble Lord appreciates, every devolution deal involves detailed discussions between the Government and those proposing the deal. No doubt if a particular area, wherever it may be, wishes to go down that route, it would be subject to discussions around the devolution deal.

[Baroness Jones of Whitchurch]

I thank the Minister for his response and I thank noble Lords around the Chamber for their support, particularly that of the noble Lords, Lord True and Lord Horam, which I welcome. The noble Lord, Lord True, has done half of my summing up of the debate for me which I would otherwise have done. I want to look carefully at the Hansard report of this debate because I am still not clear about what is so special about mayors. I was really hoping that the Minister would explain what is so unique about that particular model. My noble friend Lord Woolmer made the point that you could have two adjoining authorities with the same geography, the same population and income, but one of them would have a fast track to automatic franchising purely because of the fact that it has a mayoral system rather than another one while the other would have to go through a very convoluted process.

I do not understand what it is about the mayoral model that is so important. It is not just about the geography and economics or even the strategic role, as the Minister has suggested; there is something much more singular about a particular local government structure. The fact is that we trust local authorities with making very serious decisions already. We entrust social services issues to them where they make life-or-death decisions about child protection. We trust them to take serious decisions in the commissioning of all sorts of services. It is not as if they do not already commission services and of course they have the expertise to do so. Running a bus service does not require particularly special skills which authorities do not already have. Some might not choose a franchising model, which is perfectly understandable, while others may want to have it. I do not quite understand what is so special about having a mayor in charge that would qualify them in this way.

--- Later in debate ---

[Baroness Jones of Whitchurch]

My Lords, I will be brief. I have listened carefully to the contribution of my noble friend. As he indicated, he is making these proposals in the context of being against franchising. On that basis, we are not convinced that these amendments are necessary.

As it stands, the Bill requires those considering a franchise scheme to prepare an assessment that considers the merits of franchising weighed against other options. My noble friend is suggesting that they would just steam ahead regardless, but the checks and balances in the Bill make that unlikely and, indeed, impossible. We would expect there to be a detailed, thoughtful piece of work by the local authority that genuinely balances the different options in the context of what is in the best interest of the local community.

As it stands, the Bill requires the assessment to consider affordability, value for money and how it would apply to wider authority policies. We believe that that is the right tone to adopt when making an assessment. My noble friend’s proposals would go further than that and require greater certainty that all the conditions are met at that stage. We believe that that would go too far and discourage authorities from going through that appraisal and assessment process before making any decisions, which is the important point.

Therefore, we believe that the checks and balances in the Bill are the right way to go forward. There are many stages in the assessment process that would allow the proposal to be fully scrutinised, including a full audit, which we are going to talk about later. We want authorities to consider all that in an open and thoughtful way and go through what is in the best interests of the locality, taking into account all the factors and complexities of moving to a franchise situation, which my noble friend has identified—but it must be done in a balanced way. We believe that the provisions in the Bill should be supported.

[Lord Ahmad of Wimbledon]

My Lords, I thank the noble Lord for tabling his amendment. He proposes a series of amendments that would change the nature of the assessment that franchising authorities must prepare for their proposed franchising scheme before determining whether to introduce franchising.

In thanking the noble Lord, let me assure him that we recognise the importance of ensuring that decisions to move to a model of franchising are taken on the back of a robust assessment. In developing the Bill we have been keen to move away from the processes set out in the Transport Act 2000 that must be followed before a quality contract scheme can be established. That legislation required authorities to be satisfied that a number of tests had been met before introducing such a scheme. As was touched on at Second Reading, only one authority ever attempted to use the quality contract scheme legislation to introduce a quality contract scheme. In part I think this was because the “must pass” tests proved to be too restrictive.

I agree entirely with the noble Lord that authorities looking to franchise must consider whether the scheme is affordable, represents value for money and contributes to the implementation of relevant policies. But I think that devolved decision-making must be respected, with the mayor or authority considering the issues listed in Section 123B and any other relevant issues when assessing their scheme, and then taking reasonable decisions with their eyes wide open. I do not want to repeat the failings of the quality contract scheme legislation, and I want to ensure that franchising is a realistic option where it makes sense locally. I am concerned that the amendments as proposed would unnecessarily restrict mayors and authorities by requiring them to be satisfied about a number of issues, rather than requiring them to set out their thinking and rationale. I agree entirely, though, that I would expect authorities to proceed with franchising only where there is a strong case to do so. However, I do not want to rule out, for example, an authority proceeding with franchising where a scheme contributes hugely to its transport policies but not necessarily to its other published policies affecting local services.

The noble Lord raised a specific issue about operators having assets such as bus garages being taken away or awarded to winning bidders. It is important to note that the Bill does not give authorities powers to acquire bus operators’ assets. Authorities could potentially come to agreements with operators or lease new depots or garages to those winning businesses.

I trust that this short debate has helped to assure the noble Lord that the Bill as drafted will ensure that authorities consider a number of specific factors in their assessment of whether to move to a franchising model and allow decisions to be taken in the light of local circumstances. I hope that the noble Lord is reassured to the extent that he feels able to withdraw his amendment.

[Lord Snape]

Of course, I listened with care to what both Front Benches said but was not entirely surprised at the contribution from either side. I can envisage a situation where a company based in a city loses a franchise. The Minister said that there is no power for the local authority to commandeer a particular garage or vehicles. However, they are not much use based in the middle of Birmingham if, for example, there is no franchise to operate in the middle of Birmingham. Presumably, we could build another tower block in the centre of Birmingham and move the buses elsewhere. Again, that rather places a darker cloud on the somewhat optimistic view from my own Front Bench that all these matters can be agreed by civilised discourse between two people, and that everything in the garden can be rosy, if I may mix my metaphors.

However, having listened to what the Minister had to say, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Ahmad of Wimbledon]

My Lords, I thank the noble Lord for moving Amendment 33. My noble friend Lord Attlee behind me referred to summary sheets that may or may not exist on the Front Bench. I am becoming increasingly conscious that telepathy is at work.

Moving on to the amendments, as I have said before—and I agree with all noble Lords who have spoken in this short debate—improving bus services for passengers is one of the key aims of the Bill. The amendment in the name of the noble Lord, Lord Kennedy, relates to increasing passenger representation through the life of franchising and enhanced partnership schemes. I sympathise with his aims and agree that one of the issues that authorities and bus operators should be considering is how passenger representation can be increased. Hearing from passengers helps authorities and operators understand the needs of their local communities and encourages meaningful engagement in the future.

Many noble Lords—the noble Baroness, Lady Randerson, in particular—spoke about passenger representation at Second Reading and in earlier Committee debates, particularly the need for passenger groups and representatives to be fully consulted on any proposed changes to bus services in their area. I too would like greater passenger representation across the board—I share the intent behind the amendment—particularly in areas where partnerships are established or where the status quo remains, as well as where franchising is implemented. I encourage bus operators and authorities to work with local people and community groups to design services that are attractive to users.

However, the amendment as drafted—and I am sure this was not the intent of the noble Lord when he tabled it—may not fully address those aims in particular circumstances. It addresses the issue of considering passenger representation in the context of franchising and enhanced partnerships, rather than where other partnership proposals are put in place or where the status quo is felt to be the most sensible way to deliver local bus services. It also refers to operators increasing passenger representation during the life of the franchise or the enhanced partnership plan, rather than the authority involved engaging with passenger groups directly as the schemes and plans are developed.

I assure noble Lords, especially the noble Baroness, Lady Randerson, that the Government are committed to ensuring that passengers have a say as plans for bus services are developed, and we welcome further debate and thought on this matter as we consider how we can best deliver this through the Bill.

[Baroness Randerson]

Is the Minister willing to give a commitment that the Government will consider bringing forward amendments that actually place the phrases “bus users” or “passenger groups” within the Bill, to counteract the balance of power whereby it mentions operators and local authorities but not passengers?

[Lord Ahmad of Wimbledon]

I have already said that I am open to discussing how we move this matter forward. I hope that I am indicating that I believe we should proceed in a collaborative way on the passage of the Bill through Committee and Report. I am happy to discuss with the noble Baroness and the noble Lord, Lord Kennedy, how we can develop this amendment to reflect the intent behind it, which I share and which I am sure she shares, and also incorporate the issues raised by the noble Baroness. On that basis, I hope that the noble Lord is minded to withdraw his amendment.

[Lord Kennedy of Southwark]

I thank the noble Lord for that very helpful response. When we tabled the amendments we should have included the advanced partnerships and the current arrangement, as the noble Lord mentioned, but is he saying that, through the discussions that will take place over the coming days and weeks, we will seek to agree an amendment that will deal with the issues raised here?

[Lord Ahmad of Wimbledon]

It is certainly my intention to discuss with the noble Lord and the noble Baroness how best to take this forward. Yes, if it needs to be in the Bill, that is something we can discuss. I am sure we can overcome the drafting issues and it is important to reflect the points raised by the noble Baroness, Lady Randerson, in any amendment that comes forward.

[Lord Kennedy of Southwark]

That is very helpful. I am very happy to get involved in discussions on an amendment that we are all happy with and can work with, and which delivers the aim expressed across the Committee today of making sure that passengers are properly involved. However, what I do not want to see at the end of those discussions is a note in guidance, because, importantly, that does not have the same strength as something in the Bill.

[Earl Attlee]

Will the Minister take great care to make sure that everyone who has an interest in the Bill is included in these discussions? Sometimes it is possible for people to fall out of the loop and not be fully involved.

[Lord Ahmad of Wimbledon]

I give my noble friend that assurance. I will go further and say that I never forget my noble friend when it comes to such discussions. He has made a very valid contribution throughout this debate and I am sure he will continue to do so in debates going forward. Any noble Lord has an open invitation to meetings, as I have said, as we look to strengthen the provisions of the Bill and the services it provides.

[Lord Kennedy of Southwark]

I thank the noble Lord for those very helpful responses. I am very pleased to have received support from the noble Earl, Lord Attlee, and the noble Baroness, Lady Randerson. It is beneficial that local transport authorities and operators seek the views of their passengers, who are, in fact, their customers. Being sensitive to the needs of your customers is usually good practice for any business or public service and benefits everybody concerned, particularly the providers of the service. A role for bus passengers, as the noble Baroness, Lady Randerson, said, is important and needs to be in the Bill. I am very pleased with the comments of the noble Lord, Lord Ahmad of Wimbledon, and look forward to our discussions. I hope that we can agree an amendment we can all be happy with during Report.

[Lord Ahmad of Wimbledon]

Before the noble Lord sits down, let me assure him that that is the Government’s intention with all the provisions we have discussed. Putting passengers at the heart of what we seek to do is a key part of delivering either the franchising model or the partnership model. Importantly, as I said, the current amendment does not incorporate, for example, the issues around the status quo.

I know the noble Lord is working with me to ensure that that is what we do. That is certainly the intention—one that is resonating around the Chamber. Given that assurance and the positive nature of the debate, I think the noble Lord is moving towards formally withdrawing his amendment.

[Lord Kennedy of Southwark]

I thank the noble Lord again for his very helpful comments. I beg leave to withdraw the amendment.