Baroness Jones of Whitchurch
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Bus Services Bill [HL]
Baroness Jones of Whitchurch Excerpts(8 years, 5 months ago)
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Lord Berkeley
My Lords, on the amendments that we have discussed in Committee, many noble Lords have said how important it is for devolution to happen and for local authorities around the country to be able to operate franchises without too many controls from central government. Whether that happens or not, the importance of independence in the audit is vital, as other noble Lords have said. It would be so easy for some local authorities in the future to get it wrong and then for a rather nasty article to appear in Private Eye, suggesting that the leader’s brother-in-law was the auditor. I am sure that would never happen, but we do need independent checks. My noble friend Lord Snape’s suggestion of traffic commissioners appointing the auditor has enormous merit. The two issues in Amendment 42 in the name of the noble Lord, Lord Bradley, and myself, about the affordability of the scheme and whether it represents value for money, are the two most important ones that should be focused on by the auditor. Then we would all feel comfortable that it would probably work very well.
Baroness Jones of Whitchurch
My Lords, we very much support the intent of the first amendment introduced by the noble Baroness, Lady Scott, and of Amendment 42, which was introduced by my noble friend Lord Bradley. It is important that the audit process is properly independent and provides a trustworthy external scrutiny—that makes perfect sense. It also makes perfect sense to ensure that the proposals are properly costed and that we can have confidence that they are affordable.
However, regrettably, we do not feel able to support the amendment of my noble friend Lord Snape—we seem to be making a habit of that. We believe that his amendment is too specific and restraining and we hope that, on reflection, he will feel able to support Amendments 41 and 42, which we believe would achieve the additional reassurance he seeks and ensure that a fair, independent assessment process takes place. I hope that my noble friend will reconsider and that the Minister will feel able to support the first two amendments.
Lord Snape
Before my noble friend sits down—I am sorry that she finds herself unable to support what is, in my view, a well-intentioned and well-meaning amendment—perhaps she can tell us why she objects to the traffic commissioner and why that is too specific. After all, by the very nature of his or her job, the traffic commissioner knows the business inside out and is widely trusted by all sides in the industry. Surely to have someone like that appointing an auditor is a very sensible way forward.
Baroness Jones of Whitchurch
Without wishing to get into a dialogue, I think that we felt that as long the role was prescribed to be independent, different authorities will have different arrangements for appointing independent auditors. We do not feel that we need to be that prescriptive in this piece of legislation. I would not go any further than that.
Lord Ahmad of Wimbledon
My Lords, there are a number of amendments in this group, all related to the audit function required as part of the franchising provisions. The noble Baroness, Lady Scott, proposes an amendment to state explicitly that the auditor, whose role is to issue a report to the franchising authority on certain aspects of the assessment of the proposed franchising scheme, must be independent. The noble Lord, Lord Snape, proposes an amendment that would require the auditor to be appointed by a traffic commissioner. The noble Lord, Lord Bradley, proposes an amendment that would require the auditor to consider matters relating to an authority’s consideration of affordability and value for money. I thank all noble Lords for their amendments, and will turn to each one.
Before I go into those details, the noble Baroness rightly talked about the Public Accounts Committee’s report on local scrutiny, and I thank her for bringing that to the Committee’s deliberations. We are of course ensuring that we consider its recommendations very carefully as the Bill moves through Parliament, and we will respond during the course of the Bill.
Turning to the amendments, I recognise the importance of ensuring that decisions to move to a model of franchising are taken on the back of quality information and robust analysis. As I have explained previously, in developing this Bill we have been keen to move away from the quality contract scheme processes set out in the Transport Act 2000, which, in particular, included the need for independent scrutiny by a “Quality Contract Scheme Board”. While I agree entirely that there is a need for a level of independent assurance, I do not think that devolved decisions should be second-guessed by an independent panel. We introduced the role of the auditor to ensure that an independent third party provides assurance that certain information used in the assessment is of sufficient quality, that the analysis of that information is robust and that relevant guidance has been followed. It is not the auditor’s role to take a view on the decisions taken by the franchising authority. As I am sure that noble Lords agree, its role is to provide a quality check.
The Bill requires any auditor to have a “recognised professional qualification” and to be eligible to act as the local auditor of the authority’s accounts. As such, we would expect any auditor to be suitably qualified and able to provide independent assurance.
Baroness Jones of Whitchurch
My Lords, I will speak to Amendments 48 and 51 in my name. I very much support the amendment tabled by my noble friend Lord Whitty. Amendment 48 takes a similar position—that as part of the consultation process, passenger organisations and trade union and employee organisations must be involved. We believe that proper time should be allocated to make this a meaningful consultation and an effort made to explain the changes in a clear and accessible form to those who may be affected. As my noble friend said, we have debated these issues in relation to previous amendments and received a positive response from the Minister. I hope a similar response will be forthcoming today.
I hope that Amendment 51 is an area where the noble Earl, Lord Attlee, and I are able to agree for once; I am pleased that some commonality is coming out of this debate. One of the problems with bus provision in this country is that the market is dominated by a small number of large bus operators. This makes the procurement process more difficult for local authorities and does not always result in the best passenger experience. It is difficult for new entrants to enter the sector, even though they often provide more responsive, quality services with high customer satisfaction. Reference has previously been made to the social enterprise company HCT, which runs highly successful services in parts of London, Yorkshire and Bristol. It also has the contract for providing bus services in Jersey. Since it took over that service, passenger usage has increased by 32%, the level of subsidy has reduced by £800,000 a year and customer satisfaction has increased by 5%. Somewhat uniquely, the contract also has a profit-sharing element and it is now giving money back to the local authority.
We need opportunities for innovative providers like HCT to enter the market and win new contracts, but the rules are stacked against them and the regulatory burden is far too onerous for the small providers to navigate. There is a danger that the proposals in the Bill will entrench local monopolies, at best replacing an unresponsive private sector monopoly with a publicly commissioned one. When it comes to enhanced partnerships, we need to be clearer about the process for opening up partnership lists to competition to allow new entrants to join. As it stands, the Bill acknowledges this problem in new Section 123F (1)(i). It requires the consultation document for authorities going down the franchising route to include a statement on how they propose to facilitate the involvement of small and medium-sized operators. We obviously welcome that.
Our amendment takes this one step further and requires the consultation document to consider how the franchise could be divided into smaller units. This would help to break down the local monopolies and encourage new entrants into the market. I hope the Minister understands and shares these objectives: I look forward to hearing his response.
Lord Ahmad of Wimbledon
My Lords, this group contains a number of amendments to the consultation process that a franchising authority must complete before it can implement a franchising scheme. Before going any further, my noble friend Lord Attlee asked about “small and medium-sized operators” and whether in the context of the Bill that meant small and medium-sized companies. The short answer is yes. It is judged by the size of the company rather than the nature of its operation. In the interests of clarity, which is always important, I will write to him formally in that respect.
Turning to the amendments which relate to the persons or bodies to be consulted and the form the consultation should take, Amendment 44, in the name of the noble Lord, Lord Whitty, would require franchising authorities to consult Transport Focus when consulting on their proposed franchising schemes. Once again, I am delighted to say that I agree with the noble Lord that it is important that organisations that represent passenger needs have an opportunity to respond to a consultation on a proposed franchising scheme. Transport Focus already works closely with local authorities and bus operators with a view to securing improvements to bus services for passengers, and I will consider how best to ensure that the Bill gives Transport Focus an opportunity to express views on franchising scheme proposals. I hope that this provides assurance to the noble Lord, Lord Whitty, in that respect.
Amendment 45, in the name of the noble Baroness, Lady Scott, would require franchising authorities to consult the Competition and Markets Authority on their proposed franchising schemes. As I said at Second Reading, competition does not disappear when franchising is introduced; it merely moves from “on the road”, where bus operators compete at bus stops for passengers, to “off the road”, where bus operators compete for contracts to operate services. Franchising authorities will be able to design a franchising system which suits their local area and local needs, whether that be through gross-cost or net-cost contracts, or with large or small bundles of routes, bearing in mind the need to involve small and medium-sized bus operators.
However, I agree that any fundamental change to the bus market that is being considered by a local area should take account of the potential effects on competition and the benefits or impacts this could have for bus operators and local people. I further agree that it may be helpful for franchising authorities to work with the Competition and Markets Authority as they develop their proposals, and for the authority to be consulted. I hope I have reassured the noble Baroness that I am with her in ensuring that we look at how to fit that into the Bill.
Amendment 48, in the name of the noble Baroness, Lady Jones, would add some additional requirements to the consultation provisions in relation to franchising, including requiring passenger interest groups to be consulted on franchising proposals. I thank the noble Baroness for her amendment, and agree that it is vital that passenger groups and others that may be affected are consulted fully on proposals to improve local bus services. I recognise that many noble Lords spoke about passenger representation and accessibility of bus services at Second Reading and in earlier Committee debates, and I fully understand that there is a wide spectrum of views and needs to be considered when planning local bus services.
The franchising provisions already include requirements for the authority to consult organisations that represent users of local bus services. Therefore, I encourage any authorities thinking of using the new tools in the Bill to engage fully with interested parties as proposals are developed. I hope this goes some way to addressing the noble Baroness’s concerns about the interests of passenger groups and reassures her that the Bill requires authorities to consult fully with those groups on franchising proposals.
Turning to the form that consultations on franchising and enhanced partnership proposals should take, the noble Baroness, Lady Jones, raised an important issue about accessibility and the need for consultations to be conducted in a manner and over a time period that is accessible to all. I agree that any consultation must give local people due time to consider and respond, particularly as proposals about local bus services are likely to have a large impact on local communities. I will therefore give further consideration to how best to ensure that consultation exercises relating to franchising proposals are accessible to all.
Turning to the amendments on the consultation materials that franchising authorities must prepare, Amendment 51, in the name of the noble Lord, Lord Kennedy, would reinforce the need for authorities considering franchising to give due consideration to small and medium-sized operators, given the important role they play in the delivery of local bus services. I sympathise with the aims of the amendment and I think we can all agree that small and medium-sized bus operators across the country deliver vital services to our local communities. Many of these smaller operators deliver tailored and bespoke services to suit local needs, and we want to see these small businesses continue to thrive, regardless of the model of bus service delivery that is employed.
The Bill requires franchising authorities, both as part of their consultation exercise and in issuing their response to that consultation, to set out how, in conducting the procurement process, they intend to facilitate the involvement of small and medium-sized operators in the provision of local bus services once franchising has been introduced. I agree entirely with the principle in the amendment that in reality, this provision will require the authority to consider in practical terms how it intends to facilitate the involvement of small and medium-sized operators, which may well include the division of local service contracts into smaller lots. However, there may be other ways to achieve that aim—for example, through subcontracting—and I do not want to prejudge the procurement strategy that an authority may employ. I hope I have reassured noble Lords that the Government are committed to ensuring that small and medium-sized operators continue to have a place in the market regardless of the model of delivery, and that the provisions in the Bill already address this issue.
Amendment 52, in the name of the noble Baroness, Lady Scott, would require franchising authorities to include in their consultation document their assessment of their proposed franchising scheme, conducted under new Section 123B, rather than a summary of their assessment. I hope I can reassure the noble Baroness that franchising authorities are already required to publish their assessment of their proposed scheme. The Bill also requires that a summary of the assessment of the proposed franchising scheme should be included in the consultation document itself, with the aim of ensuring that the consultation document contains sufficient information for the lay person to consider, without necessarily having to refer to the full assessment. I hope the noble Baroness agrees that these proposals are sensible and that the Bill as drafted already achieves her aims.
Amendment 53 would require franchising authorities to publish all the responses to their consultation on their proposed franchising scheme. I agree that it is important for those reading the response to the consultation to be informed of the views that have been expressed in responses to that consultation. I fully expect any authority to set out in its response to the consultation the views expressed by those consulted, subject to any disclosure issues, and the authority’s response to those views.
However, I do not want to be too prescriptive about how the authority should respond to the consultation and the exact form the response should take. For example, the authority may receive many responses on the same issue and may choose to summarise those responses and list the number of responses received. Again, that is common practice in local government. But I will consider how best to ensure that franchising authorities set out a summary of the responses they receive to their consultation, and hope that I have reassured the noble Baroness in this respect.
Government Amendment 50 removes the requirement for the franchising consultation document to include a description of how it is proposed persons are to be invited to tender for the provision of services. The Government believe that it is proper to remove this reference as the Bill does not make provisions anywhere else as to how the procurement process will work. This will be a decision of the authorities involved, in the context of procurement law, and guidance will be provided on procurement approaches.
Finally, Amendment 49, also in the name of the noble Baroness, Lady Scott, would require franchising authorities to have an auditor reassess their proposed franchising scheme if it is modified following consultation. I sympathise with the aims of this amendment, and agree it is vital that franchising authorities have the assurance of an auditor in relation to certain aspects of their assessment. We have already spoken about the audit function at length today so I do not want to go into further detail. I have agreed to sit down with noble Lords to discuss this further.
The section of the Bill to which the noble Baroness refers ensures that authorities are able to take account of the views expressed in the consultation and modify their franchising scheme appropriately. I also expect authorities to use their good sense and judgment. If the consultation unearths new data or causes the authority to radically rethink its approach, then of course I would expect the authority to take a view on whether it should choose to seek the auditor’s opinion on the new data or the revised analysis, and whether it should consult again on the revised scheme. I do not, however, want to force authorities to go through these processes again when a franchising scheme is modified. It may be that an authority makes a small tweak to its proposed scheme which does not materially affect it, when it would seem unreasonable for the authority to have another assessment by the auditor.
“(8) The scheme must specify whether consideration has been given to the wider social, economic and environmental benefits of the scheme, in accordance with the Public Services (Social Value) Act 2012.”
Baroness Jones of Whitchurch
My Lords, Amendments 58A and 99ZA call upon commissioners of bus services under franchise, and those developing enhanced partnership schemes, to apply the principles of the social value Act 2012 in specifying the service required.
The social value Act, brought in by this Government, recognises that many public services can have a wider role than a simple cost-benefit analysis would identify. It requires those procuring services to consider the economic, social and environmental benefits of each bid. It allows local authorities to think about public services in a more coherent way with wider benefits and encourages those bidding for contracts to be more imaginative about the community benefits their service could bring. Often this can result in better-designed services, with other benefits and efficiencies.
In the case of bus services, it could include, for example, a commitment to train and employ a number of long-term unemployed people to work on a contract. It could include a number of apprenticeships and work experience places for young people. It could include a commitment to support an existing community bus service—perhaps with some shared facilities. It could include an environmental plan with targets for green energy and reduced CO2.
These are just examples, but the point of social value is to encourage providers to commit to their own added-value measures without costing any more money. It is essentially supplier neutral, in that it can apply to all operators, whether commercial, social enterprise or municipal. It allows local authorities to be as specific as they choose—either specifying the expected wider benefits at the outset of the bidding scheme or encouraging bids to offer up more creative service solutions at a later stage of the process.
Implementing the social value Act would appear to be an excellent tool for achieving many of the community benefits which we have been seeking in other amendments to the Bill so far. I am sure the Minister is aware that the operation of the social value Act was reviewed last year by the noble Lord, Lord Young. He concluded that, where it was used effectively, it resulted in commissioners being much more innovative and delivering much more responsive public services. However, the noble Lord also concluded that the opportunities and advantages were simply not widely enough understood and therefore take-up of the model was low.
This is the Minister’s opportunity to put this matter right by embracing this model as it applies to bus services in the future and putting social value at the heart of the Bill. I beg to move.
Baroness Scott of Needham Market
My Lords, I am very pleased to see that the noble Baroness has tabled this amendment. I raised the question of the social value Act in a group of amendments when the Committee met last week. In doing so, I was trying to get at the point that the noble Baroness has made, which is really about extending the ambition of the Bill in terms of understanding the broader context, whether it is environmental or social. Because the inspiration of using the social value Act only came to me very late in the day, when it was too late to table an amendment, I raised it in debate rather than tabling an amendment. I am pleased to see that the noble Baroness has rather more ingenuity than I have and has found another place in which to put it.
Lord Ahmad of Wimbledon
As I have reflected on before, while we are in the holy month of Ramadan, noble Lords should be thankful that they are not getting emails from me because they would be arriving at about 3 am. If I am writing them, I hope noble Lords are reading them. I will of course confirm when the guidance is due to be published, but I hope I have provided clarity and that the noble Baroness will withdraw her amendment.
Baroness Jones of Whitchurch
I think the Minister for his response and I thank all noble Lords who contributed. For a little while there, we had a sense of what is possible in the Bill. If we were not careful, we were going to get bogged down in the technical detail of franchising but, as my noble friend Lord Judd said, it is about building community and using the real advantages that you get with a Bill like this that comes along only once every 20 or 30 years. This is a chance to build in that ambition and to have some excitement about the possibility that bus services can provide in terms of community assets. We have had a glimmer today of some of those opportunities.
My noble friend Lord Berkeley showed not only that you can have some innovation and excitement but that you can actually save money by pooling all those services. It seems foolish that social services pay for one set of transport while education pays for another, and no one ever thinks that they could pull that together into one complicated yet coherent grid.
I am pleased that the Minister spoke positively in response. I am slightly sad that he thinks this should go in guidance. I know we debate this over and over again, but guidance does not have the same weight as legislation. From our perspective, the social value Act is worth specifying in the Bill because it brings very specific requirements. I look forward to receiving the letter, when it eventually comes to us, but we need to explore how much more we can enforce this within the Bill rather than leaving it within the guidance. Perhaps that can be part of the wider discussion for us to have outside. In the meantime, I beg leave to withdraw the amendment.