Bus Services (No. 2) Bill [HL]

Baroness Pidgeon Excerpts

Committee stage
Tuesday 28th January 2025 Grand Committee

[Lord Grayling (Con)]

My Lords, I will speak only briefly, but I want to raise a particular point with the Minister on which I would like his clarification. What I would say to the noble Baroness who has just spoken is that, having just arrived in this place from the House of Commons, I find it noticeable that the depth of scrutiny of Bills seems to be rather deeper here. In many ways, as a former MP, I regret that, as it should not be like that. It is important that legislation is scrutinised carefully and questions are asked. I think that this House plays a very important role in ensuring that legislation is as good as it possibly can be.

The issue I have to raise with the Minister is the reason I support the amendment moved by my noble friend. I worry that ideology may sometimes get in the way of good service. I know that it would not happen in his case—I have the highest respect for the Minister—but I can quote one or two other examples in government, the future of academies, for example, where ideology seems to be treading on the toes of what is best for young people. I would not wish that to happen in the area of transport and buses, and I have misgivings about the Government’s plans to allow the setting-up of municipal bus companies. There is no obvious mechanism to ensure that there is a high-quality case for doing so.

I have also been quite worried about a simple principle. One of the things that has always attracted me to deregulation is the ability of an individual or a group of individuals to decide that the firm they work for is not doing a good job, so they will set one up in competition and do a better job themselves. I see no real reason why a simple clause such as this that places a duty on not just the Minister personally but those who work for him to ensure that the decisions they take, the interactions they have and the things that follow through from this legislation deliver high-quality, better bus services and are not just there for ideological reasons.

My noble friend mentioned London and the concern that certainly exists outside London. What makes London distinctive in bus terms is that it is vastly more subsidised than any other part of the country. I remember as Secretary of State being surprised to discover the level of discrepancy. What we all want is the best possible service. That is why I relaxed the franchising rules five years ago. I cannot see the objection to a simple clause that places a duty on the Minister and the teams who work for him to ensure that every decision taken is the best one for the passenger.

[Baroness Pidgeon (LD)]

As we start our detailed examination of this bus legislation, we should not forget that 1.6 billion passenger journeys were made by bus across England outside London in 2023 and that buses are essential for people to get to school, college, work or appointments and to have access to shops and leisure. A good bus service provides wider economic and social benefits for local communities, businesses and public services. As we start our deliberations today in Committee, we on the Liberal Democrat Benches overall welcome this legislation, which is looking to improve bus services, grow the number of passengers using buses and ensure a more reliable network connecting people and places. Our approach is to make improvements to the Bill to tackle the problem that bus services in many communities across the country fall far short of the required standard and level of service. As I stated at Second Reading, this situation must change. Reliable public transport is not a luxury. It is a necessity, especially for those who are most vulnerable.

Amendment 1 would place a duty on the Secretary of State to have regard to the purpose of the Act, namely, to improve the performance and quality of bus passenger services in Great Britain. It is similar to the amendment tabled by the noble Lord, Lord Gascoigne, to the public ownership of the railways legislation last autumn. At face value, it is impossible to disagree with this statement. It is fundamental to this legislation and the range of areas covered in it that this is about improving bus services across the country, rather like the rail legislation was the Government’s first response to improving our railways. In many parts of the country, our bus services have reached a crisis point and, indeed, are virtually non-existent. Therefore, improved performance and quality of bus passenger services must surely be the clear aim of this legislation. This amendment would make it clear that the primary, but not the only, purpose of the Bill is to improve the performance and quality of services.

My Amendment 52, in the third group, would place a broad duty on authorities to promote bus services in their jurisdiction, with a lot of detail regarding measures to consider. A report every two years covers the point about improvement to services and, in my view, deals with this issue in a more comprehensive and devolved manner, which is much better suited to this legislation.

The comments made by the noble Earl, Lord Effingham, about one size fits all do not reflect the legislation before us today, which provides a range of options for local transport authorities to choose the best option for their area and community. This is not about putting the London bus model across the country; it is about using whichever model suits local areas. I look forward to hearing from the Minister how the Government will respond to this amendment, how they interpret these words and, if they do not support them, whether they have other words that they may bring forward instead.

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[Lord Hampton (CB)]

My Lords, I shall speak to my Amendment 61. I was very pleased to hear the Minister say that the Bill is about safety. All my amendments are about safety, but this is the briefest. It is very simple and builds on Amendment 6 tabled by the noble Baroness, Lady Brinton, to make sure that those who make these decisions are qualified to do so. My amendment would simply ensure that franchising authorities responsible for the design have the appropriate IOSH and NEBOSH certificates so that they can judge what is and is not safe.

[Baroness Pidgeon (LD)]

My Lords, I shall speak first to Amendment 6, which seeks clarification following the debate on changing an “auditor” to an “approved person” in assessing bus franchise schemes. It would ensure that within three months of the Bill becoming an Act, the Government will publish the qualifications required for an approved person under the Act and would also lay a regulation with that information in it prior to the commencement of the clause. This is because Clause 9 amends Section 123D of the Transport Act 2000 to remove “auditor”, a term synonymous with an appropriate level of qualification, registration and probity, with the more generic term “approved person”. An auditor, by contrast, must be a member of the Chartered Institute of Public Finance and Accountancy.

The Minister said in response to my noble friend Lady Brinton’s question at Second Reading:

“The intention is not to deregulate approved persons but to widen the range of them. I completely agree with her that they should have some qualifications. An unqualified person should not be able to make a judgment about whether a franchising scheme is right”.—[Official Report, 8/1/25; col. 790.]


The powers and responsibilities of the approved person are significant. Clause 9(2)(1) states:

“A franchising authority, or two or more franchising authorities acting jointly, may not proceed with a proposed franchising scheme unless they have obtained a report from an independent approved person on the assessment of the proposed scheme (see section 123B)”.


I understand why the Government would like to broaden the scope of those able to provide assurance that an approved person will have, at the very least, a CIPFA qualification or its equivalent. However, one of the problems of loosening very specific language in previous legislation is that without sight of exactly what the new qualifications are some organisations will take advantage of the new scheme. From these Benches, we would want any new franchise proposal to have been assessed and reported on by a qualified person because this is about significant public money and assurance. On that point, I hope that the Minister can clarify today what qualifications the Government would expect for such a person in order to reassure these Benches.

My noble friend Lord Goddard clearly set out Amendments 2 and 12, which aim to ensure that we learn from the Manchester franchising experience and that best practice is shared more widely, making franchising more dynamic and responsive. Clarity is absolutely needed on whether there is a minimum period from which services or changes to services proposed by a franchising authority may be enacted. I hope the Minister can answer this point and provide much-needed clarity today.

Amendment 61 in the name of the noble Lord, Lord Hampton, regarding the qualifications needed for officials working in franchising authorities who will be responsible for designing, negotiating and enforcing any franchising schemes, is welcome, given that it is important that staff have a clear understanding of health and safety issues. The noble Lord, Lord Woodley, raised a number of points linked to employment rights, and I look forward to hearing a response to his specific concerns.

The amendments in this group from the noble Lord, Lord Moylan, are a mixed bag, with many seeming, quite frankly, to be trying to put more obstacles in the way of any local transport authority that wishes to introduce franchising. They feel like an ideological response rather than genuine concern about bus service provision across the country. The noble Lord suddenly does not seem to believe in localism. I am not sure that he would have had the same opinion in his previous life as a local councillor and a deputy mayor of London.

If all local transport authorities want to move towards franchising, so be it. This is about devolution and local authorities deciding what suits their local communities. It is highly unlikely that everywhere will move towards franchising, but they should have that option. To want potential intervention from the Secretary of State feels an unnecessary and bureaucratic top-down approach, whereas this is supposed to be a bottom-up approach to bus services. I look forward to hearing the Minister’s response to the points raised.

[Lord Whitty (Lab)]

My Lords, I will make a couple of brief points. I apologise to the Committee that I am Boxing and Coxing with another meeting this afternoon and that I did not table my amendment for today’s Committee. Formally, I support Amendment 17 tabled by my noble friend Lord Woodley, but I will put it in a broader context.

The amendment deals with the relationship between franchising companies and franchising authorities and the trade unions, which is vital, but, as I said at Second Reading, we need a provision for planning the workforce of bus services across Britain in the same way that we do in other industries. I say to the Minister and his colleagues that the Government are attempting major reorganisations of several industries—energy, railways, buses—yet in the proposed legislation, there is no clear commitment to forward workforce planning. I would have tabled an amendment to that effect, and I hope that the Government will come forward with that in any of the Bills that I refer to, but particularly this one.

The workforce in buses has declined by 25% over recent years. With all due respect, it is a very skilled but elderly workforce. Not many new people are coming into it. We need a new forward system as part of this Bill and the processes it starts to ensure that there is an adequate workforce-planning dimension. Part of that involves the arrangements with the trade unions, which my noble friend Lord Woodley points out in Amendment 17, but it is broader than that and has to be national as well as local. I hope that before the Bill reaches its final stages it will have a clear strategic commitment to workforce planning for bus services.

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Finally, on a similar note, I come to Amendment 69. Again, there is nothing forward-looking in this Bill. I have tried to introduce a couple of forward-looking things. For instance, should you be able to charge your phone on a bus? There are already municipal buses that you can buy for providing those services which have chargers. Should we be encouraging that? What about free wifi on buses? Should we have those things as well? Also, could we use technology better to improve accessibility and real-time information? None of these things, which are at the heart of modern buses, are referred to in the Bill as ambitions or objectives. I very much hope that the Minister will be able to accept this amendment so that we can make this Bill fit for the future and not just reviving an historic past.

[Baroness Pidgeon (LD)]

My Lords, first, I want to speak to Amendment 33. It is one that Jenny Randerson had marked up in her paperwork for this Bill, so we felt that it was really important to table it for her.

Although there are many bus operators across the country—as of last October, there were some 367 in England—the reality is that around three-quarters of bus services are run by a handful of large companies. This amendment would enable local transport authorities to prioritise small transport operators when allocating grants, thereby helping to promote diversity in the sector. Some local, smaller operators may know the area and community far better than a large company; we felt that it was important to acknowledge this when looking at the grants that a transport authority may choose to award.

Such operators are also more likely to provide services in rural and less connected areas, including those that will be deemed socially necessary routes. For example, bus routes in Bishop’s Waltham in Hampshire are particularly poor. Despite it being a sizeable town, it lacks adequate bus connections to Winchester and the surrounding area. A small operator may be able to provide this service in a way in which the larger operators are clearly choosing not to do currently. Additionally, such grants may enable small operators to invest in cleaner, more modern vehicles, contributing to environmental goals and improving the overall quality of service. This amendment is designed to support a competitive and dynamic transport market that ultimately benefits passengers.

Amendment 52 would provide a duty on relevant local authorities to promote bus services in their area. With this new focus on improving bus services, it is right that they are properly supported and that their benefits to the local environment, as well as their wider social and economic benefits, are promoted locally. Promoting bus services will help reduce the number of private vehicles on the road, leading to lower greenhouse gas emissions and improved air quality. Reducing congestion can help improve the local economy and ensure a more reliable bus service, thereby facilitating access to jobs, education and other services. Although this is a probing amendment, its aim is to ensure that there is wider thinking about what happens beyond this legislation if we are to have the step change in bus services across the country that all sides of the Committee, I am sure, would support.

With Amendment 4, my noble friend Lady Pinnock has raised the elephant in the room: the adequacy of central government funding to support local bus services. Although this legislation gives local transport authorities a choice of options in providing services, money is needed for that, and this is not just coming from local and regional government. One of the large operators, Stagecoach, has flagged with me that bus services can be successful only if they are properly funded, irrespective of the delivery model. Securing long-term clarity and certainty around funding for this sector will help enhance the benefits delivered to local communities—exactly the point that my noble friend Lord Bradshaw has just made. The noble Lord, Lord Moylan, also touches on funding allocation in his Amendment 31, on which he spoke in great detail.

The Bill also talks about net cost for contracts that are direct awards, which implies that the revenue risk sits with the operators. It is not clear how that sits with control of fares being within the remit of the local transport authorities. Perhaps the Minister can explain the thinking regarding these contracts and funding from government going forward. My noble friend Lady Pinnock has also touched on the enforceability of by-laws, the need for model by-laws and staff training if by-laws are going to work in practice. Operators are concerned about the requirements for training and whether additional funding will be provided to cover this new requirement. Again, we are back to the elephant in the room: funding.

My noble friend Lord Bradshaw has spoken with his extensive experience and knowledge about the need to improve the reliability of bus services and ways to incentivise this through conditions in any financial support.

A wide range of other amendments in this group pick up improving the passenger experience with what we would expect from a modern bus service, whether that is wifi, charging or accessibility improvements. We do not know what we will need in the future. Things will move along. At the moment, we think about plugging things in to charge them up. Technology moves at such pace. I am not sure whether these are needed in the legislation, but perhaps they should be in the guidance. I look forward to hearing from the Minister on that point.

I would like clarity from the Minister, on the record, about demand-responsive bus services. I raised this at Second Reading, and it was made clear in the Minister’s letter in response that this legislation enables demand-responsive bus services. They may well be the solution in some parts of the country, but I want assurance that this legislation enables that rather than prevents it. I look forward to hearing detailed responses from the Minister to these important points.

[Lord Hendy of Richmond Hill (Lab)]

I will now address the amendments relating to local authorities, specifically the Bill’s grant-making powers, functions and duties. Before I address the amendments tabled by your Lordships, I will talk to the government amendment in my name, Amendment 81. This makes a minor change to Clause 30, providing for the provisions under Clause 21, on local transport authority by-laws, to come into force by regulations. Clause 30 sets out the commencement details for each clause of the Bill. The majority of clauses will come into force on days appointed by the Secretary of State by regulations. The current exceptions are Clause 21, “Local transport authority byelaws”, which is due to come into force two months after Royal Assent, and Clause 23, “Safeguarding duty: drivers of school services”, which comes into force six months after Royal Assent.

Clause 21 empowers local transport authorities to make by-laws addressing anti-social behaviour on their bus networks. It also allows the Secretary of State to issue statutory guidance about the exercise of enforcement functions in relation to local authority by-laws. Bringing Clause 21 into force by regulations, rather than two months after Royal Assent, is imperative to ensure that officials in my department have time to develop meaningful guidance to aid local transport authorities and their officers in undertaking enforcement functions. If the change cannot be made, local transport authorities may make by-laws before the guidance can be issued, or there may be insufficient time to develop comprehensive guidance that will be of the most use to local transport authorities and their enforcement officers. It is therefore an important change to make.

I move next to Amendment 4, tabled by the noble Baroness, Lady Pinnock. I thank her for her recognition that the Government’s recent settlements for local transport authorities are comprehensive for the moment. Her amendment seeks to include further consideration of funding requirements in the scheme assessment that authorities must undertake when developing a franchising scheme. I reassure her that consideration of the affordability of proposed franchising schemes, and therefore funding, is already a central part of the assessment. The existing legislation states that the assessment must include consideration of whether the proposed scheme would be affordable to set up and operate. As for a requirement for a specific analysis of the funding required to maintain or improve services for all communities, I stress that the legislation already requires the proposed franchising scheme to be properly costed and compared to another course of action, such as an enhanced partnership.

Finally, I note that both the franchising assessment and the independent assurance report must be published alongside the consultation. This ensures transparency around the local transport authority’s decision.

The Government have set out their ambitions to consolidate and simplify bus funding streams and to provide the long-term certainty that local transport authorities and bus operators have been calling for. The forthcoming multi-year spending review provides a real opportunity for the department to assess the sector’s funding needs so that bus services are adequately funded to support economic growth and, in particular, to overcome the barriers to the Government’s missions. Of course, any future spending decisions must be subject to the outcome of the spending review process. For all those reasons, and with that statement, I hope that the noble Baroness will feel able to withdraw her amendment.

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[Lord Grayling (Con)]

My Lords, I support my noble friend’s comments. The difficulty with direct awards is that sometimes they are genuinely necessary. We experienced that on the railways—where circumstances change, a business fails or there is simply a need to take greater control for reasons that come along unexpectedly. The danger is—I go back to what I said earlier about ideology —that the requirement for a direct award caused by circumstance is overtaken by direct award driven by ideology.

I am afraid that that is at the heart of the noble Lord’s amendment. I understand the principle he represents, but it would not be right to have a situation in which a local authority was able, unfettered, to set up its own bus company and make a direct award to it, regardless of whether it was any good or not—there have been many occasions in history where the local municipal bus company has not been good at all.

In the world the Government seek to create, where in my view there is a role for direct award, on occasions, when it is necessary, I too would like to understand how the Minister would ensure that that power is used in a way that is right and proper, and, ultimately, as I said earlier, beneficial to the passenger.

[Baroness Pidgeon (LD)]

The amendments from the noble Lords, Lord Woodley and Lord Moylan, show both ends of the spectrum in this area—one wanting to make it easier for a local authority bus company to be directly awarded a service, and the other wanting the Secretary of State to be involved and lots of bureaucracy to make it even harder. But I absolutely agree that these amendments throw up some real questions around direct awards, and I hope the Minister can provide some clarity.

Direct awards can be made to existing operators where the post award services are deemed “substantially similar” in the context of direct awards. What criteria will be used to determine that? What is the precise definition of “substantially similar” services? How will the requirement for operators to take on real operational risk be defined and enforced under a direct award? As the noble Lord, Lord Moylan, has just rightly stated, in situations where multiple operators currently run services, what are the criteria for selecting an operator to receive a direct award? Will all existing operators be awarded a direct award? What guidance is going to be provided to local authorities regarding the structure of direct award contracts? What flexibility will they have in negotiating terms?

The bus industry welcomes this legislation but it will want some certainty. I hope the Minister can provide that in his response to this group of amendments.

[Lord Hendy of Richmond Hill (Lab)]

I will first address Amendments 9 and 10 from my noble friend Lord Woodley. The option of a direct award is designed to support the transition to bus franchising, bringing forward some of the benefits of franchising while delivering service continuity to passengers. Expanding the scope of direct awards to include local authority bus companies under all circumstances would not meet these objectives, which are limited and designed to deliver continuity and would, in the case of his amendments, prevent fair competition with private operators. With respect to my noble friend, these amendments are unnecessary and I would ask him to withdraw Amendment 9 and not press Amendment 10.

I thank the noble Lord, Lord Moylan, and the noble Earl, Lord Effingham, for tabling Amendment 13. It is up to local leaders to determine how to run their bus services best and to assess the effectiveness of the delivery of their franchising contracts. Franchising authorities using direct awards are subject to comprehensive reporting requirements and the Bill does not change this. The additional requirement would create unnecessary additional burdens.

Noble Lords asked whether the clause complies with the Procurement Act 2023. As I said in my letter to all noble Lords, Clause 11 is limited to the direct award of net cost contracts, also called concession contracts, where the operator provides franchise services in return for the fare revenues. These contracts are exempt from the Procurement Act 2023—see paragraphs 21 and 37 of Schedule 2 to that legislation—and instead fall under the Public Service Obligations in Transport Regulations 2023, which the Bill is amending. Therefore, this clause does not impact on the Procurement Act 2023.

On the questions raised about there being more than one operator, this is a transition arrangement in order that the passengers involved, the customers of bus routes, and the operators get more certainty in the transition than might otherwise be the case. Clearly, the provision of direct award can be useful to authorities seeking to move to a franchising model both now and in the future. It also provides flexibility to stagger the full implementation of franchising, for example, tendering competitive franchise contracts at different times. It can be used only for the first franchise contract in an area to support the transition. Direct award contracts will have a maximum duration of five years, and in many cases a shorter duration will be appropriate. Long-term franchising contracts will be competitively tendered in the usual way. For clarity, in areas where there is more than one operator, only the incumbent operator can receive a direct award contract for the same or substantially similar services. It is uniquely placed to provide service continuity to passengers during this transition.

The amendment tabled by the noble Lord, Lord Moylan, and the noble Earl, Lord Effingham, would create unnecessary additional burdens on local and central government to complete the assessment. I therefore ask them not to press their amendment.