Bus Services (No. 2) Bill [HL]

Baroness Pidgeon Excerpts

Report stage
Wednesday 26th March 2025 Lords Chamber

The compromises that the Minister put forward are acceptable alternatives to what I have said. I make the point that traffic commissioners have very few staff indeed. When the whole apparatus is reviewed, I hope that they will have enough enforcement staff to make these penalties effective in bringing about a speeding up of bus routes.

[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.

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[Lord Moylan (Con)]

My Lords, this group consists of three amendments that are sufficiently related to merit being included in one group but are each distinct from each other, and each requires a degree of explanation that, given the hour, I shall try to keep as short as possible, and I hope I will do a sufficiently good job at explaining what their purpose is.

Amendment 9 carries forward the notion of accountability that was contained in Amendment 1 relating to the purpose of the Bill. Amendment 1 related to the Secretary of State. Amendment 9 would place upon a duty upon a local transport authority that was considering embarking on a franchising proposal to make a statement as to what their objectives were in doing so. The franchising process itself is set out in some detail as a result of the amendments here to the Transport Act. I have no quarrel with the process, which is quite elaborate and involves half a dozen steps, including an external audit. It starts when a local transport authority, singly or jointly, decides to start it, and it concludes when that local transport authority decides whether or not to make the scheme. It is perfectly lawful for the local transport authority, having gone through all its process, to reach the conclusion that it should not make the scheme and not therefore proceed with franchising. But at no point does the local transport authority have to say to the public, although it may do as a matter of politics and local communications, what its objective is in doing this, what success is going to look like or what it is trying to achieve. Amendment 9 requires that. I think that is very sensible, and should be welcomed by the Minister, so the public know exactly what their local authority is embarking on and with what purpose.

Amendment 12 relates to the effect of the franchising scheme on incumbent private bus operators, which are companies that have staff and that have to make investment decisions and so forth. It says that, if having gone through that franchising process a local transport authority quite legitimately decides that it will not make a scheme, then it is not allowed to re-embark on the process for another five years. I would be open to persuasion if the Minister were to say that the period should be three years or even two years, but there must be a period of respite for the incumbent private transport operators during which they and their employees know that they can get on with a future, with a prospect, with reasons for investment and know that they are not necessarily going to be taken into a franchise arrangement. Otherwise, they could live in a state of perpetual uncertainty, with all the effects that would have on investment, business planning and staff morale. Amendment 12 intends to prevent that happening. It involves no criticism of anybody and would be the result of a perfectly legitimate outcome of the process as it stands. But it would be an adverse effect if through change of control, which of course does not have to follow an election in a local authority—change of control happens quite often without elections taking place, because councillors defect or change to one side and coalitions change in local authorities—the bus company does not have that period of respite.

Finally, we come to Amendment 13, on which I will listen very carefully to what the Minister has to say. The Bill does not contemplate giving the Secretary of State any power to step in if everything goes horribly wrong. What I mean by horribly wrong is something equivalent to bankruptcy of a local authority. In that case, the Government have the power to send in commissioners to rescue the situation. A situation of perpetual drift and financial incoherence will not be allowed to persist because that would not be good for the local people served by that local authority. Commissioners are sent in, and everything is somehow brought back into order so that services and so forth can continue. What is contemplated in this amendment—and it is carefully worded—is that

“If, due to poor operational or financial management by the franchising authority or franchisees, there is a persistent failure”—

not a bad weekend—

“to deliver a service specified by the contract, the Secretary of State may”—

it is permissive—

“take over the management of the service”.

In exercising this power, he may become the counterparty to the contract and continue to do this until

“a new contract is let, or … another permanent solution is found”.

The Secretary of State should welcome having this power because it is possible for things to go horribly wrong. You can imagine a situation where bus services in a particular area simply collapse and stop running. What is to happen if that was to occur? This gives an answer to that question and gives the Secretary of State the power to step in.

I want to listen very carefully to what the Minister will say because it is just conceivable that he has this power or an appropriate power he can use. I have had the advantage of a brief discussion with him about this beforehand. The Transport Act, which this Bill amends, is a very large document and I do not have the resources of the Government Legal Service at my hand ploughing through it, looking for the necessary power. If the Minister replies that he has such a power and can point it out, my amendment would fall away. If not, it is something that I would want to press and something he, I hope, would welcome. With that, I beg to move.

[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.

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[Lord Goddard of Stockport (LD)]

My Lords, I support the excellent speech of the noble Baroness, Lady Pinnock. It gave a dose of realism—there is nothing for free in this world and we all know that.

In Committee, enormous numbers were bandied around on the cost of franchising, so I did some research. The Greater Manchester franchising bill was £134 million. That money came entirely from Greater Manchester; there was not a penny of government money involved, so it can be done. In Greater Manchester, they did it with £78 million from the mayoral earn back fund from GMCA’s devolution agreement; £33.7 million from the mayoral precepts; £17 million from local authorities; and £5 million of existing and forecast business rates. It can be done from within, but, where there is not a mature combined authority, it is more difficult. That is where the Government need to step in and give funding.

The question might be asked: why would we do that? From the very start, this debate has been about the public and making transport more accessible and reliable. All I can tell you from Greater Manchester is that patronage, revenue and punctuality are up and the cost of running the network per kilometre is one-third lower than when it was run by private operators. If we had not franchised in Greater Manchester, we would have a smaller bus network, which stifles growth, and a more expensive network, which supports no one.

This is not a lot of money, and I just hope that the Government can look at this. Everything is about capital expenditure, but sometimes you have to create the opportunity for revenue, which can be delivered by having a better bus service going where people want it to go: hospitals, outlying villages and where people live and commute to work from. That is the difference. In Greater Manchester, we now have a night bus that goes to north Manchester—it never did before, but for people to get employment and jobs it is invaluable. It shows that, with imagination and the right funding, franchising does work, but sometimes it needs a bit of help from the Government.

[Baroness Pidgeon (LD)]

My Lords, my noble friends Lady Pinnock and Lord Goddard have raised, with Amendment 10, the elephant in the room: the adequacy of central government funding to support local bus services. While this legislation has the potential to transform bus services and empower local transport authorities, ultimately money is needed for this. This is not the view just of local and regional government—they would say that, wouldn’t they?—but the bus industry as well. Securing long-term clarity and certainty around funding for the sector—revenue and capital—will help enhance the benefits delivered to local communities. I look forward to the Minister’s thoughts on this amendment.

[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.

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[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.

[Baroness Pidgeon (LD)]

My Lords, this group of amendments is very important and improves the legislation. I am pleased to read the many amendments from the Government, picking up the issues that many of us raised in Committee, for which I am grateful. But far more consultation and engagement with disabled persons and representative organisations is essential as franchising and enhanced partnerships are adopted by local authorities, and as routes are amended or changed and a new way of working settles down.

I am also pleased to see government Amendment 19, which ensures that local transport authorities in England make a bus network accessibility plan. That responds in part to the points raised by my noble friend Lady Brinton in Committee. However, as my noble friend has set out in Amendment 37, we need to take that further; it is essential that we get changes across the bus sector. We hope that the Government respond positively to that amendment.

[Lord Moylan (Con)]

My Lords, the Official Opposition welcome and support the government amendments in this group, and we look forward to hearing what the Minister has to say in response to the very pertinent questions raised by the noble Baroness, Lady Brinton, in relation to her Amendment 37.

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Moved by

[Baroness Pidgeon]

14: Clause 12, page 9, line 20, at end insert—
“(iv) health care services, or(v) schools and other educational institutes, and”Member’s explanatory statement
This amendment ensures that health care services, schools, and other educational institutes are considered under the provisions of “socially necessary routes”.

[Baroness Pidgeon (LD)]

My Lords, one of the main purposes of this legislation is to transform bus services across the country. The deregulation of buses in the 1985 Act has seen bus route after bus route thinned out and then cut completely, especially in many rural and suburban areas such as Shropshire and Hampshire. That is why the new socially necessary routes clause in this Bill is so important to ensure that bus services provide the routes that meet the needs of local communities rather than simply those which are profitable.

Amendment 14 specifies that access to education, including schools and colleges, and health services, from a GP surgery and primary care to an acute medical setting such as a hospital, are included in the definition of a socially necessary route. These seem to be obvious places to connect communities to in a timely manner. But, as I highlighted in Committee, this is not the current case. In Tonbridge, Kent, bus services have been cut so much that school bus services either drop children off far too early, leaving students hanging around the streets before school, or they are actually late for school. Naming education institutions as part of socially necessary routes will help to address this as we move forward.

As a Londoner, I am very fortunate to be able to access local health facilities and world-leading teaching hospitals with ease on public transport. But this is not the case across the country. If we want communities to stay healthy and fit, they need good access to health services wherever they are located.

I am sure we all know family and friends who have been diagnosed with a condition or illness. They often require regular, routine appointments at different health buildings throughout their treatment. These are not just in a traditional hospital setting but right across the community. In rural areas, these can be located some considerable distance away. That is why we believe that socially necessary services need to be explicit regarding health services to ensure that patients can get to appointments at different locations without having to rely on family or volunteers to drive them there and back.

Amendment 16 in this group puts a duty on local authorities to implement a socially necessary service as far as is reasonably practical should alternative operators fail to do so, with provisions for financial support if needed and the possibility of transferring responsibility to an alternative operator once the service is established. We on these Benches felt that that was important, given that the Bill allows for a clear definition of socially necessary routes but no clarity on how these routes will be provided. If, either through franchising or enhanced partnerships, it has proven impossible to secure a provider for a service, what then happens? This is the back-up clause, but we felt it was important to ensure that such crucial services for communities are picked up and provided.

I have no doubt that, where franchising is used, local authorities will package profitable routes with socially necessary services to ensure that comprehensive bus services are provided. But our amendment picks up those services which are just not securing an operator, to ensure that communities have access to essential services.

I hope the Minister will be able to respond to these important points shortly to ensure that socially necessary bus routes properly serve local communities. I look forward to hearing from other noble Lords on their amendments in this group and I beg to move Amendment 14.

[Baroness Jones of Moulsecoomb (GP)]

For those listeners with visual impairments, I state that my name is Jones of Moulsecoomb.

I have Amendments 15 and 53 in this group. I will speak to Amendment 53 first. As we have heard a lot during the progress of the Bill, we need buses in villages. Having them does all sorts of things. It boosts people’s health because they do not use their cars as much and it improves air quality within the villages themselves. It is quite an important aspect of village life to have good buses to good services. Here, I am slightly nervous about asking for a review, because reviews take time and cost money and we have to be sure that they are properly targeted. However, I care about this, I think we could tweak it and perhaps it will find acceptance from the Minister.

My Amendment 15 basically cuts out the need for a review, because it states that bus services that were in place should be replaced. That is an option that we could look at. I take buses all the time and it seems to me that, when we reduce bus services, we reduce all sorts of opportunities that people cannot access any more. So I feel very strongly about this and I hope to hear that the Minister looks favourably on these amendments.

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[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.

Amendment 14 withdrawn.

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[Lord Moylan (Con)]

My Lords, the Conservative Government maintained a cap on individual bus fares of £2. We pledged in our manifesto—and had we been re-elected we would have put into that effect that pledge—that we would continue the £2 bus cap. I suppose that I do not need to remind noble Lords that the Conservatives did not win the general election last year.

When the cap expired, the current Government replaced it with a £3 cap, with no examination whatever of the effect that might have. We are now in a position, as the months have rolled by, to carry out a review of its effect. We know from studies done independently by Frontier Economics and SYSTRA when the Conservatives were in power that the £2 fare cap delivered significant benefits. The report concluded that the scheme had had a positive impact on bus patronage and had helped to support the cost of living by reducing travel costs. It also noted an increase in the number and proportion of single bus journeys since the scheme began.

It would be a very strange thing indeed if the Government said that they did not wish to know the effects of their own policies. The Conservatives wanted to know, and commissioned reports to find out, what the effects of their fare policies were, but the current Government simply do not want to know. I cannot believe that that it is the response from the Front Bench. This amendment requires the Government to carry out that research and bring it to the House so that we can all understand the effect of this large increase in the bus fares cap. I beg to move.

[Baroness Pidgeon (LD)]

My Lords, we on the Liberal Democrat Benches were saddened that the Government cancelled the £2 bus fare cap. It was an incredibly successful scheme that saw an increase in passengers on buses and made bus travel more affordable. I have an amendment to bring back a £2 bus fare cap scheme, which we will debate next week. I believe it is far stronger than this amendment before us today.

However, I am glad to see that His Majesty’s Opposition are highlighting this issue through an assessment of the scheme. As I said earlier, the key issue here is always the level of funding for bus services and, indeed, the costs to the passenger. If we want more people out of their cars and using buses, we need to ensure that fares are more attractive and services are provided where passengers need to go. I look forward to hearing the Minister’s thoughts on this amendment.

[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.

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[Lord Moylan (Con)]

My Lords, in the last week or two, your Lordships’ House has occupied itself extensively with the effects of the increase in national insurance contributions on various parties, often vulnerable and small operations. One of those is the private sector providers of special educational needs transport. They are vulnerable to the increase in national insurance contributions, for reasons that have been spelled out at considerable length in earlier debates on another Bill.

In the end, it seems likely that your Lordships’ House will, with its customary sense of responsibility, give way on the NICs Bill and allow the Government to have their way, and to do so very shortly. After all, in the end, the King’s Government must go on and the King must have supply; it is a financial matter. Fortuitously now, we have in front of us a Bill on bus services, where we have an opportunity to return to the matter—I shall speak only briefly, because it has been well aired—and come forward with a measure which is not financial in character and against which the other place will not claim financial privilege.

Amendment 17A simply calls for an assessment by the Government of the consequences for SEND transport of the increase to and changes in national insurance contributions. Noble Lords will not need reminding that it is not merely the rate that has an effect but the threshold at which the national insurance contributions are payable. In a way, this is the least the Government can offer, after the way in which your Lordships’ House has, as I say, indulged them with its customary sense of responsibility.

We should look at this carefully. This form of transport is absolutely crucial to schools and it is part of the bus service, in the broadest sense. I hope very much that the Government will be able to support this amendment. I beg to move.

[Baroness Pidgeon (LD)]

My Lords, we on these Benches have consistently advocated for sufficient funding to meet the transport needs of those requiring accessible services, particularly those relying on special educational needs and disabilities—known as SEND—bus services. Given our support on this issue, in this Bill and other legislation, we feel it is essential to assess the impact of NICs increases on these vital services.

A review would ensure transparency, protect accessibility for SEND passengers and mitigate financial pressures on operators that could jeopardise these services. Without a proper review, there is a real risk that rising costs could force operators to cut routes or reduce service levels, leaving many SEND passengers without reliable transport. This would undermine efforts to create an inclusive and accessible bus network. A thorough bus assessment would help identify any necessary mitigations, to ensure that SEND services remain sustainable, well-funded and fit for purpose.

Protecting these services is a matter not just of policy but of fairness, ensuring that no one is left behind due to financial pressures beyond their control. We therefore support this amendment and look forward to the Minister’s response.

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[Lord Moylan (Con)]

My Lords, I hope noble Lords will agree that in my speeches so far this evening I have been as brief as possible. This amendment is of some technicality and legally quite complex. Not being a lawyer, I hope that I can get it right and explain it correctly in as brief a compass as possible, but if I go on a little bit longer than I have otherwise, I hope noble Lords will indulge me.

I will start at some distance from the Bill, with European Union procurement law, to which we were subject for so many years. Anybody involved in local government or any departmental procurement will remember that it obliged us to put out to tender any contracts that were above a certain threshold. We had to advertise them and go through what was known as the OJEU process.

At that time in European law, a question arose: what was the situation of a public authority which had set up its own company? Could it award work to a company which was its own subsidiary, without going out to tender? This case, which was called Teckal, went to the European Court of Justice, which determined that in certain circumstances, especially those in which the subsidiary was doing substantially most of its work for the public authority, contracts could be awarded to it without the need for any tendering. So, you have a public authority which has a subsidiary, the subsidiary does most of its work for that public authority, and contracts can be awarded without going out to tender—the Teckal exemption.

Of course, we left the European Union and in the course of time we replaced that procurement legislation with our own Procurement Act, seen so ably through the House, if I may so, by my noble friend Lady Neville- Rolfe. That procurement legislation carried forward the provisions of the Teckal exemption—I do not know whether it is still called that but I am going to call it that because everybody in the procurement universe does—so that the situation I described still pertains in UK law.

The Bill offers to local transport authorities three ways of carrying forward the provision of bus services: through an enhanced bus partnership, through the franchising route, or through establishing their own bus company subsidiary. It is manifest to me, even as a non-lawyer, that a bus company that was established and owned by a local transport authority, which inevitably would provide practically all its services to that local transport authority, would qualify for the Teckal exemption —that is, work would be given to it without going out to tender. I am going to park that for a moment.

Let us now travel to a different part of the Bill, relating to the franchising route. Permission is given to local transport authorities to make initially what is called a “direct award”, which is to give to the existing incumbent bus company the contract to carry out the franchised service without going out to tender. This provision would apply for only a limited period. One understands the Government’s thinking on this: if you are going to adopt a franchise model and you have only one bus company operating, then perhaps you should be able to give it to that company for the sake of continuity and smooth operation and then develop the market later, so that when you next arrange your franchising there is a market into which you can tender. The direct award route is not in itself objectionable— I am not saying that anything in this is objectionable.

I come to the interaction of the two, because the anxiety is that the legislation is so drafted—not deliberately, I imagine, but I will come to that—that it may be possible for a local authority on the one hand to use the route of setting up its own subsidiary bus company: a so-called LABCo, which seems to be the terminology that is going round; I depreciate it as much as I think the Minister does, from the shaking of his head. On the other hand, a local authority could then use the direct award mechanism to give the whole contract to its own subsidiary immediately and without any tendering.

I think the Minister can respond to what I have said by saying one of three things. Fortunately for him, I have given him my own inadequate explanation of this case in advance, so he has had some time to think about it. He can say that I have got the law wrong—he has the benefit of the Government Legal Department behind him, and I have my poor resources, so that may be the answer. He will be able to explain why I have got the law wrong and put the House right as to what the legal position is. That is one thing. He could say that I have alighted upon a loophole and a weakness in the legislation which should be addressed, that he is going to take steps to address it, that my amendment is therefore unnecessary and that something will be done between now and Third Reading. Or he could say words to the effect that I have got the law right, the loophole exists, and he is going to do nothing at all about it. In the last case, I give notice that I suspect I would want to the test the opinion of the House, but in the first two cases, if I was corrected on the law or if the Minister said that he agreed with me on the law and was going to do something about it, then I would of course expect to withdraw my amendment.

I am very interested to hear what noble Lords have to say about this exciting argument that could, for all I know, provoke widespread debate in the House, but I am particularly interested to know what the Minister has to say when he comes to reply. I beg to move.

[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.

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[Baroness Pidgeon (LD)]

My Lords, I am pleased to see these amendments from the Government around the issue of data transparency and the use and processing of personal data relating to the bus sector. I am assured by the Minister’s introductory remarks on this group of amendments.

[Lord Moylan (Con)]

My Lords, we have no objection to these amendments.

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[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.

[Lord Moylan (Con)]

My Lords, we have no objections.