Community Transport

Debate between Bob Seely and Lilian Greenwood

Thursday 10th May 2018 Westminster Hall

[Lilian Greenwood]

The right hon. and learned Gentleman makes a very important point, and I think that it is for the Minister to explain precisely why he has taken this specific legal approach to the interpretation of the regulation. I am sure that he will do so in his response to the debate.

The DVSA told Erewash Community Transport that it must

“take action to bring its operations into line with all applicable legal requirements”,

and that that applied to all its drivers and services, not just those provided under the terms of contestable contracts. The DFT’s letter confirmed that this interpretation was now to be universally applied, and not just applied to one operator, and that it was intended to make clear the broader implications for the community transport sector. The letter acknowledged that existing guidance

“may have provided an inaccurate indication”

of the rules for sections 19 and 22 permit use. Nevertheless, all operators in similar circumstances would

“now need to take action to bring their services into compliance with legal requirements.”

The letter asserted that additional licensing requirements were likely to apply mainly to large, transport-only organisations, and that many—perhaps the majority—of other smaller and community-based permit holders were likely to be unaffected. It said that the DFT intended to explain the implications more fully and to consult on its proposals in the autumn. The evidence to our inquiry, including evidence from hundreds of community transport organisations of various types and sizes, overwhelmingly suggested that that assumption was simply wrong.

Although the DFT’s letter may have been well-intentioned and designed to clarify and calm the situation, it achieved the opposite effect, by creating widespread confusion and panic. Mobility Matters, an urgently convened campaign group, told us that its survey evidence suggested that the new requirements were likely to be catastrophic for many community organisations, with 40% saying that they would be unable to carry on operating as a result of the additional costs.

There were many unanswered questions and the broad community transport sector was understandably confused about what action was required and by what date.

[Mr Bob Seely (Isle of Wight) (Con)]

I thank the hon. Lady for calling this debate. On the Isle of Wight, we have the excellent FYTbus service—the Freshwater, Yarmouth and Totland service. It is very successful and needs no further help. This heavy-handed and bizarre approach to regulation puts a question mark over the future of the FYTbus service, and I think that that is very unnecessary. Does she agree that we need to be encouraging voluntary drivers and the community sector, and not hitting them in this way?

[Lilian Greenwood]

That is precisely right and my Committee called on the Government not to use a sledgehammer to crack a nut.

After the DFT’s letter arrived, traffic commissioners and local authorities were also unclear about its immediate implications. We heard about traffic commissioners sitting on applications for new permits, because they were unsure what to do. We heard about local authorities holding off from agreeing new contracts and that some contracts with permit-holders had already been terminated. Concern was growing that vital and socially valuable services might already be being lost. Frankly, it all seemed to be a total mess and the sector felt in limbo.

The pressure from our inquiry, from the Community Transport Association and from campaign groups such as Mobility Matters perhaps hastened the DFT’s attempt to clarify the situation. On 9 November last year, it issued a letter to local authorities, making it clear that at that stage no contracts should be cancelled. On the face of it, that letter also seemed to offer some of the clarifications that were being sought. For example, it explained that services could be considered “non-commercial” where there was demonstrably no commercial market—that is, where a community organisation had stepped in to replace a failed commercial bus route, or where it was delivering a service for which no commercial operator had tendered. Essentially, it set out a potentially broader definition of “non-commercial” and seemed to address some of the more obviously perverse consequences of the initial statement. We therefore welcomed the clarifications as a starting point from which to find a more workable solution.

However, we also concluded that the fact that it had taken more than three months to produce that letter demonstrated the Department’s lack of understanding of the sector and the potential impacts of the July proposals. What we wanted, and what we recommended in our report, was for the Government to use their consultation to consider reforms designed not only to achieve compatibility with the EU regulation but to maintain achievement of the key public policy objective— the provision of high-quality, safe and secure community transport services for people who might otherwise be left isolated.

I was not reassured by the Government’s response to our report. It took precisely the legalistic position that we had warned against, and discounted almost all of our recommendations, which were intended to lessen the impacts of the proposals. It did not consider the interplay with commissioning bodies’ responsibilities under the Public Services (Social Value) Act 2012, despite indisputable evidence of the immense social benefits of community transport. In addition, it did not consider establishing any kind of hybrid category, whereby there would be more proportionate licensing requirements for the sector. It could not even set out an appropriate and clearly defined transition period for affected organisations and there was no commitment to offer tangible support to those required to make changes.

It concerns me greatly that the Department has offered no properly reasoned justification for its implacable stance. Given the importance of what is at stake, it is surely incumbent on the Government to explain their thinking. The comments that I am hearing about the consultation, which closed last week, are not encouraging either. The fundamental questions of whether the Government’s interpretation of the EU regulation is correct, whether their proposals will achieve what they set out to achieve and whether those proposals are proportionate and workable have not been adequately open to challenge. It amounts to a consultation in name only; the Government’s proposals are presented largely as a done deal.

Mobility Matters’ opinion, with which I have sympathy, is that the interpretation is arguably wrong. Mobility Matters asserts that the definition of “non-commercial purposes” should be applied to organisations and not only to the services that they provide. For example, it should take account of an organisation’s charitable status and the social value that it brings to its local community. Mobility Matters also points out that the issue at hand is about fairness in competition for contracts. If that is the case, logic would suggest that the issue should be dealt with in procurement guidance.

The Minister needs to demonstrate today that the Department has properly engaged with these arguments and properly considered alternative courses of action. However, the Department seems intent on pushing ahead with more stringent, more expensive licensing requirements, without knowing how many operators will be affected and how much this will cost them, or how many operators will be able to bear the strain. There is a real danger that the Government have massively underestimated the detrimental effects on the community transport sector. That is demonstrated by the initial impact assessment, which was published alongside the Government’s consultation paper and which, frankly, is woefully inadequate. First, it is dated “October 2016”, when we know, by the Department’s own admission, that as recently as last July it did not have a reliable picture of the size or shape of the community transport sector.

Secondly, in the absence of reliable data, the Department seems to have grossly underestimated the total net costs for affected operators, putting it at £69.5 million over 10 years. The Community Transport Association, the trade body set up to support community operators, with the assistance of the Department, puts the figure at nearly £400 million. The Department’s assessment did not monetise substantial costs, including the costs of tachographs, additional insurance, company registration for those needing corporate restructure, and funding required to prove financial standing for PSV operator licences.

The Department’s estimate was that 1,567 permit-holders would be affected by the operator or driver licensing requirements, which is 25% of permit-based operators. The CTA’s analysis is that 95% of permit-based operators will be affected, which is a total of 5,956 operators. Just today, I received the latest example of the wider impact. Keep Mobile is an operator with 14 paid drivers, three volunteer drivers and 12 minibuses providing services around Berkshire, primarily to vulnerable passengers. Last year, the Prime Minister visited to celebrate its 25th year of operation. However, as a result of the confusion created by the Department’s letters, a local authority contract was not renewed and Keep Mobile was forced to make four members of staff redundant and sell two of its vehicles. Now it fears it will have no alternative but to close down. These impacts are real and devastating.

With such a level of uncertainty about the effects of the proposed changes, it is surely incumbent on the Department to take stock, to reconsider or, at the very least, to proceed with extreme caution, and I hope the Minister will be able to assure us that that is the approach he is taking. The published impact assessment is no basis on which to proceed. Frankly, the Department has this back to front: it is announcing its policy without a clear view of the impact that it will have. When will a fuller, more robust impact assessment be published? Is he ready to rethink his plans in the light of that new data?

Will the Minister consider how we got to this point? The Transport Committee concluded that the Department failed to address valid concerns over many years. It acted too slowly. Perhaps now it feels it has painted itself into a legal corner, but why has that happened? As I understand it, complaints about the widely accepted permit system have emanated solely from Martin Allen and his small group of commercial operators, the Bus and Coach Association. The main trade body, the Confederation of Passenger Transport, seemed intensely relaxed about permit use in its evidence to our Committee. Why did the DFT allow the complaints of a small group of commercial operators to rumble on for years? If it had addressed these relatively localised complaints years ago, could we have avoided the current situation? Why could localised problems in relation to competition for local authority contracts not be dealt with through procurement guidance? Why the need for a new, blanket approach to operator and driver licensing when we all accept that the permit system has worked effectively for decades and very broadly still does?

Martin Allen and the BCA say they want an end to unfair competition, but is there not a very real danger that they will succeed in eliminating all competition from community transport operators? Has the Department for Transport and the European Commission effectively been bullied into proposals that could do immense harm to vital community services and achieve precisely the opposite of the regulations’ intention?

--- Later in debate ---

[Mr Seely]

The whole point about voluntary bus services, such as the FYTBus and others that we are here to defend, is that they take up the slack where there is no commercial option because the commercial bus operators will not provide services in those areas. That is the whole purpose and logic of having voluntary services.

[Lilian Greenwood]

The hon. Gentleman is right. In many places community transport operators are filling gaps. In other places, they are providing local authorities with an affordable option to continue providing services to their communities.

As we emphasised in our report, the community transport sector has acted in good faith, in accordance with official guidance and with the acquiescence and encouragement of local and central Government over many years. The Minister must confirm today that he will take full account of the views and concerns expressed during the consultation. He must be clear about the next steps and the timetable for change. I would like to hear him talk about transitional arrangements, financial support and other mitigations. We have heard precious little about them so far. It would be unjust if even one socially valuable community transport service was lost in these circumstances. I fear the ultimate outcome, if the Government pushes ahead regardless of the concerns, could be far worse.