Community Transport

Lilian Greenwood Excerpts

Thursday 10th May 2018 Westminster Hall

[Lilian Greenwood (Nottingham South) (Lab)]

I beg to move,

That this House has considered the First Report of the Transport Committee, Community Transport and the Department for Transport’s proposed consultation, HC 480, and the Government response, HC 832.

It is a great pleasure to serve under your chairmanship, Mr Davies. I thank the other members of the Transport Committee for their work on this inquiry. I am pleased to see that my hon. Friends the Members for Cambridge (Daniel Zeichner), for Easington (Grahame Morris) and for Plymouth, Sutton and Devonport (Luke Pollard), and many hon. Members from across the House, are present to debate our report.

The Transport Committee often scrutinises multibillion-pound investment in roads and railways—high-profile mega-infrastructure projects. Community transport rarely comes under the spotlight, yet it encapsulates what local transport is for: connecting people with their communities. It is vital to many thousands of users, who are often the most vulnerable in society, and it provides them with reliable, high-quality and, above all, friendly and caring local transport services.

[Nick Thomas-Symonds (Torfaen) (Lab)]

On that point, in my constituency I have a provider called Torfaen Community Transport, which is exactly as my hon. Friend says. Does she agree that, with rules and regulations, it is important to recognise the special status of community transport and the excellent services it provides?

[Lilian Greenwood]

My hon. Friend is exactly right, and I suspect I will hear from many more hon. Members who want to talk about their local providers.

On reading through the many comments on the Committee’s online forum from community transport groups, drivers, users young and old, their families and even a tea shop and bed and breakfast in the Yorkshire Dales, it is clear just how important those services are to people’s daily lives. It is noticeable how many people referred to them as a lifeline. I recommend that everyone looks at #WithoutCT on Twitter to see the range of socially valuable activities that would simply not be possible for some without a local community transport operator.

[Neil Parish (Tiverton and Honiton) (Con)]

I thank the hon. Lady for the report and for what the Transport Committee is doing on it. Community transport is important, especially in more rural areas, and especially to enable our elderly to get to hospitals all over the place. We have to try to provide some direct help with fuel costs or insurance—something that will keep those community groups going. They often cannot afford to run commercially, but they can do such a good job with some support. They do so all across my constituency, as I am sure they do across hers.

[Lilian Greenwood]

The hon. Gentleman is right that those services are invaluable. It might be a regular trip to the shops, a lift to a social or sports club, or a visit to the doctor or hospital, as he just said. It could even be something that we would all strongly advocate: a lift to the polling station on election day.

Community transport encompasses a broad range of services, whether that is lift-giving by volunteer car drivers, dial-a-ride minibuses for people with disabilities or other mobility problems, or community bus routes that would not otherwise exist because they are not commercially viable. I have seen the importance of Nottingham community transport in my area, and I am sure that we all have wonderful examples that showcase how local community transport operators serve our constituencies. That is why we support and highly value community transport, and why we want and need more of it, not less. We must not take it for granted.

A vibrant, not-for-profit community-based system is becoming increasingly important to complement existing commercial bus and taxi services, and to plug gaps in provision that are growing in many places because of pressure on local authority budgets. Last summer, however, the community transport sector faced an existential crisis. The Department proposed an about-turn in relation to not-for-profit operator licensing arrangements that could have serious, perhaps catastrophic, implications. Grave concerns were expressed by the sector, and by hon. Members across the House, which is why the Transport Committee became involved. I am proud that it was the first issue we considered after I was elected as Chair.

We heard evidence from all sides, including from the commercial operators who claim that there is unfairness in the current system, from hundreds of community organisations that feel under threat, and from the public bodies whose job it is to oversee the licensing and regulation of both sectors: the Department for Transport, the Driver and Vehicle Standards Agency and traffic commissioners. Our report was published in December and the Government responded in February, alongside the launch of their consultation on proposed changes.

My anxiety is that despite the work of our Committee and others to expose the dangers of the Department’s approach, the Government have not yet started to listen fully or engage properly with those legitimate concerns. A potential crisis has not yet been averted.

[Andrew Percy (Brigg and Goole) (Con)]

I congratulate the hon. Lady on securing the debate. Following that consultation, the portfolio holder in the East Riding of Yorkshire Council said that little had changed from the Department for Transport’s proposal, which will have devastating consequences for the sector in the East Riding of Yorkshire. Community groups such as Goole GoFar and Age UK Lindsey rely on volunteer drivers. The truth is that the Government have simply not understood what the proposals will do to that sector. They should listen to councils such as the East Riding of Yorkshire that know how it works.

[Lilian Greenwood]

I agree with the hon. Gentleman, and I hope that during this important debate, we can begin to get the assurances we need from the Minister.

The UK has taken a unique approach to community transport by legislating for a relatively light-touch, affordable regime through the section 19 and section 22 permits of the Transport Act 1985. It is widely acknowledged, including by the Government, that the regime has provided an effective framework within which not-for-profit organisations can safely provide community-based local transport services. The Government have also very broadly accepted throughout that the long-established permit regime still achieves that. Furthermore, they accept that developments in the sector that have led to the current situation have been not only supported by official guidance, but explicitly encouraged by local and central Government for many years.

Not-for-profit community organisations have been encouraged to become more professional in outlook and, in the face of growing pressure on local authority budgets, to become more financially self-sufficient. Community organisations have responded to that call by quite properly and, I stress, in accordance with the official guidance, developing their operating models to deliver services via a mix of grant funding and local authority contracts.

[Daniel Zeichner (Cambridge) (Lab)]

Does my hon. Friend agree that the changing situation in local authorities—I have seen it in Cambridgeshire—whereby mainstream services have disappeared to be replaced by not just voluntary, but professional schemes, has led to those problems?

[Lilian Greenwood]

My hon. Friend is right. Many community organisations, some very successfully, have achieved greater self-sufficiency and sustainability by cross-subsidising what can be thought of as core community transport services with income from contracts for school and social care transport, for example.

And so to the bombshell of last summer. At the end of July, in what the Department seems to have hoped would be a relatively innocuous letter from a senior official to issuers of section 19 and section 22 permits, it set out a new approach, which was contrary to the official guidance that had been applied for decades but in line with a new interpretation of EU regulation 1071/2009, which has been in force since 2011. This is the crux of the matter: there is a potential misalignment of the relevant sections of the 1985 Act and its associated guidance and practice, and EU law.

The European regulation defines three derogations from the operator and driver licensing requirements on the mainstream commercial sector: where organisations are engaged in road passenger transport services exclusively for non-commercial purposes; where they have a main occupation other than that of road passenger transport operator; and where organisations have only a minor impact on the transport market because of the short distances involved. Member states can choose whether to apply the third derogation.

The Department’s letter noted the findings of a DVSA investigation into the licensing arrangements of an individual community operator in Erewash, Derbyshire—I see the hon. Member for Erewash (Maggie Throup) is present. Essentially, that investigation, which was conducted in response to a complaint from a commercial operator, found that as the operator in question held a number of competitively tendered local authority contracts, it could not be considered to be operating for non-commercial purposes.

[Maggie Throup (Erewash) (Con)]

Is the hon. Lady aware that to date this is the only case that has been brought forward in response to this letter issued by the DFT?

[Lilian Greenwood]

Yes, the hon. Lady is right—absolutely. For years, guidance and practice in the UK had considered “not-for-profit” and “non-commercial” to be interchangeable terms. The DVSA investigation and the DFT’s letter signalled a completely new interpretation. The consequence for the operator investigated by the DVSA was that it could no longer operate on the basis of community transport permits, because—according to the new interpretation—the derogations from full public service vehicle operator and passenger carrying vehicle driver licensing did not apply.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

Did the Select Committee have any chance to access any legal advice on this rather startling interpretation of this regulation, which has been interpreted in totally different ways, as the hon. Lady said, for decades? Very little policy point seems to lie behind the changes that are being proposed, and I wonder whether we are somewhat pedantically accepting a rather eccentric legal opinion that is threatening very genuine voluntary services that are quite non-profit making in many parts of the country.

[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?

[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.

[Philip Davies (in the Chair)]

I ask everyone who wants to speak to stand, so I can assess how many Members we have to squeeze in. To try to get everyone in, I will have to set a time limit to start with of three minutes.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Transport (Jesse Norman)]

You are an adornment to the Chair, Mr Davies, and it is a delight to see you there. I am very grateful to colleagues across the House for taking the time to take part in the debate. I recognise that the reason they do that is because of the strength of feeling of individuals across political parties on this vital sector. I am delighted to have the opportunity to respond to the questions that have been put and the Committee report that has been produced.

I will start by saying that far from it being the case that Government have not started to listen, as the hon. Member for Nottingham South (Lilian Greenwood) said, we have been very carefully listening all the way through this process. As Members were standing up, I found myself wondering how many of their specific organisations I had myself visited. They include Community Connexions in Cheltenham, the community transport business in the constituency of my hon. Friend the Member for Witney (Robert Courts) and Hackney Community Transport. My officials have visited other community transport organisations. That is because, as colleagues have said—it was put beautifully by the hon. Member for Easington (Grahame Morris) and by many other colleagues across the House—they are vital community organisations.

It was right to recognise, as several Members did, that the organisations in many ways are not entirely distinct but often highly different in their nature from purely commercial operators. That is because the services they offer are often incidental to the wider public good that they discharge and the wider social value that they add. I see this in Herefordshire: we have the city of Hereford but we also have rural lands. I acknowledge the value of community transport. That is why this Government and their predecessors have supported community transport organisations.

My right hon. Friend the Member for Derbyshire Dales (Sir Patrick McLoughlin) was right to highlight the fact that those organisations had been supported by the bus service operators grants—BSOG—and by the minibus grant scheme that we have in operation. Hundreds of organisations up and down the country have benefited from both schemes. We recognise the importance of the sector.

This consultation is, and was always designed to be, a consultation in the full sense. The Government do not have a formulated and final policy on this matter. My hon. Friend the Member for Cheltenham (Alex Chalk), who is a thoroughly distinguished lawyer in this area, pointed out—as others with legal practice experience have acknowledged—that the law in this area is a complex matter on which our understanding continues to evolve. Part of the purpose of the consultation is to understand how the law plays out in community transport organisations’ practice across the country.

[Lilian Greenwood]

I am very pleased that the Minister gave the assurance that he is listening and that he has been to visit operators. Will he explain what he intends to do in response? Will he consider alternative interpretations of that EU regulation? Is he prepared to think again in response to the results of that consultation, rather than the explanation that was given in the consultation, which seemed to take a very legalistic approach with no room for manoeuvre?

[Jesse Norman]

I will come to the full thrust of what the hon. Lady said later, but let me respond to that point. We will pursue the consultation process, reflect on the experience that comes out of that, publish a response to the consultation and take action based on that, which is exactly what Members would expect of the Government. We do not believe that we should proceed without listening to people or taking account of what they say.

This was a consultation in the full sense of the word. It was not just about listening to local community transport organisations and their wider representative organisations throughout the country, but about gathering evidence. As I think my right hon. Friend the Member for Derbyshire Dales mentioned, when he ran the Department the Government had relatively little information about this area and there was a certain lack of legal clarity. I only wish that I had his flexibility in that regard, but the point of the consultation has been to gather information as well as to take soundings from operators.

--- Later in debate ---

[Jesse Norman]

Well, I offered my hope, but I am happy for the hon. Gentleman to contradict me if he wishes. The point is that the regime remains light-touch and affordable. That is precisely why the consultation was necessary—to gather information and understanding. It is misguided to suggest that we are adopting a narrow and legalistic approach when in fact we are proceeding with extreme care and caution in the face of a complex situation. As I said, I very much encourage the hon. Lady to place on the public record any legal advice that she has commissioned or received.

[Lilian Greenwood]

Will the Minister give way on that point?

[Jesse Norman]

The hon. Lady will have a chance to respond in about three minutes, so she can defend her position later if she wishes. I should say that I absolutely respect the Committee, which did extremely well to call this debate. That is a very important aspect of its work—it is an extension from when I was on the Treasury Committee and the Culture, Media and Sport Committee. I also have great respect for the Committee’s report, as do my colleagues across the Department.

The question of whether there has been gold-plating here is a proper one. I am not persuaded that there has been. I say to my right hon. and learned Friend the Member for Rushcliffe, and others who think there may have been, that the consultation and the draft statutory instrument went through a process of discussion across Government, including at the Regulatory Policy Committee and other committees, the purpose of which is to prevent gold-plating and which reflects custom, practice and decisions made by many Ministers, and they passed that process. I do not believe there has been gold-plating, but we do not yet have a final, evolved position on this matter, so it would be a rush to judgment to take that view.

Let me close by saying that no one respects the importance of the community transport sector more than my officials and me. We have been up and down the country to talk to these organisations. My officials have covered every part of these British Isles and, indeed, the United Kingdom in an effort to understand the sector and to support it, as the Government have historically. I give that sector, which I respect so much, my reassurance that we will continue to do whatever we can to protect and support it, subject to the process of law, in the coming months.

[Lilian Greenwood]

I am pleased that the Minister recognises the strength of feeling about this issue among Members on both sides of the House who represent constituencies urban and rural across the UK. There cannot be many issues that unite the Father of the House, the leader of the Liberal Democrats, a Conservative former Secretary of State for Transport, three Select Committee Chairs, the Scottish National party and Labour spokespeople, and so many other learned hon. Members. We know the immense value of community transport. It meets unmet need, generates social value and provides a lifeline to people who may otherwise be cut off from friends, family, work, education, social activities and essential appointments by disability or geography.

The Minister must have misunderstood our report if he thinks we recommend a legalistic approach. We ask for exactly the opposite. In our report, we called on the Government to explore whether a more practical and pragmatic interpretation of the EU regulation is possible, and that has been added to today. If he is prepared to listen, think again and amend his proposals, he has an opportunity to avert disaster. I very much hope he takes it.

Motion lapsed (Standing Order No. 10(6)).