Bus Services (No. 2) Bill [HL]

Lord Moylan Excerpts

Report stage
Wednesday 26th March 2025 Lords Chamber

Moved by

[Lord Moylan]

1: Before Clause 1, insert the following new Clause—
“Purpose: improvement of bus passenger services(1) The purpose of this Act is to improve the performance, accessibility and quality of bus passenger services in Great Britain.(2) The Secretary of State must, in taking any actions under the provisions of this Act, have regard to this purpose.”Member’s explanatory statement
This amendment 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 in Great Britain.

[Lord Moylan (Con)]

My Lords, the amendments in this group fall into three parts. Amendment 1 stands on its own and Amendments 2 to 8 work together to a single effect and will be dealt with as such. Amendment 61, in the name of the noble Baroness, Lady Brinton, seeks clarification. All I will say on it is that I look forward to hearing both what she has to say and what the Minister has to say in reply. I will attempt to be brief, given the hour and the amount of business that we have to get through.

Amendments 2 to 8 give me an opportunity to thank a group of people who have been largely ignored in debates on this Bill: the private companies, entrepreneurs, capitalists and workers—the people who invest their money in providing a service for this country and who are being simply rubbed out as businesses by this Government and will become merely servants of the state, not entrepreneurs or businessmen, as the Minister was when he ran a private bus company. They are not to have those opportunities but simply to be wiped out. The work they do should be acknowledged because they have worked diligently for us over the years.

We are told that what we will get in its place is something better, run by the Government, and we are pointed to places such as London for examples. In London, when the subsidies run out—there are hundreds of millions of pounds of subsidies to operate the buses—we see routes sometimes being cut altogether or having a cut in their frequency. This group of amendments would allow private bus companies to continue to operate without seeking a special permit so as to meet demand. I do not intend to press this group of amendments to a Division. I am sure that the Minister will explain that it is all going to be sunny and wonderful under the state-managed regime, but it is not. We know that from our experience of when the subsidies run out.

In that connection—the notion that it is all going to be better because the Government, or, in this case, local transport authorities, will run the buses—I turn to Amendment 1. There is nothing in the Bill, nor have the Government even made the case, as to why it is going to be better, what the purpose of this Bill is, what it sets out to achieve and what the prime focus is. We know that the unions want to see this happen. We know that many, often Labour-run, local authorities want to see this happen, but they should not be the heart and the driver of the way we manage our public transport services. The heart and the driver should be the passengers, in this case bus passengers. Amendment 1 gives us a purpose to the Bill and puts bus passengers at the heart of it.

I am grateful, incidentally, for an earlier amendment, now withdrawn, from the noble Baroness, Lady Brinton, which reminded me that accessibility needed to be included alongside performance and quality of service with regard to bus passengers. That has improved the amendment and gives us what we see today. I strongly believe that this Bill needs such a purpose. The Secretary of State needs to be required to put the passenger at the heart of the Bill. There is no sign that that is the intention at the moment. There are only promises and pledges, but nothing in writing. With that, I beg to move.

[Baroness Brinton (LD)]

My Lords, I thank the Minister for recent meetings with him and his officials. I have tabled Amendment 61 in this group and I thank the noble Lord, Lord Moylan, for his kind comments about my previous amendment—I thought his revised one looked a little familiar.

Amendment 61 is not only about disabled access to buses, which is why I wanted to debate it right at the start of Report. Rather, it would confirm the importance of the Equality Act 2010 in relation to bus operators, local transport authorities and, of course, passengers. The Equality Act 2010 sets out, in Section 149, the public sector equality duty of public bodies delivering services to people. Anyone under it must have due regard to the need, and take steps to advance, equality of opportunity, not only for disabled passengers.

In this Bill, it is the local transport authorities which are under the PSED directly and plan, implement and monitor bus services in their area, as outlined in Section 108 of the Transport Act 2000. LTAs’ responsibilities are not limited to contracting for certain franchised bus services but include the responsibility for planning services for all their passengers, including the non-franchised. That does not mean that LTAs run the free market commercial bus routes, but they must ensure that everyone in their area has usable bus services.

In Committee, the Minister said that the regulation for public sector vehicles—PSVs—includes the duty to make reasonable adjustments. However, in practice, it is often a “best efforts” provision, leaving many disabled passengers frustrated when they cannot access a bus service. The actual compulsory provision includes wheelchair spaces, announcements and visual displays on the next stop, et cetera, and is way stronger than just reasonable adjustments.

I have continued to meet some pushback in meetings with government officials outside your Lordships’ House on the formal powers that all PSVs have to comply with. There seems to be something of a mindset that the commercial bus services are not included, but it is clear that they are covered by the Equality Act, which does not say that the definition is about commissioned or franchised services; it is any bus service that qualifies as a PSV, and its work must be monitored under another part of the Equality Act—the PSED—by the local transport authority, which will assess whether bus services in its area are meeting the needs of the people.

I have checked the case of FirstGroup Plc v Doug Paulley. The Supreme Court’s judgment, delivered in January 2017, sets out in paragraphs 11 and 12 the position that the bus operator had

“failed to comply with its duties under the Equality Act”

and confirmed that it was a public service vehicle under the Public Service Vehicles Accessibility Regulations 2000. The House of Commons Transport Select Committee’s report, Access Denied: Rights Versus Reality in Disabled People’s Access to Transport, published last week, explains in paragraphs 10 to 17 the entirety of the law, including how the Equality Act—and within that, the PSED and the PSV section—and the PSV regulations I mentioned all fit together, as well as retained Regulation (EU) No. 181/2011.

The key to all this is the Equality Act, and my amendment simply restates that, as barrister Catherine Casserley said in evidence to the Commons Transport Select Committee, rights to accessible transport

“should be enforced in the same way as any health and safety requirement. As part of any operation, any business has to comply with a range of obligations. These should be no different”.

The Select Committee concluded that, despite the legal framework, much needs to happen to improve compliance and practice on a daily basis. Disabled passengers agree. We need to remind bus operators and LTAs that the Equality Act duties are at the heart of provision for truly accessible bus services. It needs to be in the Bill.

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Finally, I note the noble Lord’s comments on the importance of recording incidents both in and outside buses. Some 96% of buses now have CCTV, which is a great fillip for both bus drivers and passengers, ensuring that crime and anti-social behaviour is recorded and properly dealt with. In addition, the department’s bus and coach safety best practice guidance was updated last year to ensure that, alongside CCTV, there is nationwide best practice regarding security and anti-social behaviour incidents.

[Lord Moylan (Con)]

My Lords, I am grateful to the noble Lord; I listened carefully to what he said. On Amendment 1, he says that we can trust the Government that performance, accessibility and quality of service for bus passengers are safe in their hands and those of local transport authorities, and that this does not need to be in the Bill. Yet, when one looks at Marshalled List, there are half a dozen—welcome—amendments on accessibility. Why are they there? They are there because the Government forgot about accessibility when they drafted the Bill. They are there because of the work of the noble Baronesses, Lady Brinton and Lady Grey-Thompson, and others, who, in Committee, put this issue right at the heart of the discussion.

The truth is that there are a number of drivers influencing the Government in their direction on bus policy. They include the unions, local authorities—many of which are Labour or left-wing led—and the passengers. But the passengers should not have to compete with other parties. As I and the noble Baroness, Lady Pidgeon, have said, passengers’ interests should be at the heart of the Bill. For that reason, I wish to test the opinion of the House on Amendment 1.

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Moved by

[Lord Moylan]

9: Before Clause 9, insert the following new Clause—
“Franchising statementIn section 123A of the Transport Act 2000, after subsection (1) insert—“(1A) The power in subsection (1) cannot be exercised until the franchising authority, or two or more franchising authorities acting jointly, has published a statement, subject to the requirement in subsection (1B), stating—(a) their objectives in making the franchising scheme, and(b) their reasons and evidence for believing that the making of such a scheme is the best option for achieving those objectives.(1B) It is a requirement that a statement in subsection (1A) must be published before the franchising authority complies with the requirements in sections 123B to 123G.””Member's explanatory statement
This amendment seeks to ensure that before initiating the formal franchising process under sections 123B to 123G of the Transport Act 2000, franchising authorities must first publish a statement outlining their objectives, reasons, and supporting evidence for believing that franchising is the best option to achieve their aims.

[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.

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[Lord Moylan (Con)]

My Lords, I am grateful to the Minister and the noble Baroness, Lady Pidgeon, for what they had to say. I do not intend to press Amendment 9. I think it is a missed opportunity on the part of the Government. It certainly is not, and was never intended to be, an obstacle—how could it possibly be an obstacle to embarking on a franchising scheme that one has to issue a notice explaining what one is doing?

However, on Amendments 12 and 13, I am simply unconvinced by what the Minister said. You can be totally devoted to local decision-making and still expect the Secretary of State to have the power to appoint commissioners in the case of a failed local authority. That happens—and of course it should happen—rarely and in appropriate circumstances.

I think the Minister almost sounded frivolous. Let us say people were stranded in the Yorkshire Dales, waiting for a bus that never comes because of the persistent mismanagement of their local scheme. We would be able to quote the Minister and tell them that it is entirely a matter for local democracy—that when the local council elections come, in two or three years, they will be able to put this right, and the bus may then come and collect them. That is complete nonsense.

When the time comes, I may wish to test the opinion of the House on Amendments 12 and 13. For the moment, I beg leave to withdraw Amendment 9.

Amendment 9 withdrawn.

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[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.

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Baroness, Lady Pinnock, for this amendment and the noble Lord, Lord Goddard, for his intervention. It is helpful of him to have quoted those figures, which I concur with, if only because, earlier in the process of this Bill, some completely different figures were quoted—very high ones—which were incorrect. One reason why the figure in Manchester is so high is that the franchising process that the Mayor of Greater Manchester has had to go through has been tortuous. That is one of the reasons why this Bill is in front of this House—to make franchising simpler and easier to carry out. It is a great achievement for Transport for Greater Manchester and the mayor to have got to the place that they have. The noble Lord, Lord Goddard, remarked on the success of the bus service in Greater Manchester, with night services, more reliability and greater revenue than anybody expected.

I am sure that noble Lords will recall that I had the pleasure of standing here at the end of last year to announce a settlement of just under £1 billion to every local transport authority in the country. That was the first for some time; previous settlements had been partial and selective between different local transport authorities. Of course, the majority of that money could now be spent rather more economically on a faster franchising scheme, if that is what local transport authorities want to do. Some of them will not want to do that, because it is clear that bus services are a patchwork across England and plenty of towns and cities have adequate local bus services provided through enhanced partnerships. I have no doubt that a local transport authority will see no need to change them in those circumstances. I can name some of those places, but it is probably better if I do not.

In any event, the affordability of the proposed franchising schemes, and therefore funding, is already an integral aspect of franchising assessment, which is hard-wired into this legislation. Assessments’ financial case should include consideration of funding available from government, as set out in the statutory guidance. Indeed, the guidance for franchising schemes allows local transport authorities to choose whether it applies to all or part of their area, or to some small part of their area, for a necessarily much smaller expenditure. The franchising assessment must be published alongside the independent assurance report if an authority decides to proceed to a consultation, and that will ensure transparency about the proposed scheme’s financial viability and impact on communities.

For those reasons, although I absolutely respect the noble Baroness’s regard for the general measures in the Bill, I hope she will feel able to withdraw this amendment.

[Lord Moylan (Con)]

The noble Lord referred to the £1 billion last year. Of course, £250 million of that went to bus companies, and £750 million went to local transport authorities, of which there are roughly 140. A quick back-of-the-envelope calculation shows that it was about a £5 million one-off sum to local transport authorities. I am not sure how far that takes you in terms of franchising and the subsidies that go with it, given that in London the subsidy is closer to £700 million than £7 million. If this Bill is to go forward, can the noble Lord give us any assurance that sums of that order or greater will be offered to local transport authorities in the future—or have we seen the best of it?

[Lord Hendy of Richmond Hill (Lab)]

The noble Lord quotes a subsidy figure for London, which is a world city of 10 million people. A choice is made by the Mayor of London in respect of the balance between fares and subsidy, amounting to the balance of subsidy that needs to be put into the network. The subsidy in Manchester will be nowhere near what the Mayor of Greater Manchester thought it would be, because of the relative growth in patronage after a long period of decline. I cannot promise any particular numbers, as the noble Lord, Lord Moylan, well knows, because that is a matter for the Chancellor, for future years and for a spending review. But I will say that that funding, and the fact that it was universally awarded to every local transport authority, is a clear indication of the Government’s commitment to devolution and local bus services in a way that was not apparent with the previous Government.

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[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

[Lord Moylan]

12: After Clause 11, insert the following new Clause—
“Franchising scheme: restrictionWhere a franchising authority, or two or more franchising authorities acting jointly, prepare an assessment of a proposed franchising scheme under section 123B of the Transport Act 2000 but fail, for any reason, to make and publish a scheme under section 123H of the Transport Act 2000, they must not initiate another franchising assessment for the same area, or a substantially similar area, for a period of five years from the date on which the assessment was prepared.”Member's explanatory statement
This amendment prevents franchising authorities from repeatedly conducting franchising assessments for the same or substantially similar areas within a five-year period if they do not proceed to make and publish a franchising scheme.

[Lord Moylan (Con)]

My Lords, the private sector—the private bus companies—will remain absolutely integral, even under a franchising arrangement and certainly under an enhanced bus partnership, to the provision of bus services in this country under the Government’s scheme. It is incumbent on us to treat them properly and with respect. They cannot be held constantly in a state of suspension, potentially not knowing what their future is, as a result of repeated franchise operations.

Amendment 12 is absolutely necessary in order to maintain the sense of investment and purpose that private bus companies need if they are going to go forward, and for that reason I wish to test the opinion of the House.

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Moved by

[Lord Moylan]

13: After Clause 11, insert the following new Clause—
“Poor performance of franchising(1) If, due to poor operational or financial management by the franchising authority or franchisees, there is a persistent failure to deliver a service specified by the contract, the Secretary of State may take over the management of the service.(2) In exercising this power, the Secretary of State may substitute themselves for the franchising authority in the relevant contract.(3) The Secretary of State shall continue to manage the service until such time as—(a) a new contract is let, or(b) another permanent solution is found.”Member’s explanatory statement
This amendment seeks to provide the Secretary of State with the power to intervene in cases where franchised bus services are persistently failing due to poor operational or financial management.

[Lord Moylan (Con)]

My Lords, it is common ground between the Minister and me that, in the event of a local authority failing financially, it is possible for the Secretary of State to send in commissioners to sort out the matter. It is also common ground between us that, in the similar event of a local transport authority failing financially and not being able to deliver the bus services that it has contracted, or a franchisee falling into bankruptcy, the Secretary of State would have no power under this Bill, and no power under the Transport Act that the Bill amends, to step in and do anything about it.

I think that every noble Lord in this House would agree, if they were entirely disinterested, that that is a power the Secretary of State should have. Amendment 13 would simply give the Secretary of State the power to step in, in those limited and prescribed circumstances, in the interests of passengers. It has been barely an hour since the Minister stood at the Dispatch Box and told us that the interests of passengers were absolutely at the heart of the Bill. Of course the Secretary of State should have this power, and for that reason I wish to test the opinion of the House.

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[Lord Moylan (Con)]

My Lords, the noble Baroness, Lady Pidgeon, has put her finger on what might be described as the other elephant in the room. The whole purpose of this Bill is defeated if it does not result in uncommercial services being run on the basis of subsidy. We have discussed in a previous group the complete absence of any information from the Government about where those subsidies are coming from. In this amendment, the noble Baroness draws attention to the types of routes that should be included and what a socially necessary service is.

To the noble Baroness, Lady Jones of Moulsecoomb, I say that no party cares for villages more than the Conservative Party. While I cannot sympathise with her attempt to resurrect bus routes as old as 15 years, I have great sympathy with what she has to say about villages. I hope that the Minister shares that and can reach out to her to achieve the sort of compromise that she is offering—and which can only improve the Bill.

[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.

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Moved by

[Lord Moylan]

17: Clause 12, page 10, line 7, at end insert—
“(5) The Secretary of State must conduct an assessment of the impact of ending the £2 bus fare cap on passengers’ ability to access socially necessary local services identified in accordance with section 138A of the Transport Act 2000.”

[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 Hendy of Richmond Hill (Lab)]

My Lords, I will make just a few points about the former £2 national bus fare cap. The first is quite obvious. The previous Government left no forward funding for that scheme at the time of the election and, indeed, left a rather large hole in the public finances, which, in effect, prevented its continuation.

The second point is that it is very easy to assume that somehow the maximum cap of £3 meant that all fares went up by 50%. The vast majority of travellers on bus services travel for a short distance and many of them paid less than £2 in any event. Fares between £2 and £3 went up only by inflation, and the cap still applies to longer-distance journeys that would cost more than £3.

In any event, in February, the Government published an evaluation of the first 10 months of the £2 fare cap. Evidence from that suggests that the scheme had a relatively greater impact on leisure trips compared with those for education and employment and was, in fact, rather poor value for money. So I believe that a legislative requirement for further evaluation is unnecessary and, on that basis, I would ask for the amendment to be withdrawn.

[Lord Moylan (Con)]

My Lords, I hesitate to be drawn by the noble Lord, Lord Snape, who intends only to provoke me. But I am to some extent provoked. I am provoked to the extent of pointing out that there was a solemn pledge by the Conservative Party in its manifesto to continue the £2 bus cap and that the Conservative Party keeps its pledges. He should not find that astounding.

As far as the Minister is concerned, we suddenly discover that leisure trips on buses are of no account and no real value. “It is much better if people use their cars for leisure trips”. I mean, really, this an astonishing convolution of his arguments: “Now we don’t value leisure trips”. Of course we want people to use buses for leisure trips—and not merely people who are economically active. This is something the Government should understand properly. They should look into the effects of their own policy. I wish to test the opinion of the House.

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Moved by

[Lord Moylan]

17A: Clause 12, page 10, line 7, at end insert—
“(5) The Secretary of State must undertake an assessment of the impact of the level of employers’ National Insurance contributions on the provision of socially necessary bus services, including transport services for children with special educational needs and disabilities (SEND) and lay it before both Houses of Parliament within 3 months of the day on which this Act is passed.”Member's explanatory statement
This amendment would require for a review of how the increase in National Insurance contributions from 6 April 2025 would affect socially necessary bus services, including transport services for children with special educational needs and disabilities (SEND).

[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.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, Amendment 17A concerns the impact that the increase in employer national insurance contributions will have on socially necessary bus services, including those for children with special educational needs and disabilities. The Government do not expect the changes to national insurance to have a significant effect on home-to-school travel for children with special educational needs and disabilities, so it would not be proportionate to conduct the assessment that this amendment suggests.

Local authorities are responsible for arranging home-to-school travel and delivering this through a range of providers. Department for Education officials engage regularly with local authorities to understand the challenges that they face and will continue to monitor this situation. It is expected that private sector organisations that contract with local authorities will take the impact of national insurance changes into account, along with other changes to their cost base, in the usual way through contract negotiations.

The Government have already announced £2 billion of new grant funding for local government in 2025-26, which includes £515 million to support councils with the increase in employer national insurance contributions. This is not ring-fenced funding, and could therefore be used to fund contracted services should a local authority wish to. Moreover, I understand that a large proportion of special educational needs and disabilities transport operators are self-employed and therefore exempt from this charge. The Government are protecting the smallest businesses and charities by increasing the employment allowance to £10,500. Next year, 865,000 employers will pay no national insurance contributions at all, more than half of employers will see no change or will gain overall from this package, and employers will be able to employ up to four full-time workers on the national living wage and pay no employer national insurance contributions.

On socially necessary services more broadly, excluding special educational needs and disabilities transport, the Government have already confirmed, as I said, an additional £925 million for the 2025-26 financial year to support and improve bus services in England outside London. The Government recognise that local transport authorities are best placed to understand the needs of their communities and can use the £925 million to introduce new bus routes, make services more frequent and protect crucial bus routes, ensuring passenger access to essential goods and services. I contend that this amendment is not required.

[Lord Moylan (Con)]

My Lords, it is a sorry reply from the Minister. The modest amounts of money he splashes around seem to have an awful lot of work to do, since they are the response to nearly every group of amendments we have discussed. It is very sad that he does not want to accept this amendment, and, in that light, I feel I am obliged to test the opinion of the House.

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Moved by

[Lord Moylan]

20: Clause 18, page 13, line 35, at end insert—
“(4A) In relation to the award of a local service contract by one or more franchising authorities pursuant to a franchising scheme, any contract to be awarded pursuant to that franchising scheme shall not be an exempted contract under the Procurement Act 2023 unless awarded to a local government bus company that is an Exempted Local Government Bus Company and Schedule 2 to the Procurement Act 2023 shall be construed accordingly.(4B) An Exempted Local Government Bus Company is a local government bus company as defined by subsection (5) and which was in business providing local services on 17 December 2024.(4C) In section 3 of the Procurement Act 2023 (public contracts), after subsection (6) insert—“(7) Section 18 of the Bus Services (No. 2) Act 2025 restricts the circumstances in which local service contracts awarded to a local government bus company are to be regarded as exempted contracts.””Member’s explanatory statement
This amendment ensures that any contract awarded under a franchising scheme by one or more franchising authorities cannot be exempt from the Procurement Act 2023 unless it is awarded to a local government bus company that meets specific criteria - specifically one that was actively providing local services as of December 17 2024, and aligns with the provisions outlined in section 18(5) of the Act.

[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.

[Lord Moylan (Con)]

My Lords, I apologise for not addressing in my opening remarks the government amendments in this group, which I am happy to say I am content with. I mean, if one is as short of money as the Minister and his department probably are then giving local transport authorities the power to borrow money is probably the best that you can hope to get away with. We have no objection to those amendments.

I am disappointed—well, not entirely disappointed; I am rather thrilled—that the Minister has more or less agreed that I got the complex legal position right, but I am disappointed that he feels that the loophole should stay open. It should not. One of the purposes that the Government have set out is to encourage competition, where it can be stimulated, between bus service providers. To allow those two provisions to operate together in a way that would exclude competition would be an abuse. The abuse should be closed down. It is simple to do so: they could just say it was not going to be allowed. It would not upend procurement law. It would not overturn the sacred rules of procurement. It would simply say, in this specific case, because of the way these two statutes will interact, you cannot actually do the thing that would be an abuse. So I am sorry to say, because I know it is getting on—actually, we have made good progress and there is time—that I am afraid I am going to have to ask the House’s opinion on this matter, because I do not think the Government should be allowed to take this lackadaisical approach.

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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.

[Lord Hendy of Richmond Hill (Lab)]

I commend these amendments to the House.

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[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.

Amendment 30 agreed.