Public Service Obligations in Transport Regulations 2023

Lord Tunnicliffe Excerpts

Monday 27th November 2023 Lords Chamber

The Government do not have a shining record on the procurement of anything—from PPE to HS2. Therefore, can the Minister give us an absolute assurance today that nothing in these regulations waters down the principles of transparency and fairness that were enshrined in the EU-based legislation? It may be expressed differently, but is there any intrusion on those basic principles? Can he give us an assurance that this is not, in any way, a second best?

[Lord Tunnicliffe (Lab)]

My Lords, I welcome this instrument. The Government are right to permit the making of direct awards for PSO contracts and to ensure that they are able to meet the obligations under the EU-UK Trade and Cooperation Agreement. I have no intention of opposing the regulations.

I had a number of questions, but the Minister has already answered most of them—although I will not go as far as saying that he did so satisfactorily—and at this late hour, I do not intend to repeat them. Along with the answers he will give to the noble Baroness, Lady Randerson, I think that this will be sufficient debate.

[Lord Davies of Gower (Con)]

I thank the noble Baroness and the noble Lord for their consideration of the draft regulations. I will turn to the points raised.

Regulation 1370 provides a bespoke, flexible procurement and subsidy regime for public service contracts, reflecting the fact that they are vital public services and cannot always be operated on an entirely commercial basis. Now that we have left the EU, we are able to preserve essential flexibilities and simplify the regime where possible, giving contracting authorities a strong basis for providing these key public services. Simply revoking the regime altogether would mean allowing to fall away direct award powers which provide government and franchise authorities such as Transport for London with important flexibilities in awarding rail contracts. That would create significant challenges in ensuring the effective operation of public transport services, particularly rail services.

Following privatisation 25 years ago, passenger numbers had more than doubled before the pandemic, rising more quickly than in most of Europe. The private sector has invested billions in new, modern trains and upgrading our stations—investment that would not have happened under nationalisation.

It is the Government’s intention to return to competition as quickly as possible. The intent of regulation 1370 is to encourage competition, so the default process for the award of a passenger services contract is primarily through competition. However, regulation 1370 recognises that, in certain circumstances, it will be necessary to award a contract without competition by instead making a direct award. The powers to award directly are not new but were due to expire under EU legislation. We feel that it is in the best interests of the railways and passengers in Great Britain to retain them, and leaving the EU has given us the flexibility to do so. We have committed to restart the competition for contracts as soon as possible, which will require stable market conditions and sufficient long-term certainty.

Engagement with the proposed amendments to regulation 1370 has been ongoing since early summer 2022. The key amendments to regulation 1370 were publicly consulted on as part of the plan for rail consultation. Stakeholders were generally supportive of the proposed amendments, and the Government response will be published shortly. We have held targeted engagement with key affected stakeholders on the amendments proposed in addition to those publicly consulted on. In addition to face-to-face meetings to talk stakeholders through the additional amendments and our reasoning, we have sent written detail for further consideration, including to rail partners, franchising authorities and bus and light rail stakeholders. The wide engagement enabled the Department for Transport to work closely with stakeholders affected by the instrument and address issues raised; for example, updating the definition of “rail” in line with survey feedback enabled us to achieve a broad consensus on the change.

The noble Baroness, Lady Randerson, raised the point about engagement and consultation carried out with the devolved Administrations. As a result of close engagement, both Scottish and Welsh Ministers have provided agreement to the regulations. My officials met with each of the devolved Administrations covered by this instrument on a regular basis during the formulation of the policy and the drafting of the instrument. We worked closely with the devolved Administrations to address any concerns, including detailed work on the SI with Transport Scotland, with the result that, following ministerial approval to the instrument, Scottish parliamentary agreement was received. I commend the Motion.