Draft Enhanced Partnership Plans And Schemes (Objections) Regulations 2018

Nusrat Ghani Excerpts

Wednesday 7th March 2018 General Committees

[The Parliamentary Under-Secretary of State for Transport (Ms Nusrat Ghani)]

I beg to move,

That the Committee has considered the draft Enhanced Partnership Plans and Schemes (Objections) Regulations 2018.

It is a pleasure to serve under your chairmanship, Mr Rosindell. The Bus Services Act 2017 contains a range of options to improve local bus services in England. In addition to franchising, new and improved options allow local transport authorities to enter into partnerships with their local bus operators to improve services for passengers. One of those, the enhanced partnership regime, allows local authorities to define a geographical area in which it provides new facilities such as bus priority measures, or take other measures that would make bus services more attractive, such as reducing car parking provision or increasing its cost.

In return, local bus operators are required to meet service standards specified as part of the scheme. That can include a multi-operator smart ticketing scheme, a requirement to operate cleaner vehicles, or provision of comprehensive timetable and fares information. The partnership can also limit the number of vehicles that operate along specific corridors to reduce congestion or improve air quality, or require the buses to co-ordinate their timetables with other modes of transport, such as rail services.

The draft regulations, which were laid before the House on 17 January, set out the mechanism by which the bus operators may formally object to the package of proposals during the development of an enhanced partnership scheme. A key element of enhanced partnerships is that only the majority of bus operators need to agree to the proposal in order for it to go ahead. That means that improvements to bus services that are supported by the local authority and the majority of bus operators cannot be prevented from being introduced by a blocking minority of operators who, for whatever reason, do not wish the partnership to be introduced.

The 2017 Act provides a mechanism to allow individual operators an opportunity to object to the proposal to make an enhanced partnership plan or scheme at two key stages: the first opportunity to object arises when the proposal for an enhanced partnership scheme is subjected to a formal public consultation; and the second opportunity arises if the plan or scheme is modified following the consultation.

The draft regulations set out the process for determining whether the number of operators objecting to the enhanced partnership plan or scheme, as proposed or modified, is sufficient to stop it from proceeding any further. If that happens, the partnership would need to renegotiate the package until the objections fall below the statutory threshold. The regulations provide two criteria that need to be satisfied to determine whether there are sufficient objecting operators to stop the partnership proposal. Both criteria need to be considered and either one of them, if met, would be enough on its own to stop further progress.

We will now drill into the detail. The first criterion for objections to be sufficient is that the objecting operators together represent 25% of operated bus mileage in the partnership area, where at least three bus operators are objecting. If fewer than three operators run bus services in the area, the draft regulations require all of them to object in order for this criterion to be satisfied. That ensures that objections are raised by operators with a significant stake in the local bus market, while at the same time preventing a single operator or a pair of dominant operators from exercising an effective veto.

The second criterion is that objections are received from 50% of local bus operators that together operate at least 4% of operated mileage in the partnership area. That prevents a large number of operators that together have only a relatively small stake in the bus market from objecting to a partnership that is supported by the local authority and the operators with the largest stake in that bus market.

I will now explain how those thresholds were arrived at. The bus market in England has been deregulated since 1986, and the number and size of bus operators in individual areas varies greatly. The objections thresholds in the draft regulations cater for that and were arrived at following detailed analysis of real-world bus markets by my officials in the Department for Transport and discussions with key stakeholders such as bus operators and local authority stakeholder groups. The objections mechanism was subject to a full consultation exercise between 8 February and 21 March last year.

Even taking that into account, however, it would not be possible for any statutory criteria adequately to cater for all the different bus markets in England where enhanced partnerships may develop. That is why the 2017 Act also allows further flexibility. The statutory objection thresholds in this instrument are required to apply only when a plan or scheme is introduced. An enhanced partnership can also include a bespoke objection mechanism for use when an existing scheme is varied or discontinued. That allows individual partnerships to adopt an objection mechanism that better suits their needs.

The draft instrument also sets out those services that are not eligible to take part in the objection mechanism, in addition to community bus services, which under the 2017 Act are not required to meet the requirements of an enhanced partnership scheme. That includes tour buses, services that operate less than 10% of their mileage in the partnership area and services paid for under subsidy by the local transport authority. Since the Act came into force in June last year, nearly 30 local authorities up and down the country have either expressed an interest or are actively pursuing an enhanced partnership with their local bus operators. However, there will inevitably be some operators that will seek to block progress, perhaps because the improvements proposed are not in their commercial interest or they prefer the freedom to operate in a fully deregulated market.

These regulations seek to strike a balance, ensuring the partnership has broad support from local operators without allowing a minority to block vital improvements that will make local bus services better for passengers. I ask the Committee to give these regulations its full support.

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[Ms Ghani]

I welcome the comments from the hon. Member for Keighley. He is absolutely right: bus services are vital for getting people across our constituencies. They are also vital for our constituents because family demographics have changed and more and more people rely on bus services; more people travel to work on a bus than on any other form of public transport.

To date, 30 providers are in negotiations with the Department for Transport, and many more have shown an interest. I have some facts and figures to hand, and if I am able to make them public, I will of course do so. We are keen to ensure that those relationships come about as soon as possible. We are keen to enable local authorities to work with local bus operators to provide a service that passengers want to take.

The hon. Member for Harrow West spoke about community transport, which is not covered under this regime because community transport is not the bus service we are trying to tackle here. This is about members of the general public getting on a bus service that stops at stops; it is not a dial-a-ride or specific kind of service.

[Gareth Thomas]

I am grateful to the Minister for that clarification. Nevertheless, will she recognise the depth of concern across the House about the future of community transport, given what her ministerial colleagues appear to be proposing in response to pressure from a small group of bus and coach operators?

[Ms Ghani]

I believe that the Minister responsible for community transport has been in communication with local authorities and people who are actively involved in that particular community bus situation. The Minister has announced a fund of £250,000 in this financial year to fund advice for operators that might be affected by any changes. We are also working with the Driver and Vehicle Standards Agency to ensure that a proportionate response is made to operators working toward urgent compliance.

Returning quickly to the hon. Member for Keighley, because I know he has a huge amount of experience in this area and I would not want to give him any inaccurate information, Nottingham City Council will probably be the first to implement that, perhaps as early as later this year.

With regard to the comments by the hon. Member for Reading East, I am pleased that Labour supports the regulations. It is vital that we encourage bus usage, and to do that we must be able to support our local authorities and they must be able to form partnerships with local bus operators to provide a service that passengers want. They can do that by having priority bus lanes, looking at ticketing and looking at the service that is being provided. The key point is that the decision is made locally.

Enhanced partnerships are a new type of partnership agreement that did not exist prior to the 2017 Act, and I am encouraged by the interest that local authorities and bus operators have already shown. The objection mechanism is a key part of the regime and it is important that the mechanism in the regulations strikes the right balance between allowing operators a fair say on what should go into these schemes and preventing a minority from stopping improvements that would benefit passengers.

The hon. Member for Reading East asked for information on the consultation process. That process was conducted fully and involved the Confederation of Passenger Transport, the Urban Transport Group, the Association of Transport Coordinating Officers and the Association of Local Bus Company Managers, which represents small bus operators. The consultation process looked at mileage, patronage and threshold, which were agreed by the majority of respondents. That is how we came up with the figure we have today.

The fact that the mechanism is in secondary rather than primary legislation gives the flexibility to amend and further debate the rules in future. My Department will not hesitate to do so if that is required to ensure the ongoing success of these schemes.

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[Ms Ghani]

I thank my hon. Friend for his comments. He is a strong champion for his community. The draft regulations do not cover community transport; they cover a bus service that is picked up by members of the public. They do not allow anyone to monopolise the market. If a local authority wants to set up a partnership that enhances a bus service within a community, it is able to do so without objection from one provider that tries to crowd out everybody else or lots of small providers that do not provide enough services to be able to decide what should be provided in that community. I will take his comments to the Department and to my colleague, the Minister with responsibility for community transport. Such partnerships will enable local authorities to leverage more with bus operators to provide a service that is important for their communities.

[Gareth Thomas]

Will the Minister be willing to commit herself—or, more appropriately, her colleague, the Minister with responsibility for community transport—to meeting a group of Members from both sides of the House who are concerned about the future of community transport and the Government’s proposals for changes to licensing?

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[Ms Ghani]

I am nervous about committing a colleague to a meeting. The Minister with responsibility for community transport often talks about this in the Chamber and meets representatives. We all have community transport providers in our constituencies, and we want to make sure that they and local bus providers deliver a service that our constituents want. If the hon. Gentleman writes to the Minister, I do not doubt that he will receive a full response to all his questions.

Question put and agreed to.