Local Transport Bill [Lords]

Public Bill Committee, 6 May 2008.

Stephen Hammond (Conservative, Wimbledon)

On a point of order, Lady Winterton. I seek your advice on the tabling of amendments. As we all know, we have had a bank holiday, and a number of people were hoping to table amendments to the latter parts of the Bill in the normal way. If they are tabled today, they will clearly be starred amendments. Would you would look favourably on such amendments?

Ann Winterton (Conservative, Congleton)

The advice to give to the hon. Gentleman is that there have been weeks in which to table amendments, and I would not look favourably on his suggestion at present.

None

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 73, in clause 24, page 22, line 23, at beginning insert ‘Subject to subsection (8),’.

Ann Winterton (Conservative, Congleton)

With this it will be convenient to discuss amendment No. 74, in clause 24, page 22, leave out line 25.

Stephen Hammond (Conservative, Wimbledon)

Welcome back to the Chair, Lady Winterton.

Clause 24 empowers the approvals board to hold inquiries. I envisage that those inquiries will be an important part of the work of the board. Members of the board will want to investigate the evidence provided to them by the local authority that is proposing the quality contracts scheme. They will want to examine any other representations made as part of the consultation process. They will also want to consult as widely as they consider necessary to reach an informed decision about whether to approve the scheme.

I hope, therefore, that my first substantive amendment to clause 24 will not prove controversial. Proposed new section 126C(4) provides that inquiries held by approval boards should be held in public. Proposed new subsections (8) and (9) provide that confidential commercial information should not be disclosed, which seems sensible to me. There is, however, a missing link, for it would be hard for the board to meet in public and discuss commercially sensitive information without disclosing such information. There may therefore be certain circumstances when it would not be appropriate for the board to meet in public.

My amendment would add the words “ Subject to subsection (8)” to the end of the provision that reads:

“Any inquiry held by the board for the purposes of section 126 must be held in public.”

The intention of the amendment, which I trust is not contentious, is to enable confidential commercial information to remain just that—confidential. I do not think that the Bill will allow that to happen.

Amendment No. 74 also relates to the provision that any inquiries must be held in public. At the end of proposed new subsection (4), the Bill says:

“This subsection is subject to any provision made by regulations.”

I am concerned to probe exactly what sort of regulations might affect the board’s ability to conduct its inquiries in public, other than those that would be tackled by amendment No. 73. Therefore, I look for guidance from the Minister on what regulations she is thinking of.

Rosie Winterton (Labour, Doncaster Central)

Welcome back to the Chair, Lady Winterton. I hope that I can give the hon. Gentleman some reassurance here. The Bill already takes account of the need for commercial confidentiality in the circumstances he described. It allows for regulations to be made that might restrict public attendance at inquiries where appropriate. We have it in mind that that might be used to restrict members of the public from attending those parts of an inquiry that are concerned with confidential financial information. A similar provision to that which we envisage already exists in regulations on inquiries held by traffic commissioners.

The Bill will also make it a criminal offence to disclose protected information. We will be consulting on the draft regulations later in the year. I hope that that gives the hon. Gentleman some reassurance that the Bill covers his concerns and that he feels able to withdraw his amendment.

Stephen Hammond (Conservative, Wimbledon)

I think the Minister has just said that protected information will cover commercial and commercially confidential information. That being so, will she clarify another point before I withdraw the amendment? What other reason might there be for an inquiry not being held in public, other than information being commercially confidential? Are there any other reasons that the Minister anticipates?

Rosie Winterton (Labour, Doncaster Central)

I cannot think of many other reasons why there might be a need for confidentiality. However, no doubt when we consult, the experience that traffic commissioners already have of some inquiries that they have held might offer further enlightenment. At the moment, though, the main reason is commercially confidential information.

Stephen Hammond (Conservative, Wimbledon)

I am grateful for the Minister’s explanation, but I am still troubled by the fact that the subsection says

“subject to any provision made by regulations.”

However, I shall see what the Minister comes up with in the guidelines on this point. I beg to ask leave to withdraw the amendment.

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 75, in clause 24, page 22, line 28, at end insert

‘and shall supply a copy of that document to all the persons listed in section 125(1)’.

The purpose of the amendment is to explore exactly what “prescribed manner” might mean. When the approvals board plans to hold an inquiry, it will be required to publish a notice of inquiry in the prescribed manner. I want to ensure that the words “in the prescribed manner” ensure that all the people who are entitled to receive a copy of that notice receive it. It seems only logical that all people who are supplied with a consultation document should also be told about any inquiry relating to the proposed scheme. The list of people and operators includes local operators and various others, including the chief police officer.

I tabled an amendment, which I believe had some support from the Liberal Democrats, on extending the list of people to be consulted. Unfortunately, the Minister was not minded to accept it. The crux of the matter is that members of the approvals board must be given access to all the relevant information and the full spectrum of opinion before they come to their decision.

At the moment, it is possible to conceive a scenario where a person or a group of persons or an organisation that had made a representation to the local authority objecting to the authority’s proposal to bring forward a quality contracts scheme might have done so as part of the consultation process. However, for whatever reason, the authority might dismiss that objection, push ahead with its process and pass it to the board for approval. There is nothing to ensure that the approvals board will necessarily know of the objectors. It seems to me that the board must be made aware of the objectors to the scheme, as well as the reasons for it. Therefore, those affected must be made aware of the inquiry.

My amendment, therefore, says that the board, in addition to publishing a notice of the inquiry in the prescribed manner,

“shall supply a copy of that document to all the persons listed in section 125(1)”,

which is the provision detailing to whom the local authority must send a copy of the document.

I look to the Minister either to accept the amendment or to reassure me that all persons to whom representations are made as a result of the consultation procedure automatically get a right of hearing at the approvals board.

Rosie Winterton (Labour, Doncaster Central)

The hon. Gentleman makes a fair point. It is obviously right that people, particularly someone who has objected to a scheme, should be informed of the fact that there will be a public inquiry.

I hope that the hon. Gentleman will accept that we want to cover that in regulations, rather than in the Bill. Given that assurance, I hope he will withdraw his amendment.

Stephen Hammond (Conservative, Wimbledon)

I am grateful to the Minister for her assurance. Subject to seeing the regulations and ensuring that they specify that point, I beg to ask leave to withdraw the amendment.

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 76, in clause 24, page 22, line 31, leave out from ‘to’ to ‘as’ in line 32 and insert

‘such person or organisation as the board thinks fit,

‘(b) by such person or organisation’.

Proposed new section 126C(6) will empower the approvals board to ensure that any costs incurred by the Secretary of State or by the board in connection with holding the inquiry are reimbursed. That seems to me to be well and proper. Oddly, however, such payments are limited in that the only person to whom they can be made is the Secretary of State. Given that costs may be incurred by the traffic commissioner chairing the board, other members of the board or, indeed, a third party organising the inquiry, why does only the Secretary of State stand to be reimbursed?

When a public inquiry is being organised by an independent approvals board, is it right that the Secretary of State should be the one reimbursed? In what circumstances does the Minister foresee the Secretary of State incurring costs in helping the board to arrange an inquiry in a particular area or case? Is that appropriate? Why is the Secretary of State incurring the costs? Those costs are more likely to be incurred by others. The board will organise and hold the inquiry; therefore, the board will incur the costs. The Secretary of State is not a member of that board.

The amendment is probing and it seeks to find out why the Bill is so worded. Why should other people not be entitled to reimbursement should they incur costs in the organisation of the inquiry?

Rosie Winterton (Labour, Doncaster Central)

I am grateful to the hon. Gentleman for clarifying the purpose of the amendment, as we were slightly confused about what it is trying to achieve.

The purpose of the provision that the hon. Gentleman seeks to amend is to enable an approvals board to require one or more parties to contribute to the costs incurred by the Secretary of State or the approvals board itself as a result of holding the inquiry. Costs incurred by an approvals board will ultimately be funded by the taxpayer, which is why the Bill says that the costs will be paid back to the Secretary of State.

I will set out my objections to the amendment. First, as the Bill is drafted, an approvals board can require a person to contribute to the costs of the inquiry only if they are a party to the inquiry. It is unclear to me why the hon. Gentleman wants to widen that provision. Under his amendment, people not even involved in the inquiry would be required to contribute to the cost of it.

Secondly, the Bill states that parties to the inquiry might be asked to make a payment to the Secretary of State in respect of the costs incurred by the Secretary of State or an approvals board. Under the amendment, the costs incurred by the Secretary of State or the approvals board could be reimbursed to other parties. I am not sure why costs that are ultimately borne by the taxpayer should be reimbursed to anyone other than the Secretary of State.

Over and above that, there are objections in policy terms to the amendment. Its effect would be that one party—either a bus operator or a local authority—could be required to contribute to the costs incurred by the other party during an inquiry.

The problem with that would be that if, say, a bus operator knows that a local authority would have to reimburse his costs there is no incentive for the operator to keep those costs to a sensible level. Indeed, a disruptive operator might deliberately spend a great deal of money simply in the hope of frustrating the local authority which would ultimately have to meet those costs.

With that explanation, particularly in terms of why it says the costs would be repaid to the Secretary of State, I hope that the hon. Gentleman will withdraw the amendment.

Stephen Hammond (Conservative, Wimbledon)

If I heard the Minister correctly, she is saying that the Bill as drafted uses the Secretary of State as the collecting point for costs whether they are incurred by the Secretary of State or the board of inquiry. My concern was that costs would be payable to the Secretary of State and not necessarily to the approvals board. However, given what the Minister has said—that the Secretary of State is acting as the collection point which was my concern—I beg to ask leave to withdraw the amendment.

Clause 26

Norman Baker (Liberal Democrat, Lewes)

I beg to move amendment No. 192, in clause 26, page 25, line 4, leave out subsections (3) and (4).

Ann Winterton (Conservative, Congleton)

With this it will be convenient to discuss the following amendments: No. 113, in clause 26, page 25, line 1, leave out subsections (2) to (4).

No. 114, in clause 26, page 26, line 3, leave out

‘periods specified in subsection (1), (1A) or’

and insert

‘the period mentioned in subsection’.

No. 193, in clause 26, page 26, line 3, leave out ‘, (1A)’.

Norman Baker (Liberal Democrat, Lewes)

I will speak very briefly to the amendment as I intend to withdraw it in due course, but I wanted to get one or two comments on the record.

The proposal harks back to our long discussions on clause 23 and new clause 5, on which there will be a vote in due course. We identified various scenarios for improving on the quality contracts scheme, which Members discussed at some length last week.

The hon. Member for Manchester, Blackley and I set out three options. The proposal is a fourth; it would remove the Transport Tribunal from the process, thereby eliminating one of the hurdles that local authorities face. In my view it is the fourth best of the four options. The best option is the one set out in new clause 5. However, it is an option and I offer the Minister this opportunity to comment, having, I hope, reflected over the weekend on the strong views that were put to the Committee both by her colleagues and by me, and to let us know whether she is likely to recommend to the House on Report some changes to the quality contracts procedure, which as she knows know was severely tested last week in Committee.

Ann Winterton (Conservative, Congleton)

I assure the hon. Gentleman that I have spent the weekend thinking of little else but him, his amendment and, of course, my other hon. Friends. However, we did have a conversation about it on Friday.

As I said previously, the real issue is to make sure we have a robust system that not only gives local authorities certainty about the way they can proceed, but also gives good protection in terms of judicial review. In light of that, I hope the hon. Gentleman will withdraw his amendment.

Norman Baker (Liberal Democrat, Lewes)

Well, that did not tell us very much, did it? Suffice it to say that I will return to the matter on Report if the Minister does not, but in the meantime, I beg to ask leave to withdraw the amendment.

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 255, in clause 26, page 25, line 28, at end insert—

‘(5A) In subsection (2), in paragraph (c) (maximum period for which scheme to remain in operation), for “ten” substitute “five”.’.

Ann Winterton (Conservative, Congleton)

With this it will be convenient to discuss the following amendments: No. 116, in clause 26, page 25, line 30, leave out from ‘operation’ to end of line 31 and insert

‘for “must not be more than ten years” substitute “which may be for a fixed period or until such time as the authority or authorities that made the scheme determine that it should not remain in operation.”’.

No. 256, in clause 26, page 25, line 30, leave out ‘ten’ and insert ‘five’.

No. 117, in clause 26, page 25, line 34, at end insert—

‘(2B) If the scheme is specified to be for an indefinite period pursuant to subsection (2)(c), then the authority or authorities shall, every time that the authority or, where there is more than one authority, each authority, reviews its local transport plan pursuant to section 109(1) (further provision about plans: England) or section 109B(1) (further provision about plans: Wales), review the effectiveness and appropriateness of the scheme and the extent to which the scheme continues to satisfy the criteria in section 124 (quality contracts schemes).’.

Stephen Hammond (Conservative, Wimbledon)

The amendments look to the next stage of what the Bill discusses. We have moved on from the approvals process to the making of the scheme itself. I have made it very clear that we support partnerships, but that we are very concerned about the impact and effect of quality contracts. I see some scope for improving what is to be on the statute book.

The first place where I detect that scope for improvement is in the length of schemes. The Transport Act 2000, which introduced quality contracts, specified that schemes should operate for no longer than 10 years. The Bill does not try to change that time period, although it does make provision in subsequent clauses for extensions of a scheme beyond its original duration.

I think the Bill should change the quality contract. The maximum duration should be brought down from 10 years to five years. The reason for that is simple: I remain unconvinced by anything I have heard from the Minister or anyone else that quality contracts will do anything to improve bus patronage. They bring back a significant element of regulation. It does not seem to me that in most areas there will be the astronomical amount of financial backing that the central Government have given to London, which is why the regulated market in London has flourished.

Graham Stringer (Labour, Manchester, Blackley)

I have listened on a number of occasions to the hon. Gentleman’s point about the difference between London and the rest of the country. What is not clear to me is the Conservative intention when the Bill becomes law. Are the Conservatives giving a commitment that—in the unlikely event that they ever become the Government—they will repeal the sections relating to quality contracts?

Stephen Hammond (Conservative, Wimbledon)

I do not know where the hon. Gentleman has been for the last week, but I would have thought it highly likely that the Conservatives would be in government relatively soon.

Our position is clear. As we said on Second Reading, and I have already said in Committee, we are not convinced by anything we have heard that quality contracts will add to bus patronage. I tabled a number of extra amendments regarding quality contracts, which would have given the Government a chance to prove that they would do that, but so far we have heard nothing but assertion. We have seen no evidence. On that basis, our Front-Bench position is that when we come into power in a couple of years we will look very carefully at the system. At the moment, our intention would be to repeal quality contracts.

Norman Baker (Liberal Democrat, Lewes)

In the meantime, will the hon. Gentleman be issuing instructions to Conservative councils not to use quality contracts?

Stephen Hammond (Conservative, Wimbledon)

I would not presume to tell local councils how to behave—nor, I assume, would the hon. Gentleman—so I will be doing nothing of the sort. It would be extremely wrong of me. Likewise, I assume that the hon. Gentleman will not be instructing local authorities to use the contracts. It is up to local authorities to make their own decisions.

Norman Baker (Liberal Democrat, Lewes)

I am grateful for that reply. We do not instruct our councils. We are grass-roots up, but I was not sure that the same approach was applied by the Conservative party. Perhaps the word ‘instruct’ was wrong. Will the hon. Gentleman be encouraging his councils not to take up quality contracts?

Stephen Hammond (Conservative, Wimbledon)

I will be encouraging our councils to take up partnership schemes, be they voluntary or statutory.

Clive Betts (Labour, Sheffield, Attercliffe)

It is interesting to hear the hon. Gentleman say that he is not in the business of telling his councils how to behave. If he intends to repeal quality contracts, should he get into government, so that local councils do not have the option of adopting them, surely he is telling them that they will not be able to adopt quality contracts. That is exactly what he is doing.

Stephen Hammond (Conservative, Wimbledon)

The hon. Gentleman is taking an extraordinary position. Central Governments of all hues pass legislation that has an impact on local authorities. Is he seriously telling us that central Governments should not pass any legislation because it would have an impact on local authorities? [Inter r uption . ] That is the logic of the hon. Gentleman’s position. All the way along we have said we supported partnership and partnership routes, whether they be voluntary or statutory, and we will continue to support them. It has been a consistent position.

Clive Betts (Labour, Sheffield, Attercliffe)

I am grateful to the hon. Gentleman for giving way again. My position is not at all extraordinary. I completely accept that central Government have a right to propose legislation to the House, and that the House can pass it and, therefore, direct local authorities to behave in a certain way. However, I thought the hon. Gentleman’s party wanted to devolve more powers and responsibilities to local authorities. Surely what he is saying about quality contracts is that if those powers were given to local authorities, he would want to take them away if he got into government. That is the reverse of the philosophical position his party is now adopting.

Stephen Hammond (Conservative, Wimbledon)

The hon. Gentleman has already made that point, but as I have already told the Committee there is no evidence yet that statutory partnerships work. I want a chance to see them work. That seems the right road to go down. I prefer voluntary partnerships, and if they do not work there are powers for statutory partnerships.

I have made the point that most companies and most areas will not receive the financial backing from central Government that we have seen in the regulated market in London, which is why it has flourished. The inevitable consequence is that there would be potential for bus operators and local authorities not to increase bus routes but to cut them. What is more surprising is that if we look at what will happen under the Bill, some of the operators—particularly some of the smaller, independent operators, who provide a valuable service—will face a real impact.

I draw the Minister’s attention to the operator Trent Barton, which, as she may know, operates in Derbyshire, Leicestershire and Nottinghamshire and runs a fleet of about 270 modern buses on a network of local routes. In the company’s response to the consultation on the Bill, it talked about the impact of the legislation, saying it may be forced to close or to reduce its size. Unlike larger bus operators, Trent Barton cannot necessarily move to another part of the country. The company mentioned some of the benefits it has brought to passengers, which it might not necessarily be able to do under a quality contract; for example, the Spondon flyer, which doubled the amount of bus usage in a particular suburb of Derby and was openly praised by the local authority in its local transport plan.

Trent Barton is an example of a smaller operator that has successfully brought investment, innovation and improvement to bus services in an area. There is a possibility that quality contracts will destroy that and if we cut out small, independent operators, we will cut out a potentially valuable source of bus services and patronage. Cutting them out for 10 years seems wholly arbitrary and detrimental. I accept that the figure of five years is somewhat arbitrary, but it is significantly better than the original figure of 10 years.

Norman Baker (Liberal Democrat, Lewes)

I understand that the hon. Gentleman does not like the quality contracts process. Inevitably, it is inevitably quite complicated and relatively bureaucratic, as it needs to be to protect people, for the reasons he has given. If we have such a process every five years, will it not load up costs and make the whole business of quality contracts less desirable and attractive?

Stephen Hammond (Conservative, Wimbledon)

There is that possibility, but local authorities are forced by central Government to do plenty of other things every year or every three years, which could put much greater costs on them. The proposal may or may not add extra costs, but there is a greater benefit, because quality contracts remain an unknown quantity.

Graham Stringer (Labour, Manchester, Blackley)

I intend to come to some of those issues on amendment No. 127. The hon. Gentleman says that the amendment on five years is arbitrary, but is it not completely out of kilter with depreciation of a bus, and is that not genuinely related to innovation and to the length that a contract should be—if we want new, better buses with access for the disabled, for example?

Stephen Hammond (Conservative, Wimbledon)

I certainly accept that five years is out of kilter with the depreciation period of a bus, but equally one might argue that so is 10 years. I understand that the total depreciation period is between 15 and 20 years. I am not sure whether the hon. Gentleman is suggesting that we go to the total depreciation period.

Quality contracts remain an unknown quantity: not one exists anywhere in the country and we do not know what their impact will be. I and my colleagues fear the worst. No one has produced any evidence in their favour. We have heard assertion—that is all it is—that they will be significantly better than bus partnership schemes. Making assertions about 10 years is a brave and dangerous step to take. I shall test the will of the Committee on this matter.

Norman Baker (Liberal Democrat, Lewes)

The hon. Gentleman began by decrying quality contracts. We understand that that is his position, but the amendment relates to how long they should run, rather than the concept of quality contracts, which, whether he likes it or not, we have largely dealt with. I fear that he was seeking to re-run the argument, rather than deal with how long the contract should run, and to undermine the concept of quality contracts by reducing the period to five years.

If there are to be quality contracts, which I support, there has to be a sensible time period. There is the question of depreciation of vehicles, referred to by the hon. Member for Manchester, Blackley; the question of the cost of setting the contracts up; and the question of making them work, rather than continually having to revisit them and prepare for the next round of bidding and processing. If bus operators and local authorities are continually looking to the next process rather than getting on with delivery, that will lead to a worse service. It is not sensible to approach this in such a way.

The hon. Member for Wimbledon also raised the issue of small bus companies. I accept that that is an issue, as I did in earlier discussions. I raised the example of Norfolk Green to add to his example.

There is a very small chance that good small bus companies will be disadvantaged as a consequence of the introduction of quality contracts—I raised the issue with the Minister earlier—but I happen to think that the likelihood of that happening is quite small and remote, so it is worth taking the chance. I accept that there is the possibility of it occurring, but if it does occur and the Norfolk Greens of this world have their bus routes taken away, it will not matter whether the period involved is five years or 10, because such companies will not come back. If they disappear, they will not hang around for five years waiting for the next quality contracts to be created.

If the hon. Gentleman’s objective is to defend those companies, this, if I may say so, is not the right way to do it.

Ann Winterton (Conservative, Congleton)

My hon. Friends and the hon. Member for Lewes are right to point out that the hon. Member for Wimbledon has said that he would abolish quality contracts if a Conservative Government were returned to power. That is quite clear. It is part of the undermining of the system of quality contracts—trying to pare away at it, obviously with the ultimate threat that if a Conservative Government were to be returned—no matter what councils had done in the meantime to set up quality contracts in what they felt was in the best interests of their constituents and the people in their local authority areas—quality contracts would be abolished.

From my discussions with Conservative councillors —I have said it before, but I will say it again—I think that there is a lot of enthusiasm for the approach that we are adopting in the Bill and that they will be severely disappointed that there has not been a change of heart on this particular policy by Conservative Front Benchers, even during debates in Committee.

We need to be clear. The Transport Act 2000 gives quality contracts 10 years to run. That is the current position, and we are not changing that in the Bill. What we are doing is allowing the tenders for contracts, or the contracts themselves, to be for 10 years rather five. That is because a quality contracts scheme is likely to involve a quite major reorganisation of local transport in an area, and a well-constructed scheme should form part of a long-term strategy to improve public transport. It is also likely to involve a high degree of investment, both by the local authorities in infrastructure and by the contracted operators in better-quality vehicles.

We believe that a 10-year time scale will often be necessary to justify such investment and to achieve the desired outcomes. It is possible for local authorities, if they so wish, to have a shorter period. Again, we have said that that is up to local authorities to decide. We believe in devolving decision making and trusting people at local government level to make the best decisions for their areas. The Bill is part of that, and that is why we are sticking to what was in the original Bill.

Frankly, as I have said, because of the investment necessary on both sides, we do not believe that a five-year maximum would be sufficient in the majority of cases. For those reasons, I ask the hon. Member for Wimbledon to withdraw his amendment.

Stephen Hammond (Conservative, Wimbledon)

As I have said several times in response to the Minister, I find her unconvincing and not reassuring. Yet again, she has made assertions but produced no evidence on them. Until we hear evidence, I see no reason to change my position. I am open-minded, if the Minister would care to give me some evidence, but we have heard only assertion, so I wish to test the will of the Committee.

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 206, in clause 26, page 25, line 43, leave out subsection (10) and insert—

‘(10) Subsection (10) (power by order to vary the period mentioned in subsection (2)(b)) shall cease to have effect.’.

The amendment is designed to be probing. The original provisions on quality contracts in the 2000 Act gave the appropriate national authority the power to vary the date on which a scheme will come into operation. Clause 26(10) will amend that so that the national authority has the power to vary the date on which the scheme is made and any date relating to an appeal on such a scheme.

Given that we have just heard from several Labour Members who were anxious to jump to their feet to defend quality contracts as a localist measure put in place by local authorities, I am surprised that they are not now jumping to their feet to say, “Why would the national authority want this power?”.

Will the Minister say under what circumstances she envisages the Secretary of State interfering in such a localist measure in such a manner? Why does a national authority need the power to meddle in the scheme, which will have been proposed by a local authority and approved by an independent approvals board?

Norman Baker (Liberal Democrat, Lewes)

The consultation stage, as I recall it, drew attention to a number of comments from individuals who were concerned that the time lag between a scheme being made and coming into operation was, at 21 months, unduly long. That was seen as a difficulty that had to be overcome if we were to see implementation of quality contracts. I see the Minister nodding, so she accepts the point that that is a long time lag. What steps has she taken to reduce that time lag and what should the time lag be in most cases?

Rosie Winterton (Labour, Doncaster Central)

The amendment would remove what we believe is a very necessary flexibility to be able to amend aspects of the quality contracts scheme timetable through secondary legislation.

The 2000 Act provisions, as amended by the Bill, provide that a quality contracts scheme must be made not later than six months either after it has been approved or, in England, after any appeals against decisions of the approvals board have been finally disposed of. The Bill also continues a requirement in the 2000 Act that there must, in England, be a period of at least six months between the making of the scheme and its coming into force.

As the hon. Member for Lewes said, the period was originally 21 months. That was changed to six months through secondary legislation at the request of local authorities and others who felt that the original 21 months left too long a time lag. However, the original position of 21 months still remains in Wales, although that will be harmonised through the Bill.

Any of those periods can be varied by an order made by the Secretary of State or the Welsh Ministers. That gives flexibilities to shorten or lengthen the six-month period if, with the benefit of experience, that is considered necessary. In the past, there has been a change from 21 months down to six.

To remove the order-making power as the amendment suggests, so that it would not be possible to change those periods, would remove the flexibility that we want. The only way that the periods could be changed, if it was proved necessary, would be through primary legislation. As all members of the Committee know, passing primary legislation is a lengthy process.

Norman Baker (Liberal Democrat, Lewes)

Will the flexibility that the Minister envisages allow the period to be extended beyond six months? In due course, that might have implications for the viability of particular bus companies, if the uncertainty went on for too long.

Rosie Winterton (Labour, Doncaster Central)

Yes, it does include the possibility of lengthening the period. Here, we have in mind perhaps a situation where there are difficulties in ordering new vehicles or in constructing a bus lane. Over time, it might prove necessary to have that greater flexibility in the system.

Bus operators may fear that the order-making power might be used to reduce a limit to below six months, but it may be used to lengthen a limit if that is considered desirable. I assure the Committee that no changes will be made without full consultation.

In my view, it is necessary to have that flexibility in making quality contracts schemes and I ask that the amendment be withdrawn.

Stephen Hammond (Conservative, Wimbledon)

I am grateful for that explanation. One moment we are being localist; the next, we are for national direction. The Minister wants the flexibility to have national direction at one moment and then to castigate everybody else if she does not consider them as localist as the next person. I want to look very carefully at what the Minister has just said and possibly to revisit the matter on Report. I beg to ask leave to withdraw the amendment.

Clause 29

Graham Stringer (Labour, Manchester, Blackley)

I beg to move amendment No. 127, in clause 29, page 26, line 36, leave out subsection (3) and insert—

‘(3) Subsection (2) is omitted.’.

The amendment continues the debate that the hon. Member for Wimbledon introduced and would make the length of quality contracts more flexible and potentially longer, in line with the process in rail franchising and that in Greater London.

There are two issues here and—with your permission, Lady Winterton, as we are speeding along this morning—I will discuss the length of quality contracts and the scheme itself, which is related to this issue. Listening to what the hon. Gentleman said in proposing the previous amendment and looking at this amendment, we see that while quality contracts are a considerable improvement on what we have, they are by no means a perfect mechanism. There is a lot of evidence—not just in this country, but around Europe—that quality contracts would and will improve the quality of bus services. However, there are problems, which members of the Committee will have seen with rail franchises and, indeed, the franchises for the tram system.

If a franchise is let to a private operator to achieve all the benefits of commercial operation—response to the market, the innovation that the hon. Member for Wimbledon mentioned and investment that allows that innovation and response to happen—the contracts necessarily become front-loaded. The commercial operator will want to spend the money and get the return on it at the beginning, and towards the end of the contract there is deterioration.

The amendment says that the process should be in line with permissive EU legislation, which would allow 50 per cent. extension to the contracts—that is normal in rail franchising and in London—so that they could be extended from 10 years to 15. There would be an immediate benefit in doing that in stabilising the whole of the public transport system that relies on buses. If a quality contract were coming to its end and the operator was unsure about retaining that contract, whether because they had not been very good or because there were aggressive competitors in the market, there would probably be less interest in it. However, that would be exacerbated if the scheme itself came to an end at the same time, so the marketplace would not know what sort of scheme was going to be in place.

We come back to the point, is what is good for London good for the rest of the country? It is assumed that in London the schemes for franchising buses go on and that when it comes to the end of the scheme in 10 or 15 years, the market will know what to apply for. What is envisaged in the Bill—the scheme itself is covered in more detail in later clauses, but it is relevant to the amendment as well—is the scheme having to go back to square one and be looked at again. That seems disruptive and it will bring a lack of stability to the system.

The amendment says that it should be possible to extend 10-year franchises by 50 per cent., as is allowed under EU regulation. The stability of the process would be helped if the scheme was allowed to continue unless there was some very good reason that it could not, which could be picked up in the local transport plans.

Rosie Winterton (Labour, Doncaster Central)

My hon. Friend’s amendment relates to clause 29. As I said earlier, the clause extends the maximum length of each individual quality contract from five years to 10. At present, while a scheme can run for 10 years, a contract can run only for five. We have responded to points made to us by local authorities and others that it is more appropriate for it to be able to run for the same period as the scheme.

I understand the points that my hon. Friend has made, but under the system that we propose a quality contracts scheme will replace deregulated services with a series of contracts and, at the same time, suspend the free market in the area. The task of setting up a regulated network from scratch, which is what we are talking about, is rather different from adapting an existing one, which is more the case that we have in London. That is why the Bill provides for a review point.

After the period for which the scheme is approved, which may not exceed 10 years, it must be reviewed. If the authority is minded to extend it, a further consultation must take place to ensure that it has delivered at least some of what was promised, and that a scheme is still relevant and likely to deliver more. If, however, the scheme is not intended to expand in scope and will not involve new areas or new bus services, it can go ahead without approval, although there will be an appeal mechanism in it. If it is going to expand, the approval of the board—or in Wales, the Welsh Ministers—will still be necessary.

The amendment would affect the length of individual contracts within a quality contracts scheme. The 2000 Act extends the contracts from five years to 10; the amendment would allow further extension. However, we consider that the best way forward is to set the contract length at the same length as the overall scheme. We believe that much can change in 10 years—whether it is demand for services, travel patterns, technology and so on. It is not unreasonable to require authorities to review quality contracts schemes at least once a decade. If the duration of the scheme is to be limited to 10 years, the duration of individual contracts must be similarly limited.

I know that my hon. Friend the Member for Manchester, Blackley believes that there should not even be a 10-year quality contracts scheme duration, and therefore that it is reasonable to extend the contracts themselves. However, for the reasons I have set out, we believe it reasonable to ask local authorities to look at the schemes after 10 years to ensure that they are delivering what was promised and that if they are to continue they can do so without having to go through a whole approvals board if they are not particularly different. We believe that that is the right balance to strike, and in view of that I hope that my hon. Friend will withdraw his amendment.

Graham Stringer (Labour, Manchester, Blackley)

I welcome the increase in the length of the contract from five years to 10, although I would quibble with the phrase “removing a free market”. One kind of market is being changed to another where there is off-road rather than on-road competition. It is important that we continue to make that point. What I do not think my right hon. Friend the Minister really addressed—I am happy to give way now or wait until we consider this on Report—is the fact that the coincidence of the end of that period and the end of the scheme is bound to bring uncertainty and instability to the market. I would be grateful if my right hon. Friend reflected on that, either now or at a later stage. How could current operators and, potentially, new operators take decisions in their own companies to invest if they did not know what was going to happen? The coincidence of the end of the scheme and the end of the contract represents a serious point.

The second point is the length of the contract. As hon. Members on both sides of the Committee know, I am not the greatest advocate of EU regulation—by and large, I think we are better off without most of it—but I do not understand why in the rest of the country there should be less flexibility and less application of European laws, including the ability to extend those contracts by 50 per cent., than is the case in London and within the rail franchising system.

Regarding my right hon. Friend’s final point, on which I ask her to reflect, I completely understand that this is a new scheme. The London scheme changed slightly over the period after privatisation. There had been a publicly-owned system and there was a relatively smooth transition to a franchise system, whereas in this instance we are moving from a very lightly regulated system to a franchise system. That, I accept, is a much bigger change within the market. I also accept that it may need to be assessed. What I do not necessarily accept is that this needs to be assessed at the end of 10 years. Why cannot it be dealt with while the scheme is going on? If there are failures or if extensions are needed—as my right hon. Friend correctly points out, that might be the case—that might be dealt with in the local transport plans, which would be consulted upon.

I am happy to come back to those points on Report, but I think that there are real market issues. That is a different debate from the one about whether to accept quality contracts. If one accepts quality contracts, there is a real practical debate here about how to help the market to work to maximum effect.

Rosie Winterton (Labour, Doncaster Central)

The 10-year time period provides a good opportunity to review the scheme itself and, if an authority had decided to let a contract for the full 10 years, to say what would be the new parts of a new tendering process. Running the two together would not necessarily bring instability but could provide a good opportunity to look at how the scheme is operating, to see whether it had delivered and whether there should be different specifications in a new tender process. The two might fall quite well together.

With regard to EU regulations, I understand that the Community regulation to which my hon. Friend refers recognises the difference between, for example, a design, build and operate system for a light rail system compared with a bus contract. There is a period of 15 years for rail contracts and 10 years for bus contracts. Community regulation does specify difference in the maximum.

I have listened to the points made by my hon. Friend but it is still within the local authority’s ability to vary either of the two periods if it wishes to do so. There is a maximum when an authority would be required to review the success of the scheme. If there were no major changes to the way the scheme was to be run it could go ahead without having to go an approvals board. I hope that reassures my hon. Friend.

Graham Stringer (Labour, Manchester, Blackley)

It does, in parts. As I understand it—I do not mean to be sarcastic—the London bus system, which does not have trams or trains, has the right under EU legislation to extend those contracts if it wishes. I do not see why that should be changed.

There is a genuine difference between us on assessment of how the market might respond to the ending of both the contract and the scheme at the same time. My right hon. Friend has been very helpful and open-minded in this debate and I ask her to remain so for further discussions on these practical issues before we consider the Bill on Report. They are not matters of principle but of making the scheme work, and on the basis that we can return to the matter on Report and that there will be ongoing discussion, I beg to ask leave to withdraw the amendment.

Stephen Hammond (Conservative, Wimbledon)

As the Minister said, clause 29 has the effect of extending the maximum duration of the contract from five to 10 years by amending section 130 of the 2000 Act. As I said while we were considering amendments Nos. 255 and 256, I am unsure whether the move can be justified given that quality contracts are an uncertain beast at the moment. The ramification is that the clause and the succeeding clauses, far from extending the quality contracts rules from five years to 10, might in a number of cases extend the quality contract to 20 years. That is an extraordinary provision for something that is untried and untested. It creates an unnecessary restriction on the market and, therefore, I will be asking my colleagues not to support the clause.

Rosie Winterton (Labour, Doncaster Central)

Once again, the hon. Gentleman is showing his complete hostility to the idea of quality contracts. As I have said, there is a review of the quality contracts scheme after 10 years. Yes, if it has not changed substantially, it can continue. We think that is the right balance to strike, but the hon. Gentleman—because he does not really believe in quality contracts in the first place— is simply opposing the clause to illustrate more clearly than ever that Conservative Front Benchers are hostile to these ideas.

None

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 214, in clause 30, page 27, line 48, at end insert—

‘(i) a list of—

(i) those people who have declared an objection to the continuation of the scheme, and

(ii) the objections declared by those people mentioned in (i).’.

The amendment looks at the whole concern about extending quality contracts beyond their initial period. We have discussed the consultation process that a local authority must engage in if it wants to introduce a quality contracts scheme. I have argued that the consultation document should contain certain additional elements and be made available to a wider range of individuals and organisations.

I am glad to see that where a local authority wishes to extend a quality contract scheme, it must engage in a similar process of consultation: that seems only logical. My intention with the amendment is, as with my previous set of amendments, to ensure that the consultation procedure is robust and effective. Those who receive the consultation document, and are invited to respond to it, must be aware of all the facts about the proposed extension of the scheme. That is probably already adequately covered.

However, the consultation document is produced by the local authority, and the very production of the document is evidence that the authority thinks the extension would be a good thing. I am concerned, too, that the document should also contain the evidence or views of people who think that the extension would not be a good thing. They should be entitled to have their points of view expressed and understood by those who are consulted, so those points of view should be in the document. In that way, people reading the document would be able properly to assess and analyse the successes and failures of any schemes in place, and members of the Committee will know from what I have already said that I think there will be more concerns than successes. Nevertheless, unless the consultation document includes the views both of those in favour of an extension and of those opposed to it, the consultation process cannot be as fair and open as possible. I hope the Minister will reassure us that the document will be balanced, even-handed and able to contain the views of both sides.

Rosie Winterton (Labour, Doncaster Central)

The clause and these amendments will introduce a new process to be used where a local transport authority wants to continue a quality contracts scheme beyond its initial approval period. This process would allow it to do so without having to make a new scheme. Under the current legislation, it is not possible to continue a quality contracts scheme in that way, and the authority would have to go through the full process of making a new scheme if it wanted to do so. The Bill would introduce a more flexible system, which will enable a lighter-touch approvals process to be applied depending on the extent of the changes. Under these provisions, if an authority wanted to extend a quality contracts scheme, it would be required to publish a consultation document reporting on the effectiveness of the scheme so far, as well as making a case for continuing it for a further period of up to 10 years. Where it is proposed that the scheme should not be expanded to cover additional services, the scheme will not need to be submitted for approval. This is, as I have said, a much lighter touch than exists under current legislation, which requires in such circumstances a whole new scheme to be made.

In my view, a consultation document should be drafted in impartial, neutral terms with the objective of seeking open views from any stakeholders with an interest in the proposal being considered. To include details about objections to the proposal in the consultation, including the identities of those who have objected, would cloud neutrality and, as a result, could unfairly influence responses to the consultation. I do not think that should be the objective of any consultation, whatever the issue being discussed.

Norman Baker (Liberal Democrat, Lewes)

Will the Minister confirm that under the Freedom of Information Act 2000, any comments made in support of or against any particular proposal of the consultation document will in fact be available for public inspection?

Rosie Winterton (Labour, Doncaster Central)

I gather that certain exceptions are applied. As I have said, however, the consultation is not supposed to be a summary of everybody’s views. It is supposed to gather those views. Until the consultation process has been carried out, it would not be possible to have the objections, unless the hon. Gentleman means to go back 10 years to when the scheme was originally made. Again, I do not think that would make sense. The idea of the consultation document is to say, “This is the view of what has happened in terms of the scheme, and this is why we want to take it forward.” If there were an objection to its being taken forward, it could go through an appeal process. However, if the local authority wants to continue with the scheme, and if it is the same, with no new proposals for different services, it should be able to go ahead. The process gives the opportunity to set down why the authority thinks it should continue, and what has been achieved so far.

Norman Baker (Liberal Democrat, Lewes)

On the consultation point, the image I had in my head was akin to a planning application where, if a planning application is made, it is possible for individuals to write in to say they are for or against the application. Those letters are on a public file and can be inspected by the public at large. I hope the Minister will tell me a similar sort of process will apply in this case.

Rosie Winterton (Labour, Doncaster Central)

There would be a consultation document. If the scheme was coming to the end of its 10-year period, the local authority would set out why it believed it should go ahead with the scheme. If there are no new proposals in the scheme, and it is roughly the same as it was before, it does not need to go through the approvals process. It can be appealed against, but it does not need to go through the approvals board.

If somebody reading the document said, “Well, I do not agree with that, I do not want the scheme to go ahead, I am going to appeal against it going ahead”, it would go through that appeals process. That is the system that would be adopted. If the scheme was changing entirely it would need to go to the approvals board and through a similar process whereby individuals would write in saying, “We do not believe that the scheme should go ahead, will you take our views into consideration?”. The approvals board would see all those cases. That would be more of a consultation exercise but there could be appeals against it.

Stephen Hammond (Conservative, Wimbledon)

I think I heard the Minister say earlier that her wish for consultation and the documents that set it out should be open, fair and balanced. I take the Minister at her word and look forward to that being the direction in the guidance, when it is set out, as to how the procedure might work. With that acceptance and reassurance from the Minister, I beg to ask leave to withdraw the amendment.

Clause 31

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 215, in clause 31, page 28, line 45, leave out from ‘authority)’ to ‘applies’ in line 1 on page 29.

Ann Winterton (Conservative, Congleton)

With this it will be convenient to discuss the following amendments: No. 216, in clause 31, page 29, line 2, leave out from ‘one’ to end of line 3.

No. 217, in clause 31, page 29, line 4, leave out subsection (2).

No. 218, in clause 31, page 29, line 14, leave out subsections (3) to (10).

Stephen Hammond (Conservative, Wimbledon)

Clause 31 provides the same approvals process that we have discussed previously. As I understand it, it is stating that the approvals process can apply to extensions as well unless they are deemed to be exempt extensions. That and the strong independent process of approval are vital and I am wary of circumstances in which they may be bypassed.

The clause sets out circumstances in which such an exemption would apply but the rules are somewhat complicated. If the Government believe that they are formulating an approvals process that does the job it is intended to do, can the Minister tell us why should there be exemptions from the process? It does not seem that there is any particular reason or benefit to the public validity of an approval or an extension that certain ones can suddenly become exempt from the process.

The approvals board is designed to be independent. It is a qualified group of individuals with the power to make decisions in the best interest of local people. That is the purpose of the board and that is what it should be allowed to do. I am, therefore, looking to the Minister to give us some clear indications of circumstances in which such exemptions might apply.

Ann Winterton (Conservative, Congleton)

The amendments would move us back to the position where, in all circumstances when a local authority proposed to continue a quality contracts scheme beyond its initial period the scheme would have to be made again from scratch, with a full approvals process in every case.

We want to change the current legislation because it is not possible under that legislation for a quality contracts scheme to continue beyond its initial period—the authority has to go back through the full process of making a new scheme. We want there to be a more flexible, lighter touch, which we are bringing in under the Bill.

Under the provisions, an authority that wanted to extend its quality contracts scheme would need to publish a consultation document reporting on the effectiveness of the scheme so far, as well as making the case for continuing it for up to a period of a further 10 years. The proposals would be subject to the same consultation procedure and approvals and appeals process as a new scheme, but with appropriate modifications and certain exemptions from the approvals process.

In particular, where it was proposed that the scheme should not be expanded to cover additional services, the scheme would not need to be submitted for approval. The new approvals process with certain modifications and exemptions would apply to any application to continue a quality contracts scheme beyond 10 years. We have set out the conditions that would need to be met if the scheme is to be exempt from this process and impose a requirement on the local authority to publicise any such proposal. Other than for exempt proposals the application would need the approval of the approvals board or Welsh Ministers. Only schemes that had achieved their stated objectives or were well on the way to doing so, and where there would be public benefit, would be likely to be approved.

We now come to the exemptions. Proposals in the draft Bill would have required every continuation scheme to go through the approvals process. However, one of the key functions of the approvals process is to ensure that the effect on deregulated services is properly taken into account. If a quality contracts scheme is already in force and will usually have been in force many years, as long as the scope of the scheme is not widened, there will be no such services to take into account. In those cases, there seems little point in submitting the continuation scheme to the approvals board or Welsh Ministers.

However, we accept that some authorities will want to modify the schemes when they continue them, either to adjust the boundaries to take account of road or planning developments since the existing scheme was approved or to vary the description of services that are excluded from the scheme or to bring in additional services. If any changes of that sort meant that services previously operating outside the scheme would be part of it, it seems appropriate for the approvals process to apply. That is a necessary safeguard because without it a local authority could greatly expand the scope of an existing scheme, making it virtually a new scheme, without going through the approval process.

In order for a continuation scheme to be exempt, two sets of conditions need to be satisfied. The first is that there is no increase in the geographical area, or only to such a minor extent that no existing bus services or additional local authority would be taken into the scheme. Any one of those conditions must be satisfied.

Norman Baker (Liberal Democrat, Lewes)

Where the approvals process kicks in, in the circumstances described by the Minister—for example, an extension to geographical area—I assume the approvals process would look only at the impact of any amendment rather than looking at the entire scheme again.

Ann Winterton (Conservative, Congleton)

No, the scheme as a whole would be looked at in terms of the continuation process because in those instances it has reverted, and because it has changed it does not come under the continuation process.

As we said earlier, an approvals board is able to talk about modifications. I am sure that in those circumstances there would be a look at the scheme as it had been running and a look at the effect of the new geographical area in it. That would be quite reasonable. Otherwise, the current scheme would not be looked at all and it would simply be a new scheme starting. In those circumstances, where it was expanding, it would be quite reasonable to say that the approvals board looks at the scheme as a whole and at how it would continue as a whole. Otherwise, there would be two processes—one the continuation scheme and one a new quality contracts scheme.

Norman Baker (Liberal Democrat, Lewes)

Would the approvals process be able to take into account comments people had fortuitously taken the opportunity to make about elements of the scheme that would not in fact be affected by a geographical extension?

Ann Winterton (Conservative, Congleton)

Obviously, if the scheme went through the entire approvals board process again, people would be able to make comments about the existing scheme. The continuation scenario would be that if the local authority issued a consultation document, people could appeal against it. If the scheme reverted to going through the whole approvals board process because it had changed, people would be able to make representations to the approvals board in the same way as previously.

Norman Baker (Liberal Democrat, Lewes)

The point I am trying to get at is this: if it is deemed sensible to make a small geographical extension to the scheme and that triggers the process, I understand why it has to be looked at, but if the whole process or scheme can be looked at again, that is a disincentive to make that small geographical amendment.

Ann Winterton (Conservative, Congleton)

Again, we have to strike the right balance between changing the current legislation, which requires any scheme to go through the approvals board process all over again, and having flexibility, so that if a scheme is extended outside the geographical area or there are additional services, the scheme can be considered as a whole. Frankly, the alternative is to have a continuation in one area and a new scheme in another area. It is obviously in a local authority’s remit to be able to do that.

The second set of criteria that come under the exemptions are that there should be no reduction in registered bus services previously excluded from the scheme. Both of those conditions must be satisfied for a continuation scheme to be exempt from the approval process. As I have said, that is the right way forward in striking a balance between the two processes. I hope that, in view of that, the amendment will be withdrawn.

Stephen Hammond (Conservative, Wimbledon)

I think I heard the Minister say that, except for minor alterations, all alterations to quality contracts that are proposed as an extension will have to go through the approvals board. If that is so, I am happy with that reassurance, and on that basis I beg to ask leave to withdraw the amendment.

Clause 36

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 222, in clause 36, page 33, line 28, leave out paragraph (b).

Clause 36 is mainly uncontroversial and makes small amendments to the Transport Act 2000 that are consequential to changes made in the preceding clauses. As I understand them, they relate to regulations that can be made about quality contracts. The changes in the clause merely ensure that the regulations can be made about continuations as well. However, if I understand it correctly, subsection (3)(b) makes a change of somewhat greater substance. It provides that the regulations may be made by the appropriate national authority in addition to matters already listed in the act, namely

“the procedure for determining such applications”,

meaning, of course, the applications for approval of quality contracts. Why is subsection (3)(b) necessary? In what circumstances would those regulations be made, and what sort of regulations are they? The amendment is entirely probing.

Ann Winterton (Conservative, Congleton)

The amendment would remove the regulation-making power in clause 36 that enable regulations to be made to set out the procedure for determining applications for the approval of quality contracts schemes or the continuation of such schemes. In a sense, the amendment would mean that an approvals board’s actions would not be defined. The Government believe that it is important that the procedures for an approvals board should be clearly and legally defined, and that is the purpose of the clause. Subsection (3)(b) refers to the

“procedure for determining such applications”,

which deals with how the approvals board would receive applications. Removing it would mean that it would not be possible to set that out in legislation.

Subsection (3) is simply about the regulations and how the approvals process might work. Removing paragraph (b) would undermine the whole system of quality contracts and approvals boards, so I invite the hon. Gentleman to withdraw the amendment.

Stephen Hammond (Conservative, Wimbledon)

The purpose of the amendment was to probe and to understand exactly what was meant and exactly what procedures were referred to. Given the Minister’s reassurance and explanation, I beg to ask leave to withdraw the amendment.

Clause 38

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 223, in clause 38, page 34, line 8, after ‘authority’, insert

‘, the Senior Traffic Commissioner, and the Public Transport Users’ Committee’.

I regard clause 38 as slightly ominous. It deals with the whole issue of guidance and what may or may not be in guidance, regulations and the Bill. Proposed new section 134A of the Transport Act 2000 states:

“The appropriate national authority may issue guidance concerning the performance by local transport authorities of their functions under this Part in relation to quality contracts schemes”.

Inevitably, it goes on to say:

“Those authorities must have regard to any such guidance”.

This morning, the Minister has been helpful to our understanding of the Bill and its language, and I am sure that she will be helpful again now. However, I am unsure that she will be able to satisfy us why only the “appropriate national authority” will be able to issue the guidance.

I am not suggesting that every body should be allowed to issue guidance to which local authorities must have regard. That would clearly be unsustainable. However, but two bodies in addition to the “appropriate national authority” are competent and qualified enough to issue guidance: first, the senior traffic commissioner, whose functions include the registration of bus services and the overview of bus services in local areas; and, secondly, the public transport users’ committee, which is the dedicated passenger watchdog.

We should remind ourselves that the guidance is about the performance of local authorities in respect of quality contracts. As has been discussed, the stated aim of quality contracts schemes is to bring about improvements for bus users. Who better to judge whether that aim is being achieved than bus users themselves, through the organisation set up to represent them? Another stated aim of the quality contract is to ensure that other bus services will not be adversely affected. Who better to pass judgment in relation to that criterion than the traffic commissioner?

Beyond the appropriate national authority, the senior traffic commissioner and the public transport users’ committee could offer useful, appropriate and constructive advice to local authorities when carrying out their function of regulating bus services, particularly in this part of the Bill. The thrust of the amendment is to say to local authorities that there are two other bodies beyond the appropriate national authority that could help them to formulate better policies.

I hope that the Minister will accept that the senior traffic commissioner and the public transport users’ committee are experts; they are independent and qualified and they should be able to issue guidance to local authorities on this matter, which rightly falls within their remit. That would help local authorities and ultimately, help passengers by encouraging local authorities to ensure, by having regard to what they have said, that the bus services for passengers will be better. I hope the Minister will accept the amendment.

Norman Baker (Liberal Democrat, Lewes)

I have a simple question. The Minister has been telling us throughout our discussion of the Bill that we do not need to have everything written into it and we should rely on regulations or other informal means. I am struggling to understand why the clause needs to be included at all, given that the Minister or any national authority can issue guidance at any time it likes.

Ann Winterton (Conservative, Congleton)

As has been stated, the Bill confers a power on the Secretary of State and Welsh Ministers to issue statutory guidance to local authorities about quality contracts schemes. Local authorities would be obliged to have regard to such guidance. The amendment tabled by the hon. Member for Wimbledon would empower the senior traffic commissioner and the public transport users’ committee to issue such statutory guidance, as well.

The guidance is intended to assist local authorities in deciding whether a quality contracts scheme is a realistic option for their area and, if it is, how they might introduce it. The Department has produced draft guidance, which is available to the Committee and is also on the Department for Transport website. We will be issuing a revised draft for formal consultation later in the year.

As far as involving the public transport users’ committee is concerned, the hon. Gentleman will no doubt be aware that the Secretary of State announced on 8 April that we intend to widen the remit of Passenger Focus, the rail watchdog, to include functions relating to local bus and scheduled coach services in England. That followed public consultation on how to deliver strengthened bus passenger representation. Subject to working up the details of conferring these official functions on Passenger Focus and further consultation, that means that the powers to establish a public transport users’ committee for England would not be taken up immediately. Retaining the powers in the Bill, however, gives us the flexibility to establish such a multi-modal committee in the future.

As I have said, we have already issued draft guidance and will revise it later in the year. Waiting for the bus component of Passenger Focus to be established so that it could help to write the guidance would delay the process of making guidance available to local authorities. Passengers might be best served by their passenger representative groups offering comments on individual quality contracts schemes when consulted.

Stephen Hammond (Conservative, Wimbledon)

I hear the Minister’s point about the potential delay, but surely that can be covered by issuing additional guidance?

Ann Winterton (Conservative, Congleton)

Would that be different to the original guidance that has already been published? If we wanted to publish some guidance fairly quickly to be able to assist local authorities that wished to take up quality contracts, we would not like to then delay further. I will deal with the matter of consultation later.

It is not clear why the hon. Gentleman thinks that the relevant national authority—the Secretary of State in England and the Welsh Ministers in Wales—is not best placed to develop statutory guidance. The purpose of the guidance is to provide authorities with an overview of the legislation and to assist them in the development of schemes to ensure that they can work up realistic and well structured proposals where that is the right thing for their area.

To answer the question put by the hon. Member for Lewes, the reason that this provision appears in the Bill is that the guidance is statutory guidance. Local authorities will be obliged to have regard to it, which gives the guidance more weight. In any appeal against a scheme, the local authority’s actions and decisions will be considered in the light of the guidance. That is why it is included in the Bill in this way.

The traffic commissioners and the passenger representative body will look at quality contracts from a particular perspective. The traffic commissioners will have a major role in the approvals board for schemes, and a separate power is introduced in the Bill for the Secretary of State to issue guidance to that board. One of the strengths of the approvals board structure is that it provides an independent and impartial assessment of proposals to make a quality contracts scheme. As I have said before, we believe that it is important to preserve that independent role; we do not want it to be compromised by the senior traffic commissioner having the power to issue statutory guidance to local authorities. That is why we believe that the best method of issuing guidance is to have it prepared by the Secretary of State and the Welsh Ministers.

We also have concerns about statutory guidance potentially emanating from three different sources: the relevant national authority—the Secretary of State or Welsh Ministers—the senior traffic commissioner and the passenger representative body. We think that that would be rather confusing for authorities, especially if they were expected to have regard to guidance that sought to represent the stance of very different bodies.

That said, we will, of course, consult the traffic commissioners and passenger groups on the guidance and will continue to seek their views, particularly those of the traffic commissioners as they gain approvals board experience. I hope that that explains why we have taken our stance and that the hon. Member for Wimbledon will consider withdrawing the amendment.

Stephen Hammond (Conservative, Wimbledon)

I listened very carefully to the Minister. I am not entirely satisfied with the explanation or the rationale behind the senior traffic commissioner not being involved in issuing guidance. I take the point that there may be some confusion, but I still think that that gentleman has a role to play. None the less, I wish to go back and have another look at this. I give notice to the Minister that I might raise this matter again on Report. I beg to ask leave to withdraw the amendment.

Clause 39

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 224, in clause 39, page 35, line 22, leave out from first ‘is’ to end.

Let me say at the outset that this is a probing amendment and I think that the Minister will see fairly quickly where my argument is going. The clause is important because one of the great concerns about quality contracts is to ensure that staff will be treated fairly during and after the crossover period to the provision of services under a quality contract. The Minister knows that the clause provides that such a change shall be treated as a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006.

The clause has evolved during the Bill’s pre-legislative scrutiny and during its passage through the other place. The Lords had a very interesting debate on the matter, and the Minister will remember that the Government tabled amendments both on Report and on Third Reading in the other place.

As I understand it, one of the main issues arising from the original wording of the clause was that protection might only be available to employees taken on by a new employer that had won a quality contract. It would not provide protection for those in existing schemes and existing services transferred to a new operator. I think that amendment was moved by Lord Bassam, and it was right and proper.

On Report, it was also proposed that the incumbent operator be required to provide information to the local traffic authority about its current work force, which could be used as a basis for tendering. The successful tenderer would be obliged to employ that work force, provided they were willing or it was looking for new employees. I do not see anything wrong with that either.

Third Reading added a further element, which was to make it an offence for an operator to provide information that is false or misleading in a material way, if the person providing the information knows that it is false or is reckless as to whether it is. Again, I have no problem with the intent of that Government amendment. It makes sure that there is adequate protection.

What I am trying to find out through amendment No. 224 was not answered by Lord Bassam in another place on behalf of the Government, and I hope the Minister will be able to answer. It relates to the word “reckless”. In addition to providing false information, an operator will be breaking the law if it is “reckless” about whether that information is false. Will the Minister clarify the precise meaning of “reckless” with reference to this behaviour, how the definition of “reckless” behaviour will be set out in guidance, and who will set out that guidance? It was on that point, when asked directly, that her colleague in another place could not answer.

Ann Winterton (Conservative, Congleton)

I understand the hon. Gentleman’s questions and I hope I can be of some help. I will set out a little of the background and purpose of the requirement in subsection (5)(c).

In normal circumstances, when a local authority is providing a public service that is to be contracted out, it would, as part of the tender process, provide anonymised details of the members of staff who would be likely to be available for transfer to the contract on TUPE terms. Similarly, if a contract is re-tendered, the outgoing contractor can be obliged, as a contractual duty, to provide this information for the benefit of any other employer that wins the new contract. Without information of that sort, it would be very difficult for a new company to make a realistic bid for the work, as an important cost element would be missing from the calculation.

However, where a commercial bus service falls to be replaced by a contracted service, the existing operator would not be under any form of contract with the local authority that could oblige him to provide the information. Our TUPE provision therefore includes a regulation-making power under which operators could be placed under a statutory obligation to do so.

If all the operators in an area are keen to bid for contracts, and recognise that they could be winners as easily as losers, it is likely to be in their interest to provide the local authority with accurate information about staffing, but in some cases, that will not be so. An operator that has little prospect of winning a contract, does not intend to put in a bid, or is even so opposed to the whole idea of the scheme that he would like to cause mischief, may have no incentive to provide correct, complete and accurate information, and might not bother to check the facts and assumptions. It is also possible that an incumbent might provide deliberately false information to mislead competitors into bidding higher than necessary, either with the prospect of undercutting them, which would obviously be fraudulent, or simply with the hope of wrecking the scheme by making it unaffordable. The offence could therefore cover a wide variety of behaviours, from mere carelessness to deliberate attempts to deceive. It would be for the courts to determine the severity of the behaviour and the appropriate penalty, if any, on a case-by-base basis.

If a court is satisfied that an operator simply made an innocent mistake, it might decide not to impose any penalty at all. However, there could be instances where it is clear that an operator has not correctly represented the facts available to him, but it is difficult or impossible to prove a deliberate intention to deceive. That is where the question of recklessness becomes important, for if it were necessary to prove knowing deception beyond reasonable doubt, many negligent or irresponsible operators would go unpunished.

As with all criminal offences, the purpose is to deter rather than to punish. A responsible or prudent operator, weighing up all the odds, is not likely to behave in such a manner that could lead to a criminal prosecution, but if there were no obvious remedy in criminal law, the temptation to cheat might well be too great. I hope that explains that explains the thinking behind the term “recklessness” and that the hon. Gentleman will withdraw his amendment.

Stephen Hammond (Conservative, Wimbledon)

I want to probe the Minister a little more, because it seems to me that all the circumstances she described were covered by the fact that it is an offence for an operator to provide such information that is

“false or misleading in a material particular”.

I understand entirely what she is trying to cover, but it is already covered by that provision. What she is saying is that in this situation, recklessness—the test of which we have discussed under previous Bills—is a lower test of deception. Is that what she is saying to us?

Ann Winterton (Conservative, Congleton)

It is a failure to take due care to provide accurate information. That is the difference between a deliberate intention to mislead and not taking due care to provide accurate information.

Stephen Hammond (Conservative, Wimbledon)

The problem with what the Minister is saying is that someone could be reckless without any intention to mislead. The Minister has spoken about an intention to mislead, and that is already covered. I am still not clear that reckless is anything other than a lower test that might catch a number of people who may have provided false information, but did not necessarily intend to do so and had no intention to deceive.

I hope that the Minister will ensure that in any guidance she produces she gives a very tight legal definition to the word “reckless,” because I think that the provision is open to an extraordinary number of misinterpretations. I am glad we have had the chance to explore it today; I hope the Minister will take on board my concerns about the meaning of “reckless” and that she will consider tightening the definition to avoid unintended consequences. For now, I beg to ask leave to withdraw the amendment.

Ann Winterton (Conservative, Congleton)

With this it will be convenient to consider new clause 8—Quality contracts: application of TUPE—

‘(1) After section 134A of the TA 2000 insert—

“134B Quality contracts: application of TUPE

(1) Where subsection (2) applies, the cessation of the provision of local services to which a quality contract relates by one person and the commencement of the provision of those services by another (“the new operator”) shall be treated for all purposes as a relevant transfer within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (whether or not those Regulations would apply apart from this section).

(2) This subsection applies where, immediately before the date of the making of a quality contract, one or more persons were employed by a person other than the new operator in the provision of local services in the area to which the relevant quality contracts scheme relates (“the old operator”).

(3) The date on which the relevant transfer shall be deemed to take effect is the day on which the quality contracts scheme is made.

134C Quality contracts: compliance with guidance

(1) Where section 134B(2) applies, a local transport authority, in making a quality contract scheme—

(a) must deal with matters affecting the terms and conditions of employment of the employees of the old operator as at the date of the relevant transfer, or the arrangements for their pensions, in accordance with any directions given to it by the appropriate person;

(b) shall comply with guidance issued to it by the appropriate person on matters relating to the terms and conditions, or arrangements for their pensions, of the employees of the old operator as at the date of the relevant transfer;

(c) must provide for the involvement of recognised trade unions in the tender preparations and the evaluation process in accordance with any guidance issued by the appropriate person;

(d) shall comply with guidance issued to it by the appropriate person on matters that must be taken into consideration in the award of a quality contract, which shall include any earlier failure to comply with the safeguards provided for employees under these provisions, including those contained in the Transfer of Undertakings (Protection of Employment) Regulations 2006.

(2) In subsection (1), references to employees of the old operator are references to persons to whom section 134B(2) relates.

(3) The date of the relevant transfer referred to in subsection (1) shall be determined in accordance with section 134B(3).

(4) The “appropriate person” shall be the Secretary of State.

134D Quality contracts: pensions

(1) The appropriate person shall exercise his power to give directions under section 134C(1) so as to secure that where a local transport authority concludes a quality contract with the new operator, it does so on terms—

(a) that provide for any employee working on services governed by a quality contract to be eligible to join the Local Government Pension Scheme;

(b) that, for those employees who are not members of the Local Government Pension Scheme, otherwise require the new operator to secure pension protection for each transferring employee;

(c) that, so far as relating to the securing of pension protection for a transferring employee, are enforceable by the employee.

(2) For the purpose of subsection (1)—

(a) “transferring employee” means an employee whose contract of employment becomes, by virtue of section 134B(1), a contract of employment with the new operator.

(b) “pension protection” is secured for a transferring employee if after that change in his employer he has, as an employee of his new employer, rights to acquire pension benefits and those rights—

(i) are the same as, or

(ii) under the directions count as being broadly comparable to or better than,

those that he had as an employee of the old operator.

(3) The appropriate person shall exercise his power to give directions under section 134C(1) so as to secure that where—

(a) a quality contract between a local transport authority and an operator (“the incumbent operator”) governs the provision of services by an operator;

(b) the local transport authority concludes a subsequent quality contract under a quality contract scheme with an operator (“the subsequent operator”) other than the incumbent operator; and

(c) the application of the TUPE Regulations results in one or more employees (“transferring employees”) of the incumbent operator becoming employed by the subsequent operator in relation to its operation of the subsequent quality contract;

the local transport authority concludes the quality contract with the subsequent operator on terms satisfying the requirements of subsection (4).

(4) Those requirements are that the terms—

(a) provide for any employee working on services governed by a quality contract to be eligible to join the Local Government Pension Scheme;

(b) require the subsequent operator to secure pension protection for each transferring employee;

(c) that, so far as relating to the securing of pension protection for a transferring employee, are enforceable by the employee.

(5) For the purposes of subsection (4) “pension protection” is secured for a transferring employee if after that change in his employer he has, as an employee of his new employer, rights to acquire pension benefits and those rights—

(a) are the same as, or

(b) under the directions count as being broadly comparable to or better than, those that he had as an employee of the old operator.

134E Quality contracts: consultation

(1) The appropriate person shall exercise his power to give directions under section 134C(1) so as to secure that where a local transport authority is seeking to introduce a quality contract scheme or to introduce a quality contract with a new operator, it will, at the earliest opportunity, consult with recognised trade unions as to the tender preparation and evaluation process.

(2) The appropriate person shall, in further exercise of his power to give directions under section 134C(1), provide guidance to local transport authorities contemplating the award of a quality contract with a new operator as to the matters that shall be taken into consideration, which shall include any earlier failure to comply with the safeguards provided for employees under these provisions.”’.

Graham Stringer (Labour, Manchester, Blackley)

To refer back to the previous debate, a wide variety of bus operators operate in the private sector in this country; some of them have the greatest integrity and provide a good service, and some of them are cowboys. It is as well to be prepared for reckless intentional and unintentional behaviour, given the statements of Brian Souter, who said that he would withdraw all services if he lost a contract, leaving the people of South Yorkshire without service. That is the real world in which we operate.

New clause 8 deals with how TUPE could apply. In one sense, TUPE normally applies to a business or occupation—grass cutting, or whatever—which continues, and the employees are protected doing a similar job with a new company. That could happen in the bus industry. If a bus operator—not Stagecoach, but some operator with integrity—applied for a quality contract, lost it, and carried on its operations until a transfer of undertakings, its employees could transfer to a new bus company if there was an exact match between the previous scheme and the new scheme.

I suspect that that situation will be rare indeed, and that two things will happen. There will be people such as Brian Souter, who take their bat and ball home, damaging the service. Protection is needed for employees in that situation. There will also be confusion, which I suspect will apply in all metropolitan areas where a small number of bus companies and one or two large bus companies operate across boundaries. The purpose of the new clause is to protect employees who operate services in such areas by allowing them to transfer to the new operator—the winner of the contract. It also provides that if such people are contracted to provide public services, they should be able to join and have the benefit of the local government pension scheme.

Ian Stewart (Labour, Eccles)

First, I declare that I am a member of the union Unite. I spent 20 years as a regional officer for one of the unions that merged into Unite, the Transport and General Workers Union.

Trade unions are needed to protect vulnerable workers. Workers and their families are vulnerable in times of redundancy and uncertainty. New clause 8 would provide protection for bus workers, security of employment and pensions for bus workers employed in an area that becomes subject to a quality contract. Proposed new sections 134B, C and D of the Transport Act 2000 are intended to strengthen the application of TUPE and allow trade union involvement in the quality contract process. Proposed new section 134B would protect the pensions of bus workers who transfer to a quality contract.

There are three hurdles that local and transport authorities must cross before a quality contract is made. Quality contracts will give specified areas such as routes, timetables and fares to local authorities. That power would be welcomed by my constituents in Pendlebury, Swinton, Eccles, Irlam and Cadishead, and by people throughout the country. Once the three hurdles—consultation to determine whether people want a quality contract for their area, approval from traffic commissioners and, should an operator not agree about the contract, an appeal to the traffic commissioners—are cleared, an operator under a quality contract effectively becomes a monopoly provider. Although that type of regulation of bus services will result in greater control over the services than is possible under complete deregulation, which is the system outside London, important employment matters need to be dealt with. That is the purpose of new clause 8.

One clear benefit of quality contracts is that once one is in place there will be stability of bus service provision and—I hope—of employment. The difficulty, which the Bill has not yet adequately addressed, is in ensuring stability of service and employment during the transition to quality contracts. Unless protections are forthcoming, the process of introducing quality contracts has the potential to result in significant redundancies among bus workers, as my hon. Friend the Member for Manchester, Blackley mentioned. That is surely not what the Government intend to result from what is clearly a good-news measure. Fortunately, the Government will, I hope, table their own amendments either in Committee or on Report.

The potential threat to jobs stems from the fact that there is no legislation providing for staff transferring from a wholly private company—any bus operator outside London, for example—to a company regulated through quality contracts. Under the current arrangements, therefore, there is nothing to stop service operator employers terminating the service on learning of the intention to introduce quality contracts. There is nothing, apart from the 56-day notice requirement, to stop such a service provider simply walking away from the service in question at any time.

The intention of proposed new section 134B is, therefore, that persons being transferred to quality contracts will come under the provisions of TUPE—the Transfer of Undertakings (Protection of Employment) Regulations 2006—whether TUPE applies or not. The proposal is that TUPE protection should apply as early as possible and should be assumed to run from the date on which the quality contract was made. The provision would give the entire protection afforded under TUPE to all cases in which the introduction of quality contracts meant the transfer of employees from one employer to another. That implies that variations to terms and conditions, and/or dismissals arising by reason of the transfer, would be void and/or rendered automatically unfair, with liability vested in the transferee. That protection would relate back to any prior changes or dismissals made by the transferor, provided that they were made by reason of the impending quality contract.

Importing the protections of TUPE would ensure that the transferee had an interest in the continued employment of the staff in question and in the protection of their terms and conditions, given that it would stand to pick up any liability for dismissals and so on relating to the quality contract.

The new clause would not only improve on the Government’s clause in relation to when TUPE should apply; it would make an important improvement with respect to which people it should apply to. Proposed new section 143B provides for TUPE to apply to one or more persons—that is, all workers involved in the operation of bus services in the area to which a quality contract scheme related would transfer to the operator who won the quality contracts bid. That would provide operators with a disincentive to run down resources, with the consequent redundancies and effects on passenger services. It would also create a level playing field for operators that tendered, because they would all understand the possible TUPE consequences. The information and consultation provisions of TUPE would apply, so those who tendered would understand where they stood and what the proper employment costs were.

The importation of TUPE might not, however, address the concern that former service operators and employers could simply terminate the service early on learning of the intention to introduce quality contracts. I would therefore like local transport authorities to have the power to act as providers of last resort in that respect. Proposed new sections 134C and 134E would mitigate such an effect by providing local authorities with a sanction and allowing them to take such behaviour into account when awarding future quality contracts. Similar practices are provided for in other local government contracts, such as the code of practice on work force matters in local authority service contracts.

The new clause provides further protection for the work force by allowing for consultation with trade unions, and for trade union involvement in the tendering preparations and the evaluation process in accordance with any guidance issued. That would allow, at an early stage, the employment implications of introducing quality contracts to be fully factored into the preparation of invitations to tender and into consideration of whether bids would adversely impact on employment.

I turn to the serious issue of pensions. The new clause highlights the aspiration of trade unions and workers that bus workers who transfer to quality contracts should be eligible to become members of the local government pension scheme by virtue of the fact that they will be employed under a local government contract. That would not only provide them with obvious benefits, but tackle one of the biggest challenges facing the bus industry—high staff turnover and poor recruitment and retention. All the evidence has shown that a secure and fair pension secures stability in employment.

Furthermore, the new clause would protect the existing pension benefits of employees who transferred to a quality contract. That is necessary because TUPE does not provide full protection for existing pension benefits. I therefore hope that the Government will amend the Bill to ensure that bus workers who transfer from the deregulated market to a quality contract have their pensions protected. As the Conservative Front-Bench spokesman, the hon. Member for Wimbledon, said, the proposal received cross-party support during the Lords debate. The Government have also given a commitment to give serious consideration to providing such protection.

Pension rights and benefits are not protected by TUPE. Occupational pension schemes are not transferred by reason of a relevant transfer. Sections 257 and 258 of the Pensions Act 2004 require that where there is a relevant transfer within the meaning of TUPE, a transferee must offer a transferring employee the opportunity to participate in an occupational pension scheme following the transfer if they were eligible to participate in such a scheme before the transfer. The new scheme must meet a minimum statutory standard, but it need not be as favourable as the scheme provided by the transferor.

The amendments tabled by Lord Rosser in Committee in the Lords would have had a beneficial effect on protecting pension rights. When the Government responded on Report, they recognised that that was an important issue and were sensitive to the fact that pensions should be properly preserved. The need to protect existing pension benefits attracted cross-party support in the Lords.

The Government have previously introduced legislation to protect existing pension benefits in other reorganisations of the transport sector—the privatisation of British Rail and the public-private partnership for the London underground, for example. The Department for Transport and the Department for Communities and Local Government have, as I understand it, recognised that pensions protection is important not only for employees affected by quality contracts, but for companies, as it provides a level playing field.

Will the Minister table an amendment on Report to protect existing pension provision? I hope that those two issues, which can be among the most devastating parts of a family’s life—they affect not just the workers, but the whole family—will be addressed and that this good legislation, which is good news for passengers, will also be good news for workers.

Ann Winterton (Conservative, Congleton)

I am extremely grateful to my hon. Friends for their explanation of their new clause. As they said, substantial improvements were made to the Bill in another place to ensure that some of the concerns about the potential effect of quality contracts schemes on bus workers have been addressed.

In preparing those improvements, we wanted to ensure that there was the right degree of protection for workers—in particular, by ensuring that the TUPE regulations apply while also ensuring that we do not prevent quality contracts schemes from being a realistic option for local authorities. I appreciate that the period of transition to a quality contracts scheme may not be easy for local authorities to manage. There are some measures that we can take in regulations to help with that. In particular, there is already a power to change, in specific circumstances, the period of notice that an operator must give before he may stop running existing services. Increasing that notice period during the transition to a quality contracts scheme might make a substantial difference, giving local authorities more time to make plans for filling any gaps in service that might arise.

The Bill also provides a power to make regulations modifying or disapplying the usual tendering requirements that apply when a local authority wishes to enter into a subsidy contract with a bus operator. There may be scope within the constraints of EU law to make some changes that streamline the process to give authorities a better opportunity to fill short-term gaps in service provision during the transition to a quality contracts scheme.

I can assure my hon. Friends—particularly my hon. Friend the Member for Eccles—that we have had quite detailed discussions with the trade unions and with some members of Unite, and I pay tribute to the work of the all-party group in pressing those cases. The discussions with the trade unions have been fruitful and led to some of the changes that we made in the other place.

With respect to the changes to the regulations modifying or disapplying the usual tendering requirements, I would like to consult on the proposals for regulations in those areas later in the year. I can assure my hon. Friends that I will involve the trade unions in those discussions.

In relation to the application of TUPE during the transitional period, my hon. Friend the Member for Eccles expressed very strongly the points that were made during some of the discussions with the trade unions. In the light of his arguments, I am prepared to consider further whether we can move in the direction that he and my hon. Friend the Member for Manchester, Blackley seek.

Important questions were raised about the degree of pension protection that should be afforded to bus workers. Difficult issues need to be considered here, such as the potential costs to local authorities. I will have to give the matter a good deal of further thought. The Minister for Local Government has been involved in some of the discussions. He and I have written to Jack Dromey of Unite regarding the agreement that a quality contracts operator will be eligible to apply for admitted body status, but, as in other local government contracts, there will not be an automatic right to join. The decision on whether to join will rest with the operators. I have had discussions about that and they will continue.

The new clause would also ensure that trade unions were duly engaged in the process of moving towards a quality contracts scheme. It is right that trade unions should be consulted when a local authority is working up proposals to make quality contracts schemes. The obligation on local authorities to consult appropriate persons on proposed schemes is already comprehensive and includes a general requirement to consult

“such other persons as the authority or authorities think fit.”

I cannot imagine a situation in which representatives of the appropriate trade unions would not fall into those categories. I am happy to reassure my hon. Friends that that is something we will consider reinforcing in the statutory guidance.

Ian Stewart (Labour, Eccles)

Will my right hon. Friend ponder on the distinction between when a contract is made and when it is implemented? Will she also be mindful of the fact that we are keen for her to understand that we want the protections in place when the contract is made?

Ann Winterton (Conservative, Congleton)

As I said, those are all matters on which we hope to give some reassurance.

We were also asked what we will do about bus operators that fail to provide the employment protection to which employees are entitled. It has been suggested that we should specify it in the Bill that such failure should be taken into consideration when that operator bids for other quality contracts in the future. I have some sympathy with the suggestion made by my hon. Friends, who seek to ensure that operators who successfully tender for quality contracts have a good record in honouring their commitments to employees. However, I am not convinced that the matter should be dealt with in the Bill itself.

Obviously, when a local authority is considering tenders for quality contracts, it must take into account a wide range of factors, not least the reputation and standing of the operator submitting the bid. The authority must also act in accordance with procurement legislation. Where such legislation applies, it specifies the criteria on which a contracting authority either must or may reject a tender. Obviously, the appropriate procurement legislation is the right place for such restrictions. I think it would wrong for us to apply different restrictions in the Bill.

That said, I am prepared to consider whether it would be appropriate to include references on that point in the next draft of the quality contracts scheme guidance. I am certainly happy to explore that further.

I hope that I have indicated a number of steps that we might be able to take in future regulations to help to manage the period of transition to a future quality contracts scheme. I will very carefully consider the points made about the application of TUPE during the transitional period and the need to secure a fair degree of pension protection. While I cannot guarantee it, I am happy to see whether there is anything that we need to bring back on Report with regard to this and also to look at regulations and guidance in relation to some of the other points that have been made. I hope that, with those reassurances, my hon. Friends feel able not to press their new clause.

Clause 41

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 231, in clause 41, page 36, line 13, at end insert—

‘(c) agreements between two or more local bus operators relating to bus services.’.

A large number of bus services up and down the country are being revised as a result of voluntary partnership agreements between a bus operator and the local authority. These are not statutory quality partnerships yet; they are not affected by those. As I have said many times, voluntary partnerships are the best way to move forward. We have seen a number of excellently performing bus services. Any provision that encouraged such partnerships would have the support of my party. For that reason, I welcome clause 41, as did my hon. Friend the Member for Chipping Barnet (Mrs. Villiers) on Second Reading.

Clause 41 addresses the scenario in which bus operators and local authorities want to form a voluntary agreement for the benefit of the travelling public but are constrained by competition law, going through some of the competition tests. While I understand and appreciate that there has been a huge amount of relatively extensive consultation on this matter, there are one or two things on which I wish to probe the Minister.

Schedule 2, which we will discuss later, introduces the new competition test. Any agreements that are subject to that competition test will become an exemption from the relevant elements of competition law. The purpose of the amendment is to explore further the issue that was raised in another place. Lord Berkeley tabled an amendment that would have extended the scope of the competition test such that it applied to agreements between two operators. In other words, it would have allowed two operators to have an agreement without being subject to some of the competition law and not have the involvement of the local authority if it were proven to be helpful to bus patronage. The gist of my amendment is not dissimilar.

There are situations in which operators might wish to enter into agreements relating to bus services that would definitely benefit bus passengers. An obvious example might be timetable co-ordination. If two operators were discussing something that could clearly be of benefit to passengers, that should not be hindered by competition law.

The clause was amended in another place by means of a Government amendment. That represented some progress. What I am unsure about is whether that amendment covers an agreement of the sort that I have mentioned. Schedule 10 of the Transport Act 2000, as amended by the Bill, sets out the competition test and its application to voluntary partnerships and other agreements. I would like to know whether the Government amendment covers two operators discussing something—particularly timetable co-ordination—that would be to the benefit of bus passengers.

Ann Winterton (Conservative, Congleton)

The amendment would extend further the new competition test that will apply only to voluntary partnership agreements and certain agreements between bus operators. Through the changes that we are making to the competition test, we have tried, for example, to allow two operators to agree to co-ordinate their timetables to provide even patterns or services that connect with each other. That was in response to representations received from local authorities and bus operators about obstacles in the way of them working in partnership, through voluntary partnership agreements, and agreeing with local authorities on improvements, in the best interests of passengers.

When the Bill was introduced in another place, the new competition test applied only to agreements between one or more bus operators and one or more local authorities. However, the Government were persuaded to extend it, so it now applies also to certain agreements between operators only, provided that the local transport authority has certified the agreement as meeting the necessary requirements, which are that the agreement is in the interest of persons using local bus services in the relevant area and does not impose unnecessary restrictions on the operators concerned. It may impose only restrictions necessary to achieve what are referred to as the “bus improvement objectives”. Those objectives are identical to those used to assess whether potentially anti-competitive measures in a quality partnership scheme may be justified.

As I said, those amendments were made in another place. I think that bus operators were pleased with the changes, as too were the Campaign for Better Transport and local authorities. Furthermore, it is right to put on the record my thanks to the Office of Fair Trading for its help in preparing the provisions. However, my problem with the amendment is that it would allow bus operators to come to an agreement without the local authority having certified that it meets the requirements that I set out. Such an agreement should not be allowed unless the local authority agreed that it would improve public transport in the area and that it was to passengers’ benefit.

I appreciate that the amendment is probing and aimed at finding out the reasons for the changes made in another place, which further extend the requirement. However, we do not believe that agreements should be made without the local authority’s endorsement and certification.

Stephen Hammond (Conservative, Wimbledon)

I am grateful to the Minister for her explanation, and I can certainly see the thrust of her argument. I shall consider what she said, particularly on local authority certification. I beg to ask leave to withdraw the amendment.

Norman Baker (Liberal Democrat, Lewes)

I beg to move amendment No. 258, in clause 41, page 36, line 20, after ‘area’, insert

“including actions to ease congestion on a highway network.”.

Good afternoon to you, Mr. Taylor. I am happy to move the amendment. Before the break, we heard about the enthusiasm for voluntary partnerships, which I am happy to tell the hon. Member for Wimbledon I share. They are indeed a useful way forward. If they can be made to work, they are preferable to quality contracts—although they too have a role. The amendment would make them as attractive as possible by making it explicitly clear that a voluntary partnership arrangement can cover

“actions to ease congestion on a highway network”.

The amendment would write that definition of a voluntary partnership agreement into clause 41(2). The Minister might say that such matters can certainly be taken into account by a voluntary partnership agreement. If she says that, I shall be happy to withdraw the amendment in due course. However, it is important to put on the record that a voluntary partnership agreement should cover such matters, not least because there is reluctance among some local highway or transport authorities to recognise that they too have a role to play in delivering better bus services. It is not simply a question of encouraging bus companies to put on more or better buses. If there is a problem with the highway network, it can lead to congestion and delays, which in turn is a significant disincentive for people who wish to travel by bus.

An example in my constituency is Brighton and Hove Bus and Coach Company, which has been successful with a voluntary agreement with the local councils. It has put on extra buses through Lewes to Ringmer and almost as far Tunbridge Wells, and to Brighton in the other direction. That has been successful, but there is a major problem with the junction at Earwig Corner, which is out of Lewes on the way to Ringmer. There has been complete inaction from the local county council in dealing with the junction, and the consequence has been a knock-on effect on punctuality all along the network from Brighton to Tunbridge Wells. Bus passengers all along that route are being severely disadvantaged. A voluntary partnership in that area, and more generally, ought to pick up such problems. That should be a key part of dealing with any agreement between bus companies and local councils. I would welcome the Minister telling me whether that is the case. In parenthesis, if she can put any pressure on East Sussex county council to sort out that junction, it would be even more welcome.

Rosie Winterton (Labour, Doncaster Central)

Welcome back to the chair, Mr. Taylor.

As the hon. Member for Lewes has noted, the definition of a voluntary partnership agreement requires the local authority to undertake to provide facilities that might include bus lanes, new bus shelters and so on, or do anything else for the purpose of bringing benefits to bus passengers. We have deliberately cast that definition quite widely because of comments that we received during the consultation process from the Passenger Transport Executive Group and others.

Obviously, it seems likely that if a local authority agrees to take action to help address traffic congestion, it should deliver benefits to bus passengers in the form of reduced and more predictable journey times. As long as passengers are expected to benefit in that way, the existing definition of a voluntary partnership agreement in the Bill already delivers the effect that the hon. Gentleman’s amendment would have. I understand the point that he is making, but I think the matter is covered in the Bill. I hope that provides the reassurance that he is seeking and enables him to withdraw his amendment.

Norman Baker (Liberal Democrat, Lewes)

I am grateful to the Minister for confirming that those sorts of measure are included in the wider definition. I thought that they probably were, but it was useful to check. Accordingly, I beg to ask leave to withdraw the amendment.

Stephen Hammond (Conservative, Wimbledon)

Good afternoon, Mr. Taylor. I want to register some other issues about competition and to get some comments from the Minister.

As the Minister said earlier, the Government are working closely on this part of the Bill with the Campaign for Better Transport and she has rightly acknowledged the input of that organisation. I would like to raise an issue that has not been tackled and which concerns the organisation—that the changes made by the clause and by schedule 2 affect the way in which agreements between operators and local authorities are deemed to be in the public interest or not. In effect, they allow competition law to be relaxed so that bus companies can discuss how best to work in partnership.

What has not yet been discussed is how that competition law might relate to the integration of other modes of transport. Although bus companies compete with one another, they also compete with other modes of transport, most commonly the car and the tram.

What can the Minister tell us about how the market might be defined? For example, a merger between two bus companies to create a dominant operator in a given area could be seen as anti-competitive if looking at the bus market alone and it might fall foul of competition law while actually enhancing bus patronage. If the product of the merger were to improve the attractiveness of buses overall, there might be a switch from car to bus, something I am sure the Minister would seek to encourage. In what circumstances might she be prepared to look again at how we might define the market? What consultation has the Office of Fair Trading had with the Department about the bigger picture? Buses do not just compete with themselves, they compete with other modes of transport as well.

Norman Baker (Liberal Democrat, Lewes)

That is an interesting contribution from the hon. Member for Wimbledon. There is also the question of what happens when the bus competes with the train and whether that should be taken into account, particularly if the bus company and the train company are run by the same parent, which does happen. Companies such as First run buses and trains, sometimes in competition with each other. How do we deal with that situation?

Rosie Winterton (Labour, Doncaster Central)

The point is that what we are trying to achieve here is limited to the competition between bus services. We are talking about voluntary partnership agreements between local authorities and bus operators. I take the point that there might be times when it is important to take into account that a railway service might be running along the same route but we are talking about the specific situation where bus operators are allowed to run along particular routes as and when they want, if it is a commercial service. In other areas a subsidy can be given by the local authority.

We are trying to get over the fact that it has been difficult for one or more bus operators to sit down with the local authority and work out, for example, what might be appropriate in terms of the frequency of patterns of service—that is definitely between the bus operators themselves. We have discussed at other points in the Bill whether it would be a good idea, when considering overall integrated transport plans, to look at how bus services fitted in with rail services, for example. However, in this case, we are talking specifically about the issues of bus operators, because they would be talking about running along particular routes—the local authority would like to sit down with them and organise such things as the patterns of service. I take on board the comments made by the hon. Member for Wimbledon, but that would fit into another part of how the local authority or integrated transport authority would want to look at other services in its overall transport plan.

Clause 43

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 225, in clause 43, page 38, line 14, leave out subsection (5).

David Taylor (Labour, North West Leicestershire)

With this it will be convenient to discuss the following amendments: No. 226, in clause 43, page 38, line 18, leave out ‘that question’ and insert

‘whether to accept the application’.

No. 227, in clause 43, page 38, line 19, leave out ‘those representations’ and insert

‘any relevant representations made by a relevant authority or a relevant operator’.

No. 228, in clause 43, page 38, line 25, leave out subsection (7).

No. 229, in clause 43, page 38, line 28, leave out

‘If subsection (7) above does not apply,’.

No. 230, in clause 43, page 38, line 29, at end insert—

‘(za) accept the application;’.

Stephen Hammond (Conservative, Wimbledon)

I am speaking to a series of amendments dealing with one particular theme, which we discussed when we looked at the quality partnerships part of the Bill. Local authorities have some powers to impose restrictions on bus services that operate in an area where a quality partnership is also in operation. Clause 43 looks at the issue from the other side—that of the prospective traffic commissioner. My amendments are motivated by a concern that some unnecessary and inappropriate restrictions are being placed on traffic commissioners carrying out their functions. Under the provisions of the clause, when the traffic commissioner receives an application for a registration in an area where a quality partnership is in operation, he must first give notice to the authority and the operator or operators party to the new quality contracts scheme. The authority or the operator may make representations to the traffic commissioner, which he must consider in making his decision.

I am trying to see why that provision is necessary. When traffic commissioners decide whether to accept the registration applications made by the operators, they already take into account all local circumstances that might be affected by such a registration. The traffic commissioner will know about the quality partnership in the area, and will bear in mind the impact that he believes additional registrations would have. I am not clear why he needs to be placed under the obligation to take into account additional representations. It seems to me that an element of the clause is telling the traffic commissioner how to do his job, which is neither necessary nor appropriate.

Rosie Winterton (Labour, Doncaster Central)

The clause will give traffic commissioners powers to determine whether applications to register new services, or to modify or withdraw existing ones, would be detrimental to a quality partnership scheme. That is linked to measures in clause 13, which would allow a local transport authority to include registration restrictions in a scheme. When making such decisions, the traffic commissioner must apply the registration criteria contained in the scheme. The clause sets out the procedure to be followed when an application to which such restrictions apply is received. If the traffic commissioner decides that an application would be detrimental to the quality partnership scheme, he may turn it down, he may require the applicant to amend it or he may require them to undertake that they would provide services to the standards specified in the scheme. The clause also provides a right of appeal to the Transport Tribunal against decisions of the traffic commissioner.

We included the provisions in response to concerns that a successful quality partnership scheme could be undermined by disruptive competition—by competitors not prepared to meet the standards specified in the scheme. The purpose is to protect operators and authorities that might have made significant investment in facilities or standards of service. The provisions also provide protection for the passengers who benefit from the improvements in service that a scheme should bring.

The amendment would prevent the traffic commissioner from making an assessment as to whether a registration application would be detrimental to services provided under a quality partnership scheme. He would instead be limited to basing his decision on the registration criteria and the representations and evidence put before him. He would obviously have to consider representations from operators and authorities as part of the decision-making process. Indeed, if no such representations are made, the legislation stipulates that he must accept the application.

We believe that the changes are necessary. It is important that the traffic commissioner should be able to make such assessments, as that will ensure that quality partnership schemes cannot be undermined in the ways that I outlined earlier. We included the provision for registration restrictions to help prevent destabilising competition—it is often seen in so-called bus wars—which can affect operators that have invested in quality partnership schemes and the passengers who need the services. We believe that limiting the assessment strictly to the relevant representations with authorities and operators would diminish the commissioner’s ability to make an informed decision. That is why I urge the hon. Member for Wimbledon to withdraw the amendment.

Stephen Hammond (Conservative, Wimbledon)

I listened carefully to the Minister, and I am reassured by her words. I beg to ask leave to withdraw the amendment.

Clause 44

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 239, in clause 44, page 40, line 20, leave out subsection (3).

David Taylor (Labour, North West Leicestershire)

With this it will be convenient to discuss the following amendments No. 240, in clause 44, page 40, line 23, at end insert

‘and the appropriate approval authority’.

No. 241, in clause 44, page 40, line 24, leave out subsections (5) and (6) and insert—

‘(5) The traffic commissioner shall decide whether to accept or reject the application.’.

Stephen Hammond (Conservative, Wimbledon)

Under the Transport Act 2000, operators are prohibited from registering additional services in an area where there is a quality contract scheme in operation, subject to certain qualifications. Clause 44 re-examines the issue and makes some modifications to the rules that govern the registration of services in areas where a quality contract scheme is operational.

My belief that the clause requires some change stems from a number of concerns. That will be no surprise to the Committee. First, is it right to restrict free competition, let alone in an area with a quality contract? Should other operators not be able to run services alongside the quality contract if they see a demand? Last week, the Minister put it on record that if a service was not detrimental to the quality contract she would regard it as acceptable. The services provided under a quality contract may or may not suffice in providing the services that locals require. It is possible that the network of services could be improved.

Secondly—I return to my fear that the traffic commissioners will end up being micro-managed—the provisions of the Bill and of previous legislation are designed to ensure that traffic commissioners are given certain functions and that they have the appropriate proficiency, resources and independence to carry out those functions. Beyond that, it should not be necessary to interfere in their work. One of the most important functions of traffic commissioners is the registration of buses. They receive the registration application and, having weighed all the pros and cons, they have to decide whether to accept or reject it. Under the clause, they will be told who to consult and how to reach that decision, but that calls into question the very independence of the traffic commissioner.

The clause removes from the traffic commissioner the function of accepting registrations It does so by placing an obligation on the traffic commissioner to invite representations from the relevant local authority. If he receives a clearance certificate, he has no choice but to accept the application. If he does not receive a clearance certificate he has no choice but to reject the application. All he is at that point is a thoroughly pointless middleman who does nothing but pass the application on to the local authority to be approved, or not. I am not sure that that was what the Government intended the traffic commissioner to do at that point. One wonders why he becomes just a pointless middleman.

My amendment would work in two ways. First, it would put an obligation on the traffic commissioner to consult not only the local authority running the quality contract scheme but the approvals board that approved it. That is important, as the board will consist of independent, qualified individuals with an intimate knowledge of the arrangements of the quality contract scheme and its impact on the registration of additional services. Secondly, the amendment would remove from the clause the subsections that require the traffic commissioner to comply with the issuance or non-issuance of a clearance certificate. A traffic commissioner should not need to be told by anyone how to do his job. His job is to decide on the registration of bus services, but the clause takes that away.

Rosie Winterton (Labour, Doncaster Central)

As the hon. Gentleman said, the amendments would place decisions as to whether additional services could be operated in an area covered by a quality contracts scheme with the traffic commissioner, rather than the local authority that made the scheme. Perhaps I could briefly explain the purpose behind the clause. It provides an exception to the general rule that in an area where a quality contracts scheme is in place, all services must be provided under quality contracts. That means that no other services can be registered with the traffic commissioner to operate in the area. There is already a power for the authority to exclude certain services or types of service from the scheme, and they may be registered with the traffic commissioner in the usual way. For example, long-distance services with only one or two stops in the scheme area might be excluded, or services for a niche market such as tour buses or works buses.

A need or demand may arise, however, during the lifetime of a scheme for services that were not anticipated when the scheme was developed, and which might be advantageous, or further niche services might be identified that would not particularly affect the viability of the scheme one way or another. It would be very unsatisfactory if there were no way of allowing those services to be provided other than by formally amending the scheme. The clause would give the local transport authority the discretion to allow operators to run additional services that were not detrimental to the scheme, and those services would be registered with the traffic commissioner in the normal way.

In normal circumstances, traffic commissioners do not have the power to reject applications to register, provided the operator is licensed. It is right that the local transport authority that made the scheme in the first place should decide whether a proposed new service is compatible with the quality contracts scheme. The amendments would take that function away from the local authority and give it to the traffic commissioner. He would apparently have total discretion as to what to allow and what to reject. Although the local transport authority would be consulted, the decision would be entirely out of its hands. That would make it possible, for example, for an operator to register a service that would compete with one provided under a quality contract, possibly undermining the financial basis of the contract.

The aim of providing flexibility is to allow the local authority to say that it accepts that a particular service will not undermine the quality contracts scheme, and that it is happy for it to go ahead and for it to be registered with the traffic commissioner. We believe that the local authority that made the scheme should have the discretion to do so, and we do not believe that the decision should be handed over to the traffic commissioner. I hope that that explanation is useful and that the hon. Member for Wimbledon will withdraw his amendment.

Stephen Hammond (Conservative, Wimbledon)

That was helpful in some ways, but not entirely. I was trying to explore why the traffic commissioner becomes just a middleman at this point. What is his function if he simply passes round pieces of paper? It is right that the local authority should be consulted, but ultimately the traffic commissioner should have the chance to look at the application.

Rosie Winterton (Labour, Doncaster Central)

It would just mean that a service would be registered with the traffic commissioner in the normal way. As I have said, in normal circumstances, if an operator is licensed, it simply registers with the traffic commissioner. The point is that that would happen during a quality contracts scheme. In normal circumstances, it would not be allowed to register, but if the local authority agrees that it can do so, it would register in the normal way.

Stephen Hammond (Conservative, Wimbledon)

Again, I was listening carefully to the Minister, and I am somewhat reassured by what she said, although I might like to test this point again on Report, if given the opportunity. I beg to ask leave to withdraw the amendment.

Clause 45

Greg Knight (Conservative, East Yorkshire)

For the benefit of the Committee, will the Minister put this clause into context and tell us what eventuality will be covered by it that escapes the scope of current legislation? Will the clause be used to deal with transient problems or only where there is a persistent and permanent problem or an anticipated persistent and permanent problem?

Rosie Winterton (Labour, Doncaster Central)

The clause will extend the circumstances in which a traffic authority may ask the traffic commissioner to impose traffic regulation conditions on bus operators to include situations in which the authority foresees a likely traffic problem. Under current legislation, a traffic commissioner can impose traffic regulation conditions on operators of local bus services following a request by the traffic authority in response to a traffic problem in a particular area. Traffic regulation conditions may be imposed only to prevent danger to road users, to reduce severe traffic congestion or to reduce or limit noise or air pollution. The conditions are attached to the public service vehicle operator’s licence of the bus operators providing services in the area where the conditions apply. For example, they may prevent certain operators from using certain routes, or stipulate that operators may stop at certain places for no longer than a given time. They may also restrict the use of noisy tourist commentaries or specify minimum emissions standards.

In response to consultation on the draft Bill, a number of people told us that the problem with those provisions was that they could be used only where a problem had already arisen, resulting in a delay before the conditions could be imposed, during which time serious problems might arise, such as severe congestion and danger to road users arising from so-called bus wars. We appreciate that difficulty, so provisions in this clause mean that a traffic authority can make a request to the traffic commissioner for traffic regulation conditions to be imposed in anticipation of a problem, rather than after it has arisen, which will help traffic authorities to be proactive in dealing with potential problems. I believe that that will help reduce congestion and provide a quicker, safer and more reliable service for passengers. I hope that the Committee will support clause 45.

Greg Knight (Conservative, East Yorkshire)

I thank the Minister, who has answered most of my concerns, except the point I made when I caught your eye, Mr. Taylor. Will the provision be used to deal with transient problems? For example, the borough of Sandwell has an annual transport weekend on which it takes over a large field and has a display of vehicles going through the town centre. Will the provision be used to deal with such occasions, which perhaps occur only once a year, but when they do are massive, change the pattern of congestion in a town or city and clearly need to be addressed?

Rosie Winterton (Labour, Doncaster Central)

The point is that they could be either. However, if the problem were transient, we would expect the traffic regulation condition to be transient as well.

Graham Stringer (Labour, Manchester, Blackley)

I am grateful to the right hon. Member for East Yorkshire for bringing this issue up under the clause stand part debate. I know that the Whips want us to bounce on very quickly, so I will not take much time. Will the Minister tell us whether the regulations, because they refer to the safety of passengers, will deal with the situation that arose in the north of Greater Manchester where the wheels kept falling off FirstGroup’s buses? This is not a joke; it was a serious danger to passengers. An inquiry found FirstGroup in Rochdale in north Greater Manchester not fit and proper to be running that route. It registered a wholly-owned subsidiary of FirstGroup to run exactly the same routes. The traffic commissioner was just applying the law. The passenger transport authority, which had instigated this inquiry, was incensed, as were the travelling public. Will that anomaly and unfairness be dealt with under this or any other section?

Rosie Winterton (Labour, Doncaster Central)

I believe that that would be an issue for existing road safety rules, which are for the traffic commissioner to enforce. For example, the traffic commissioner would be able, through a licence condition, to take action in that instance. I will take away my hon. Friend’s point and if there is different advice that I ought to be giving, I will write to members of the Committee.

Clause 47

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 242, in clause 47, page 41, line 26, leave out subsection (2).

The purpose of this probing amendment is to encourage the Minister to explain to the Committee why a bus operator should be required to pay a fee for cancelling the registration of one of its services, if that fee is beyond that which covers the administration. A fee is already payable when a service is registered under the provisions of the Transport Act 1985. The circumstances in which a fee is payable are extended by this clause so that a fee can also be incurred when a service is continued or cancelled.

I would like to be reassured by the Minister that the only purpose of charging a fee is for recovering administrative costs. If so, could she give us some indication of how she intends to give guidance on how these costs will be calculated and how the traffic commissioners are going to set these fees? Can she reassure us that they are set only at a level that covers administrative costs. I am sure that in the interests of maximum patronage, in certain areas operators must be given flexibility to respond to the demands of the travelling public. If it were a punitive fee, there would be some serious issues about what was being provided. I understand that costs must be covered, but I seek a guarantee from the Minister that the purpose of the clause is to cover administrative costs only. What guidance does she intend to give on how those administrative costs might be assessed?

Rosie Winterton (Labour, Doncaster Central)

It might help if I put it in the context of what we are trying to achieve in clause 47, which will allow the Secretary of State to update the range of fees payable by the operators of local bus services. I stress that any new fees would be set out in regulations and subject to further consultation.

The regime covering the fees paid by the operators of local buses has remained unchanged for the past 20 years. Before an operator can start running a bus service, he must register the particulars of that service with the local traffic commissioner, and a fee is payable then. If he wants to vary the details of the scheme—for example, by introducing a new timetable or changing the number of services—a further fee is payable. However, he does not have to pay a fee if he cancels the service altogether, which carries a transaction charge, or if he simply leaves it as it is.

The clause will allow the Secretary of State to make regulations to provide for fees to be payable in additional situations. For example, a fee could be charged for the cancellation of a local service. What is known as a continuation fee could also be charged—perhaps an annual fee where registration particulars are unchanged. Holders of a bus operator’s licence already pay a fee in order for their licence to continue in force. A number of right hon. and hon. Members have pointed out that we need to ensure that the traffic commissioners are properly resourced. They are at the heart of ensuring that bus operators deliver good services and will play an important role in enforcing the new punctuality regime. I stress that no decision has been taken to increase the fees burden on operators at this stage, but it is important to think ahead. That is why we have taken the powers. I hope that the hon. Member for Wimbledon will understand why we have done so and withdraw his amendment. [Interruption.]

Stephen Hammond rose—

Rosie Winterton (Labour, Doncaster Central)

You weren’t listening, were you?

Stephen Hammond (Conservative, Wimbledon)

I was listening carefully and attentively to the Minister, as ever, but I was worried that the Whips need to make progress and that the door handle might have come off. I listened carefully to what she said, and I beg to ask leave to withdraw the amendment.

Clause 50

Greg Knight (Conservative, East Yorkshire)

I have raised this matter with the Minister before. She gave me an encouraging reply, but I should like it to be placed on the record again, particularly as clause 50 relates to the carrying of passengers in wheelchairs in vehicles providing local services, and clause 51 contains supplementary provisions. I should declare an interest as chairman of the all-party historic vehicles group, but I should like the Minister again to confirm that nothing in clause 50 or clause 51 can be used to prevent historic vehicles from carrying members of the public as part of a balanced passenger transport division. That is particularly important for tourist areas where historic vehicles—some of them are not even powered by the internal combustion engine; some are steam vehicles—are still used to carry passengers. It would be an over-the-top, heavy-handed approach if they were caught by this provision.

Rosie Winterton (Labour, Doncaster Central)

As the right hon. Gentleman set out, clause 50 will apply certain duties under the Disability Discrimination Act 1995 to drivers of taxis and private hire vehicles who provide local bus services, known as taxi buses, using a wheelchair-accessible vehicle. The duties include helping a person in a wheelchair to get in and out of a taxi, carrying them in safety and comfort and not making an additional charge for doing so. The clause signals the Government’s clear commitment to delivering more accessible taxis and to making it easier for disabled passengers to use public transport. This discussion refers back to our earlier discussion in which the right hon. Gentleman mentioned historic vehicles. I can assure him that this provision will not affect that. The clauses are about duties on drivers. As I said, accessibility regulations fall under part V of the DDA and relate to vehicle standards. They would be covered in that way.

Clause 51

Norman Baker (Liberal Democrat, Lewes)

I beg to move amendment No. 259, in clause 51, page 45, line 6, leave out ‘may’ and insert ‘shall’.

This simple amendment would change the word “may” to “shall”. In my view, a licensing authority ought to maintain a list of vehicles falling within subsection (2) of proposed new section 36A of the 1995 Act if it is serious about undertaking its responsibilities under that Act. It is important that it has an up-to-date picture of which vehicles are available in its area and which are not. If it only has the option of maintaining a list, there may be areas where that information is not available.

In addition, when an authority, either a different one or the same one, is proposing, say, a quality contract scheme it is important to understand the range of vehicles that are available in an area when it draws up conditions that it wishes to see under the quality contract. However, under these provisions, it may not have that information available, which is a gap that ought to be filled. Those are the reasons why I believe that the word “may” should be changed to “shall”.

Rosie Winterton (Labour, Doncaster Central)

The amendment is to a clause that was inserted into the Bill in another place in response to a very well-argued proposal made by Baroness Chapman, who is certainly a doughty campaigner on this issue. The clause, in conjunction with clause 50, will place certain duties on the drivers of wheelchair-accessible taxi buses—that is, taxis and private hire vehicles used to provide local bus services—when carrying passengers in wheelchairs. The provisions will make it optional for local authorities to maintain a list of such wheelchair-accessible vehicles. Once such a list was in place, the duties in section 36 of the 1995 Act would apply to the drivers of taxi buses designated as wheelchair accessible. Those duties include helping a person in a wheelchair to get in and out of a taxi, carrying them in safety and comfort and not making an additional charge for doing so. Failure to observe the duties could lead to a criminal prosecution and fine.

The amendment would place an obligation on all local licensing authorities to maintain a list of vehicles being used to provide wheelchair accessible taxi buses. However, we do not think that that is either necessary or desirable. As I have said, the Bill allows local licensing authorities the option of maintaining the list if they have wheelchair accessible taxi buses that provide services in their area and they decide to designate them. That is in line with the Government’s general policy on taxis.

Local licensing authorities are normally given particular powers, but they are able to use their own discretion about whether to use them. There are about only 200 taxi buses that provide local bus services, although we hope that that figure will rise as a result of other provisions in the Bill. Only some of those taxi buses will be wheelchair accessible. Also, not all local licensing authorities will have taxi buses operating in their area, so there will be no need either to designate wheelchair accessible taxi buses or to maintain a list.

I understand the thrust of the amendment, but it would place an unnecessary burden on local authorities. I hope that I can therefore persuade the hon. Member for Lewes to withdraw the amendment.

Norman Baker (Liberal Democrat, Lewes)

I am not sure that the amendment would be an unnecessary burden on local authorities if they had to make a nil return each year, which is what the Minister implied in relation to not many local authorities having taxi buses. If there are only 200 taxi buses in the country—she accepts that the number should increase—one way to secure an increase is perhaps for local authorities to realise through the mandatory compilation of a list just how few they have in their areas and how difficult it is for those with disabilities to get around because of the absence of such vehicles.

The Minister has given me no confidence that the current system will engender an increase of the kind that she and I wish to see. She also has not taken account of the other points that I made, such as the need to be able to take a quick metaphorical photograph of how many vehicles there are in an area, for future planning purposes. However, I do not intend to go to the stake over this, so I beg to ask leave to withdraw the amendment.

Clause 52

Stephen Hammond (Conservative, Wimbledon)

I rise to ask the Minister to clarify the intention of the clause. The Transport Act 1985 enables permits to be granted to educational, religious, social, welfare and other bodies so that they do not need a public service vehicle operator licence. Is it the purpose of the clause to take that to a new level? I understand that the 1985 Act covers all possible vehicles, so does the clause mean that if a vehicle carries fewer than nine passengers no permit will be required, and that therefore an educational body that operates a vehicle with fewer than nine seats will not require a permit as per the 1985 Act?

Rosie Winterton (Labour, Doncaster Central)

Clause 53 will make amendments that are consequential to the provision in clause 52, which extends the scope of section 19 permits to cover vehicles with fewer than nine seats. Such vehicles are not what most of us would consider a bus. That will allow educational and other bodies to provide transport services for their members. Clause 52 will also strengthen the requirements on bodies to keep records to aid better enforcement.

Clause 52 extends the scope of section 19 permits to cover vehicles with fewer than nine seats. As the hon. Gentleman says, the amendment replaces “bus” with “vehicle” in the relevant legislation. The provision will ensure that those bodies can use vehicles with fewer than nine sets for educational and other transport, but because the vehicle might not be what most of us would recognise as a bus, we have changed its title from “bus” to “vehicle”.

Clause 54

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 243, in clause 54, page 47, line 33, at end insert—

‘(4A) In subsection (2)(b) after “permit”, insert “or has undertaken such training for drivers of vehicles for the purpose of community transport as the Secretary of State shall by order define.”.

(4B) In subsection (2) after paragraph (c) insert—

“(d) the driver is not employed by, nor is the vehicle owned by, an operator whose annual turnover is more than £150,000 per annum, or such higher amount as the Secretary of State may by order define.”’.

As I said on Second Reading, any proposals with the consequence of helping community transport will certainly enjoy my support, and the clause will do that by allowing larger vehicles to be used for community transport and by removing the prohibition on paying drivers of community transport vehicles.

The clause is very welcome, but not perfect. I have two major concerns, which are reflected in my proposals. The first proposal is important, because it goes to the question of safety. We want to introduce words that would ensure that community transport drivers were adequately trained. Later this year, a new certificate of professional competence will be introduced for drivers of other buses and coaches. The CPC will be issued on behalf of the Department for Transport, in accordance with the law, and will be a requirement for all professional bus drivers, in addition to a driving licence.

Rightly in my opinion, the CPC is not a requirement for drivers of community vehicles—we want to establish greater community transport. However, there is specialist community transport training available in the form of MIDAS—the minibus driver awareness scheme. Therefore, although community transport drivers do not face the higher test, the lower test would help to ensure safety. MIDAS addresses issues such as driver confidence and passenger safety and comfort. That is a useful way forward and something that the Secretary of State could define by order: community transport drivers would get the specialist training required for their vehicles, giving reassurance to those using that transport but without having to fulfil the much higher test.

Another proposal looks at what we might call the social businesses or the not-for-dividend sector. A number of community transport schemes provide an excellent service, but I am concerned at the scope for some non-professional bus operators to take advantage of a loophole in the legislation. There are a number of operators who turn over large amounts and who, potentially, would not require a licence.

I want to ensure that cowboy operations do not take advantage of the rules for community transport providers. The amendment relates to those community transport organisations, which are clearly focused on being not for dividend, although they follow some commercial strictures. For example, we all know that Ealing Community Transport provides an excellent service across the country and it decidedly could not be called a cowboy. However, unless there is a turnover test—I am not sure that I have got the turnover level right—the clause could become a loophole for cowboys to provide a service under the guise of community transport, which is a term that should describe organisations that provide transport in communities for those who have difficulty getting around or that provide a service in excess of the norm. Perhaps a number of charities and others would use it.

These proposals are important. Will the Minister give reassurance that the turnover test is not necessary? If it is not necessary, will she explain how cowboy bus operators will be prevented from using the clause? Will she also us why the lower level of driver training cannot be put in place relatively cheaply to provide some reassurance to those people who will use community transport?

Rosie Winterton (Labour, Doncaster Central)

The measure is extremely popular and it has been widely welcomed by the community transport sector for two reasons: it will allow community bus services to use larger buses and remove the restriction that prevents drivers of those services from being paid. That welcome from the community transport sector is one reason why I was surprised that Opposition Front Benchers voted against the Bill on Second Reading. We will all have received representations from our constituents who have tried to run those excellent services but have been constrained in how they can do so.

The clause relates to the section 22 permits that are available to the operators of community bus services. The services we discussed before were the section 19 aspect of community service. Section 22 permits allow a non-profit-making voluntary body that is concerned with the social and welfare needs of a community to provide local bus services for the general public. Unlike section 19 permits, they can be issued only by the traffic commissioners, who must be satisfied that the body using the permit has adequate maintenance arrangements.

As I said, operators who provide services under the permits are restricted to using vehicles that can carry between nine and 16 passengers. The clause will enable buses with more than 16 passenger seats to be used to provide community transport services under section 22 permits.

Also under current legislation, drivers of such services cannot be paid, as I said. However, many people, particularly from the community transport sector, told the Government that that places an unnecessary restriction on the provision of the services, because it is often not possible for community groups to find enough volunteer drivers to run them. The clause will remove that restriction.

Graham Stringer (Labour, Manchester, Blackley)

I hope that the answer to this question, which my right hon. Friend might send in a letter, will allow us not to have a debate on new clause 1. Will these drivers be subject to the same vetting procedures as drivers of hackney carriages and private hire vehicles? Will they have to be a fit and proper person? Preferably, they will be vetted in relation to whether they are on the sex offenders register.

Rosie Winterton (Labour, Doncaster Central)

The clause will require operators of community transport services to check that every person driving a vehicle on their behalf is not on the sex offenders register.

Stephen Hammond (Conservative, Wimbledon)

Does that include a Criminal Records Bureau check?

Rosie Winterton (Labour, Doncaster Central)

I want to address the point on the public sex offenders register, which is what I think the—

Rosie Winterton (Labour, Doncaster Central)

I refer back to the point that I made in response to my hon. Friend the Member for Manchester, Blackley, which referenced his new clause, which would require operators of community transport services to check that everybody driving a vehicle on their behalf is not registered on the sex offenders register. I want to make it clear that the Bill does not provide for that, but I emphasise the existing safeguards and checks on community transport drivers. Much of the work of community transport organisations will be done under a contract to a local authority or other public body, which can make it a condition of contract that the drivers used have all been subject to a criminal record check. Where necessary, that check can be to the enhanced level of enclosure to provide all the information to the Criminal Records Bureau.

In addition, the Government are now implementing the Safeguarding Vulnerable Groups Act 2006, which obtained Royal Assent in November 2006, and which was introduced specifically in response to recommendation 19 of the Bichard inquiry report. The Act provides the legal framework for the new independent safeguarding authority scheme. Under the SVG Act, those who exclusively transport children and/or vulnerable adults are subject to the requirements of the new scheme. The ISA’s role will be to consider all relevant information relating to the risk of harm posed by persons seeking to work with children or vulnerable adults in either a paid or voluntary capacity, and to bar those considered unsuitable for such work. The scheme will be launched in October 2009; that will allow systems to be developed and legislation laid, and it will give organisations time to prepare for the introduction of the most robust and thorough vetting and barring scheme.

I will ensure that the Home Office is aware of the concerns raised by my hon. Friend the Member for Manchester, Blackley about drivers of community transport. As I said, new clause 1 is not included in our debate, but I shall ensure that the Home Office is aware of what has been said.

As for amendment No. 243, moved by the hon. Member for Wimbledon, I can tell him that safety is obviously an important consideration in the operation of community transport. However, we have to consider whether there is a problem and if so whether what he proposes is the right solution. Section 22 operators are a relatively rare breed, and we obviously cannot draw many conclusions about their safety record from that small sample. When we consider the much larger body of community transport that operates under section 19 permits, which includes both paid and unpaid volunteer drivers, there is no evidence that volunteer drivers are unsafe compared to those driving similar vehicles commercially.

Road accident statistics are generally based on vehicle type rather than usage. The minibus category is split three ways—between purely private use, the voluntary sector and the commercial sector. The safety record is pretty high across the board. Only recently did it become a legal requirement for commercial bus drivers to undergo formal training, as distinct from passing the appropriate driving test, although the requirement does not come into force until September. At the moment, therefore, we do not have much evidence about its effect on road safety.

I accept that the amendment would not require the full rigours of the commercial training regime to be imposed on voluntary drivers, although that would be the logical outcome of the arguments being put forward. The voluntary sector itself provides a great deal of training. For good reasons, it has always done so. Apart from the question of public safety, it would not be sensible to put rather expensive vehicles into the hands of incompetent drivers.

I am not opposed to training, but the question is one of proportionality. We have to bear in mind that if we were to require the community transport sector to undertake what could be fairly rigorous training, it would place quite a burden on it. We must put that in the context of the later part of the amendment, which is about a scheme being not for profit.

The existing regulation-making power could be used to impose a training requirement on the drivers of vehicles used under section 22 permits. That is already in the Bill, so that part of the hon. Gentleman’s amendment is unnecessary for technical reasons. Although I am rejecting the amendment, I assure him that I do not rule out the introduction of a driver training requirement if a real need for it is identified in future.

Stephen Hammond (Conservative, Wimbledon)

The Minister says that the amendment is technically unnecessary because there is something else about training in the Bill. Will she tell us where in the Bill it is?

Rosie Winterton (Labour, Doncaster Central)

As it happens, it is under section 21 of the Transport Act 1985.

Stephen Hammond (Conservative, Wimbledon)

Divine inspiration.

Rosie Winterton (Labour, Doncaster Central)

I turn to the second part of the amendment, which would place a limit on the annual turnover of a community bus operator. It has always been a requirement of the permit regimes for the voluntary sector that buses are not operated with a view to profit, either directly or indirectly. I understand that the bodies that currently operate under section 22 permits are very small, and that the services that they operate are, almost by definition, ones that would not be of interest to a commercial operator.

We hope that such services will expand; members of the Committee have already made points about the rural bus sector. Such services provide the community transport sector with a lot of opportunities to expand, but I do not imagine that it will be in a position to compete with commercial operators, nor do I believe that it would want to. That part of the amendment is, therefore, not necessary either, because it is already covered in the permit regime. I hope that has answered the questions asked by the hon. Member for Wimbledon.

The hon. Gentleman also asked about cowboys, and I draw his attention to section 22(3) of the 1985 Act, which states:

“A traffic commissioner shall not grant a community bus permit unless he is satisfied that there will be adequate facilities or arrangements for maintaining in a fit and serviceable condition any vehicle used under the permit.”

I hope that I have illustrated that although I understand the hon. Gentleman’s points about safety and not-for-profit restrictions, those matters are adequately covered under the current system.

Stephen Hammond (Conservative, Wimbledon)

The Minister has come a long way towards my position. In 1985, the Conservative Administration obviously had the foresight to bring in measures that she believes I do not need to insert into the Bill. I think that she would none the less agree—this is one reason why I wished to explore the matter—that the clause potentially allows a larger number of drivers in the community transport field, in some cases driving bigger vehicles than they have driven before. The whole matter of safety must be considered, and I hope that the Minister will think again. My amendment does not specify what has to be done, but it gives the Secretary of State the chance to define safety training by order at some stage. That is extremely important, as my concern is that the Bill will widen the field of people who operate the vehicles in question.

Norman Baker (Liberal Democrat, Lewes)

It is my understanding that drivers who want to drive public vehicles with more than 16 seats have to acquire public service vehicle approval. Far more training would be required to drive a vehicle with 16 seats so, in a sense, although I am sympathetic to the hon. Gentleman’s point, I assume that the extra training is already in place to some degree.

Stephen Hammond (Conservative, Wimbledon)

The hon. Gentleman may be right. Some of that training might be in place. None the less, specialist training is available for community transport under MIDAS, which is why I hoped that the Minister would mention it.

I come now to my point about cowboys. The Conservative Administration again showed great foresight in 1985. I was talking not about vehicles and safety requirements, but those operating them as a commercial route and not following all the necessary requirements, when the route was intended to be a community transport route. I hear what the Minister had to say, but that is not the representation I have received from various parts of the industry. There is real concern that rogue—rather than cowboy—operators might try to use the community transport clause that we all support and want to work as a means of getting round some of the provisions that would usually be set, which is why the test is in place.

I have listened carefully to the Minister and to her reassurances that my amendment is technically not necessary. I shall be watching matters closely. I beg to ask leave to withdraw the amendment.

Clause 56

Stephen Hammond (Conservative, Wimbledon)

I have no particular concern about the clause, but I just want to check with the Minister that the traffic commissioners will keep records of such permits. Can she confirm that such permits will be open for public inspection as will the detail of what the permits grant?

Greg Knight (Conservative, East Yorkshire)

My hon. Friend has asked one of the questions that I was about to ask the Minister. Who will be able to see the permits? For how long will the records need to be kept? What length of time will the data have to be kept on file?

Rosie Winterton (Labour, Doncaster Central)

As Conservative Members have said, the clause will require traffic commissioners to keep records of community transport permits granted by them and copies of permits submitted to them by designated bodies. It is important that we have a better record than we do at the moment of what community transport services operate. The existing legislation does not place an obligation on the traffic commissioners to keep records of permits, although we understand that records are held by the Vehicle and Operator Services Agency on their behalf. As I said, we believed that it was important to improve our record keeping of community transport operators and that it was right to impose a requirement on traffic commissioners similar to that on designated bodies.

As for how long the data would need to be kept, obviously it would need to be retained while the permit was in force. Other provisions in the Bill will introduce time-limited permits. One of the issues that has come up is that some permits were given out that had perhaps expired a long time before. For the community transport sector as a whole, it is important to have not only good records, but up-to-date records and to know exactly what is in operation at a particular time. Some difficulties had arisen previously where permits had been given out, the service had completely stopped operating, but nobody had any idea about it. As to who will be able to see the records, I shall have to write to the hon. Member for Wimbledon about that. I cannot see that there would be any problem with there being a public record of what permits were available. However, I would like to take the opportunity to check that and ensure that in any consultation we have done with the community transport world we have explored the options, so I shall come back to the Committee on that.

Greg Knight (Conservative, East Yorkshire)

I do not want to make a meal of this. I think that the Minister has been helpful, but may I make two points? First, would she write to all members of the Committee and not just to my hon. Friend the Member for Wimbledon on that particular point? Secondly, would she be prepared to reflect on the length of time these records should be kept? For example, there did not use to be a legal duty on lawyers in the United Kingdom to keep the papers when they had finished a case, but most lawyers now keep the papers for about seven years in case an issue arises after the matter is finalised, where the papers can be of help. I realise that this situation is not entirely on all fours with what lawyers do with case paperwork, but an issue may arise after a permit expires for which it would be helpful to see the document itself, to see if any conditions were imposed in it and so on.

Perhaps the Minister could reflect on that and tell us on Report whether she feels—I am not suggesting that it should go into the Bill, but perhaps it should be in practice directions—that it is something on which she would want to advise the traffic commissioners.

Rosie Winterton (Labour, Doncaster Central)

I shall certainly consider whether there might be circumstances where retaining the paperwork was appropriate, and the reasons for doing so. I would not like to ask the traffic commissioners to maintain excessive amounts of information, but I am prepared to ask the community transport sector whether that is something that would be helpful. I do not think that that would be a matter for the face of the Bill, but it might be something that we could talk to the traffic commissioners about in guidance.

Clause 57

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 244, in clause 57, page 49, line 14, leave out from ‘to’ to end of line 20 and insert

‘the licence mentioned in subsection (1) above’.

David Taylor (Labour, North West Leicestershire)

With this it will be convenient to discuss the following amendments: No. 245, in clause 57, page 49, line 21, leave out ‘conditions are’ and insert ‘condition is’.

No. 246, in clause 57, page 49, line 25, leave out paragraph (b).

No. 253, in clause 57, page 50, line 8, leave out from ‘to’ to ‘a’ in line 9 and insert

‘the licence mentioned in subsection (5) above’.

No. 254, in clause 57, page 50, leave out lines 11 to 17.

Stephen Hammond (Conservative, Wimbledon)

This string of amendments relates to the power of the traffic commissioner to attach conditions to operator licences. These conditions can be attached if the operator in question has failed to comply with the requirements and specifications of his licence. Such conditions can relate to the specific vehicles that can or cannot be used by the offending operator. Broadly, that is something that everybody will support, but the detail of clause 57 contains a much wider extension to the power of the traffic commissioner and I am not sure whether the Government meant that intentionally.

I am looking for some reassurance from the Minister regarding the Government’s intention, for the clause will enable the traffic commissioner to attach conditions not only to the licence of which the requirements have been breached, but to other licences held by that operator, and even to licences held by other operators connected with the offending operator. I am worried that those powers are excessive in the extreme, and that the punishment would be worse than the crime.

It seems wholly inappropriate that if an operator breaches the rules of its licence, another operator, even a related or subsidiary company, can be punished for the same offence, unless the traffic commissioner were going to attach conditions to all those licences as well. I cannot think of similar circumstances where such wide and varied penalties have been proposed.

Furthermore, if an operator holds several licences and one of them is breached, is it fair that every other licence could have conditions attached to it? The licences could relate to different types of service, for instance.

Obviously, the traffic commissioner needs the function to attach conditions to a licence if the licence is breached by the operator, but the powers that clause 57 gives him are much wider than that. Was that the Government’s intention, and, if so, in what circumstances does the Minister envisage those wide and excessive powers being used?

Rosie Winterton (Labour, Doncaster Central)

As the hon. Gentleman said, the amendments would, in effect, negate the purpose of clause 57, which is to extend the powers of traffic commissioners to take enforcement action against operators who fail to provide services of a satisfactory standard. It is the first of three clauses that will give traffic commissioners new or enhanced powers.

At present, traffic commissioners have at their disposal several powers that they can use to take action against operators who are not delivering a reliable service, who are not delivering the services that they said they would deliver, or who are using vehicles that do not meet the necessary safety standards. One of those powers is that the traffic commissioner can attach conditions to an operator’s licence. The conditions can be used to prevent the operator from providing certain services, and can even go so far as to prohibit an operator from operating any bus services at all in a particular area.

That is an effective tool, but there are several difficulties with it. When we debated part 1 of the Bill, I referred to the fact that Great Britain is divided into eight traffic areas. When an operator applies for a public service vehicle operator’s licence, he must apply to the traffic commissioner for the traffic area in which the vehicles are based. Those vehicles may then be used anywhere in Great Britain. But a large operator with vehicles based in more than one traffic area will have separate licences for different traffic areas.

Under the current legislation, it is generally accepted that there is no power for a traffic commissioner to attach conditions to a licence held by an operator in another traffic area. This means that even if conditions are imposed, an operator can continue to provide services under a licence held in a different traffic area unless and until the appropriate traffic commissioner takes action against him.

There is also no power for a traffic commissioner to prevent operators from circumventing the effect of licence conditions by transferring the operation of services to a subsidiary of the same holding group of companies. Such potential loopholes weaken the powers of the traffic commissioner to take action if operators are failing.

The clause will give traffic commissioners the option, where conditions have been attached to an operator’s licence, to direct a traffic commissioner in a different traffic area to attach conditions to other licences held by the company. The other traffic commissioner could refuse only if there were good reason to do so.

The clause will also give traffic commissioners powers to attach conditions to licences held by operators connected with the original, defaulting operator, such as subsidiaries of the same holding company. I hope that the Committee will agree that it is only right that a bus operator should not be able to use the current limitations on the imposition of conditions on licences to circumvent enforcement action and, by doing so, to continue to operate bad services. That is exactly why clause 57 is in the Bill.

The hon. Gentleman’s amendments would undo those important changes, leaving operators the opportunity to continue to circumvent enforcement action. Moreover, amendments Nos. 245 and 246 would go even further, watering down existing powers so that traffic commissioners would no longer be able to impose a licence condition preventing a licence holder from operating any services in a particular area. Because the group of amendments would undermine the whole purpose of clause 57 and leave traffic commissioners with even weaker enforcement powers than they have at the moment, I cannot accept them, and I urge the Committee to reject them. With that explanation, I hope that the hon. Gentleman will withdraw them.

Stephen Hammond (Conservative, Wimbledon)

I am not sure whether I agree with the Minister’s contention that the amendments would weaken the existing powers. I accept the possible need for an arrangement for holding companies or subsidiary companies, so that licences could not be switched from one company to another, as that would clearly not be right. I am still not convinced that she has addressed the point about the traffic commissioner’s greatly increased powers under the clause. The powers could give the traffic commissioner the ability to impose conditions on the licences of operators that are related, although not through a holding company arrangement. I may wish to consider the matter again on Report, and I beg to ask leave to withdraw the amendment.

Clause 58

John Leech (Liberal Democrat, Manchester, Withington)

I beg to move amendment No. 260, in clause 58, page 51, line 25, leave out from ‘and’ to end of line 27 and insert ‘to the local traffic authority’.

The amendment would require that, where a bus service is not operating as registered and the traffic commissioner, after investigating, issues a report recommending remedial measures, a copy must be sent to the local traffic authority, regardless of whether the local traffic authority is expected to take remedial action. The Bill stipulates that a report must be sent to the local traffic authority only if it must implement any of the recommended remedial measures. The explanatory notes give an example where the local traffic authority might be expected to make changes to help with bus punctuality. There will be occasions on which the local traffic authority is not expected to take any remedial action, but we believe that it should be informed about what action bus operators are to take, regardless of whether it is expected to do anything.

Rosie Winterton (Labour, Doncaster Central)

Clause 58 is extremely important. In response to consultation and discussions on the Bill, many people told us that poor punctuality sometimes occurs when the local traffic authority is failing in its duties, perhaps because it is not taking appropriate action against parking or bus lane contraventions, or because poorly planned road works are disrupting bus routes. The clause will give traffic commissioners the power to hold traffic authorities to account where their actions are part of the problem.

Graham Stringer (Labour, Manchester, Blackley)

If I remember rightly, about two and half years ago, in answer to a parliamentary question about responsibility for traffic delays and congestion, one of the Minister’s predecessors said that two thirds of the problems with late buses were caused by the bus operators themselves. Does she have an update on that figure? That is an important matter, because part of the large bus operators’ propaganda is that it is always the local authorities’ fault. In fact, it is usually their own fault for not having the right engineering facilities or drivers available.

Rosie Winterton (Labour, Doncaster Central)

I do not have an update on that figure, although I accept what my hon. Friend says. As I said, however, we cannot ignore some of the results of the consultation on the draft Bill, which showed that it is important to ensure that local authorities fulfil their side of the bargain.

John Leech (Liberal Democrat, Manchester, Withington)

The point of the amendment is not to suggest that local authorities are never responsible, because they clearly cause some of the problems, whether to do with congestion or whatever. I agree with the hon. Member for Manchester, Blackley: most of the time the operators are at fault. The amendment would ensure that local authorities are informed of what actions need to be taken, regardless of whether they have to take remedial action. That is not to suggest that they should absolve themselves of any responsibility.

Rosie Winterton (Labour, Doncaster Central)

I accept that point; I was simply explaining the background to clause 58 and why it is important. The approach taken in the clause is the right one. The traffic commissioner should send a copy of any report to the relevant operator and, if any of the remedial measures are for implementation by a local traffic authority, to that authority. However, the hon. Gentleman’s amendment would require a copy of every report to be sent to the local traffic authority regardless of whether any of the measures were for implementation by the authority.

I accept that the local authority might have an interest occasionally, and it would be possible for the local traffic commissioner to send a copy to the local authority if that were the case. However, I feel that the approach in the hon. Gentleman’s amendment would be too burdensome. We believe that it is better for the local traffic commissioner to have discretion over which authorities should receive particular reports, rather than to be prescriptive in the Bill. In view of that, I hope that the hon. Gentleman will withdraw his amendment.

John Leech (Liberal Democrat, Manchester, Withington)

I will withdraw my amendment, although we might want to revisit the issue on Report. However, I do not quite accept that it would be too burdensome to send the local transport authority a copy of the report that is sent to the operator. I beg to ask leave to withdraw the amendment.

Clause 59

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 247, in clause 59, page 53, line 5, leave out from ‘money’ to end of line 7.

The amendment deals with a very specific power of the traffic commissioner. I welcome and support the general thrust of clause 59, which states that, when an operator is fined by the traffic commissioner, the money must be invested either in the provision of local services or used to compensate passengers on such services. That is clearly sensible and laudable. If passengers suffer as a result of poor services, it is only right that the fines should be used to improve the services or directly compensate passengers.

I can think of other areas of transport in which such an approach might be welcomed. When Network Rail was fined by the regulator for disruption to passengers over new year, the money went straight to the Exchequer and not back into rail improvements. Perhaps the Minister could impress it on her colleague the Under-Secretary of State for Transport, the hon. Member for Glasgow, South (Mr. Harris), that a similar approach in that field would be welcomed as well.

To return to my amendment and compensating bus passengers, the clause says that the compensation can take the form of payments of money or such form, including the provision of free travel or travel at a reduced price, as is specified. That raises a number of questions about whether or not the latter part is tightly defined or clear enough. For example, does it mean that only passengers previously affected by the poor provision of service will be offered free or reduced travel? Or does it mean that travel on the offending routes will be free or reduced for a period of time, which would benefit people who had not previously been caught up? Therefore, if an operator was obliged to offer the latter—the free or reduced travel for a period—it could result in some unintended consequences.

I am in favour of fining the operators if they fail to provide the right service and of reinvesting the money or giving it to those who need to be compensated. The best way for that to happen and to ensure that there is no ambiguity—unless the Minister wishes to add some other words to the clause—is to make a direct monetary payment to the passengers.

Rosie Winterton (Labour, Doncaster Central)

What we want to achieve is to give a traffic commissioner more choice in the sanctions that can be imposed against operators in such circumstances. The hon. Gentleman is right to say that a traffic commissioner can fine an operator up to £550 for every vehicle operated under the licence. That penalty is paid into the general fund. The problem is that that could worsen the position for passengers, because the operator may simply pass on the cost of that fine through higher fares without making any improvement to the services. When an operator provides a bad service, there should be a way in which sanctions can be used to bring direct benefit to those passengers who have been affected. Ideas, such as offering free or reduced travel, were developed in collective discussions in the Bus Partnership Forum, which is a collective of industry, local authorities and others, including the senior traffic commissioner.

By giving traffic commissioners a range of options, they will be able to assess what is right on a case-by-case basis, taking into account local circumstances. Sometimes, it might be appropriate to give some free or reduced fare travel. Having that flexibility can only add value to the work of the traffic commissioners. If the operator was not happy with the sanction that had been taken, it has the right to appeal to the Transport Tribunal. I hope that the Committee will agree that these are sensible additions to the tools available to traffic commissioners and that the hon. Member for Wimbledon can be persuaded to withdraw his amendment.

Stephen Hammond (Conservative, Wimbledon)

I am always open to persuasion if the argument is full of good reason. I am prepared to accept that the traffic commissioner should have a range of tools available to him, although I prefer the reinvestment in local bus services. I can see that he may wish to direct free travel or whatever, but the question remains that there may be an unintended consequence of people trying to use that free travel even though he did not intend them to do so. None the less, we will not go to the stake on this one. I beg to ask leave to withdraw the amendment.

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 248, in clause 59, page 53, line 30, leave out from ‘to’ to ‘, and’ in line 31 and insert ‘the appropriate local authority’.

We have agreed the principle that the traffic commissioner should have the right to impose sanctions, and one of those sanctions is that the money from fines should be reinvested in the bus service in the area. Under the amendment, any fines payable under the clause would be payable to the local authority and not, as the clause is currently drafted, to the Secretary of State or Welsh Ministers. That is appropriate: it fits in with the nature of the bus industry, which is a very local industry. As we have stressed throughout proceedings on the Bill, the local authority should have a key role in determining the provision of bus services in the area. That function is carried out by local transport authorities and local operators, so having any proceeds of fines paid to national Government is an anomaly in comparison with the rest of the Bill. I strongly believe that the proceeds of fines should be reinvested in the bus services, and that that should be done by the appropriate local authority, not by moneys going to the Secretary of State or Welsh Ministers.

John Leech (Liberal Democrat, Manchester, Withington)

I do not intend to say much on the amendment; I just want to support it strongly. It is very important that where services have been affected locally, the proceeds of fines go into improving local services. It is completely appropriate that, rather than going to the Secretary of State, the money should be reinvested locally.

Rosie Winterton (Labour, Doncaster Central)

I would not like to raise expectations unduly, but the amendment does raise some interesting points. I am not sure, however, that it would work. It does not, for example, talk about ring-fencing, and there are difficulties with the suggestion, but I am prepared to have a look at the points that the hon. Member for Wimbledon has made. As I said, there are difficulties. I am not sure whether the proposal fits in with other cases, as we would require local authorities to spend money on a particular area, which carries with it certain considerations. However, I am prepared to look further at whether there would be benefits for passengers. Discussion would be required with a number of other Departments, particularly the Treasury, with regard to directing funds to a particular area. I cannot promise the hon. Gentleman that it will be possible to introduce an amendment, but I will certainly give the proposal careful consideration.

Stephen Hammond (Conservative, Wimbledon)

After seven and a half sittings, that is probably as near as I am going to get in persuading the Minister to agree to one of my amendments. I hope that she will put the point to the Treasury carefully, stating that it is road user charges that are being reinvested and that this is not about hypothecation of tax. I am sure that the Treasury will see the wisdom of the amendment and that, on Report, the Minister will introduce something similar. Following her reassurances, I beg to ask leave to withdraw the amendment.

Greg Knight (Conservative, East Yorkshire)

I shall not detain the Committee long. However, I would like the Minister to confirm that her understanding of proposed new subsection (1A)(d) of section 155 of the Transport Act 2000 is the same as mine and that the power being given to the Secretary of State, in respect of England, and to Welsh Ministers, in respect of Wales, relates only to the range of sanctions available, and that it is not a power to intervene in any specific case.

Rosie Winterton (Labour, Doncaster Central)

That is correct.

Clause 60

Graham Stringer (Labour, Manchester, Blackley)

In my quest to make the Whips’ lives that much easier, I thought that it would be worthwhile to ask some questions and make some statements on this clause to save us having a debate on new clause 10. The purpose of the previous three or four clauses that we have debate is to increase the enforcement powers of the traffic commissioners and to help them to deal with bus services that do not comply with registration requirements. Clause 60 deals with the prevention of the misuse of records and the need to make them available for inspection. It seems to me that both aims are quite worthy; I agree with them and support the clause.

If, however, we really want to check rogue and cowboy operators, both large and small, it would be worth while ensuring that bus companies have real-time, global positioning system information available, and requiring them to keep that information on a historical basis. We have only to talk to drivers, certainly of the larger bus companies in Greater Manchester, such as Stagecoach and FirstGroup, and they will explain very quickly that if they are running behind schedule, they will either miss out stops or take shortcuts, and that they will not comply with their registration. However, the records will show that they left on time and arrived on time. They will not show that they did not travel along the right route.

The only way for commissioners or any inspection body ever to get that right is for accurate GPS information to be made available in real time and kept for historical inspection purposes. That is the purpose of new clause 10, but it might save time if, in considering clause 60, my right hon. Friend would recognise that problem and agree that there are more effective forms of record keeping.

Rosie Winterton (Labour, Doncaster Central)

As my hon. Friend said, the clause will enable traffic commissioners to impose sanctions on operators who fail to meet statutory requirements to provide bus punctuality. It is important that we ensure that traffic commissioners have access to regular and accurate information on the punctuality of bus services, enabling them to pinpoint areas of consistent underperformance. That will enable them to investigate the underlying causes.

My hon. Friend made a good point about GPS systems and ensuring that, as far as possible, bus operators use them. However, we should seek to achieve that in other ways. When we talk about quality partnership schemes and quality contracts, the thrust of the Bill enables local authorities to have greater discussions with bus operators about the use of such equipment to ensure that proper records are kept. That is not something that we want covered under primary legislation, but it is an extremely important point. There are areas in the country where, for example, local authorities have invested with bus operators in installing GPS to enable them to have joint information about punctuality and important real-time information. When local authorities want to say that the next bus arrives in 10 minutes and so on, they often need the support that comes with GPS to be able to do so.

While I take my hon. Friend’s point about supporting the idea of giving more power to traffic commissioners to request information about bus punctuality, it means that local authorities will be able to work with bus operators and that, in some cases, reaching agreement about the fact that they would like buses operating with the GPS if that were appropriate in their area. However, we can address such issues in other ways rather than through primary legislation. I have especially in mind the fact that, as he is aware, technology can move on. I am sure that we want not want to be restricted to one type of technology under the Bill when other types might become available in future.

Clause 61

John Leech (Liberal Democrat, Manchester, Withington)

I beg to move amendment No. 261, in clause 61, page 54, line 26, at end insert—

‘(2) After subsection (1)(vii) insert—

“(viia) to require operators of public passenger services (within the meaning of section 9A) to display within any vehicle or premises used for providing those services information appropriate to enable users of those services to make representations (including complaints) about them to the Executive.

(viib) as a result of any representations (including complaints) it has received from users of public passenger services pursuant to subsection (1)(viia), to make and publish recommendations or representations in such manner and to such persons as the Executive sees fit.”’.

The amendment is fairly self-explanatory. It would require bus operators to display information in their vehicles and bus stations that detail how a customer can make a suggestion or a complaint about the services that they operate to the relevant passenger transport executive. It would also mean that the PTE could use the suggestions and complaints to inform any recommendations that it might wish to make about bus services. For example, it might want to inform the revamped Passenger Focus or the Secretary of State.

The problem is that much of the time people do not know to whom to make a complaint. Passengers get on buses and inevitably the person to whom they complain is the bus driver. I—and I am sure that this is the case for other hon. Members, too—have been told by numerous constituents who, having followed through their complaint or suggestion about the service to a bus driver, were told that the operator of the service knew nothing about it. That is mainly because the bus driver is too busy and forgets that a complaint or a suggestion was made or that such matters just never filter back to those who should handle such matters. The amendment would give people clear information about whom they can contact or speak to, and to whom they can make a complaint or suggestion. It is eminently sensible, and I hope that that the Government will take it on board.

Rosie Winterton (Labour, Doncaster Central)

I certainly agree that there should be clear information available to bus and coach passengers about how and to whom they can make comments or complaints about the service they are using. That issue came up time and again in consultation. In response to the debate on the matter in the other place, the Government amended the Bill on Report to insert what is now clause 70. That clause will give powers to the Secretary of State to make regulations to require certain persons to display particular information in appropriate places. That could go wider than just information about complaints. What we have in mind is local authorities, bus companies and scheduled coach operators being required to display on passenger vehicles, at bus stops and bus stations or in timetable leaflets the contact information for customer service and passenger representation. Those notices might also be used to raise awareness of the new bus passenger champion and to ensure that passengers have appropriate customer service contact details.

It is more appropriate to have the powers as laid out in clause 70 than to give powers to PTEs, which would be the effect of the amendment. First, the suggested powers would help only passengers who lived and travelled in PTE areas; they would not help to address issues in other parts of the country. Secondly, we want to ensure consistency throughout England in the information available to passengers. That will be more effectively achieved by the appropriate power being with the Secretary of State.

In a sense, the amendment would also address complaints against the operator, but there might be instances where passengers wish to complain about a local authority—for example, if it is not enforcing bus lanes properly. The powers in clause 70 will allow the appropriate information to be provided to passengers who want to make such complaints.

I hope that I have reassured the hon. Member for Manchester, Withington that I take the issue of information about complaints seriously. We feel that the amendments that we have made through clause 70 are a more appropriate way to deal with that. With that reassurance, I ask him to withdraw his amendment.

John Leech (Liberal Democrat, Manchester, Withington)

We may return to the issue on Report, but with that reassurance I beg to ask leave to withdraw the amendment.

Graham Stringer (Labour, Manchester, Blackley)

I beg to move amendment No. 128, in clause 61, page 55, line 2, after ‘under’, insert ‘section 10(1)(i) or’.

David Taylor (Labour, North West Leicestershire)

With this it will be convenient to discuss the following amendments: No. 129, in clause 61, page 55, leave out line 8.

No. 130, in clause 61, page 55, line 10, at end insert—

‘(7) For subsection (1)(i) (power of PTE to carry passengers by road) substitute—

“(i) in the event that a quality contract is terminated or local services provided under it cease in whole or in part to be provided, to carry passengers by road within, to and from that area for the purpose of maintaining local services provided under the quality contract for so long as is required to procure another person to provide such services under the relevant quality contracts scheme;”’.

Graham Stringer (Labour, Manchester, Blackley)

The amendment was introduced and debated in the House of Lords, so I will not repeat everything that was said there, although the Government’s arguments for not accepting it were quite weak.

The amendment would allow passenger transport executives or integrated transport authorities to be the operator of last resort if a bus company decided to move its fleet out if it went bankrupt or for some other reason could no longer operate services. It may be that no other bus operators in the area could come in and immediately replace the existing operator. The Government’s argument against is that the PTE—the integrated transport authority—would have to comply with EU regulations, be competent in the PTE operational scheme, and have managerial competences and certification.

That is a lot of words, but when we consider some bus companies, which in effect are run by a couple of men and their dog—the purpose of the 1985 Act was to allow small bus companies to compete with large ones, among others—those words do not seem to carry much weight.

It is not expected that operator of last resort will be used on many occasions. In fact, it will probably be used very infrequently. Not for the first time in this debate, we can look for similar situations elsewhere. With rail franchises, we find that Network Rail—previously Railtrack, I believe—has the power to be the operator of last resort. In fact, in the south-east, it became the operator of last resort for a time. In the London system, Transport for London has the authority to be the operator of last resort, although I think that London is probably one of the last places where that power would need to be taken up.

It seems slightly unreasonable not to have something in the Bill that may be used only occasionally—in an emergency. If it were used, it could be useful as a benchmarking exercise to see how a locally run, publicly initiated bus company operated against many of the private operators.

It is unlikely that this section of the Bill will be used, but we have the opportunity to include a measure that may be used occasionally, or hardly ever, and it seems unreasonable not to take it. At some future time, somewhere in the country, somebody might regret it if we do not do so.

Ian Stewart (Labour, Eccles)

It is good to see you in the Chair, Mr. Taylor. Earlier today, I highlighted instances where I felt there would be the need to allow transport authorities to be the operator of last resort, and I hope that the Minister heard as well as listened. I know that she listened, but I hope that she heard the example that I gave of a quality contracts scheme being awarded and an operator walking away from an existing contract that it provides. In such circumstances, residents, passengers and workers would be left in an insecure situation.

Over the past 10 years, I have argued in the House that it would be sensible to allow passenger transport authorities to be an operator of last resort for all sorts of different reasons. If the Government were to accept that there will be unusual circumstances in which no provider is left, a local transport authority could make provision almost as a stop-gap until such time as a private operator was found to deliver the service.

Indeed, I would like to go further and say that that should be encouraged in a wider sense, so that transport authorities could provide a service but on a temporary basis. I hope that the Minister will listen and hear what hon. Members have said.

Rosie Winterton (Labour, Doncaster Central)

As my hon. Friends know, the main purpose of clause 61 is to put PTEs on equal footing with other local transport authorities. While those other authorities do not have a specific power to lease buses to operators, they do so by using their general well-being powers under local government legislation. The PTEs are in a different position—first, because they have no well-being powers and, secondly, their explicit power under the Transport Act 1968 to lease out buses was disapplied by secondary legislation following deregulation.

The Bill will give the renamed integrated transport authorities well-being powers, but those powers will still not allow them to do anything specifically prohibited under other legislation. The other disapplication of the appropriate legislation amounts to a prohibition on them leasing buses. Clause 61 will restore the power to do so, but only in specified circumstances consistent with their current statutory functions.

The amendments aim at a partial restoration of the power of PTEs to operate buses, which, as my hon. Friends said, was their primary function before the implementation of the 1985 Act. One problem with that suggestion is that I am not sure whether the Committee is aware of the commitment needed for a PTE to play the role of operator of last resort.

For such powers to be of any use, it would have to be possible for the PTE to exercise them at a moment’s notice. Otherwise, it might as well let an emergency contract, which it can do. The PTE would certainly need a public service vehicle operator’s licence, the necessary financial standing and a professionally competent transport manager available any time the emergency might arise. The requirements of the licensing system need to be satisfied at all times while the licence is in force, not just on the rare occasions when an emergency arises. The PTE would also need vehicles and drivers to operate the services. Arguably, those of the failed company would be available, but they would not necessarily fall into the PTE’s lap.

Similar problems arise with the operator-of-last-resort powers in rail franchising legislation, which my hon. Friend the Member for Manchester, Blackley referred to. There are few undertakings qualified to step in and run a railway at short notice, so there is no alternative to those powers. The letting of emergency bus contracts, however, is quite a commonplace occurrence, particularly with school bus services, for example. That seldom causes serious problems.

John Leech (Liberal Democrat, Manchester, Withington)

Does the Minister accept that without those powers local authorities could be held to ransom by operators over quality contracts?

Rosie Winterton (Labour, Doncaster Central)

I will come to that. My point is that, taking the issue of quality contracts, local authorities already have powers to enter into emergency subsidy arrangements with an operator. We have a power in the Bill to disapply the usual tendering requirements in certain circumstances.

John Leech (Liberal Democrat, Manchester, Withington)

In fairness, the Minister has just proved my point—it is all about subsidised services and operators making a fortune at the expense of the PTE.

Rosie Winterton (Labour, Doncaster Central)

I do not accept that. The hon. Gentleman has to balance what he is saying. A PTE could bring in a private operator under a contract to the local authority more quickly than an authority could get hold of enough drivers, vehicles and so on to operate a service of its own.

We understand that PTEs would be concerned about the consequences of a large operator suddenly pulling out or falling on hard times and being unable to carry out its contractual duties. It is also true that in those circumstance receivers or administrators would be called in to continue to run the company’s affairs as best they could until a buyer was found. In particular, they would want to keep services going, as they would bring in revenue.

Maintaining contractual obligations would take precedence over discretionary activities, so services outside quality contracts schemes—if we want to look again at the quality contracts system—could be more at risk than those provided on a purely commercial basis. While I understand the point being made about being the operator of last resort, the problem for PTEs would be that requirements would have to be in place the whole time to fulfil that and we believe that the ability to allow emergency contracts, which we have powers to do, is available under existing legislation.

Clive Betts (Labour, Sheffield, Attercliffe)

May I put a possible scenario to my right hon. Friend? She is indicating that the clause gives new powers to PTEs to enable them to purchase vehicles that they can hire out to operators on a contractual basis, which may fit this particular requirement. Would it be possible for a local authority under its well-being powers to tender for such a contract?

Rosie Winterton (Labour, Doncaster Central)

As I understand it, that was disapplied under the Transport Act 1968. If I mistaken in that, I will write to the Committee. In terms of emergency powers, we believe that it is possible for local authorities to have adequate facilities in place to ensure that if a contractor failed the local authority could put the contract out very quickly and the usual tendering process would not have to be undergone. For that reason, we do not believe that it would be reasonable to expect PTEs to have some of the large operators’ licences that could be possible for 200 or 300 vehicles and be able to fall back on trying to get them up and running with drivers and people running them. Frankly, it is more likely that that would be more effectively achieved by actually going through the emergency tendering process that we have in place. With that reassurance and clarification, I hope that my hon. Friends will withdraw their amendments.

Graham Stringer (Labour, Manchester, Blackley)

I shall eventually withdraw the amendment, but in a way it will be in spite of my right hon. Friend’s arguments rather than because of them. There was one argument and one point that I do not think she dealt with, although she went through a number of scenarios. In a sense, I agree with her because, as both my hon. Friend the Member for Eccles and I have said, the provision would be used only in the most exceptional and potentially unforeseeable circumstances. The Minister has gone through all the alternatives—yes, there will be alternatives—but she did not say why the emergency powers are held in London and not the rest of England.

My second point has run through a lot of our arguments. Let me say clearly that some very decent people own and run bus companies. There are good bus companies that run services with integrity and that are good for passengers, but there are also absolute rascals out there who will use anything they can to get one over on the public sector and get subsidy. They threaten and they push. We have mentioned Brian Souter and Stagecoach. During the so-called bus wars in Manchester, that company did not behave reasonably but said, “We will close this city down. We will park buses on all the roads in the city centre if you don’t do what we want.” That part of the atmosphere in which towns such as Preston and cities such as Manchester have had to operate. To deny even relatively small powers such as the amendment proposes is to give the rascals a benefit. The powers will not do down or harm the decent bus companies.

I hear what my right hon. Friend says. All the other available powers might well be able to deal with an emergency, but they might not. I have been in a number of situations in local government where companies have gone bankrupt or other things have happened, and the lawyers have searched through the law books to see what they can do. In such situations, it is important to have as many powers and alternatives as possible to deal with something damaging to the communities we represent.

We may come back to the amendment. It is not the most important amendment moved, but the Government’s case seems particularly weak.

I beg to ask leave to withdraw the amendment.

Clause 66

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 266, in clause 66, page 56, line 19, leave out subsection (2).

Subsection (2) repeals the provisions set out in the Transport Act 1985, which state that when a local authority votes on matters relating to the activities of a transport company owned by the council, any councillors who are directors of that company are not allowed to vote without the Secretary of State’s permission. When I read the explanatory note saying that that obligation would be dispensed with, I was slightly at a loss. It seems a perfectly sensible and logical provision that preserves independence of decision making, so I am surprised that the Government want to delete it.

John Leech (Liberal Democrat, Manchester, Withington)

Would that not be covered under the councillors code of conduct, which precludes councillors from voting on matters in which they have an interest?

Stephen Hammond (Conservative, Wimbledon)

It may or it may not—the code of conduct certainly requires them to declare an interest—but saying so explicitly on the face of the Bill would add weight to what should happen. I see no reason why the Government should want to repeal that provision. I am sure that in a moment the Minister will use her extraordinary powers of persuasion to tell me why I am wrong, but she will have to go a long way in this case.

Rosie Winterton (Labour, Doncaster Central)

If enacted, clause 66 will remove two forms of central Government control over bus companies that are owned wholly or partly by local authorities. If those companies include elected members on their boards, which I believe they all do, they must be unpaid, non-executive directors. Current legislation, which goes back to 1985, requires those elected members to obtain a dispensation from the Secretary of State or Welsh Ministers before speaking or voting on matters affecting their company. That was intended to prevent possible conflicts of interest between their roles as councillors and as directors.

Of course that is still important, but local government has changed. Under more recent local government legislation, the conduct regime for councillors allows such dispensations to be granted by local standards committees. The role of the Secretary of State or Welsh Ministers is no longer needed, and the clause will fulfil a long-standing commitment to remove it. That is fully supported by the Department for Communities and Local Government and by Welsh Ministers.

The amendment would retain the dispensation provisions in the 1985 Act, meaning that councillors would effectively need two sets of dispensation, one from their local standards committee and one from central Government. The Bill provides an opportunity to get rid of an unnecessary layer of bureaucracy, and I am afraid that the amendment would deprive us of that opportunity. I ask the hon. Gentleman to withdraw it.

Stephen Hammond (Conservative, Wimbledon)

That may be what the Minister wants, but it is not what she has left us with. She says that it will be recognised that the standards bodies are the appropriate bodies to give dispensation, but that point needs to be in the Bill. I am not persuaded by what she says, so I shall press the amendment to a Division.

Clause 68

John Leech (Liberal Democrat, Manchester, Withington)

I beg to move amendment No. 232, in clause 68, page 57, line 22, leave out ‘by sub-committees with members’ and insert

‘on a regional basis by persons’.

David Taylor (Labour, North West Leicestershire)

With this it will be convenient to discuss amendment No. 233, in clause 68, page 57, line 39, after ‘policies’, insert ‘, including regional transport policies,’.

John Leech (Liberal Democrat, Manchester, Withington)

Amendment No. 232 would enable the functions of the new watchdog to be carried out on a regional basis. Although we would not favour the establishment of a large regional structure or a regional committee structure for the new watchdog, it should have a regional dimension.

Bus travel is local in character, and multiple operators are involved in its provision, including a host of very small local operators. It is far less easy for a single national organisation to have a good grasp of all the local variations than it is in the case of rail, where there are a limited number of players, and information on them and their performance is readily available and easily assimilated. In addition, key changes to services, for instance fares and frequencies, do not happen at the same time and with ample warning, as they do in rail. Again unlike rail, there is no guiding hand in Whitehall that influences the extent and quality of service provision, other than by indirect measures such as grant and subsidy regimes, vehicle regulations and so on.

Most of the key decision makers on the quality of service that bus passengers receive are regionally based, and thus the influence and credibility of a purely national watchdog—especially if it is London based—is arguable. Given that, there is a strong case for the bus watchdog to have a limited regional dimension, especially if it will eventually take on an appeals role for complaints, liaise effectively with the main actors on bus services in each region, and act as a credible voice for passengers in the deregulated regions, whenever major problems or issues arise.

Rosie Winterton (Labour, Doncaster Central)

The amendments are directed at the powers included in the Bill to establish a Public Transport Users’ Committee for England. However, on 8 April, the Secretary of State announced that subject to further consultation on the details, it is proposed to confer additional functions on the Rail Passengers Council, Passenger Focus, to enable it to represent the interests of bus passengers. Amendments to the clause will not, therefore, have any immediate effect. I assure the hon. Gentleman that were we to set up a committee in that way, the powers in the Bill would be wide enough to enable a regional sub-committee network to be established if that was thought desirable. As I have indicated, those are matters for the future, and I hope that my reassurances will enable the hon. Gentleman to withdraw his amendment.

John Leech (Liberal Democrat, Manchester, Withington)

I beg to ask leave to withdraw the amendment.

Stephen Hammond (Conservative, Wimbledon)

I beg to move amendment No. 267, in clause 68, page 57, line 23, at end insert—

‘(ea) about the making of an annual report on the discharge of functions and financial situation of the Committee to—

(i) the Secretary of State,

(ii) all local transport authorities,

(iii) both Houses of Parliament, and

(iv) such other person, if any, as the Secretary of State may determine.’.

The Committee will not be surprised to learn that the amendment does not require much in the way of introduction. It continues the theme that I have followed throughout about consultation and accountability. The new bus passenger watchdog should make an annual report in which it describes its activities during the year and the state of its finances. We should state in the Bill exactly where that report should go. It should go to the Secretary of State and all local transport authorities and it should be available to both Houses of Parliament and—in the usual exhaustive provision—

“such other person...as the Secretary of State may determine.”.

The amendment would effectively give the Secretary of State power to include a provision about such a report in the order that she makes, for the purpose of establishing the Public Transport Users’ Committee for England. It should not be controversial. If we are to create that body and put it on a statutory basis, we must ensure that it is accountable and does the job it was set up to do. All other organisations produce similar annual reports, which generally prove a relatively effective way of reviewing their work. I hope that the Minister will be persuaded to accept my entirely sensible amendment.

Rosie Winterton (Labour, Doncaster Central)

The amendment would add to the list of provisions that could be covered in any order made by the Secretary of State to establish a public transport users’ committee. Again, as the Secretary of State announced on 8 April, it is now proposed to confer additional functions on the Rail Passengers Council, Passenger Focus, to represent the interests of passengers, so in a sense the amendment is not relevant to the body that we will establish. I assure the hon. Gentleman that we probably will require the new body to publish some kind of annual report, but we do not want to put that requirement in the Bill. I therefore ask him to withdraw the amendment.

Stephen Hammond (Conservative, Wimbledon)

Obviously, I think that the requirement would benefit from being included in the Bill. None the less, I am persuaded by the Minister’s reassurance that she will put it in guidance that the body must produce an annual report. I beg to ask leave to withdraw the amendment.

John Leech (Liberal Democrat, Manchester, Withington)

I beg to move amendment No. 234, in clause 68, page 58, line 25, at end insert—

‘(1A) The Committee may consider representations (including complaints) made by or on behalf of users of any public passenger transport services or facilities in England and, where it appears to the Committee to be desirable, make and publish recommendations or representations in respect of those services or facilities.’.

The amendment would create a complaints role for the passenger transport users’ committee. The consultation document did not envisage the watchdog having any complaints role; instead, it argued that operators should be the primary complaints bodies with the industry-funded bus appeals body taking on the appeals role. That contrasts with existing arrangements for rail passengers everywhere and for all transport users in London. For rail passengers, the system is that complaints are made first to operators and can then be appealed to the statutory watchdog, Passenger Focus. In London, the user of any transport mode complains first to Transport for London and can appeal to the statutory watchdog, London TravelWatch. We would like to see the same system for bus travel outside London.

The rest of the debate is in Hansard.