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Local Transport Bill [HL]

My Lords, first, I apologise to your Lordships for not declaring an interest in my earlier intervention today, although I have done so on previous occasions during the passage of the Bill. I am employed as a consultant to FirstGroup plc. I am also a declarable shareholder in the National Express Group, although given the state of the Stock Exchange I perhaps will not have to make that declaration for too many more years. It is only fair to say at the outset that, while I do not believe that the amendments in this group would significantly improve the Bill from when it last left your Lordships’ House, I hope that the Minister can assure me and reassure the bus industry that the Government have stayed true to their word. Can he confirm that this legislation, as amended, will still protect the legitimate interests of bus operators and passengers? I am aware that we have had a long summer of lobbying. Indeed, we have had eight long years of lobbying on quality contracts. I am also aware that there has been some glee and jubilation from certain members of the passenger transport executives up and down the country over the recent amendments to the quality contracts scheme process. Those of us who have taken a long interest in these matters are aware that a great deal of face saving is involved and that the amendments under discussion in this group fall some way short of what the more control-oriented, let us say, brethrens of the local authorities sought. Ministers have been at pains over the past few months to allay any fears that the industry might have and to point out to bus operators that any quality contract proposal will still be subject to independent and sequential scrutiny. I know that many members of the bus industry are still comfortable that quality contracts are some way from the easy option portrayed by some in the Passenger Transport Executive Group. Will the Minister assure us that quality contracts will be used only as a last resort by sensible authorities that have exhausted all faster, more economic and passenger friendly options? Some people in the bus industry think that pressing for these amendments is something of an own goal by the would-be regulators as it could open the door to longer and more expensive legal action. ““Bring it on”” was the response, as I understood it, from certain more active members of the Passenger Transport Executive Group, but it is not their money. If you are paying for court cases with local ratepayers’ money, it is less of a problem than it would be perhaps to a commercial operator. I believe that passengers will be best served if the legitimate interests of the bus operators are, as Ministers have continuously promised, properly protected. Bus operators got a bad and inaccurate press from those rather few honourable Members of the other place who participated in the debate throughout the most recent stages of the Bill. But it is important that Ministers concentrate on fact rather than rhetoric. It is a fact that £2.2 billion has been invested in buses outside London over the past 10 years. In seven of those 10 years, that investment exceeded net profit in the bus industry. FirstGroup, the company I work for, has built up over the past decade from a small municipal undertaking based in Scotland to a multinational company employing many thousands of people in the United Kingdom. In replying to the debate, the Minister should tread very carefully indeed so as not to cause any further anxiety in the bus industry, particularly during this somewhat delicate economic period. It is important, and I think both legitimate and right, that passengers as well as operators should have their legitimate interests protected under this legislation. Many people in the bus industry believe that if the quality contract route is to be followed without some of the safeguards that Ministers have indicated will be provided, much of their business—whether lawfully or not will be for the courts to say—will be confiscated. I understand that Ministers have assured the bus industry privately that even though this is far from an easy option, if the proposals were to be taken forward, not only would operators have every opportunity to put their own case, they would also have a proper right of appeal against any decision. It would help to allay many fears in the bus industry if the Minister could confirm that it is indeed the case that the amendments I would have proposed had he spoken at the time I expected him to speak—that is, on this particular group—would therefore be superfluous. I trust that he can do so because I have already indicated that I do not propose to move Amendment No. 44A. I want to ask my noble friend why the appropriate approvals authority for a quality contract scheme in Wales may approve the scheme if it is satisfied not only that the new public interest test in Clause 19 is met but also if it is satisfied that the scheme is in the public interest. I expect to be told that it is because Wales has a devolved Administration, but I do not think that the public interest is any less important in the rest of the United Kingdom. Indeed, I would point out that Ministers and the Government generally have been consistent in saying that the legitimate interests of bus operators have to be taken into account when the merits of a quality contract are being assessed. In order to do that and to ensure that the benefits of a quality contract are proportionate to the disbenefits, surely it is essential that the QCS board is able to assess fully the financial losses that any operator might incur as the result of a quality contract being introduced, not just the collective position of all operators. Can the Minister confirm that the government amendment which creates new Section 124(1A) of the Transport Act 2000 will oblige QCS boards to assess each operator’s financial interest, not just an overall assessment of them all? I want also to press the Minister on government Amendment No. 69. As currently drafted, the Bill restricts the scope of an operator’s appeal to the Transport Tribunal. Where a QCS board has approved a quality contract or recommendations to change the quality contract have been taken on board by the relevant authority, an operator’s appeal can be made only a point of law, not on a point of fact. As far as I can see, this prevents operators appealing to the Transport Tribunal against the assumptions that might have been made by the authority and the QCS board in justifying a quality contract. It also prevents operators making representations to the tribunal on matters taken into account or not taken into account by the authority or QCS board. An operator’s only right of appeal to an independent tribunal against an approved quality contract would be his submission to the QCS board on the authority’s consultation. I ask my noble friend whether such a procedure actually makes sense and indeed whether it would be defensible in law. Surely there can be no justification for restricting the scope of an operator’s appeal to the tribunal, and this amendment therefore removes the restriction currently applied by the amended Bill. It will enable an operator to appeal to the tribunal on a point of law and fact, regardless of the view of the QCS board. This is a further amendment designed to ensure that the legitimate interests of operators are taken into account. I apologise for the length of this speech, but it is the only one I intend to make during the passage of this Bill, and these matters are of enormous concern to the bus industry. I turn finally to the question of the invitation to tender to be issued while appeals are outstanding. It is possible, under the terms of the amended legislation, for an authority to proceed to issue an invitation to tender to operators who may wish to bid for a contract to run a quality contract even if an appeal against a quality contract is outstanding. Again, we are in the realms of certain members of the Passenger Transport Executive Group saying, ““If there is legislation, so what?””. I would point out that legislation of this kind is likely to be protracted and expensive, and that there ought to be a proper justification from PTEG to justify this course of action. Surely it cannot be right for public authorities to proceed with an ITT and all the costs that involves while an appeal is outstanding. If the appeal is successful, all the time and expense of proceeding with the tendering process would be wasted. The position is even more serious if a tender is awarded before an appeal against the particular contract has been won. It is, to say the least, a bizarre arrangement and there appears to be a fundamental lack of common sense and of justice in the procedures as they are presently laid down. It may well be that common sense would prevail and an authority would not proceed to prepare and issue an ITT while an appeal is outstanding, but there is nothing to stop it doing so under the terms of the Bill before us today. By stating expressly that an ITT can be issued even when an appeal is outstanding, the Bill almost encourages local authorities to proceed in that way. The straight question for my noble friend is this: how do the Government propose to ensure that authorities use their powers wisely? In conclusion, having taken a deep interest in the Bill and having some years’ experience in the bus industry, I cannot say personally that the prospects for companies and bus passengers have been enhanced by the Government’s amendments. I hope that the Minister will take it upon himself to give an assurance to bus operators that the last stage of any change in the quality contract will not be made as easy as some, in my view overly optimistic, members of the Passenger Transport Executive Group apparently believe.