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Local Transport Bill [HL]

My Lords, I have made my point about the Liberal Democrats in the two Houses. I suspect that the Bill will be supported by my party in this House as well. Furthermore, I do not accept the argument of the noble Lord, Lord Bradshaw, that quality contracts go with high levels of subsidy. The two are separate issues and one does not necessarily go with the other. I am pleased that the Government have accepted the principle behind the amendment. The issue is that, in the event of a quality contract operator defaulting for any reason, a local transport authority must be able to use any means at its disposal to keep bus services running, including operating services itself. Although I listened carefully to what my noble friend said, I remain concerned that the time limits being placed on the operator of last resort are too stringently set out in primary legislation, which is emphatic that while 12 months may be needed, 12 months and one day will not. In the Bill, those powers of last resort are restricted to nine months, with an additional three months at the discretion of the traffic commissioner. In the other place, concern was expressed that that was too restrictive, given the wide range of scenarios that could result from an operator defaulting on a franchise. What would happen if a deal with a replacement operator for the franchise fell through at the last minute? What would happen to bus services then? Another scenario could be a franchise deal involving significant investment in new vehicles, to which reference has already been made, but where that programme of investment had not been completed when the initial quality contract operator, or contractor, defaulted. It might be a difficult task for a local transport authority to secure a replacement operator for the quality contract and ensure that the new vehicles were supplied at a competitive price when potential bidders knew that the local transport authority had a fixed period in place whereby it could keep services running as the operator of last resort. That does not seem to place the local transport authority in a strong position in any negotiations. There are other possible scenarios, although one accepts that they would be exceptional. The independent or local transport authority might no longer require the use of a particular operator because of poor performance and could be subject to legal challenge. Surely in that situation the challenge might go on for a considerable time. Would any other operator be prepared to touch the provision of services with uncertainty remaining over the status and position of the original quality contract operator? What happens if an operator goes out of business 13 months before the end of their contract? What would the position be, then, if the local transport authority could operate services, if necessary, only for 12 months, when the contract itself was going to end after 13? What happens if there is an argument between competing operators and an independent transport authority over the ITA’s decision on who should get a contract following the existing operator’s defaulting? That, too, might be subject to legal challenge. As I said a moment ago, if a deadline to negotiate on contracts is approaching, considerable power is handed to the bidders when they know that the local transport authority is in the position that it can no longer operate those services after a maximum period of 12 months. It is also worth noting that when the Government used their power of last resort in the operating role to take over the operation of south-east trains, following the failure of the Connex South Eastern franchise, I believe that those powers were exercised for almost two and a half years. How would passengers and the taxpayer have fared on south-east trains if the Government had been subject to a fixed time limit set out in primary legislation on their own powers of last resort on rail franchises? I realise that the Government are concerned that a local authority might seek to abuse these powers to, in effect, municipalise local bus services, taking them back into public ownership. Even if that were a likely threat, though, under the terms of the amendment the traffic commissioners would provide a safeguard against that, as they would decide whether or not the last-resort powers were to be granted. The Government’s guidance to the traffic commissioners could be used to ensure that these last-resort powers could be extended only to protect passengers in exceptional circumstances following the default of an operator and the restarting of the franchise under a new operator. I hope that my noble friend will be prepared to consider this amendment. The deadline seems unnecessarily restrictive; it allows no room for manoeuvre if, in exceptional circumstances—and one accepts that they would be exceptional—the specific date could not be adhered to. The amendment would allow the traffic commissioner, if he or she so desired, to agree to an extension. I have no doubt that they would want some compelling reasons for granting an extension rather than seek to use the power that I propose they should have in a way that did not reflect the need for exceptional circumstances to be proved.