Clause 13
Local Transport Bill [Lords]
1:45 pm
Ann Winterton (Congleton, Conservative)
That point has been raised, but I hope that I can reassure the hon. Gentleman by saying that merely registering a service and pretending that it will be operated would not do. If an operator wanted to register a service, the traffic commissioner would be interested in whether it had relevant depots and staff and adequate vehicles. It would not be just a question of disruption. Traffic commissioners will be wise to people who just want to register a service on the off chance. They would have to show that they were serious about running a service.
We have proposed that an objection should be admissible only when it would not be practicable for an operator who is providing, or intends to provide, services to the standard specified in the proposed scheme, or when it would not be commercially viable for a competent and efficient operator to provide services to a standard specified in the scheme. I shall return to how the proposals will work in practice.
The draft regulations propose clear criteria that must be met before an objection would be admissible. They specify deadlines for each stage of the process to ensure that the making of a scheme is not unduly delayed by the admissible objection process. What specific issues in a quality partnership scheme could an operator object to? In terms of practicality, which is the first ground that I addressed, an operator could object if it needed more time to procure vehicles or to take on more staff to deliver the quality enhancement stipulated in the scheme. If the operator was operating only one service an hour on a route and wanted to operate two services, for example, it could ask for more time to recruit extra staff, to provide more buses or to adapt existing buses if there were accessibility issues.
On commercial grounds, the operator might object that it would not be possible to provide the requested service and make a reasonable financial return. I shall return to that, and explain how it will be particularly beneficial to small operators.
Objections under the commercial criteria, however, would have to be addressed case by case, taking account of local circumstances, market trends and cost and revenue implications in the context of the scheme as a whole. It would be for the bus operator to make its case, but if it said that the scheme was not commercially viable, the local authority or the traffic commissioner would have to take into account issues such as the estimated cost of operating services to the specified standards, the expected revenue from operating those services—taking into account any potential increase in demand—whether the operator could be expected to secure an appropriate rate of return from the operation of services to the standard specified in the scheme, taken together with other services the operator provided in that area, and the views of other relevant operators about whether it would be commercially viable to provide services to that standard. Therefore, where two operators were satisfied that a particular set of requirements was commercially viable, but a third operator objected, it seems unlikely that the objection would be admissible.
A key point here is that the operator and the traffic commissioner would be considering what would be expected from a competent and efficient operator—not necessarily the operator making the objection. To determine that, they would need to have regard to the appropriate rates of return for operating similar local services elsewhere.
The aim of the process is to prevent ill-conceived, vexatious or frivolous objections, while protecting the legitimate interests of operators involved in the provision of local services and who would be affected by the scheme. If, in response to consultation—because the process would be that a local authority would say that it wished to make a scheme—an operator in the area felt they had grounds to object to the authority’s proposals on fares, frequencies and timings, which are the possible issues for objection, the operator would initially object to the local transport authority. If that authority rejected the objection, the operator could refer the matter to the traffic commissioner for a determination.
The traffic commissioner would make a decision and inform all parties. If the commissioner decided that the objection was not admissible, the local transport authority could make the scheme as proposed. If the objection were admissible, the authority would either have to amend the scheme or omit that particular provision. It does not mean that a scheme could not be made. It is not a right of veto, but the traffic commissioner might say, “We do not believe this will work at 50p a passenger, but it might work at 75p a passenger.” It does not mean the authority would have to go right back to the beginning; it could simply amend that bit of the scheme to make it practical or commercially viable.
I shall illustrate why we think that is helpful to smaller operators, who have made representations to us. They do not feel that they would always have the economies of scale to respond to the demands of a policy partnership scheme. The process we are suggesting has the flexibility for them to make the case that if they are a competent and efficient operator, they should not be subject to unreasonable demands. For example, if a local transport authority proposed a particularly demanding scheme that two big operators could live with—because economies of scale meant that they could absorb the costs—a small operator could still successfully make an objection by comparison to similar operators of their size in similar environments.
A practical example would be a small, traditional operator—many of us know that some smaller companies in our areas have been running local services for years without complaint, at relatively low but not necessarily rock-bottom prices. The local transport authority could decide to invest in new bus lanes city-wide and enter into negotiations with, for example, the major operator in the city. It could then consult on a quality partnership scheme with tight fare controls on the basis that the large operator—operator B—was willing to commit to low fares throughout the whole city because he expected more fare payers on the busiest routes and could use the extra money to offset less revenue on others.
The small operator would not have the luxury of using the busiest routes and being able to subsidise the others. He might face bankruptcy if he was forced to live with the fares. He would make representations to the local transport authority saying that the fares were unreasonable but, if it ignored those representations, he could go to the traffic commissioner who could consider the matter on the basis of comparisons with other small operators in similar areas and decide whether that small operator was making an unreasonable objection.
The small operator would have the protection of being able to make representations that it would not be commercially viable for him to run the scheme and that it would drive him out of business, perhaps in some circumstances leaving only one operator in the town. By the same token, the traffic commissioner could say that the small operator had been operating inefficiently for years and that a competent operator could easily live within the proposed fare limits. In each case, the objection would be inadmissible and the local transport authority could proceed as proposed. We are not saying that means that the quality partnership would not be allowed; we are saying that it might need to be varied or that, for example, it did not include fares. The measure is important protection, particularly for small operators.
Some concerns have been expressed about how long the admissible objections procedure might take. In response, the procedure prescribed under the regulations sets clear deadlines for each stage of the process. For example, if a local authority notifies a bus operator that it does not consider its objection to be admissible, that operator would have 14 days to refer the matter to the traffic commissioner. The regulations stipulate that, if either party fails to meet a deadline such as getting further information to the traffic commissioner, a determination can still be made. Operators would not be able to employ stalling tactics to delay the process.
Even if there were no opportunity for operators to register admissible objections, we anticipate that making a quality partnership scheme would take a minimum of 18 weeks from when the local transport authority first publishes the notice and launches a consultation about the proposal to when the scheme is made. Under our proposals for admissible objections, in a best-case scenario the admissible objection procedure need not add anything to that time scale. Even in a worst-case scenario, in which more information might be requested from either the local authority or the operator, we would expect the admissible objections procedure to add no more than seven weeks to the overall timetable. We have set out the details on page 13 of the guidance.