New Clause 9 — Power of authorities to provide services in exceptional circumstances

Part of Orders of the Day – in the House of Commons at 4:15 pm on 27th October 2008.

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Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport) 4:15 pm, 27th October 2008

I welcome the Minister to his new role and commend him for his courage in taking on the Bill at this stage. I agree entirely with the intervention made by Norman Baker.

The Government's management of the process and of this part of the Bill has been shambolic, illogical and discourteous—shambolic because in the past 10 days they have produced no fewer than 165 new amendments and 12 new clauses, and illogical because a number of those new clauses make a nonsense of what the previous Minister told us in Committee was absolutely necessary. Some of the concerns that she raised to objections to the approvals board and some of the justifications that she gave us for the approvals board have proved to be a nonsense. Finally, the Government's management of this part of the Bill has been discourteous to the House. We finished consideration of the Bill in Committee on 8 May. The Government chose to wait until 17 October to produce the bulk of their amendments. Last Thursday, the very last business day before Report, they produced another three amendments and another new clause.

Some of the amendments in this large group are substantive, some are technical and some are consequential. A number of amendments have been tabled by my hon. Friends and me to Government new clause 9. I understand the necessity for the new clause, if it is a clause of last resort. The Minister has just assured us that he sees it as such, and that there is no chance of its being a back-door way for local authorities to start running bus companies again.

There is a real possibility that bus operators, particularly small operators, may go out of business in the current climate. We are already seeing operators struggle as a result of the iniquitous distribution of funds for the concessionary fares scheme. The underfunding of the national scheme is threatening the scheme and already driving bus services off the road. My hon. Friend Mr. Goodwill and I were both contacted last week by Mr. Peter Shipp, the chairman and chief executive of the East Yorkshire Motor Services Group, who described the difficulties facing his firm. He spoke of "disastrous consequences" and a

"situation that is getting worse, not better" because of the underfunding of the national concessionary scheme.

Furthermore, in an age of rising fuel costs and the uncertainty surrounding the bus service operators grant, more small operators will find it difficult to survive. The clause provides for that and for the scenario where an operator gets into trouble because it is tied into a quality contract and can no longer fulfil its obligations. If an operator goes out of business, it is clear that those who use its services need to be protected. It is therefore right that local authorities should be able to step in as operators of last resort, but only for a limited period. Provided that it is for the limited period that is the premise of the Bill, I understand the necessity for it and will support it. However, I am concerned that people may use it as an excuse to return bus services for a prolonged period to be run by local authorities, thus depriving the sector of the private sector funds and innovation it needs if it is to flourish.

I see the necessity for the new clause, but it must not be a back-door route. Normal services should be resumed as quickly as possible in the event of an operator going out of business, and my new amendments (a), (b), (c) and (d) would place an obligation on the local authority to invite tender for the provision of replacement services no later than a month after the termination of the original service. Amendment (b) is of particular significance because it would firmly place an obligation back on the local authorities to ensure that they did not take their time, that services continued and that the tender was put out. That strikes me as reasonable and generous.

It cannot be beyond the organisation of local authorities—be they local transport authorities or councils—to arrange the tender for a new route within a month. Failure to do so could jeopardise the service and the route, and they would have to accept that urgent action should be initiated. My amendments (g), (h), (i) and (j) would ensure that once arrangements had been made for a replacement service to begin, the authority would cease to be the operator within six months. That is a sensible and generous period; after all, the Minister has just reassured us that he does not expect anyone not to wish to be involved in the tendering process.

Amendments (e) and (f) are inspired by my firm belief that partnership arrangements are considerably preferable to quality contracts. As we have seen in a number of cases, partnerships have brought innovation and good and efficient services, and they are proven to work. When an operator has failed, for whatever reason, to fulfil its obligations under a quality contract, surely it is irresponsible and short-sighted to replace that quality contract with another. That method has been tried and it has failed. If something is broken, why would we replace it using the same broken method? That would be illogical. I suggest that we at least provide the option of it being replaced with something that works. There should be an option to replace a failed quality contract with a voluntary or statutory quality partnership.

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