“(1) An operator of a local service may not participate in any scheme under sections 1, 4, 7 or 9 of this Act, and an authority or authorities may not approve the participation of an operator as part of any such scheme, unless the operator has given a written undertaking to the applicable authority or authorities that—
(a) it has subscribed to the Confidential Incident Reporting and Analysis System (CIRAS) and that it has made all possible efforts to ensure that all staff of the operator have been made aware of their right to use CIRAS as a confidential reporting channel in respect of any safety concerns,
(b) it will collect and monitor bus casualty data in a manner to be prescribed by the applicable authority or authorities from time to time, and
(c) it will make its bus casualty data available to the applicable authority or authorities by way of a report on at least a monthly basis.
(2) The authority or authorities must publish on their own website every quarter the bus casualty data that they have collected from operators.” —(Ian Mearns.)
This new clause would require bus operators taking part in any scheme to subscribe to the Confidential Incident Reporting and Analysis System and to make bus casualty data available to local authorities at least monthly. It would also require local authorities to publish that data quarterly.
Brought up, and read the First time.
“(2A) A franchising scheme may not be made unless the franchising authority can demonstrate that the benefits for passengers could not be provided by a quality partnership scheme, an advanced quality partnership scheme or an enhanced partnership scheme.”
This amendment would ensure that a Local Transport Authority cannot make a franchise scheme if the passenger benefits can be provided by a quality partnership scheme, an advanced quality partnership scheme or an enhanced partnership scheme.
Amendment 16, page 15, leave out line 36 and insert—
“(3) A franchising authority or authorities shall consider an assessment and shall not proceed with the proposed scheme unless it is satisfied that—”
This amendment and amendments 17 to 23 would tighten the criteria against which an authority must consider a franchise proposal.
Amendment 17, page 15, line 37, leave out “whether”.
This amendment is consequential on amendment 16.
Amendment 18, page 15, line 43, leave out “whether”.
This amendment is consequential on amendment 16.
Amendment 19, page 16, line 1, at beginning insert “they know”.
This amendment is consequential on amendment 16.
Amendment 20, page 16, line 3, leave out “whether”.
This amendment is consequential on amendment 16.
Amendment 21, page 16, line 5, leave out “whether”.
This amendment is consequential on amendment 16.
Amendment 22, page 16, line 7, leave out “the extent to which”.
This amendment is consequential on amendment 16.
Amendment 23, page 16, line 7, leave out “are likely to” and insert “will”.
This amendment is related to amendment 16.
Amendment 15, page 16, line 9, at end insert—
“(g) the specific passenger benefits that would result from a franchise scheme, with an explanation of why those benefits could not be delivered by a quality partnership scheme, an advanced quality partnership scheme or an enhanced partnership scheme.”
This amendment would require a franchise assessment to specify the benefits of the proposed scheme for passengers and to explain why these benefits cannot be delivered by a quality partnership scheme, an advanced quality partnership scheme, or an enhanced partnership scheme.
Amendment 24, page 16, line 9, at end insert—
“(g) whether the proposed scheme would be more efficient, effective and economic than any other option, taking into account any compensation payable to bus operators whose businesses would be wholly or partially expropriated by the scheme.”
This amendment would ensure that the value for money test of a franchise scheme must factor in the cost of compensation to bus operators who lose part or all of their business as a result of a franchise.
Government amendments 2 to 4.
Amendment 25, page 17, line 7, at end insert—
“(3A) A person may not act as an auditor under this section if the person or company for whom the person is employed has been an auditor for the franchising authority at any time in the previous five years or has had any other commercial relationship with the franchising authority at any time in the previous five years.”
This amendment would ensure that any auditor appointed by the franchising authority had no commercial interest or association with the franchising authority which might create, or might be perceived to create, a conflict of interest.
Government amendment 5.
Amendment 6, page 19, line 37, at end insert—
“(4A) An award of any new franchise or contract shall not be made on the basis of labour costs estimated by the potential franchisee or contractor assuming labour costs for new employees at less than the labour cost of workers who are covered by TUPE protections in accordance with section 123X transferring to the new franchisee or contractor.”
This amendment would ensure that any new franchise or contract will not be awarded on the basis of estimated labour costs being lower for new employees than the labour cost of workers covered by TUPE protections.
Amendment 26, page 20, line 24, after “(or further postponed)” insert “or cancelled”.
Amendment 27, page 20, line 24, at end insert—
‘(1A) If an authority or authorities decide to cancel a proposed franchising scheme under subsection (1) they may not initiate a revised or alternative franchising scheme until the end of the period of five years beginning with the date on which the decision to postpone the original scheme was taken.”
This amendment would provide greater certainty for bus operators and passengers by specifying that, if a franchising authority fails to make a case for a franchise scheme or decides not to progress its proposals, it should not be permitted to bring forward fresh proposals for five years.
Amendment 7, page 30, line 2, leave out “at the same time,”.
Amendment 8, page 30, line 14, leave out “at the same time”.
Amendment 9, page 32, line 27, at end insert—
“123Y Employees not covered by TUPE protections
Employees of local bus service providers who are not covered by TUPE protections may not be employed on terms and conditions less favourable than those provided by TUPE.”
This amendment would ensure that employees working under local service contracts not covered by TUPE protections may not be employed on terms and conditions less favourable than those provided by TUPE.
Amendment 10, page 32, line 27, at end insert—
“123Z Effect on employees of introduction of local service contract
(1) Where, either before or after the introduction of a local service contract following an assessment under section 123B, any employee of an operator in the area to which the scheme relates is dismissed, that employee is to be treated for the purposes of Part 10 of the Employment Rights Act 1996 as unfairly dismissed if the sole or principal reason for the dismissal is the introduction of the relevant local service contract.
(2) Paragraph (1) applies whether or not the employee in question was part of an organised grouping of employees principally connected with the provision of local services, under section 123X(4).
(3) Where section 123X(4) applies, a new operator may not engage employees or workers on terms and conditions less favourable than those of the employees whose employment transferred from the former operator.”
This amendment would make dismissal of an employee for the sole or principal reason of the introduction of a franchising scheme automatically unfair dismissal.
Amendment 28, in clause 9, page 41, line 17, at end insert—
“(6A) The requirements that may be specified under subsections (4)(b), (4)(e) and (4)(h) in relation to fares and the prices of multi-operator tickets may only be specified if all operators party to the enhanced partnership scheme are in agreement with those requirements.”
This amendment would specify that fares structures could only be specified as part of an enhanced partnership scheme if the operators involved agree.
Amendment 11, page 57, line 3, leave out “at the same time,”.
Amendment 12, page 57, line 14, leave out “at the same time,”.
Amendment 13, page 59, line 42, at end insert—
“138T Effect on employees of introduction of enhanced partnership scheme or plan
(1) Where, either before or after the coming into force of an awarded contract in an area to which the relevant enhanced partnership scheme relates, any employee of an operator in the area to which the contract relates is dismissed, that employee is to be treated for the purposes of Part 10 of the Employment Rights Act 1996 as unfairly dismissed if the sole or principal reason for the dismissal is the introduction of the awarded contract.
(2) Paragraph (1) applies whether or not the employee in question was part of an organised grouping of employees principally connected with the provision of local services, under section 138S(4).
(3) Where section 138S applies, a new operator may not engage employees or workers on terms and conditions less favourable than those of the employees whose employment transferred from the former operator.”
This amendment would make dismissal of an employee for the sole or principal reason of the award of a contract under an enhanced partnership scheme automatically unfair dismissal.
I declare an interest inasmuch as I am chair of the RMT parliamentary group and vice-chair of the Unite parliamentary group, both of which unions have members in the bus industry.
The transport sector is a safety-critical environment. This is not a loose use of language. The sector involves carriages travelling at speed, individuals working long hours on repetitive tasks on repetitive routes, and people maintaining equipment at all hours of night and day. Hard lessons have been learned following a series of fatal road and rail crashes in the 1980s and 1990s. However, continuing financial pressures, declining support from Government through the bus service operators grant, and commercially oriented initiatives towards potentially reducing staff could threaten safe working practices.
Bus drivers are aware of where corners are being cut. In theory, they may be empowered to use their employers’ whistleblowing policies to speak out. In practice, however, workers who do so are frequently subject to all sorts of pressure and have been known to be dismissed for whistleblowing. This invariably leads to serious safety failings being increasingly ignored and not adequately investigated, or the results of an investigation not being acted on by bus companies.
To counter the dysfunction, a confidential reporting service known as CIRAS was introduced. This system, initially only for rail, has been successful in enabling workers properly to ventilate their concerns, resulting in lessons being learned and an accumulation of failings being halted, with serious harm prevented. All the major rail companies, many of which also own bus companies, such as FirstGroup, Go-Ahead Group and Stagecoach, have signed up to CIRAS.
I should declare another interest inasmuch as I am a frequent user of my local bus services in Gateshead, as I do not own a car. A very good bus service is provided by Go-Ahead Group in my locality, but unfortunately not all my constituents can benefit from such great services. The bus company tries its best and provides excellent bus services during the peak hours, but as the evening goes on, unfortunately, their frequency dwindles.
Bus workers outside London should also be able to access CIRAS. That would be the effect of the new clause, which would reproduce CIRAS in franchises or quality partnerships. In response to a spate of deaths and serious injuries involving buses on London’s roads, Transport for London successfully extended the CIRAS scheme to London buses. London has one of the best resourced bus networks and some of the newest buses anywhere in the country. CIRAS itself supports the extension of the scheme to bus operators nationwide. In line with other aspects of the Bill—including matters unconnected to franchising and partnerships, such as audio and visual announcements—a nationally mandated approach is warranted and would be greatly desirable.
The cost of membership of CIRAS is in no way, shape or form prohibitive. It is relatively modest and based on a bus operating company’s turnover. A bus operating company with a turnover of less than £1 million would have an annual fee of only £300 to pay. For a very big operator with an annual turnover of, for instance, £200 million, the fee would still be only £25,000. The fees are low and modest, and they are unlikely to present a serious obstacle.
If the Government are not willing to consent to the new clause, I hope that Ministers will agree to make regulations or at least guidance in this area, or to consult all bus companies throughout the United Kingdom—not just those that participate in a franchise or quality partnership scheme—on signing up to CIRAS. The consultation should indicate Government support for signing up to CIRAS.
The amendments would ensure that employees working under local service contracts and not covered by TUPE protections could not be employed on terms and conditions less favourable than those provided by TUPE. There is a concern that in anticipation of changes in local provision, a bus service operator might curtail a route, rendering the drivers on the route redundant, and another operator might start up the same route only a week or 10 days later. As the Bill stands, those drivers would not have automatic TUPE protection, although I am sure that their representative unions would fight for it. Workers’ terms and conditions should be no worse for the duration of the franchise, and new employees must not be employed on terms worse than those of existing employees.
There are precedents for such agreements. For example, with Government support, the contracts for the public-private partnership for the tube protected workers’ conditions. More recently, the Scottish Government’s contracts for rail and ferries provided similar protections. For ferries, an additional protection was provided by stipulating that the successful bidder could not make savings by reducing staff jobs or conditions.
Not only would the amendments prevent a race to the bottom in conditions, but they would aid recruitment and retention within the industry and thus help to secure a high-quality, stable workforce, the lack of which blights many franchise areas. Since the introduction of privatised franchises, I have been on many buses where, frankly, the driver did not know the route and had to ask passengers which way to go. Legislating or regulating that out is not beyond the realms of possibility.
More importantly, the amendments would prevent a further worsening of the bus driver shortage, which has affected services. BusMark, the bus and coach benchmarking club of the professional logistics and transport body the Chartered Institute of Logistics and Transport, has published its findings from a survey about addressing the current driver shortage in the industry. Out of 15 reasons given for the problems with recruitment and retention, the three most cited, by some distance, were poor pay, poor conditions and industry image. If the Government are not willing to concede the amendments, I hope that Ministers will agree to consider making regulations or, at the very least, giving some guidance to the industry.
Amendment 10 would automatically make the dismissal of an employee for the sole or principal reason of introducing a franchising scheme an unfair dismissal, and amendments 12 and 13 would automatically make the dismissal of an employee for the sole or principal reason of the award of a contract under an enhanced partnership scheme an unfair dismissal. There is concern about the potential for a company that has lost a bid to run a franchise or that does not wish to participate in the franchising process simply to abandon its route, as has happened on numerous occasions. For a company to do so, it needs only to deregister the route by notifying the traffic commissioner. We want the Bill to protect workers and passengers from a company conducting itself in such a manner, and we are also concerned about workers slipping outside the protective net of TUPE.
If a company abandons a franchise, the passengers who rely on the bus service day in, day out will often be left without the means of getting to and from their place of work. Transport Ministers have criticised rail unions about disruption that has had an impact on the ability of people to get to and from their places of work, and they should equally be concerned about the scope for a bus franchise owner to abandon its franchise for business reasons. Given the particularly loose way in which the bus sector is currently arranged, there is an elevated risk of that occurring.
At the moment, the Bill provides TUPE protection only at the point of transfer, or earlier if agreement is reached with the successful bidder. These amendments mean that the termination of a worker’s employment for a reason connected with the introduction of a scheme or a transfer to a new scheme would automatically be considered unfair dismissal. Not only would the amendments protect bus workers jobs, but in doing so they would help to ensure the continuity of the service if the bus service operator sought to stop providing services or to reduce services because of the threat of a franchise or because it did not win the bid for a franchise.
The Manchester Evening News of
Again, if the Government are not willing to concede these amendments, we hope Ministers will agree to make regulations or, at the very least, to issue guidance to the industry.
I rise to support amendments 14, 16 to 23, 15 and 24 to 28, which are in my name and those of my right hon. and hon. Friends. Amendment 14, which is very straightforward, would ensure that a local transport authority could not make a franchise scheme if passenger benefits can be provided by a quality partnership scheme, an advanced quality partnership scheme or an enhanced partnership scheme.
Amendments 16 to 23 are mainly drafting amendments, but it is important that a franchising authority should be satisfied, rather than that it should just have considered the issues in a franchising assessment. As we heard in the debates on clause 4, it is clear that franchising should not be an easy option. A local transport authority should not be allowed to take a simple punt at franchising without having given full and detailed consideration to all the other options available. There will of course be other options, not least the partnership arrangements that we have looked at, and to which we will surely return in the near future.
The Bill contains stringent tests, but I think it would be very easy for a local authority to say that it has considered whether a proposed franchise regime would contribute to its transport policies; whether it has the capability and resources to operate the scheme; or, just as importantly, whether it can afford the scheme and that it represents value for money for local taxpayers—in other words, our constituents. It is quite another thing, however, for the authority to say that it is satisfied that its proposals will do these things. Surely, given the importance of the step the local authority is proposing to take in implementing a franchise scheme, it is not too much to ask whether it is convinced that its proposals will do exactly what they intend. That is what my group of amendments sets out to achieve.
Amendment 15 simply complements amendment 14, although it looks at the issue from a slightly different angle. I will not say anything more about amendment 15, except that we cannot really have amendment 14 without amendment 15. Amendment 15 requires a franchise assessment to specify the benefits of a proposed scheme for passengers and to explain why those benefits can be delivered by a quality partnership scheme, an advanced quality partnership or an enhanced partnership scheme.
Amendment 24, probably the most important amendment in this group, is all about compensation. The key is to bring into play a degree of fairness. The Bill is silent on the matter of compensation and I think that is wrong. I know what the Minister will say in his response. He will probably say that he will go along with the Transport Committee when it said in its recent report that there is no case for compensating operators who lose their business. I am fully aware that compensation would not have been available under a quality contract scheme, but the days of quality contracts are severely numbered. The fact that there was no compensation under that scheme does not mean to say that it is not right to have compensation for the new arrangements. The loss of business would be bad enough for the large plcs, which would have to redeploy their staff and their assets, but what about the smaller operators?
I am listening carefully to the hon. Gentleman. Will he explain—so far, he has not done so—on what basis compensation would be given when every bus company is able to compete to run buses via a franchising process?
I am not an expert on this, but the small and medium-sized bus companies in my constituency tell me that they are very concerned indeed. They have established their businesses on the back of a lot of hard work, and they have taken a lot of risks. One company that came to see me said that its directors had re-mortgaged their homes and invested their life savings to ensure that the company grew. They stand to lose—not because they have not performed properly, not because they are a bad company, and not because the passengers have decided that they no longer want to use those services—if they do not win a bid to continue to do what they have been doing successfully for many years. I suggest to the hon. Gentleman that this is a fair measure and I ask the Minister to consider it.
The wider point is this: what message does it send to businesses looking to invest in the UK? We want businesses to come to the UK to invest. We should be saying to them, “You’ve come to the UK to invest, and if local authorities take your business off you there will at least be some compensation.” This measure will, in the longer term, represent good value for the taxpayer, because it shows that taxpayers’ money will be put to a good use. If businesses are put out of business because of measures in the Bill, then surely there should be some recourse to compensation.
The hon. Gentleman rightly talks about the importance of delivering value for money for the taxpayer. In the north-east, as in many parts of the country, there is not good value for the taxpayer. The Competition Commission has shown that a very limited number of bus operators have a monopoly over our services. The competition that was meant to follow deregulation has not materialised. This is not good value for the taxpayer. The Bill would allow smaller operators to break into a market on which the big boys currently have a stranglehold.
The hon. Lady makes a fair point. I can judge only on the basis of what is going on in my area, but I hope that the Minister will take into account what she said. I want more competition and more small operators. There are a lot of big operators around; I want to see the small ones flourishing. It is certainly the case in Norfolk that the small operators, companies such as Norfolk Green, were able to move in on routes and bring a new culture and new service ethic into place—it has done a fantastic job. I defer to Andy Burnham, who knows a lot about this subject, but these operators have been able to get more customers on to routes and even to re-open routes that had previously been closed down.
The trouble with what the hon. Gentleman is saying is that it has not worked that way under the current regime; passenger numbers have gone down in Greater Manchester. My worry is that he seems to be speaking for the bus companies rather than for the travelling public—that is what it sounds like to me. Can he assure me that this is not a wrecking amendment? Is he hoping that the fear of paying compensation will persuade local authorities not even to try to use these powers because they cannot afford to pay that compensation? Is that what he is trying to do?
I can assure the right hon. Gentleman that I am not trying to wreck the Bill in any way or do anything that is untoward. I am simply trying to make sure that SMEs are treated fairly.
Let me move on quickly to amendment 25. It is a simple amendment that is designed to ensure that any auditor appointed by the franchising authority has no commercial interest or association with the franchising authority that might create or could be perceived to create—perception is very important as well—a conflict of interest. I very much hope that the Minister will accept this amendment. It is reasonably anodyne, but quite important. I urge him to look at it very carefully indeed.
Amendments 26 and 27 are quite small amendments, too, but they are important. If a franchising authority fails to make a case for a franchise scheme or decides not to progress its proposals, should it be permitted to come back to that scheme the following year, the year after that or indeed within months? I suggest that it should not. These amendments to clause 4 would prevent the authority from coming back with fresh proposals within five years.
In the autumn statement, my right hon. Friend the Chancellor said:
“I know how much business values certainty and stability”.—[Official Report,
I think he was right. One thing that business dreads is uncertainty, which affects investment plans, recruitment decisions and the way that businesses, particularly SMEs, conduct their everyday activities. Bus operators are understandably and justifiably concerned that some of these measures could put their businesses under threat—in the worst-case scenario, with the franchise authority coming back to the franchise time and again within the five-year period. We want to create a situation in which there is a workable franchise scheme and the franchise authority cannot keep chipping away at it.
These amendments are not vital, they would also help local authorities. We know that the burdens on local authorities are growing the whole time. They are under massive pressure to deliver better services and better value for money, whether it be in respect of refuse collection, care for the elderly, street lighting, planning and so on, with ever-dwindling resources. The local authority might have a lot of pressure put on it by its elected members or other bodies to devote time and energy to bringing back a franchise exercise that was not progressed in the first place, which I think would be a mistake.
I would like clarification and reassurance from the hon. Gentleman. It sounds to me as if the combined effect of these amendments is to open up some confusion, to create possibilities for bus operators to use legal challenge, and to delay and tie the hands of the combined authority in the case of Greater Manchester and in other combined authorities elsewhere. Can he be absolutely clear that that is not what he is trying to do? It sounds to me, for all the world, that that is the real intent behind these amendments.
I have a lot of time for the right hon. Gentleman. I remember asking him questions in past times, when he was a Minister and I was on the Opposition Benches, and we have engaged in debates in Committee. I assure him that I do not intend to do what he has suggested. I think that small and medium-sized enterprises and the smaller bus companies will support the amendments.
Will the hon. Gentleman not acknowledge that the very fact of having the opportunity to take franchising powers enables local authorities to put pressure on operators, not all of which are small and medium-sized companies—in fact, most of them are very large—in order to bring them into partnership arrangements? If a local authority does not have the potential to develop franchising schemes, many operators will not seriously enter into negotiations on either advanced quality or enhanced partnerships.
I was under the impression that authorities had those powers anyway, but the Minister will obviously have heard what the hon. Lady has said. It is up to the Minister to listen to what we have said, and then to make a decision.
I now want to say something about amendment 28. I will be brief, because I have already taken up a fair amount of the House’s time. The amendment would allow fares structures to be specified as part of an enhanced partnership scheme only if all the operators involved agreed. The key issue is the ability of commercial bus operators to set their own fares, which is an important feature of a deregulated market. Of course fares structures are set competitively. In the same way, a commercial enterprise looks at what its competitors are charging, and structures its own charges accordingly. The competition authorities have introduced important safeguards to ensure that bus companies do not collude to stitch up the market and set fares at levels that disadvantage passengers. There are checks and balances, and that is extremely important.
What the hon. Gentleman is saying seems to suggest that the powers of a local authority, or collection of local authorities, in the areas that he represents would be less than those currently enjoyed by the voters of London when it comes to oversight of the running of an integrated transport system. Why should electors in all the other parts of England have an inferior set of arrangements?
I simply say to the hon. Gentleman—for whom I have a huge amount of respect—that I have listened to bus operators and passengers in my constituency. We now have more bus services in our remote communities and villages that we did, say, 20 years ago, when Daniel Zeichner was standing for election to a rural Norfolk seat—and he nearly won that seat in 1997; I think it was Mid Norfolk—because SMEs have stepped up to the plate.
I have taken enough of the House’s time. Let me simply say this to the Minister. I believe that the amendments go a modest way towards improving the Bill, without undermining or sabotaging parts of it. I think that they will help bus operators—especially the smaller ones—and passengers and local authorities by providing clarity.
I want to talk about the new clauses and amendments relating to franchising, including amendments 14 to 23, 26 and 27.
The strength of the Bill lies in devolution, and its proposal that decisions on how to provide local bus services should be devolved to local transport authorities, which should consider what works best in their areas. It is important to remember that the Bill has come about because of dissatisfaction among members of the public—people who want to use buses—with the way in which the current system operates. There have been a number of attempts to change the Transport Act 1985, which deregulated transport services, but none of those attempts —which have been made under successive Governments—has resolved the problem. The Bill is important because it tries to address the difficulties that the public have experienced, and to create a thriving bus sector.
The Transport Committee examined the Bill in detail from the perspective of passengers. We welcomed the possibility of new and smaller entrants to the bus market, but what worries me about the new clauses and amendments is they may prevent the proposed devolution from taking place. There are two aspects of that. The first relates to combined authority areas with directly elected mayors having the power to proceed with franchising. There is a lack of clarity about the regulations that will be introduced, or imposed, to impede the ability of the mayors to do that. Will it be an absolute right, or will onerous, complex and perhaps unknown regulation be imposed? I hope that the Minister will clarify that issue, because it relates to a fundamental part of the Bill.
Secondly, the Bill proposes that transport authorities in areas that are not run by combined authorities with directly elected mayors may have powers to introduce franchising in certain circumstances. The amendments make that proposal extremely complex. It would be impossible to assess whether the transport authorities would be able to proceed with franchising if they wished to do so. The Transport Committee looked at good practice, and concluded that transport authorities should consider existing ways of operating in partnership with operators before moving to a franchising system, but we did not think that that should be part of the regulations. This proposal introduces new hurdles, but it is not fully specified what those hurdles are, or—this is equally important—how they would be assessed before the authority could adopt the franchising system. That, I believe, strikes at the heart of the Bill.
The Bill is intended to improve transport services in localities and devolve to local transport authorities the ability to act on the needs of their areas, but the hurdles introduced by the amendments might enable future Ministers to impede its objectives, and I am sure that present-day Ministers would not wish that to happen. I am extremely concerned about the amendments. I hope that the Minister will tell us more about what they mean, and will make clear whether the Government intend franchising to go ahead, as they have stated, without introducing complex hurdles which would make the proposed system extremely difficult to achieve.
It is a pleasure to follow my hon. Friend Mrs Ellman, who chairs the Transport Committee. As she said earlier, the Committee has considered this issue on a number of occasions, and—my hon. Friend Ian Mearns mentioned this—we have never been able to find a reason why London should have one system and the rest of the country should have another. Stephen Hammond grins at that, and I do not blame him, because the regulated system in London is superior to the system in the rest of the country.
I listened to the responses of Sir Henry Bellingham to my right hon. Friend Andy Burnham about his not wanting to wreck the Bill, and I take that at face value. However, I do not think the amendments reflect the reality of the nature of bus services, certainly in urban areas. I am not an expert on bus services in Norfolk and suspect the hon. Gentleman knows more than I do about Norfolk, but if he is concerned about small bus companies, he should support this Bill as it is or seek to improve it, because what has happened in the west midlands, Merseyside, Tyne and Wear, Greater Manchester and the great urban areas of this country is precisely the opposite of what he wants: small companies have been driven off the road by large companies.
I could not agree more with my hon. Friend about the impact on the small bus service providers. When bus services franchising was introduced, I remember visiting Merthyr Tydfil to see Gateshead football club play Merthyr in a Conference fixture, and—lo and behold—there in Merthyr Tydfil were Go-Ahead Gateshead buses being used in a local bus war to destabilise a local small bus company. So in terms of the impact on small and medium-sized bus companies, that particular horse bolted long ago.
My hon. Friend is right: the deregulation of bus services has not led to greater competition and has not benefited SME companies. They have been literally driven off the roads, because on the odd occasions when there has been on-the-road competition, it has led to congestion and eventually a large monopoly operator taking over. FirstGroup, Stagecoach, Arriva, Go-Ahead and one or two other companies have taken control and have therefore been able to exploit the situation through introducing high bus fares and sometimes withdrawing services for other areas.
I have listened with interest to the hon. Gentleman’s comments on small and medium-sized bus companies, and there is a lot of truth in what he says about the smallest bus companies, but does he agree that the greatest concern is for medium-sized operators? There are not many medium-sized companies in the country, but there are some in counties such as mine, Nottinghamshire, and neighbouring Derbyshire: Marshalls of Sutton on Trent and trentbarton —which Lilian Greenwood will be familiar with—are good medium-sized bus companies and they stand to lose a lot from this. They will grow exponentially if they win a franchise, or they could find 30 years, in the case of either of those companies, of hard work going down the toilet with no compensation whatsoever.
The hon. Gentleman makes a fair point, and I will come on to it. He is right to be concerned about that, but I want to develop the logic of the argument that I am making as to why these are not sensible amendments. In large parts of the country, where most bus passengers are, we do not have competition. The basis of the Transport Act 1985 was that there would be on-the-road competition and that would provide good services, and if bus companies lost out because of on-the-road competition, they lost out as in any other capitalist-competitive market situation. That has not happened, however; we have moved to monopoly.
Incidentally, when the 1985 Act was implemented in 1986 no compensation was paid to those bus companies—of which there were a number—running on regulated routes. Mayne in east Manchester, for instance, had run for many years in that area; when it had to compete, it did not get compensation.
We are now moving—through principled objectives, in a different way—to a competitive system, in those areas that choose that, because there will be choices for Norfolk, Greater Manchester and other areas at some stage. As with rail franchising, in a competitive situation, when a company loses out, it loses its business, even if it has invested in it previously. In fact, one of the difficulties with franchising is that we end up with investment up front and a lack of investment at the end; that is just the nature of franchising.
On the point of Robert Jenrick about medium-sized bus companies, that can of course be taken into account in the way that franchises are set up, by local choice. Areas can set them up in as many different ways as they wish, so medium-sized companies could be given the right to tender for routes that fit the size of the company if that was what the franchising authority wanted to do.
That brings me to a point I made in Committee, and which was rejected. Rather than the amendments we have here, I would have preferred the Bill to say that the regulations should not be overly burdensome and that they should reflect local conditions. If they were reflecting local conditions, they could take into account those small and medium-sized companies. There is a large point here, however, and, as my right hon. Friend the Member for Leigh said, the large companies would be more pleased than the small bus companies if these amendments were passed.
There is not a single quality contract in this country, and that is because when they were brought in under the Transport Act 2000, it contained a clause that is very similar to measures here, saying that they are the only practical way of delivering a better bus service. That is an incredibly high hurdle to jump, which is why there are no such contracts. Quality partnerships were referred to; I asked the Minister in Committee how many of them there were in the country, and, after a little help from the officials, we discovered that there were 10. So even quality partnerships are not abundant on the ground in this country. We do not need overly burdensome regulations. We want to make this work because it will improve the service for passengers, be more competitive and lead to better services.
We are not discussing them now, but there are huge guidance notes associated with this Bill, which I think tend to be overly prescriptive. I prefer to rely on the good sense of local councillors; they will make some good decisions and some bad decisions, but there are many bus companies with vested interests who are opposed to this, and if local authorities behave in an unreasonable way, they have the right to apply the Wednesbury principle and go for judicial review.
Rather than having lots of prescriptions, and putting ever more hurdles in the way of locally elected people making decisions, we should rely on their good sense. Sometimes they will get it wrong, as sometimes national politicians in Governments and Cabinets get things wrong, but we can rely on them and the common law, which will ensure that if bus companies feel that they are being unfairly treated and that transport authorities are behaving in an unreasonable way, they can take that to court.
So I hope the Minister will reject these amendments. We have held in the balance throughout our discussions the question of what is central and what is going to help local authorities, transport authorities and elected mayors to make these decisions, and these amendments do not help move us towards having a better local transport system.
There is a wide range of amendments in this group, many of which we support, but some we do not.
I genuinely hope that the Minister will consider new clause 4 on bus safety, despite his comments in Committee. More disappointment has been expressed to me on that aspect of our Committee discussions than on any other, partly because the comments of the Minister in the other place had been encouraging, but also because I cannot believe that there is any disagreement on the value of improving bus safety, and this is widely seen as an effective and cost-effective way of achieving that goal.
I think the Minister suggested in Committee that he might be minded to insert some guidance to encourage bus operators to sign up, but the evidence on voluntarism is clear: to my knowledge, no bus operator outside the London franchises is signed up to any independent, confidential incident reporting system. We have an opportunity now to end that situation. As my hon. Friend Ian Mearns said, such a system is not expensive. It works in the railway industry, and I have not heard a strong case made against it. It seems to work well and I urge the Minister to grasp the opportunity.
Amendments 14, 16 to 23 and 15 appear to us to be unnecessary and to go against the spirit and devolutionary nature of the Bill. The assessment process laid out in the Bill and the extensive guidance—168 pages—available for it are extremely thorough and tough, and do not need to be added to. Amendment 24 undermines the assessment made by the Government of the issues relating to compensation and sufficient time to enable operators to plan. Provisions already in the Bill fully satisfy all value-for-money considerations. We are pleased that the Minister confirmed on Second Reading and in Committee that the aim of the process is not to put barriers in the way of authorities proceeding to franchising. We fear that the amendment threatens the very heart of the Bill. Amendment 25 also seems to be unnecessary, as additional appropriate independence, rigour and structure for the audit process will be ensured by the Government, to which I think the Minister is about to speak. Amendments 26 and 27 also seem at odds with the devolutionary nature of the Bill, because it should be for elected authorities to make the decisions, based on their local judgments.
We strongly support amendments 6, 7, 10, 11 and 13, tabled by my hon. Friend the Member for Gateshead. The arguments were well made in Committee, and perhaps even more strongly today. In any transfers workers should be properly protected, and we have the opportunity to ensure that. I fear that the Government will choose not to take the opportunity, but I urge them to do so.
The respective roles of central Government and local government were a running theme in Committee, and I think we are back to it this afternoon. I will begin with the amendments that deal with the franchising schemes.
The decision to move to a franchising system is a big one for any authority or combined authority to take, and it is therefore not to be undertaken lightly. It must have at its heart improvement for bus passengers, but it must be very much a local decision. That principle has underlain the Bill right from the beginning. We want to ensure that authorities contemplating franchising do so with their eyes wide open to the opportunities, the risks and the costs, and we expect them to have consulted widely on their proposals.
The Bill sets out clearly the processes that authorities must follow before they can implement franchising. Those include developing an assessment of the proposed franchising scheme—in effect, a business case. As part of that assessment, the authority must consider the value for money and affordability of the proposal and must compare making the proposed scheme with other courses of action, such as a partnership—very much as my hon. Friend Sir Henry Bellingham suggested.
Several of the amendments in the group would change how those arrangements are operated. Amendment 24, tabled by my hon. Friend, would require an authority to include in its assessment consideration of whether the proposed scheme will be more efficient, effective and economic than any other option, taking into account any compensation payable to operators. Given the extensive requirements I just set out, I do not see a need to make those similar additional matters a separate part of the assessment. Also, it is not necessary or appropriate to refer to compensation in this part of the Bill, or indeed any other. Any move to a franchising scheme will not come as a surprise to bus operators; the clear processes and consultation arrangements we have set out will give them sufficient warning and sufficient opportunity to express their views on the proposed scheme, as statutory consultees.
Bus operators are required to give 56 days’ notice of their intention to vary or cancel a bus service. The Bill contains provisions to enable authorities to extend that notice period to a maximum of 112 days, to enable the authority to take steps to ensure that services continue to operate. That is an important point in relation to the amendments tabled by Ian Mearns. Bus operators of all sizes will still be able to compete when a franchising system is implemented, if that is what is decided locally. Competition will take place off the road for contracts, rather than on the road at bus stops, but competition will still exist. Generally, only operators that choose not to compete or do so unsuccessfully will no longer be able to run services once a franchising model is implemented, and in any event they are free to register new services elsewhere.
My point is that competition will move, but it will not disappear from the market. Competition now takes place on the road; it will move from the roadside to the tender. I do not accept that competition disappears from the marketplace. I came to this place from a robust private sector background, where competition was the daily bread-and-butter activity, and I am sure that it can have a positive impact on customer service, innovation, price and so on.
The Minister kindly met my constituent John Marshall, who in addition to running a medium-sized bus company chairs the east midlands passenger transport organisation that represents other small and medium-sized bus companies in the region. He tells me that for him and his members, the question of compensation remains unanswered by the Bill. For the sake of clarity for bus operators, will the Minister say whether the Government intend that in the event that franchises are lost, no compensation will be or should be paid to any bus company in the UK?
We do not think that it will be a requirement to pay compensation, but an authority that goes down the route of developing a franchising model will of course be free to offer payments as it sees fit. It is not Government policy that such compensation will be mandatory.
Amendments 16 to 23, which were tabled by my hon. Friend the Member for North West Norfolk would require a franchising authority to be satisfied of, rather than to consider, certain matters when making its assessment of a proposed franchising scheme. That is a significant distinction. The assessment as set out in the Bill does not require the authority to pass certain tests or to prove that franchising would achieve certain outcomes. Instead, it reflects the standard approach for public sector investment decisions of requiring a view to be taken on the overall merits of the scheme.
That is a deliberate move away from the quality contract scheme process, under which no local transport authority has established a franchising system. A requirement for a franchising authority to satisfy itself that franchising will deliver certain outcomes risks raising an impossible hurdle. It would be difficult for authorities to satisfy themselves with certainty, as their analysis, by its very nature, will be based on assumptions and projections about the future. The amendments therefore risk making the Bill unworkable in practice. We agreed to deliver as part of our devolution commitments franchising powers that would be more usable than the existing quality contract schemes, and that is what the Bill does. I hope that, on the basis of the explanations I have given, my hon. Friend the Member for North West Norfolk will not press amendments 16 to 24.
In addition to requiring a franchising authority to prepare an assessment, the Bill requires the authority to obtain a report from a qualified auditor. In relation to the consideration of affordability and value for money, the report must set out whether the authority has used information and conducted an analysis of sufficient quality. The authority must publish the auditor’s report as part of its consultation process. Amendments 2 and 3 make it absolutely clear that the auditor appointed for this purpose must be independent. It has always be our intention that the auditor should be independent, but we wanted to make that absolutely clear and put it beyond any doubt. Amendment 3 imposes duties on the Secretary of State to issue guidance on the matters that a franchising authority is to take into account when selecting an auditor and on the criteria to be taken into account by an auditor in reaching a view on the relevant aspects of the authority’s assessment. An authority or auditor must have regard to such guidance.
I am happy to say that I am in total agreement with my hon. Friend the Member for North West Norfolk on amendment 2. He may be surprised to hear that I also agree with the principle behind amendment 25, but the nuances of how independence from the authority can be demonstrated are better addressed through guidance rather than on the face of the Bill. That is the thinking behind amendment 3. For example, amendment 25 would require an auditor to have five years of independence from the authority, which could be difficult to deliver. For the combined authority of Manchester, for example, it would have to be demonstrated that none of the bigger accountancy firms had dealt with any of the constituent authorities on any issue over the past five years, which could be quite a challenge. However, the principle of independence has absolutely been in the Government’s thinking since the beginning. I support that principle, which is behind my hon. Friend’s amendment, and that is why I hope that he will feel able to withdraw amendment 25.
I can give my hon. Friend that assurance. We will deal with independence in the guidance, and independence from the decision-making body will be a basic criterion for the auditor.
I am reassured by what the Minister said this afternoon in rejecting amendment 14 and other related amendments. I ask him to go a little further and commit to the House that the spirit of his remarks today will be carried into the guidance and regulations that will follow the Bill—the consultation on them closed sometime last week. Will he also work closely with Transport for Greater Manchester and other metropolitan transport authorities to ensure that the wording of the regulations and the guidance is consistent with what he has said today and what is in the Bill?
I can provide the right hon. Gentleman with that assurance. We are not seeking to stand in the way; we want to create a suite of powers for local authorities to make decisions about what is right for their area. In some cases, it will be a franchising model, but that will be at the margins and not what will happen in most parts of the country. However, some parts, such as Greater Manchester, have indicated much interest in that model. It is not one of our objectives to block local authorities from choosing what is right for their area. We want a thriving bus industry, with local authorities working with bus operators to deliver a better network with a better deal for passengers and more passengers on buses. That is our objective with this Bill.
Amendments 4 and 5 make clear the precise requirements that a person has to satisfy to be appointed as an auditor. We are proposing the changes in response to effective representations we have received from a number of Members and following meetings that the Secretary of State and I have had to discuss the practicality of existing provisions with potential auditors. I hope that the amendments will be broadly supported by Members across the House.
The aim of amendments 14 and 15, once again tabled by my hon. Friend the Member for North West Norfolk, is to prevent a franchising scheme from proceeding if the passenger benefits it is expected to deliver could be achieved by making a partnership scheme. I sympathise with much of my hon. Friend’s intentions. Indeed, my hon. Friends the Members for North West Norfolk and for Wimbledon (Stephen Hammond) have done a significant job in speaking up on behalf of bus passengers for a considerable time. I do not want to see franchising pursued for any reason other than passenger benefit, and certainly not for ideological reasons. Passenger benefit is a theme that runs throughout the Bill. We want to see passenger experiences improve.
As I have made clear, however, the Bill already requires a local transport authority to compare making a franchising scheme with one or more other options. I hope that my hon. Friend the Member for North West Norfolk will be reassured to know that that should be a proper consideration of the options available. Indeed, the draft guidance, on which we recently consulted, states:
“Identifying realistic options should not be a desk exercise… and authorities should engage with bus operators in the area” to see whether there is “a realistic partnership proposition”. It also states that an
“authority should not dismiss realistic” alternatives without detailed assessment. The decision-making arrangements for franchising in the Bill are appropriate. Following a consultation on its assessment of the options, which should include bus operators and passenger representatives, an authority that decides to implement franchising must have satisfied itself that franchising is the right option for its area. Importantly, it should have a clear rationale for that decision with passengers at its heart. I therefore hope that my hon. Friend the Member for North West Norfolk will feel able to withdraw amendments 14 and 15.
The final set of amendments relating to franchising decisions are also from my hon. Friend the Member for North West Norfolk. Amendments 26 and 27 aim to prevent an authority that has developed a franchising proposal, but not progressed it, from making another franchising scheme for a period of five years. Those amendments go against the spirit of devolution. Banning the introduction of a franchising scheme for an arbitrary time period would severely restrict the capacity of an elected mayor, or other franchising authority, to take local situations into account and to act accordingly. It could also undermine the democratic process by preventing a new mayor elected within the five-year period from developing a franchising scheme, even if he or she had had franchising in their manifesto. In practice, if an attempt to franchise were to fail, it is highly unlikely that an authority would seek to make another scheme without devoting a reasonable and significant period of time to learning lessons from the experience. Given that, I hope that my hon. Friend will withdraw the amendments.
I will now move on to consider how much freedom a mayor or local transport authority should have in implementing franchising and partnership schemes. Amendments 6 to 13 and new clause 4, tabled by the hon. Member for Gateshead, seek to limit that freedom in various ways. As I said in Committee, I do not believe that mandating the basis upon which contracts are procured by local transport authorities, or the contents of those contracts, is appropriate, but that is exactly what amendments 6 and 9 propose in relation to the terms and conditions of employees. I can assure the hon. Gentleman that the power to achieve the outcome that the amendments seek will already rest with the franchising authority that will be letting the contracts. Employees and their representative groups will have plenty of opportunities to raise such points during the consultation process for the respective schemes. Indeed, it may be appropriate to put the proposals to the mayoral candidates of each of our parties.
I am a little surprised that the amendments have been tabled, because we discussed the practical concerns about them in Committee. For example, it is not clear which terms and conditions would apply where people with different arrangements had previously transferred under TUPE, and the cost of the proposals could also prove sufficient to prevent some authorities from pursuing a franchising scheme.
Amendments 10 and 13 address potential dismissals. Again, I have some sympathy with the intention behind the first two proposed subsections, concerning redundancies of employees before or after the introduction of a local service contract, but the scenario that they seek to address is unlikely to occur. I very much doubt that any employer would choose to dismiss an employee and bear the redundancy costs if it were able to transfer them under TUPE instead. In any event, employment law already deals with the unfair dismissal of employees.
For similar reasons, I cannot accept amendments 7, 8, 11 and 12, which would broaden the Bill’s provision so that TUPE protections apply where a new operator begins providing local services sometime after the previous service ceased. The Bill already enhances employee protection by prescribing that TUPE and pension protections will apply in particular circumstances. We strike the right balance in that regard, and it would not be appropriate to broaden the provisions further. Indeed, one of the first things we established in preparing the Bill was for TUPE and pension protection in the event of franchising.
The hon. Member for Gateshead also proposes in new clause 4 to require bus operators to subscribe to a confidential reporting system in order to participate in any bus scheme provided under the Bill. The new clause would require operators to collect and monitor bus casualty data and make them available for publication. I assure the House that I take road safety very seriously. Although the number of pedestrians killed or seriously injured outside London in incidents involving a bus or coach is falling, we cannot be in any way complacent. There have been a number of debates on that matter, both in Committee and in the other place. Although I can agree with the objective of this new clause, it is not appropriate to mandate it in primary legislation.
Does the Minister accept that injuries can also occur to passengers? As a regular bus user, I have witnessed such injuries on a number of occasions. This is not only about pedestrians and other road users. Bus passengers, often without the vehicle being involved in any sort of collision, can be injured when, for instance, the bus brakes abruptly. Surely the travelling public on buses—the customers of the bus operators—have a right to some Government protection.
I recognise the hon. Gentleman’s point. There is no doubt that passengers can be injured on a bus. I am also a regular bus user—not that that is particularly relevant—and all of us who travel on buses will have seen such injuries. He makes a reasonable point, but it does not necessarily mean that we need to mandate a reporting system in primary legislation.
Transport for London is the main example of confidential reporting by a bus operator, and it has featured in our debates in Committee. I understand that TfL pays the CIRAS subscription. When the London Underground and rail contract came up for renewal, the CIRAS contract was extended to cover buses at no extra cost to TfL. That prospect is different from mandating that every bus operator subscribes to such a system.
As I mentioned in response to an intervention by my right hon. Friend Mrs Miller, there are 30 rail companies and 1,000-plus bus companies in this country. We also need to consider the evidence. I have not been made aware of any robust evidence to suggest that arrangements introduced in London have had a significant impact on safety. If a franchising authority wishes to stipulate a system such as CIRAS as part of its conditions of contract, it is of course free to do so—that is what TfL has done here in London. Authorities that negotiate partnerships could also include bus safety measures as part of such an arrangement, so I will explore through guidance how we could encourage operators and local transport authorities to consider the benefits of an independent confidential reporting system, but we will probably limit that only to a franchising or partnership scheme to start with.
I hope that, in the light of my comments, the hon. Member for Gateshead will feel able not to press amendments 6 to 13 and new clause 4.
I have been speaking for far too long, Mr Deputy Speaker. I am sure that you and Members on both sides of the House will be pleased to hear that I am coming to the end of my remarks.
Amendment 28, tabled by my hon. Friend the Member for North West Norfolk, addresses decision making in enhanced partnership schemes. It would prevent requirements on how tickets are purchased or fares paid, on how fares or ticketing arrangements are publicised and on the price of multi-operator tickets from being specified in such a scheme unless all parties agree. Ticketing is a key element of the Bill’s partnership proposals, and one of the key principles of the enhanced partnership regime is that it does not require consensus by all operators.
Instead, affected operators may object to the enhanced partnership proposals at key points in the process, and the authority cannot proceed with its proposals if more than a sufficient number of operators object. Details of what amounts to that sufficient number will be set out in the draft regulations, on which we have recently finished consulting.
Leaving aside the objection mechanism, there are further safeguards to ensure that individual operators are treated fairly when ticketing requirements are included in an enhanced partnership scheme. A key safeguard is the ability for any proposals relating to ticketing, or any other element of an enhanced partnership scheme, to be subject to scrutiny by the Competition and Markets Authority, which will be a statutory consultee on the proposals. Our draft guidance on enhanced partnerships also makes it clear that all documents should include a section on competition, and it provides clear advice on how individual operators can raise concerns with the CMA at any point during the development or implementation of a scheme.
Perhaps most importantly, I can reassure my hon. Friend that an authority making a scheme has to be satisfied that any restrictions on competition introduced by an enhanced partnership, such as setting the price of a multi-operator ticket, are balanced by the benefit to passengers. The effect on small and medium-sized bus operators should also be taken into account as part of that process, and we have built protection for small and medium-sized operators into the Bill by requiring them to be considered, whichever regulatory model is chosen locally.
I make it clear that the provisions are about fairness, and not about protecting the commercial interests of operators. Bus operators may well prefer their passengers to buy a ticket for use only on their buses, rather than one that can be used on any bus service. That is of course in a bus operator’s commercial interest, but it might not necessarily be in the interest of a bus passenger.
If my hon. Friend’s amendment were to be accepted, only one operator would need to put its commercial interests first to block an improvement to ticketing for passengers that might grow the entire market in its area. Overall, the safeguards I have outlined are enough to ensure that proposals relating to ticketing are fair and reasonable to bus operators while delivering improvements that benefit passengers. I hope he finds my explanation reassuring and will therefore not press his amendment.
I believe the Bill already has decision making right and is in the right place to get the best outcome for passengers. In doing so, it will deliver on our devolution commitments, and I trust the House will agree.
I would like to think that the Minister will provide within the guidance to the Bill, once it is enacted, a reference to the Confidential Incident Reporting and Analysis System as best practice in the industry. Notwithstanding that, I do not seek to press the new clause or amendments 6 to 13. I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.