Bus Services Bill [HL] - Committee (2nd Day) (Continued)

Part of the debate – in the House of Lords at 5:45 pm on 4th July 2016.

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Photo of Earl Attlee Earl Attlee Conservative 5:45 pm, 4th July 2016

My Lords, this amendment is all about compensation for loss of business, and its purpose is to make it a requirement on a franchising authority to factor in the cost of compensating bus operators as part of the assessment of a proposed franchise scheme.

I can anticipate the Minister’s response, but I would still like to explain my concerns. If the state needs to remove something from a person for the public good, then the state should compensate that person. It is quite simple: if land is purchased under compulsory purchase power, the owner of that land gets paid for it. I am fully aware that compensation would not have been payable under a quality contract scheme, although the days of quality contracts are severely numbered, and that when toes were dipped in that particular pool of water it ended rather badly, but it does not make it right, which is why my party was not keen on it.

The cost of compensating a bus operator who has to close his business, having failed to win a contract bid, could well run into millions of pounds, taking into account the physical assets—vehicles, depots and land—and the good will that the business enjoys. In one of our previous debates, the noble Lord, Lord Snape, asked what would happen to garage premises in the city centre, and would they be redeveloped and lost, and about all sorts of complications. I will speak about good will again when we reach Clause 5.

If that is not bad enough for the large plcs who would have to redeploy—hopefully—their staff and assets, we should consider the position of SME operators. These businesses will have been established on the back of solid hard work and with considerable financial risk and energy on the part of private individuals, who will have invested their life savings to see their company grow. They stand to lose all that not because they have performed badly, not because they are bad companies and not because their passengers have decided they no longer want to use their services. They stand to lose it all simply because they lost out on a bidding process for the franchise. Apparently, all their endeavours are worth nothing.

The Bill is currently silent on the matter of compensation, which I believe is wrong. I was really quite alarmed by the comments made by my noble friend Lord Young of Cookham at Second Reading, when he said that foreign owners of bus companies, but not British ones, might be entitled to compensation under the TTIP agreement, currently being negotiated at European level. I suggest that the whole issue of compensation needs to be revisited. Is it right that a foreign company could be paid millions of pounds of taxpayers’ money, because its local authority has decided to take control of its local bus services, while a British company is left high and dry with no business and no compensation? The Minister will have to answer this point. I hate to say it, but this all sounds rather unconservative.

It is vital that when a local authority pursues a bus franchising scheme, the process, including a detailed assessment of the scheme, must be as robust as possible. The assessment must look at every single aspect of the proposed scheme, including whether the franchise scheme stacks up financially and represents good value for money because whose money will it be? It will be local taxpayers’ money, so the compensation to bus operators who are put out of business must be an important part of the mix. I beg to move.