Clause 41

Local Transport Bill [Lords] – in a Public Bill Committee at 12:45 pm on 6th May 2008.

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Competition scrutiny of functions and agreements relating to buses

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I beg to move amendment No. 231, in clause 41, page 36, line 13, at end insert—

‘(c) agreements between two or more local bus operators relating to bus services.’.

A large number of bus services up and down the country are being revised as a result of voluntary partnership agreements between a bus operator and the local authority. These are not statutory quality partnerships yet; they are not affected by those. As I have said many times, voluntary partnerships are the best way to move forward. We have seen a number of excellently performing bus services. Any provision that encouraged such partnerships would have the support of my party. For that reason, I welcome clause 41, as did my hon. Friend the Member for Chipping Barnet (Mrs. Villiers) on Second Reading.

Clause 41 addresses the scenario in which bus operators and local authorities want to form a voluntary agreement for the benefit of the travelling public but are constrained by competition law, going through some of the competition tests. While I understand and appreciate that there has been a huge amount of relatively extensive consultation on this matter, there are one or two things on which I wish to probe the Minister.

Schedule 2, which we will discuss later, introduces the new competition test. Any agreements that are subject to that competition test will become an exemption from the relevant elements of competition law. The purpose of the amendment is to explore further the issue that was raised in another place. Lord Berkeley tabled an amendment that would have extended the scope of the competition test such that it applied to agreements between two operators. In other words, it would have allowed two operators to have an agreement without being subject to some of the competition law and not have the involvement of the local authority if it were proven to be helpful to bus patronage. The gist of my amendment is not dissimilar.

There are situations in which operators might wish to enter into agreements relating to bus services that would definitely benefit bus passengers. An obvious example might be timetable co-ordination. If two operators were discussing something that could clearly be of benefit to passengers, that should not be hindered by competition law.

The clause was amended in another place by means of a Government amendment. That represented some progress. What I am unsure about is whether that amendment covers an agreement of the sort that I have mentioned. Schedule 10 of the Transport Act 2000, as amended by the Bill, sets out the competition test and its application to voluntary partnerships and other agreements. I would like to know whether the Government amendment covers two operators discussing something—particularly timetable co-ordination—that would be to the benefit of bus passengers.

Photo of Ann Winterton Ann Winterton Conservative, Congleton

The amendment would extend further the new competition test that will apply only to voluntary partnership agreements and certain agreements between bus operators. Through the changes that we are making to the competition test, we have tried, for example, to allow two operators to agree to co-ordinate their timetables to provide even patterns or services that connect with each other. That was in response to representations received from local authorities and bus operators about obstacles in the way of them working in partnership, through voluntary partnership agreements, and agreeing with local authorities on improvements, in the best interests of passengers.

When the Bill was introduced in another place, the new competition test applied only to agreements between one or more bus operators and one or more local authorities. However, the Government were persuaded to extend it, so it now applies also to certain agreements between operators only, provided that the local transport authority has certified the agreement as meeting the necessary requirements, which are that the agreement is in the interest of persons using local bus services in the relevant area and does not impose unnecessary restrictions on the operators concerned. It may impose only restrictions necessary to achieve what are referred to as the “bus improvement objectives”. Those objectives are identical to those used to assess whether potentially anti-competitive measures in a quality partnership scheme may be justified.

As I said, those amendments were made in another place. I think that bus operators were pleased with the changes, as too were the Campaign for Better Transport and local authorities. Furthermore, it is right to put on the record my thanks to the Office of Fair Trading for its help in preparing the provisions. However, my problem with the amendment is that it would allow bus operators to come to an agreement without the local authority having certified that it meets the requirements that I set out. Such an agreement should not be allowed unless the local authority agreed that it would improve public transport in the area and that it was to passengers’ benefit.

I appreciate that the amendment is probing and aimed at finding out the reasons for the changes made in another place, which further extend the requirement. However, we do not believe that agreements should be made without the local authority’s endorsement and certification.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I am grateful to the Minister for her explanation, and I can certainly see the thrust of her argument. I shall consider what she said, particularly on local authority certification. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

It being One o’clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at Four o’clock.