Clause 26

Local Transport Bill [Lords] – in a Public Bill Committee at 10:45 am on 6th May 2008.

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Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

I beg to move amendment No. 192, in clause 26, page 25, line 4, leave out subsections (3) and (4).

Photo of Ann Winterton Ann Winterton Conservative, Congleton

With this it will be convenient to discuss the following amendments: No. 113, in clause 26, page 25, line 1, leave out subsections (2) to (4).

No. 114, in clause 26, page 26, line 3, leave out

‘periods specified in subsection (1), (1A) or’ and insert

‘the period mentioned in subsection’.

No. 193, in clause 26, page 26, line 3, leave out ‘, (1A)’.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

I will speak very briefly to the amendment as I intend to withdraw it in due course, but I wanted to get one or two comments on the record.

The proposal harks back to our long discussions on clause 23 and new clause 5, on which there will be a vote in due course. We identified various scenarios for improving on the quality contracts scheme, which Members discussed at some length last week.

The hon. Member for Manchester, Blackley and I set out three options. The proposal is a fourth; it would remove the Transport Tribunal from the process, thereby eliminating one of the hurdles that local authorities face. In my view it is the fourth best of the four options. The best option is the one set out in new clause 5. However, it is an option and I offer the Minister this opportunity to comment, having, I hope, reflected over the weekend on the strong views that were put to the Committee both by her colleagues and by me, and to let us know whether she is likely to recommend to the House on Report some changes to the quality contracts procedure, which as she knows know was severely tested last week in Committee.

Photo of Ann Winterton Ann Winterton Conservative, Congleton

I assure the hon. Gentleman that I have spent the weekend thinking of little else but him, his amendment and, of course, my other hon. Friends. However, we did have a conversation about it on Friday.

As I said previously, the real issue is to make sure we have a robust system that not only gives local authorities certainty about the way they can proceed, but also gives good protection in terms of judicial review. In light of that, I hope the hon. Gentleman will withdraw his amendment.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

Well, that did not tell us very much, did it? Suffice it to say that I will return to the matter on Report if the Minister does not, but in the meantime, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I beg to move amendment No. 255, in clause 26, page 25, line 28, at end insert—

‘(5A) In subsection (2), in paragraph (c) (maximum period for which scheme to remain in operation), for “ten” substitute “five”.’.

Photo of Ann Winterton Ann Winterton Conservative, Congleton

With this it will be convenient to discuss the following amendments: No. 116, in clause 26, page 25, line 30, leave out from ‘operation’ to end of line 31 and insert

‘for “must not be more than ten years” substitute “which may be for a fixed period or until such time as the authority or authorities that made the scheme determine that it should not remain in operation.”’.

No. 256, in clause 26, page 25, line 30, leave out ‘ten’ and insert ‘five’.

No. 117, in clause 26, page 25, line 34, at end insert—

‘(2B) If the scheme is specified to be for an indefinite period pursuant to subsection (2)(c), then the authority or authorities shall, every time that the authority or, where there is more than one authority, each authority, reviews its local transport plan pursuant to section 109(1) (further provision about plans: England) or section 109B(1) (further provision about plans: Wales), review the effectiveness and appropriateness of the scheme and the extent to which the scheme continues to satisfy the criteria in section 124 (quality contracts schemes).’.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

The amendments look to the next stage of what the Bill discusses. We have moved on from the approvals process to the making of the scheme itself. I have made it very clear that we support partnerships, but that we are very concerned about the impact and effect of quality contracts. I see some scope for improving what is to be on the statute book.

The first place where I detect that scope for improvement is in the length of schemes. The Transport Act 2000, which introduced quality contracts, specified that schemes should operate for no longer than 10 years. The Bill does not try to change that time period, although it does make provision in subsequent clauses for extensions of a scheme beyond its original duration.

I think the Bill should change the quality contract. The maximum duration should be brought down from 10 years to five years. The reason for that is simple: I remain unconvinced by anything I have heard from the Minister or anyone else that quality contracts will do anything to improve bus patronage. They bring back a significant element of regulation. It does not seem to me that in most areas there will be the astronomical amount of financial backing that the central Government have given to London, which is why the regulated market in London has flourished.

Photo of Graham Stringer Graham Stringer Labour, Manchester, Blackley

I have listened on a number of occasions to the hon. Gentleman’s point about the difference between London and the rest of the country. What is not clear to me is the Conservative intention when the Bill becomes law. Are the Conservatives giving a commitment that—in the unlikely event that they ever become the Government—they will repeal the sections relating to quality contracts?

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I do not know where the hon. Gentleman has been for the last week, but I would have thought it highly likely that the Conservatives would be in government relatively soon.

Our position is clear. As we said on Second Reading, and I have already said in Committee, we are not convinced by anything we have heard that quality contracts will add to bus patronage. I tabled a number of extra amendments regarding quality contracts, which would have given the Government a chance to prove that they would do that, but so far we have heard nothing but assertion. We have seen no evidence. On that basis, our Front-Bench position is that when we come into power in a couple of years we will look very carefully at the system. At the moment, our intention would be to repeal quality contracts.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

In the meantime, will the hon. Gentleman be issuing instructions to Conservative councils not to use quality contracts?

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I would not presume to tell local councils how to behave—nor, I assume, would the hon. Gentleman—so I will be doing nothing of the sort. It would be extremely wrong of me. Likewise, I assume that the hon. Gentleman will not be instructing local authorities to use the contracts. It is up to local authorities to make their own decisions.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

I am grateful for that reply. We do not instruct our councils. We are grass-roots up, but I was not sure that the same approach was applied by the  Conservative party. Perhaps the word ‘instruct’ was wrong. Will the hon. Gentleman be encouraging his councils not to take up quality contracts?

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I will be encouraging our councils to take up partnership schemes, be they voluntary or statutory.

Photo of Clive Betts Clive Betts Labour, Sheffield, Attercliffe

It is interesting to hear the hon. Gentleman say that he is not in the business of telling his councils how to behave. If he intends to repeal quality contracts, should he get into government, so that local councils do not have the option of adopting them, surely he is telling them that they will not be able to adopt quality contracts. That is exactly what he is doing.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

The hon. Gentleman is taking an extraordinary position. Central Governments of all hues pass legislation that has an impact on local authorities. Is he seriously telling us that central Governments should not pass any legislation because it would have an impact on local authorities? [Inter r uption . ] That is the logic of the hon. Gentleman’s position. All the way along we have said we supported partnership and partnership routes, whether they be voluntary or statutory, and we will continue to support them. It has been a consistent position.

Photo of Clive Betts Clive Betts Labour, Sheffield, Attercliffe

I am grateful to the hon. Gentleman for giving way again. My position is not at all extraordinary. I completely accept that central Government have a right to propose legislation to the House, and that the House can pass it and, therefore, direct local authorities to behave in a certain way. However, I thought the hon. Gentleman’s party wanted to devolve more powers and responsibilities to local authorities. Surely what he is saying about quality contracts is that if those powers were given to local authorities, he would want to take them away if he got into government. That is the reverse of the philosophical position his party is now adopting.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

The hon. Gentleman has already made that point, but as I have already told the Committee there is no evidence yet that statutory partnerships work. I want a chance to see them work. That seems the right road to go down. I prefer voluntary partnerships, and if they do not work there are powers for statutory partnerships.

I have made the point that most companies and most areas will not receive the financial backing from central Government that we have seen in the regulated market in London, which is why it has flourished. The inevitable consequence is that there would be potential for bus operators and local authorities not to increase bus routes but to cut them. What is more surprising is that if we look at what will happen under the Bill, some of the operators—particularly some of the smaller, independent operators, who provide a valuable service—will face a real impact.

I draw the Minister’s attention to the operator Trent Barton, which, as she may know, operates in Derbyshire, Leicestershire and Nottinghamshire and runs a fleet of about 270 modern buses on a network of local routes. In the company’s response to the consultation on the  Bill, it talked about the impact of the legislation, saying it may be forced to close or to reduce its size. Unlike larger bus operators, Trent Barton cannot necessarily move to another part of the country. The company mentioned some of the benefits it has brought to passengers, which it might not necessarily be able to do under a quality contract; for example, the Spondon flyer, which doubled the amount of bus usage in a particular suburb of Derby and was openly praised by the local authority in its local transport plan.

Trent Barton is an example of a smaller operator that has successfully brought investment, innovation and improvement to bus services in an area. There is a possibility that quality contracts will destroy that and if we cut out small, independent operators, we will cut out a potentially valuable source of bus services and patronage. Cutting them out for 10 years seems wholly arbitrary and detrimental. I accept that the figure of five years is somewhat arbitrary, but it is significantly better than the original figure of 10 years.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

I understand that the hon. Gentleman does not like the quality contracts process. Inevitably, it is inevitably quite complicated and relatively bureaucratic, as it needs to be to protect people, for the reasons he has given. If we have such a process every five years, will it not load up costs and make the whole business of quality contracts less desirable and attractive?

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

There is that possibility, but local authorities are forced by central Government to do plenty of other things every year or every three years, which could put much greater costs on them. The proposal may or may not add extra costs, but there is a greater benefit, because quality contracts remain an unknown quantity.

Photo of Graham Stringer Graham Stringer Labour, Manchester, Blackley 11:00 am, 6th May 2008

I intend to come to some of those issues on amendment No. 127. The hon. Gentleman says that the amendment on five years is arbitrary, but is it not completely out of kilter with depreciation of a bus, and is that not genuinely related to innovation and to the length that a contract should be—if we want new, better buses with access for the disabled, for example?

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I certainly accept that five years is out of kilter with the depreciation period of a bus, but equally one might argue that so is 10 years. I understand that the total depreciation period is between 15 and 20 years. I am not sure whether the hon. Gentleman is suggesting that we go to the total depreciation period.

Quality contracts remain an unknown quantity: not one exists anywhere in the country and we do not know what their impact will be. I and my colleagues fear the worst. No one has produced any evidence in their favour. We have heard assertion—that is all it is—that they will be significantly better than bus partnership schemes. Making assertions about 10 years is a brave and dangerous step to take. I shall test the will of the Committee on this matter.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

The hon. Gentleman began by decrying quality contracts. We understand that that is his position, but the amendment relates to how long they should run, rather than the concept of quality contracts, which, whether he likes it or not, we have largely dealt with. I fear that he was seeking to re-run the argument, rather than deal with how long the contract should run, and to undermine the concept of quality contracts by reducing the period to five years.

If there are to be quality contracts, which I support, there has to be a sensible time period. There is the question of depreciation of vehicles, referred to by the hon. Member for Manchester, Blackley; the question of the cost of setting the contracts up; and the question of making them work, rather than continually having to revisit them and prepare for the next round of bidding and processing. If bus operators and local authorities are continually looking to the next process rather than getting on with delivery, that will lead to a worse service. It is not sensible to approach this in such a way.

The hon. Member for Wimbledon also raised the issue of small bus companies. I accept that that is an issue, as I did in earlier discussions. I raised the example of Norfolk Green to add to his example.

There is a very small chance that good small bus companies will be disadvantaged as a consequence of the introduction of quality contracts—I raised the issue with the Minister earlier—but I happen to think that the likelihood of that happening is quite small and remote, so it is worth taking the chance. I accept that there is the possibility of it occurring, but if it does occur and the Norfolk Greens of this world have their bus routes taken away, it will not matter whether the period involved is five years or 10, because such companies will not come back. If they disappear, they will not hang around for five years waiting for the next quality contracts to be created.

If the hon. Gentleman’s objective is to defend those companies, this, if I may say so, is not the right way to do it.

Photo of Ann Winterton Ann Winterton Conservative, Congleton

My hon. Friends and the hon. Member for Lewes are right to point out that the hon. Member for Wimbledon has said that he would abolish quality contracts if a Conservative Government were returned to power. That is quite clear. It is part of the undermining of the system of quality contracts—trying to pare away at it, obviously with the ultimate threat that if a Conservative Government were to be returned—no matter what councils had done in the meantime to set up quality contracts in what they felt was in the best interests of their constituents and the people in their local authority areas—quality contracts would be abolished.

From my discussions with Conservative councillors —I have said it before, but I will say it again—I think that there is a lot of enthusiasm for the approach that we are adopting in the Bill and that they will be severely disappointed that there has not been a change of heart on this particular policy by Conservative Front Benchers, even during debates in Committee.

We need to be clear. The Transport Act 2000 gives quality contracts 10 years to run. That is the current position, and we are not changing that in the Bill. What we are doing is allowing the tenders for contracts, or  the contracts themselves, to be for 10 years rather five. That is because a quality contracts scheme is likely to involve a quite major reorganisation of local transport in an area, and a well-constructed scheme should form part of a long-term strategy to improve public transport. It is also likely to involve a high degree of investment, both by the local authorities in infrastructure and by the contracted operators in better-quality vehicles.

We believe that a 10-year time scale will often be necessary to justify such investment and to achieve the desired outcomes. It is possible for local authorities, if they so wish, to have a shorter period. Again, we have said that that is up to local authorities to decide. We believe in devolving decision making and trusting people at local government level to make the best decisions for their areas. The Bill is part of that, and that is why we are sticking to what was in the original Bill.

Frankly, as I have said, because of the investment necessary on both sides, we do not believe that a five-year maximum would be sufficient in the majority of cases. For those reasons, I ask the hon. Member for Wimbledon to withdraw his amendment.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

As I have said several times in response to the Minister, I find her unconvincing and not reassuring. Yet again, she has made assertions but produced no evidence on them. Until we hear evidence, I see no reason to change my position. I am open-minded, if the Minister would care to give me some evidence, but we have heard only assertion, so I wish to test the will of the Committee.

Question put, That the amendment be made:—

The Committee divided: Ayes 4, Noes 10.

Division number 13 Nimrod Review — Statement — Clause 26

Aye: 4 MPs

No: 10 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport)

I beg to move amendment No. 206, in clause 26, page 25, line 43, leave out subsection (10) and insert—

‘(10) Subsection (10) (power by order to vary the period mentioned in subsection (2)(b)) shall cease to have effect.’.

The amendment is designed to be probing. The original provisions on quality contracts in the 2000 Act gave the appropriate national authority the power to vary the date on which a scheme will come into operation. Clause 26(10) will amend that so that the national authority has the power to vary the date on which the scheme is made and any date relating to an appeal on such a scheme.

Given that we have just heard from several Labour Members who were anxious to jump to their feet to defend quality contracts as a localist measure put in place by local authorities, I am surprised that they are not now jumping to their feet to say, “Why would the national authority want this power?”.

Will the Minister say under what circumstances she envisages the Secretary of State interfering in such a localist measure in such a manner? Why does a national authority need the power to meddle in the scheme, which will have been proposed by a local authority and approved by an independent approvals board?

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

The consultation stage, as I recall it, drew attention to a number of comments from individuals who were concerned that the time lag between a scheme being made and coming into operation was, at 21 months, unduly long. That was seen as a difficulty that had to be overcome if we were to see implementation of quality contracts. I see the Minister nodding, so she accepts the point that that is a long time lag. What steps has she taken to reduce that time lag and what should the time lag be in most cases?

Photo of Rosie Winterton Rosie Winterton Minister of State (Regional Affairs) (Yorkshire and the Humber), Minister of State (Department for Transport)

The amendment would remove what we believe is a very necessary flexibility to be able to amend aspects of the quality contracts scheme timetable through secondary legislation.

The 2000 Act provisions, as amended by the Bill, provide that a quality contracts scheme must be made not later than six months either after it has been approved or, in England, after any appeals against decisions of the approvals board have been finally disposed of. The Bill also continues a requirement in the 2000 Act that there must, in England, be a period of at least six months between the making of the scheme and its coming into force.

As the hon. Member for Lewes said, the period was originally 21 months. That was changed to six months through secondary legislation at the request of local authorities and others who felt that the original 21 months left too long a time lag. However, the original position of 21 months still remains in Wales, although that will be harmonised through the Bill.

Any of those periods can be varied by an order made by the Secretary of State or the Welsh Ministers. That gives flexibilities to shorten or lengthen the six-month period if, with the benefit of experience, that is considered necessary. In the past, there has been a change from 21 months down to six.

To remove the order-making power as the amendment suggests, so that it would not be possible to change those periods, would remove the flexibility that we want. The only way that the periods could be changed, if it was proved necessary, would be through primary legislation. As all members of the Committee know, passing primary legislation is a lengthy process.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

Will the flexibility that the Minister envisages allow the period to be extended beyond six months? In due course, that might have implications for the viability of particular bus companies, if the uncertainty went on for too long.

Photo of Rosie Winterton Rosie Winterton Minister of State (Regional Affairs) (Yorkshire and the Humber), Minister of State (Department for Transport)

Yes, it does include the possibility of lengthening the period. Here, we have in mind perhaps a situation where there are difficulties in ordering new vehicles or in constructing a bus lane. Over time, it might prove necessary to have that greater flexibility in the system.

Bus operators may fear that the order-making power might be used to reduce a limit to below six months, but it may be used to lengthen a limit if that is considered desirable. I assure the Committee that no changes will be made without full consultation.

In my view, it is necessary to have that flexibility in making quality contracts schemes and I ask that the amendment be withdrawn.

Photo of Stephen Hammond Stephen Hammond Shadow Minister (Transport) 11:15 am, 6th May 2008

I am grateful for that explanation. One moment we are being localist; the next, we are for national direction. The Minister wants the flexibility to have national direction at one moment and then to castigate everybody else if she does not consider them as localist as the next person. I want to look very carefully at what the Minister has just said and possibly to revisit the matter on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 26 ordered to stand part of the Bill.

Clauses 27 and 28 ordered to stand part of the Bill.