Clause 29

Part of Local Transport Bill [Lords] – in a Public Bill Committee at 11:15 am on 6 May 2008.

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Photo of Graham Stringer Graham Stringer Labour, Manchester, Blackley 11:15, 6 May 2008

I beg to move amendment No. 127, in clause 29, page 26, line 36, leave out subsection (3) and insert—

‘(3) Subsection (2) is omitted.’.

The amendment continues the debate that the hon. Member for Wimbledon introduced and would make the length of quality contracts more flexible and potentially longer, in line with the process in rail franchising and that in Greater London.

There are two issues here and—with your permission, Lady Winterton, as we are speeding along this morning—I will discuss the length of quality contracts and the scheme itself, which is related to this issue. Listening to what the hon. Gentleman said in proposing the previous amendment and looking at this amendment, we see that while quality contracts are a considerable improvement on what we have, they are by no means a perfect mechanism. There is a lot of evidence—not just in this country, but around Europe—that quality contracts would and will improve the quality of bus services. However, there are problems, which members of the Committee will have seen with rail franchises and, indeed, the franchises for the tram system.

If a franchise is let to a private operator to achieve all the benefits of commercial operation—response to the market, the innovation that the hon. Member for Wimbledon mentioned and investment that allows that innovation and response to happen—the contracts  necessarily become front-loaded. The commercial operator will want to spend the money and get the return on it at the beginning, and towards the end of the contract there is deterioration.

The amendment says that the process should be in line with permissive EU legislation, which would allow 50 per cent. extension to the contracts—that is normal in rail franchising and in London—so that they could be extended from 10 years to 15. There would be an immediate benefit in doing that in stabilising the whole of the public transport system that relies on buses. If a quality contract were coming to its end and the operator was unsure about retaining that contract, whether because they had not been very good or because there were aggressive competitors in the market, there would probably be less interest in it. However, that would be exacerbated if the scheme itself came to an end at the same time, so the marketplace would not know what sort of scheme was going to be in place.

We come back to the point, is what is good for London good for the rest of the country? It is assumed that in London the schemes for franchising buses go on and that when it comes to the end of the scheme in 10 or 15 years, the market will know what to apply for. What is envisaged in the Bill—the scheme itself is covered in more detail in later clauses, but it is relevant to the amendment as well—is the scheme having to go back to square one and be looked at again. That seems disruptive and it will bring a lack of stability to the system.

The amendment says that it should be possible to extend 10-year franchises by 50 per cent., as is allowed under EU regulation. The stability of the process would be helped if the scheme was allowed to continue unless there was some very good reason that it could not, which could be picked up in the local transport plans.