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Exemption From Duty To Co-Operate In Trial Areas

Volume 981: debated on Monday 24 March 1980

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'(1) Within a trial area the duty of public passenger transport operators to co-operate with one another and with local authorities and to provide information in respect of their operators shall not apply.

(2) The duty referred to in subsection (1) is that specified in—

  • (a) section 24 of the Transport Act 1968 (in passenger transport areas);
  • (b) section 151 of the Local Government (Scotland) Act 1973 (in Scotland otherwise than in a passenger transport area);
  • (c) section 1 of the Transport Act 1978 (in non-metropolitan counties in England and Wales).
  • (3) Section 3(5) of the Transport Act 1978 shall not have effect within a trial area.'.—[ Mr. Prescott.]

    Brought up, and read the First time.

    I beg to move, That the clause be read a Second time.

    We come to the debate on trial areas. The clause is limited to the specific aspect of the duties imposed by other legislation on bus service operators in trial areas. The Transport Act 1968, the Local Government Act 1973 and the Transport Act 1978 impose upon transport operators certain duties which the Opposition believe are in conflict with the concept of the bus services that will be operated in designated trial areas. The purpose of the clause is to consider those duties and suggest to the Government that the acceptance of these duties in a trial area will impose considerable difficulties upon the remaining bus service operators in that area. It is a matter of judgment what kind of bus service will remain in trial areas, and there is a distinctive and qualitative difference of opinion between Conservative and Labour Members about the consequential effect on bus services of the designation of trial areas.

    We must wait to see what happens, but our judgment is that the imposition of these duties in trial areas will be detrimental. Bus operators are being asked to compete rather than to co-operate, and we seek reconsideration of the duties to be imposed. Bearing in mind all the obligations in this legislation, which changes fundamentally the nature of obligations and systems in bus service operation, it is our view that the whole of Britain will become a trial area. However, I shall keep primarily to the definition of "designated trial areas" as contained in the Bill, the general conditions that will apply and the conditions of competition that form part of the experiment.

    6.15 pm

    The concept of experiment is at the heart of the trial areas scheme. Almost by definition, a trial area is one in which one seeks to impose different criteria in an attempt to assess the consequences. We should make it clear from the start that the attitude of the Opposition—as of previous Labour Governments —is that we recognise that experiments are necessary in areas where it has been difficult to maintain regular passenger bus services. At the heart of the 1978 Act lay the case for introducing experiments. In 14 or 16 areas they became known as the Routex experiments. Experiments were tried out that were not allowed under the existing licensing arrangements. Those experiments included the sharing of cars and minibuses, under which there were certain exemptions on driver conditions and bus operation conditions.

    I want to make it clear that we are not against experimenting with new methods. However, the difference in our approach from that of the Government is that we wish to maintain what exists while carrying out experiments. The system that we envisaged under the 1978 legislation—despite its limitations and the criticism that it attracted—provided a public transport network. It provided services in rural areas while allowing experiments to take place. We felt that the safeguard of commissioner licensing, the maintenance of public service licensing, cross-subsidisation, the transport supplementary grant and the development of transport plans—and now the duties related to legislation as outlined in the new clause—all helped to maintain a service on which people could rely. Experiments in those areas were possible at the same time.

    I visited a number of those areas, particularly in North Yorkshire, where experiments were attempted, and it is not clear what conclusions to draw from those experiments. I have seen a report produced by the Transport and Road Research Laboratory. It offers no conclusion. If anything, it says that we had better maintain the public service system because there is insufficient information on which to recommend an extension of experimental systems at present. The Opposition have been in favour of experiments from the outset, but only alongside the provision of a public service as well.

    The definition of a trial area is spelt out in the Bill. Such an area is one where there is no requirement for licensing and where the full force of competition will apply. I presume that it is the kind of free enterprise area that is spoken of in the Government's economic policies. However, the full force of competition will not apply. The competition will be organised because, to an extent, there is a desire to see some elements of coordination. Timetables and a notice clause will be provided. That means that one cannot immediately begin or end a service under the terms of the Bill. I assume, however, that if a firm goes bankrupt overnight no one will insist that that firm carries on because it has an obligation.

    I understand the Bill to provide that where a service is to cease it will not be allowed to do so immediately but will have to continue for a specified period. I am not sure how long that period will be. The designation order refers to three weeks, and I believe that the regulation will spell that out in detail. Will the Minister tell us what sort of time span he has in mind in respect, for example, of existing bus services in a designated area? The burden of our approach is that operators will seek to pull out because the services will prove uneconomic, given that they will cease to receive transport supplementary grant and the benefit of cross-subsidisation.

    This is not an academic point. I believe that 80 or 90 per cent. of the rural services operated by the National Bus Company are likely to come into this category. Indeed, the restriction of TSG by the county authority has led in the areas affected to a direct reduction of services. The economic pressures of operating costs may well therefore lead to bus companies taking the inevitable commercial decision that they cannot maintain services with restricted support.

    If the service were to be forced to operate for a month or two after it wished to cease, that would impose a further penalty on the bus company, since it would have to operate for that period without compensation. It is interesting to see how the Bill will apply when a designated area is discontinued. If the Government felt after two years that the system was collapsing and that services were not being maintained, the Minister could state that the designation order would be revoked or altered. If it were revoked, operators who were still maintaining services in the designated area would presumably be compensated by the automatic award of a road service licence on the ground that if they had invested in bus services on the basis of trial area schemes they should not be penalised by being put out of business just because they did not have road service licences before the schemes were introduced. The aim should surely be not to disadvantage operators.

    That is not the attitude adopted towards the nationalised sector, which will be required to maintain services in these areas without compensation in that way. But that is probably not the only way in which the Bill treats the private and public sectors differently. The trial areas seem to involve the development of organised competition, with order being introduced by way of timetables and the giving of notice.

    It would be easier for us to address specific arguments on this issue if we knew which areas were likely to apply for trial area status. We have to rely on the general information given by the Minister, who said only that there had been 12 applicants. We do not know whether those applicants are in respect of whole areas or parts of them. We do not know whether Tory councils want to designate Labour districts. All that is possible under the Bill. Our job of assessment would be easier if we knew which type of county authority was applying and the transport demands upon it. The publication the Surveyor looked at the 12 areas likely to apply to become trial areas and found that they were the very authorities that spent less per head of the population on transport than the county authority average. They were the authorities that gave a low priority to a public transport system. That factor causes us concern and alarm.

    In Committee the Minister made it clear that his policy did not necessarily mean that if eight or nine authorities survived the various checks and balances they would all necessarily be granted this new status. His attitude was that he would not grant trial area status just because they wanted it. Instead, only two or three of the applicant areas would succeed. Transport operators and transport planning officers in county authorities have often explained to me that the distinctive factor in transport is that no two areas are alike. Therefore, if trial areas were allowed on a broader basis, the scheme could be more effectively monitored. With more areas, the quality of the data used to make an assessment would be higher. However, I do not press that argument too hard, because if, as I believe, the trial areas scheme is a disaster, it would be better if the disaster were restricted to only two or three areas.

    Has the Minister decided whether two or three areas will be designated, and will he name the areas that have applied? It is important for us to know that, so that we may see whether our individual county authorities are among them. I have asked my authority on Humberside whether it has applied, but it has quickly run away from the whole idea. Some authorities were attracted to the scheme because they thought that they would become licensing authorities in the way that the commissioners are. They soon learnt, however, that that was not to be. Their only role was to be in designating part or all of their areas as trial areas—that is, areas in which a road service licence was unnecessary.

    The scheme will inevitably lead to controversy, especially since only the county authority will be eligible to apply. The authority may consult a number of bodies, and is requested to do so. I understand that within three weeks of notice having been given in the press all evidence received is to be attached to the designation order so that the Minister can determine how much opposition there is to the scheme.

    The district authorities are incensed by the whole business. The Minister said in Committee that he would not be put off by the district authorities which have a vested interest and which might not necessarily know what was good for them.

    No, the Minister did not say that, but his words were to that effect. He said, however, that the experiment would require a courageous approach and that he would bear that in mind in deciding on the applications. Forty of the 50 or so county authorities are themselves bus undertakings and they have a great deal of expertise in the business. They are well aware of where their own best interests lie. Tory and Labour districts alike agree that they do not want trial area status imposed upon them against their wishes by the county authority, with the Minister's endorsement. To that extent it is a controversial argument.

    It will help the House if the Minister will indicate which county authorities he is likely to designate. Who are the favourite runners? Which counties are likely to be chosen to lead the way into this new era of free enterprise? We need that information so that we can make a proper assessment of the problem.

    The Minister is aware that some county authorities have no transport operating abilities. Some Conservative-controlled authorities—for example, in the North—will have responsibility over a number of Labour-controlled district authorities. Their attitudes to subsidies and support are clearly different and will lead to controversy. The local authority in my area is a classic example. The Government gave a TSG to the county authority, but my district authority has not received a penny of it. To be correct, it received £40,000 that was left over out of £1 million. The county authority was embarrassed by that sum and gave it to the corporation's largest district operator. An application was made by the district, but the county authority disagreed with its bus policy and, therefore, did not allow it the TSG. There is a recipe for considerable controversy on strong political lines between county and districts, of whatever political colour, and certainly between districts of different political colours within a county authority.

    6.30 pm

    We fear that that will have a disastrous effect on the trial areas. It is a matter of judgment whether that will happen, but it is common criticism that this attack will affect the cross-subsidisation argument. Cross-subsidisation is an essential feature of the network concept. There was much discussion in Committee and on new clause 6 about the concept of cross-subsidisation. It is an important economic means by which responsibility is matched to the duties imposed on local authorities. New clause 7 refers to legislation that imposes duties on local authorities.

    Cros-subsidisation is a means by which a network system is maintained. It does not necessarily mean that the difference between costs and revenue is met out of the TSG. As a means of maintaining the network system, county authorities ask transport operators to provide a service from A to B, which they know is not remunerative, but they then help them by granting a bus service from C to D. That is a means by which county authorities—Tory or Labour—have attempted to main- tain a network service. Cross-subsidisation must be regarded not only as money from the Government but as money that is derived from profitable routes, with the counties making up the difference by means of the TSG.

    The idea of a network concept and cooperation is essential to this clause. It refers to duties imposed by previous Acts of Parliament. The Transport Act 1968 states that where any area has been designated under section 9(1) of the Act it shall be the duty of the bus companies to cooperate with one another in the reorganisation of bus services within, from and to that area, and for that purpose to enter into agreements as to the services to be provided by the company or group or the subsidiaries in or in connection with that area, and as to the terms on which those services are to be provided. Clearly, certain onerous duties are laid on the National Bus Company.

    The Local Government Act 1972 makes clear that it is the duty of the county council
    "To promote the provision of a co-ordinated and efficient system of public transport to meet the needs of the county and, for that purpose, to take such steps to promote the co-ordination, amalgamation and re-organisation of road passenger traffic transport undertakings in the county as appear to the county council to be desirable."
    Those words about responsibilities, duties and co-ordination are included in all the Acts referred to in the new clause.

    Under the Transport Act 1978 the metropolitan county councils were given further duties:
    "To develop policies that would promote the provision of a co-ordinated and efficient system of public passenger transport to meet the county's needs, and … to take such steps as the council think appropriate for promoting the co-ordination, amalgamation and re-organisation of road passenger transport undertakings."
    It further provided that all public transport service operators in the county and district were required
    "To co-operate with one another in the exercise and performance of their respective functions for the purpose of co-ordinating public passenger transport services."
    Those duties are specific, and it is the basic claim of transport operators that if they are expected to co-operate in the way suggested in the Bill and to provide information in the way requested in the Bill, they will be put at a disadvantage.

    We feel that the new Clause is realistic and that the duties embodied in previous legislation shoud be removed. Under that legislation, an operator is required to give information to the local authorities which could be used directly or indirectly against and to the detriment of the first operator. Can we really expect competition to be complementary to cooperation? Are they not antitheses of each other? Is competition the requirement to co-operate, or to compete against? I think that it is to compete against. If those factors are complementary to each other, it is because it is in the commercial interests of the operator who makes the decision and not because of any basic principle of cooperation that is imposed as a duty on operators.

    The Government seem to take the view that co-operation is against the public interest and that competition is the means by which the best co-operation is achieved. Therefore, we feel that the legislation referred to in the new clause should be repealed, since considerable difficulties will be imposed on the operators.

    In our view, the trial areas are the antithesis of the present policy, in which co-operation is a requirement and a duty, and the traffic commissioners have considerable powers to ensure that there is co-operation and integration. Competition will very much undermine that.

    We must consider carefully whether the imposition of a trial area will be against the interests of the people involved. One has to bear in mind here the opposition that one hears. Certainly the operators seem to be against it to a man. I recall what the Minister said in Committee:
    "When it comes down to it, the crucial people in the transport debate are not the operators but the travelling public."
    That is a fair point. It is said that the public are the best placed to judge in this case. But they cannot make their judgment until something has happened. The operator, at least, has a good idea of what is likely to happen and what the consequences may be. Perhaps a dispute between the two sides of the House will not be a matter of common knowledge to the public. In the main, the public tend to react when faced with the con- sequences of legislation rather than before.

    In these circumstances, one hopes that the electorate will look for protection to their elected representatives, in which case, presumably, in a district they will look to their district councillors. But, as we know, the views of the district authorities are likely to be overridden. I think that the Minister has now agreed, through certain amendments, that the views of districts may be taken into account in a context rather more important than just consultation. But when the thing has collapsed, when an order is to be revoked or varied, the district council may be dragged in and all it will be able to say will be "We told you what would happen." Perhaps that is some consolation, but it will not amount to much, I believe for the district authorities.

    The 50 municipal authorities to which I have referred are one important source of democratic opinion and, speaking through their association, they are to a man against the designation of trial areas, as I understand it. Perhaps we see here an overriding of the democratic expression of opinion. We have seen much the same in regard to school transport under the Education (No. 2) Bill. I cannot say that I am very happy to see another place determine what the democratic decision of this place should be, but we have to recognise that there was an overriding of the Government by their own supporters on the question of transport provision for education.

    The Government are trying to override the power of local authorities in education, and now we see the same being done in transport. In all these respects Conservative authorities are expressing considerable alarm, and they are at one with their Labour counterparts in the district authorities against the imposition of trial areas.

    There may well be an overriding of people's choice. I am sure that the Minister will say that people in the districts have representatives on the county authorities and we have now said that the authorities, and we have now said that the county authority should have respon-systems. That is a fair argument but for the fact that the counties, especially the shire counties, where the authorities are Tory-controlled, will overwhelmingly outvote any representations from district representatives, so there is no guarantee in that sense that people who have come to expect a level of service in district areas can be certain that that service will continue.

    We have heard Ministers attack the districts on occasion as being inefficient, but they have never specified any authority as being particularly inefficient and over-protected. The Parliamentary Secretary was directly challenged to name one and refused to do so, and one can readily understand the political reasons which move him to keep away from that. But one cannot then say that the district authorities do not provide a good and comprehensive system overrall, as they are required by the legislation to do. That is what they have been asked to do by the House under both Labour and Conservative Governments.

    The question of taking account of whole areas to be designated as trial areas is causing considerable concern, especially in the light of the political bias which is sensed by district areas such as my own. But the feeling is the same in Conservative areas, too.

    The Minister has said that he believes that the power of decision should be as near to the grass roots as possible. We have quoted what he said on the subject of trial areas during debates on previous legislation when he was in Opposition. He made clear his concern that decisions should be taken as near to the grass roots as possible. I remind him of what he said in Committee on this Bill:
    "But what I must emphasise again is that a trial area will not be imposed on the local population."—[Official Report, Standing Committee H, 5 February 1980; c. 966.]
    I presume that by his reference to the local population the Minister meant, for example, that if a county authority designated a district area as a trial area to see what it would be like, the county authority would be imposing that will on the district authority, but all that the Minister could do in such a case would be to say "I do not think that you are near enough to the grass-roots decisions, and I therefore ask you to reconsider it." Or, I suppose, he could refuse to confirm the designation order. But that gives very little protection to the district authorities, so to that extent we are at one with them and have sympathy with much of the argument advanced by the district authorities.

    6.45 pm

    Although I have put the emphasis of my remarks on the district bus transport areas, they are not really the ones likely to feel the most disastrous effects of these experiments. If these experiments are introduced in rural areas, the rural services that are maintained by an element of cross-subsidisation will begin to be reduced even more than they are at present.

    In this connection, I have in mind the studies done by the Transport and Road Research Laboratory. They have made clear that while the majority of people in rural areas have cars—a greater proportion than in the urban areas, to the extent of about 80 per cent. to 65 per cent.—the remainder of the population in the rural areas is heavily dependent on public transport for journeys for medical and hospital purposes and for shopping. That comes very clearly out of the studies which have been done.

    Does my hon. Friend recognise that even the figure that he has given can be misleading, because they refer to car ownership by family? If the breadwinner in a rural area is out with the car, quite frequently neither his children nor his wife will have access to any form of transport at all.

    Yes, I agree. I was taking what I regarded as a more limited approach to the matter, and I accept that one could put the argument much more strongly in that way. Nevertheless, for the minority of low-paid people who cannot afford a car and who are heavily dependent on some form of public transport for education and other services a serious problem will remain.

    The need has now been recognised for school purposes, but the argument is the same for medical and hospital services. By the reorganisation of the Health Service, we have assumed that there will be encouragement of the provision of public transport services so that people may have medical attention. The same applies to schooling, but it is equally important, if not more important, for National Health Service facilities. But under the Government's scheme it will be the rural areas that will have to carry the brunt of the experiments.

    The Minister should be a little more honest with the House tonight. Perhaps I should withdraw the word "honest" and say that he should give the House more information about which authorities he has in mind. Which are the key leading authorities? Let him tell us so that we may make a better assessment of the effect of his legislation.

    Duties are imposed. The advice of the operators is overruled. The elected representatives, certainly at district level, feel that they will be ignored. The logic of the argument for our new clause is that competition and co-operation are not synonymous but are the antithesis of each other. Our new clause recognises that and would provide that existing public transport operators which have duties imposed on them by the House should not be disadvantaged. The trial area policy is in contradiction to the duties imposed on these operators, and we therefore urge that the new clause be adopted.

    Perhaps I may interpose briefly at this stage and allow my hon. Friend the Parliamentary Secretary to reply to the debate in due course. I wish to give some guidance to the House on what we are about in this matter, and perhaps that may be of help and convenience to hon. Members at this stage.

    The hon. Member for Kingston upon Hull, East (Mr. Prescott) is a rather difficult man to reply to, because at one stage he accuses me of being revolutionary in my approach and at the next he accuses me of being far too cautious.

    Clearly, the debate on trial areas, both inside the House and outside, has been a vigorous one, but it has not shed very much light on the present situation. This is not a plot to destroy the National Bus Company. The purpose of the trial areas is quite simple. We believe that the 1930 licensing system is outdated. We have made it clear that generally our preference is for decontrol and freedom. For example, we are convinced that the licensing of leisure services or excursion tours is utterly unnecessary. We also believe that the licensing of long-distance coach services, which we debated on the last series of amendments, is unnecessary. We also take the view that, if a local authority or a county council believed that such a provision would help its area, it would be wise to allow that authority to be designated as a trial area in which no licensing should take place.

    I emphasise what I have emphasised at every stage—that the Government are not forcing a solution upon the county council in question. We are offering a further option in those cases where no licensing applies. If the local authority believes that it is in its interests, it is an option that we are prepared to offer to it.

    The right hon. Gentleman is saying something in which he does not really believe. He is saying that if the local authority so desires, it should be given an option. But no option is given to a district council which runs its own public service operations. It will not even be consulted. The practice under local government reorganisation, as a result of the 1972 Act, shows that that is what happens now. If a district authority has invested a large amount of ratepayers' money in its successful bus operations in order to support certain profitable routes to the advantage of the community as a whole, will it ever be given the option to protect its investment?

    I am about to come on to that point. That is exactly why I intervene at this stage. If the hon. Gentleman will forgive me, I shall come on to the position of district councils a little later. Nevertheless, the point that I am making is right, and it is one which I stand by.

    The hon. Gentleman may believe that county councils should not be the transport authority. If that is his belief, it is not a policy that is accepted by the Conservative Government, and it was not accepted when the Labour Party was in Government. All these issues were gone into in some detail, as my hon. Friend the Member for Wellingborough (Mr. Fry) will remember, during our debates on the Transport Act 1978, and there was very little light from the then Government at that stage.

    Obviously, the greatest difficulty about the licensing relates to local services, which we are anxious to encourage and to see flourish. I fully understand the cross-subsidisation and network arguments for protection. Many people genuinely believe that licensing is essential in the public interest, and the Bill accepts that, with some loosening of the burden of proof which, I think, has been generally welcomed. However, I do not believe that we must uncritically acquiesce in something which is a restriction on the undoubted freedom of competition and choice simply because everyone has grown up with it and the industry is used to it.

    That is the purpose of what I said in Committee. Again, I underline it. What we are talking about in regard to transport policy is not something that is necessarily in the interests of a particular lobby. The crucial test, as with the last series of amendments, is what is in the interests of the consumer or traveller.

    I believe that we should take up the challenge. When county councils want it, that being their judgment, and if they see advantages that we also see, they should be allowed to take part in one of the trial areas.

    We are currently in discussion with a number of county councils about the trial areas. As I said in Committee, I would expect there to be probably only two or three trial areas within the country. We are not talking about the whole of Britain becoming a trial area. That is the scale about which I am thinking.

    The initiative must come from the county councils themselves. There will be proper monitoring by the Transport and Road Research Laboratory. The trial areas will have to last long enough to enable the results to be significant. Therefore, we hope that they will consist of substantial areas—not necessarily whole counties, but perhaps towns and even suburban and urban services. Those discussions are continuing at present, and it will be as a result of those discussions that we shall come forward later and make our announcement about what areas have been designated as trial areas. However, while discussions are continuing, I do not think that it is reasonable to talk about those counties that are in discussion with us.

    There are two points that I should like to make. First, is the Minister satisfied that the necessary reporting system will exist in the trial areas for the monitoring to be carried out properly? Secondly, in advance of the introduction of any trial areas, does not he agree that it would be rather unwise to assess the whole of the country on the basis of a few trial areas? In the nature of things, trial areas are likely to be introduced only in parts of the country where they are most likely to succeed. It does not necessarily follow that even if they work in one area they can be more widely applied.

    I do not agree with the hon. Gentleman's second point. I do not think that it is right to talk about these areas as experimental, in the sense in which the hon. Gentleman referred to them. It may well be that in certain areas it will work to the benefit of the public, and it may be that that is an example that other counties will want to follow. That is the way in which I look at it. The information which the TRRL will collect will, I believe, be of use. I foresee no difficulties in the reporting system. I believe that it is a reasonable step forward.

    I agree with the hon. Gentleman that this is a cautious step forward. We are not simply saying that the licensing system should be brought to an end. We are saying that if county councils feel that a no-licensing policy will be of benefit they should be allowed to carry it out. I regard that as a significant step forward in the provision of transport, and I do not go along with the fears that are being expressed.

    I do not believe that the new clause will make any practical difference to the operation of trial areas. I appreciate that there is a difference between the philosophy of the Transport Acts of 1968 and 1978 and the philosophy of the Conservative Party as enshrined in the Bill. However, I believe that the provisions of the new clause are unnecessary. For example, there is no proposal to take away the duty of county councils to coordinate public transport in their areas. They will still be able to exercise that duty through discussion with operators and through their revenue support powers. Therefore, it would be wrong to suggest that operators should not co-operate with local authorities in trial areas.

    7 pm

    At this stage I should like to advise the House on the way in which I propose later to proceed on the issue of revocation of trial areas, on which there was a great deal of debate in Committee. I agree that the original Bill was inflexible and that some county councils might have been discouraged from beginning an experiment by fear of the cost of reinstatement after possibly three years of unsuccessful trials. I also agree, as was urged on me in Committee by my hon. Friend the Member for Meriden (Mr. Mills), that district councils have an interest in trial area experiments and that their role should be recognised. Therefore, at a later stage we propose to move a group of amendments which will give flexibility in the minimum period of a trial area. Instead of being three years for all, it will be whatever period between two and five years is specified in the original designation order. That will be a matter for discussion between the Government and the county council in question.

    The balance may be struck differently in different cases between the need to assure would-be operators that the trial will continue for a reasonable period and the desire of some counties not to be locked into an experiment for too long.

    The later amendments will also involve local authorities more in the revocation procedure than was envisaged in the original Bill. That comes back to the point that was raised in Committee. Revocation, like the original designation, will be left to the initiative of county councils. The county will have to consult the district councils and notify widely before applying to the Minister for revocation. The difference in nature between designation and revocation is such that consultation will not have the same delaying effect as in the case of a designation order. Therefore, if the initiative to start experiments comes from local authorities, so should the initiative to bring them to an end. That is the second change that we shall be making.

    There is one further change, which is designed to encourage new operators to undertake the investment in vehicles which will be necessary for new stage carriage services. New operators might be put off by a fear that there could be revocation before they had recouped their investment and that, after revocation, the licensing procedure would be exploited or used by competitors to deprive them of their routes. Therefore, there will be an auto- matic right to a road service licence for anyone who provided an established service while the area was a trial area. What is meant by "established" may vary according to cases, but a service will have had to be run for at least three months.

    We hope in this way, first, to provide more flexibility by having a period between two and five years; secondly, to involve the local authorities and district councils more than was originally planned; and, thirdly, to give an assurance—this is of the utmost importance—to new operators who want to come in and who clearly want to invest in new buses—and we want them to invest in new buses, because it is in the public interest that they should—that the fact that a trial area is revoked will not leave them in the lurch. They will have an automatic right to road service licences if the situation reverts to road service licensing and traffic commissioner control.

    Will that be a priority right over and above the existing service —for example, if the National Bus Company pulled out because it could not afford to run it?

    The operator would have an automatic right to continue the service that he was operating in the unlikely event of the trial area being revoked. We do not expect this to take place, but we are anxious to give as many assurances as we can in this area. It is important to give assurances not only to district councils but to the new operators whom we hope will come forward. Therefore, what we are doing is right. We are giving an assurance and encouragement to them. I hope that the message that will go out from the House after the Bill becomes law will be that there is an opportunity here for new operators to come forward.

    I thought it right to intervene at this stage to give the House this indication of future policy. My hon. Friend the Parliamentary Secretary will sum up the debate.

    I listened with considerable care to what the Minister said, and I have fleetingly cast my eye down the Official Report of the Committee proceedings dealing with trial areas and found that, far from the option principle propounded by the Minister suggesting a process in which consultation could help to put his clause into practical operation, the right hon. Gentleman removed himself from that stance. My right hon. and hon. Friends placed an amendment before the Minister in Committee. That amendment sought to give district councils the right to raise objections. If the Minister has confidence in what he suggested, I cannot understand why he objects to the elected representatives of a district council, whether in a metropolitan or non-metropolitan county, seeking to put forward matters about which they know better than he does.

    It follows that if we are to have competition and co-operation, the principle must be carried forward. Therefore, the Minister should say something far more positive to the House of Commons than he said in Committee.

    The district council in Hartlepool is an outstandingly good transport undertaking, with a policy of renewal of its buses and an investment programme which has served the people well. If, by any chance, the Conservative-controlled Cleveland non-metropolitan county, in formal or informal discussions with the Conservative Minister of Transport, sought a designation order, my district council would have no say in the matter. No county councillor or officer at county level in Cleveland has the knowledge and experience of the transport management committee and councillors of my district council.

    While my lion. Friend is pursuing the argument of the Hartlepool district council, will he cast his mind to a possible situation that could arise? Will he assume the Hartlepool district council not being able to express a view but running a transport undertaking, the Cleveland county council approaching the Minister for a designation order and people presumably waiting in the wings to move in during the trial period? During the trial period, the Hartlepool district council will possibly say "These people are running the transport services, so we shall not run ours". After the trial period, those who had been waiting in the wings may say "It is not economical". Therefore, it could be that, those people having said that it is not economical and the district council having no say and having disbanded its good services, we shall have no services at all. What would the Minister do in such a situation?

    Experience shows that that is the consequence. What about circumstances in which someone actually contracts out? Transportation coverage has been based upon a policy of supporting non-profitable routes with revenue from profitable routes. Any new operator, albeit without a licence, unless he is a damned fool, will not take up the unprofitable routes. He will take the profitable routes of the already established operator. But the Minister is not prepared to see sense. Unless he wishes to avoid the charge of a dogmatic determination to set his mind against the experiences of others, he is running in the wrong direction.

    We want to persuade the Minister to try to understand that there will be grave consequences in urban areas. The new clause also asks for protection, through consultation, of boroughs and shires, where, I accept, there is great concern for the rural problem. The Bill will not help. Who will invest as an alternative operator, even without a licence, in the rural areas? It will not happen, so that provision might as well be taken out of the Bill.

    I ask the Minister how many applications he has had for trial areas. He will not answer. I suggest about three. Have any Labour-controlled councils applied? The answer is "No". Possibly, if we examined and scrutinised the three that have applied, we might find a couple of opportunists who would support what is in the Bill. We might discover that they have said "We would like to be a trial area, Minister". But we do not know the reasons.

    Before the hon. Member for Hartlepool (Mr. Leadbitter) gets carried away, I should point out to him that, as I said earlier, about 10 or 12 county councils applied. Perhaps I had better repeat what I have said several times. We expect that there will be about two or three trial areas, but that is not the sum total of those who applied.

    There is no need to worry about my being carried away. If anyone has been carried away on this subject it is the Minister. Indeed, he does not have many friends as regards this part of the Bill. If we assume that the principles of the House are based on a democratically supported constitution, I am sure that the Minister will agree that he is in the minority. There is no question of my being carried away. The right hon. Gentleman is on the Government Front Bench and is in a minority. He said that 10 applications had been received of which possibly three would operate. But the question that I was about to ask before the Minister challenged me so exuberantly was how many public service operators there are and how many of them will be affected. What is the extent of the clause?

    Wherever the Minister looks, he will find that nothing to the advantage of the people living in the rural areas will arise from the Bill. On the contrary. There is another answer to the problem, but this cannot be done by this clause. In the urban areas, anyone can see that, should there be operators who are given the opportunity to use buses without a licence, they will not go for the unprofitable routes. Those routes are sustained by a service provided by a public authority already licensed which uses the profitable services to provide overall coverage for the community. The Minister does not see that. But that is what will happen, I am sure that he is forcing this through because it is his own pet hobby-horse.

    7.15 pm

    Perhaps the Minister is lacking in transport experience. I served with a transport undertaking, and I know that the Minister did not. He should have the courage to remove this clause, because it will not work. In two or three years, or under amendments Nos. 14 and 16, which mention a trial Period of between two and five years—and we have not discussed revocation, which is another problem—the Minister will find that his clause has achieved the advantages that he has sought to persuade the House it will bring to communities.

    I hope that the Opposition will support the new clause put forward by my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) and divide the House on it.

    As a vice-president of the Association of District Councils, I appre- ciate the new thought that my right hon. Friend brought to this subject when he spoke. I sat here somewhat dumbfounded for about 35 minutes, listening to two or three sentences on the new clause and what appeared to be a long discussion which really belonged to the Committee stage.

    There is one main aspect only that is worth considering: will the new clause make any substantial difference to the idea of trial areas? The point that my right hon. Friend put forward, which I am sure is most significant, was that the powers of co-ordination of county councils still existed. Unlike the hon. Member for Hartlepool (Mr. Leadbitter), I should have thought that the most likely areas to be designated are not those in densely urban areas. Surely this is an attempt to try to tackle those parts of the country where public transport is either non-existent or sparse.

    The hon. Member for Wellingborough (Mr. Fry) is trying to make a positive point and is entitled to a response. However, will he take into account that the rural areas with bus services are those that have highly subsidised bus services? How can an entrepreneur who wishes to make a profit on his investment achieve that when the established services have to be subsidised?

    I can answer that by saying that in an area of Northamptonshire that is exactly what happened. A service with which the company was not happy was operated by a subsidiary of the NBC. That service was taken over by a private operator. I am in no position to judge whether that service will be running three, four or five years from now, but, through the co-ordination of the county council, a new operator has been brought in and the service is now operating. Therefore, we must give the Minister and the Government the benefit of the doubt and the opportunity to tackle this problem.

    From what my right hon. Friend said, it is clear that he does not expect hundreds of applications from people who wish to run trial services, especially in the urban areas. But surely it is right to try to find ways of providing transport for those who are denied it at present. I am sure that the hon. Member for Hartlepool would be the first to agree with that. However, we can disagree about whether the idea of trial areas will work.

    There is one weakness in this whole approach, and it is not the fault of my right hon. Friend but is due to the peculiarity of the licensing system. Any scheme for dealing with public transport in rural areas which ignores the place of the rural taxi will not deal with the problem. We all know that there are many small villages and hamlets where only a handful of people need to move at any one time. In many of the rural areas, the rural taxi can cope. For some peculiar reason, through the processes of government over the years, taxis come under the Home Office and other public transport comes under the Department of Transport. If we are to move forward in trying to deal with the problem of parts of the country and talk about delicensing, for goodness sake let us look at what transport could be available in those areas. Many of the problems could be solved by a new look at the taxi service in rural Britain. I hope that that point will not be forgotten.

    There is a danger, and, surprisingly enough, it is totally the opposite to the danger that has been advanced from the Opposition Benches. I do not think that it will be the large operators who may well suffer if there is no licensing. The people about whom I shall be worried are the small private operators, because the organisations with large resources will be able to subsidise their operations and run at a loss much longer than the man with one or two coaches or rural buses. He is the person who could be really vulnerable in this situation. Therefore, we must be aware that there is this other side to the picture, as distinct from that put forward by the Opposition.

    I am in favour of experimentation. In his contribution tonight, my right hon. Friend has already answered nearly all my queries. It is the last one that remains. We must be careful that we are not undermining some of the other services that are being provided, particularly by the small operator. In any case, the county council has a serious responsibility and a chance to help here, because it is the county council which co-ordinates not only public transport but the schools service. Therefore, I hope that when they are looking at this matter the county councils will be very sympathetic to those who are trying to supply a bus service and will certainly continue to bear them in mind when they are awarding school transport contracts.

    I always listen to the hon. Member with great interest. However, it seems that the case that he has made is equally true in respect of the National Bus Company. Basically, what he is saying is that small operators could suffer because of operators moving in on the more profitable routes. That seems to be a reasonable case to argue. But is it not also the same case to say that the National Bus Company should withdraw from rural transport and that the subsidy that it was putting into rural transport should be galvanised into its long-route services to make them more competitive? Therefore, rural services, whichever way the hon. Gentleman has the argument, will suffer.

    As the hon. Gentleman knows, I feel that that is a possible danger. However, my right hon. Friend is not considering making the whole of rural England the designated area. He is deliberately asking for one or two areas in which experiments can take place. Surely it is right to try to have one or two areas where these experiments can take place. I shall be joining in watching very closely indeed how the experiments are taking place and seeing what dangers may befall them. My right hon. Friend will be looking to one interest and I shall be looking to another. But we have one thing in common: we shall be considering the public interest above all else.

    I should like the Minister to tell the House how many Scottish local authorities have made application to be designated as trial areas. My own authority, Strathclyde regional council, which covers some 5,000 square miles and encompasses large urban areas as well as very large remote rural areas, might well be thought of as an ideal example of an authority which could be considered fit to be designated as a trial area. Yet, when we examine the figures for subsidies paid to transport operators, we find that in Strathclyde regional council in the 1979–80 financial year the local authority will be paying transport operators a subsidy of £23·9 million, and that at present it subsidises about 25 bus and post bus operators as well as seven ferry service operators.

    As far as I am aware, no rural bus operator in the Strathclyde region operates at a profit, and many of these operators would simply cease to exist without this subsidy from the local authority. There is no rush by entrepreneurs in Strathclyde to set up in business as transport operators, because there is simply no profit in it in the rural areas. If there were, the local authority could well save some of the £24 million that it pays in general subsidies.

    The Scottish Bus Group, which is far and away the largest bus operator in Scotland, made the following comment on trial areas:
    "The idea of trial areas where road service licensing for all bus operators would be temporarily waived, is viewed with some trepidation unless bus operators are well represented in the discussions and organisation of such a scheme. The danger foreseen is that if abstraction results from established services during the trial period and these services are consequently reduced or withdrawn, it is unlikely that on the termination of the experiment passengers will return in sufficient numbers to justify restoration of these facilities. Generally the industry is not against positive experimental schemes but doubt must be cast as to whether operators would be prepared to make the necessary investment in vehicles and plant for a trial period only with no guarantee of continuity. Finally it must be said that transport in any area is a product unique to that area reflecting peculiar local circumstances and the results obtainable from one area do not necessarily become applicable to any other part of the country without modification."
    The present road service licence system ensures that in general only companies with serious intentions to run a viable and efficient service will make application. There is no evidence to support the Government's claim that the system is daunting to new entrants or difficult to understand. Under the present arrangements, very few applications for new licences are ever refused. It is not bus licensing that hampers initiative or restricts competition. It is simply the inability to make a profit.

    I agree with my hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson) that there is little doubt that in the short term the public interest would be served by having State-sponsored trial areas free of road service licensing, but only if some public money is used to initiate them. We have seen nothing of lasting value under the experimental areas legislation of 1977, and nearly all of these schemes have financial and staffing problems.

    It is in the long term that the real danger of trial areas exists. The damage that could be done to the existing service could never be repaired except possibly at considerable public expense. I should have thought that that was not something for which the present Government would like to be responsible.

    The hon. Member for Glasgow, Shettleston (Mr. Marshall) sums up the views of all those with fears by a defence, largely, of the existing licensing system, with a distinct reluctance to contemplate any change and a dismissal of recent experiments which, in his opinion, have not got very far, as such under the 1977 Act. I concede to those who have raised the matter that that is the reaction of quite a lot of people in the passenger transport business, which has become quite accustomed to 50 years of rigid licensing and is somewhat worried to contemplate change of any kind. But we are contemplating change generally and change particularly in the trial areas. It is right that hon. Members should express their further fears about it in this debate.

    First, I think that the comparisons with the 1977 Act and Routex and so on rather put the trial area concept into the wrong context as an experiment, a very limited project. As my right hon. Friend emphasised, our approach to the idea of trial areas is a cautious one. The Bill is riddled with caution so far as the mechanics for consultation and so on are concerned. Nevertheless, we are envisaging something much more significant than the 1977 Act experiments. We are in the hands of the local authorities. Where local authorities agree with us that the time has come for change, we think that very considerable change in passenger transportation could come from these experiments.

    Our approach to trial areas and what led us to look at the possibility of trial areas free of quantity road service licensing altogether was an underlying belief that a great deal of the licensing system in many parts of the country had probably outlived any useful purpose. Perhaps we shall discover—if enough trial areas are designated—that the licensing system exists because it has existed for 50 years but that it serves no worthwhile purpose. Trial areas provide a way of challenging that in an adequate number of diverse circumstances.

    7.30 pm

    That belief is partly based on a study of present circumstances. People agonise about the delicate network arrangements that now exist, that cross-subsidise and support rural services and help outlying areas of municipalities. It is surprising to hear such arguments. The real background is one of continuous decline in the passenger transport networks of Britain.

    The hon. Member for Truro (Mr. Penhaligon) reminded us of the disasters that had hit parts of Cornwall. My hon. Friend the Member for Meriden (Mr. Mills) pointed out that rural parts of his constituency were losing the services of a National Bus Company subsidiary. It is no good saying that the present system supports a viable network in all rural areas or that it is fulfilling all passenger needs. It is very much in need of change. We shall, therefore, make that change.

    Trial areas must be contrasted with the position that will exist in the country as a whole. We shall change the burden of proof, whether in trial areas or not, in attempts to resist new operators seeking new services. The traffic commissioners will be enjoined to give licences, unless those licences are against the public interest. Express services that travel more than 30 miles without setting down a passenger will be free from licensing throughout the country. The commuter coach will be given priority. Regular contract services serving works and schools will be a reality throughout the country outside road service licensing. Within that context, county councils may ask my right hon. Friend to designate the whole or part of the county as a trial area. Such councils may share our belief that in practice road service licensing serves no purpose.

    About a dozen councils have expressed interest. I am told that two regional councils in Scotland have expressed interest. That information may be of benefit to the hon. Member for Shettleston. However, as yet no one has formally applied. Many councils are consulting. Some have not yet reached the consultation stage. We hope that two or three will put it into practice. We would like variety. However, we are in the hands of local authorities. The question of how many trial areas and how big they are will depend upon local authorities. They are the transport authorities. It would be nice to have a trial area in a large city or town as well as a rural one.

    The hon. Gentleman has stressed the word "consultation" and the phrase "in the hands of local authorities". Perhaps he will heed his own remarks. In Committee he said:

    "Such procedures will certainly be demanded by those district councils which are flatly against the whole idea of trial areas in their or any other district. Some of those councils are controlled by people who are as hostile to the whole idea of competition in transport, as well as trial areas, as many members of the Committee are, and who will use the statutory consultation procedures deliberately to delay and obstruct the implementation of the county council's intentions."—[Official Report, Standing Committee H, 5 February 1980; c. 938.]
    In other words, he has said that there will be no consultation. He distrusts district councils. He is saying that they are prejudiced.

    I am glad that the hon. Gentleman reads my speeches. I remember well what I said. If the hon. Gentleman has read the whole of that speech, he will know that earlier in it I answered the questions that he has posed. He asked how local authorities could set up trial areas. He wanted to know the position of district councils. He said that we did not want to know the views of district councils. He queried the position of areas such as Hartlepool. He said that if the county council had considered designating a trial area its representations would not be made known. He knows that I made those remarks about a demand that there should be formal statutory consultation when the Bill is enacted, even if consultation has already been held. I pointed out that it would give an opportunity to those districts that are hostile to the idea as a matter of principle to delay the proposals indefinitely. However they will have information and be able to make representations.

    The hon. Gentleman will also know that I referred to schedule 2. I made clear that when a county council wishes to designate a trial area it must begin by informing many bodies about its intention to apply to my right hon. Friend. It must inform all district councils. The district councils may then make representations to the county council. If the county council still wishes to persevere with the desire to be a trial area, its application to my right hon. Friend must be accompanied by all the representations that have been received.

    Before designating a trial area, the Minister will consider all the representations that a district council may choose to make. The hon. Gentleman is merely prodding at a passage in Committee that he has taken out of context. In that passage I dismissed the idea of going beyond the adequate arrangements that I have already described and of writing statutory consultation into the Bill in addition to all the requirements of information and of representations. He knows that formal statutory consultation will provide opportunities for delay.

    Of course, we appreciate the position of district councils. That position was pressed upon us by Conservative district councils and by my hon. Friends in Committee. Indeed, my hon. Friend the Member for Wellingborough (Mr. Fry) again stressed it tonight. My right hon. Friend has dealt with the changes that we made concerning the revocation of trial areas and a district's desire to be consulted. That will be accommodated in later amendments.

    The apparent desire to write out the duty to co-operate was merely a means of obtaining a debate. The Opposition proposed to wipe out large portions of the 1968 and 1978 Acts, to which they are so wedded. The hon. Member for Workington (Mr. Campbell-Savours) jumped the gun and asked what would happen in these trial areas. He wanted to know how we could be certain that they would not be of great disadvantage to the areas concerned. That is the main point.

    I stress that we are not advocating trial areas because we believe that there will be a collapse of public transport as we know it. By that I mean that which is urged upon us by the most cautious of operators, by all trade unions and by the ideological opponents of the Bill. We do not envisage dramatic overnight changes in trial areas. Those who find themselves within a trial area will wake up the morning after their area has been designated and find that nothing has changed. The same bus service will be operating. However, the climate may change because the traffic commissioners' road service licensing powers will have gone.

    What might happen? The hon. Member for Workington put his case succinctly. He spoke of the rural areas in his constituency and of the profitable urban parts. I shall not go into detail about Cumbria as that is a matter for Cumbria county council and for local operators. Let us take an imaginary county.

    We are concerned not so much about ideological changes but about the effect of those changes upon community life in certain areas.

    I accused my opponents of being interested in ideological changes.

    I wish to return to the practical arguments put forward by the hon. Member for Workington. In an imaginary county, half of the services need to be profitable and half unprofitable. It may be thought that the profitable ones generally subsidise the unprofitable ones and that the county council chips in a bit of revenue to support the network. That is a fairly typical set-up. If the traffic commissioners' arrangements are withdrawn, what will happen? There will be no dramatic change unless the National Bus Company, or one of its subsidiaries, starts behaving in a foolish and precipitate way—as they have said that they might. However, I do not think that the subsidiaries will take such action in practice. The hon. Member for Workington dwelt on the first thing that might happen. People might move in on the profitable services. The first sign of change will be that a proportion of the better services will have more buses and reduced fares. Operators will move into the better routes—

    The hon. Member for Hartlepool (Mr. Leadbitter) flits in and out of the debate like Fairy Blackstick without listening to the parts in between. All his right hon. and hon. Friends have referred to pirates moving in to cream off the profitable routes. A profitable route is vulnerable to competition. Somebody might move in and provide more buses or lower fares, or do other wicked and heinous things to those who live along the route. No one is arguing with that except the hon. Member for Hartlepool. We are told to consider the consequences to the rest of the network. Those who live along the routes will discover that they have been paying high fares and tolerating a poor service to cross-subsidise the network—to use the jargon of the passenger transport industry.

    What happens to the unprofitable services where there is a defined public need for operators? Revenue support is given to subsidise the network as a whole. Very few counties give revenue support to specific services. An operator with a certain piece of territory asks the county for a subsidy and probably receives it. It is possible to move away from that system with the MAP—market analysis project—arrangements, but it is the norm. Counties must realise that trial areas are not a substitute for revenue support. There is nothing wrong with revenue support. However, trial areas will provide counties with an opportunity to use revenue support in an intelligent, creative and better way.

    Trial areas will identify not only the present routes, who operates them, what are their losses and how much finance is required to keep them running—most of the present networks are a combination of history and chance—but which routes the county council, as the transport authority, considers to be fulfilling a public need but which are not being served or which might not be served if there were change to a more commercial regime. The county councils must identify the routes and the public need, and decide how to make intelligent use of their revenue support to provide the necessary services.

    I know of a council that has invited tenders for revenue support for certain routes, to discover who will come forward, what services and vehicles such operators can provide and at what price to meet the county council's desire. That option is open to the National Bus Company because there is no bias in the Bill as between the public sector and the private sector.

    The Minister's remarks read like something from Hans Christian Andersen. There is no need to look into a crystal ball when one can read the book. We heard similar remarks during the Beeching era. We were told that there would be no change and that the only difference was that one would ride on a bus instead of a train. Lo and behold, the fairy descended and the buses started. But the fairy's wand rusted and there were no buses and no trains. What will the Minister do in that context?

    7.45 pm

    The hon. Gentleman has said a lot about fairies, Beeching and trains, but I do not see the analogy with what I have described. The revenue support given by the public service obligation to the railways is not for specific routes. The Beeching operation predated the PSO by some years and was a national attempt to stop the deliberate closure of routes. We are not closing any routes. We are indicating that counties can, if they so wish, take away the restrictions on road service licensing where they can make better use of revenue support. Once the restrictions have been lifted, there will be a wider choice of operators and types of service. It is for the county councils to use the purse strings that are in their possession and their duties as transport co-ordinating authorities to make the best use of the moneys provided.

    Does my hon. Friend believe that the same principle should be applied to British Rail? Surely, it is unfair to treat road transport in one way and rail transport in a completely different way.

    7.45 pm

    We are not responsible for the present financial arrangements for British Rail. I am biting off my tongue before launching into the analogy of British Rail. It should be run on the basis of the subsidy being applied to certain services where an accepted public need is defined by the Government. Sir Peter Parker is fond of talking about the contract between British Rail and the Government to provide certain passenger services at a certain price. That is a system that bus companies could arrive at with their county councils. Nothing within a trial area system would prevent them from doing so.

    The Minister has announced certain concessions for private operators. Will there be a degree of compulsion to ensure that they provide the service required by the rural communities and do not opt out if they find that it is not profitable?

    I emphasised that there was no concession to private companies. The public sector and the private companies are left on precisely the same footing. Each sector can take advantage of the Bill in whichever way suits it best. Each can lose out if it is uncompetitive and is forced to give way to more efficient competition.

    My hon. Friend the Member for Wellingborough made it clear that many private companies were cautious about the proposals. Operators must give notice to serve routes, and must give notice if they seek to withdraw from those routes. A bus company cannot be compelled to provide a service that will lose money and for which the county councils will not pay. Under the present licensing system, rural village after rural village is losing its services. We are not doing away with a system that protects the small operator in the rural areas or removing an unqualified success. We are altering the terms under which revenue support and other assistance is given. We hope that counties will use that support more intelligently.

    We accept the importance of rural taxis, mentioned by my hon. Friend the Member for Wellingborough. In many of the smaller communities we must find alternatives to the traditional bus service. Other parts of the Bill deal with shared cars, community bus services, post buses and other experiments that we wish to encourage.

    Taxis are the responsibility of my right hon. Friend the Home Secretary. Nevertheless, parts of the Bill touch on that subject. We have consulted those with taxi interests to ensure that we shall not damage them by our proposals. Other new clauses, tabled in the name of the hon. Member for Newcastle upon Tyne, Central (Mr. Cowans), refer to the provincial taxi service. I believe that the hon. Gentleman discussed his new clause with those concerned. We hope to meet the legitimate fears of taxi owners.

    Other parts of the Bill provide for revenue support for shared car schemes, which is a matter of some doubt in rural areas at present. We have not lost sight of the fact that taxis will have a part to play in rural areas. We must move away from the half-empty large bus rumbling through the leafy lanes. Some claim that it is subsidised by profitable services elsewhere. Others claim that it is supported by the county through the network but argue that it is not supported sufficiently. Nobody really knows the cost of the service or whether it serves the needs of the area. It is provided only because it has always been provided and because the operator has held a licence since goodness known when. Nobody else has been allowed to apply to the commissioners to service the route. We think that that must change considerably. That is the purpose of this part of the Bill, and it certainly would not be helped by the addition of the new clause.

    The Parliamentary Secretary has made a number of interesting statements, some connected with the clause and some not. Certainly we were interested in the reply to the hon. Member for Wellingborough (Mr. Fry)—whether there is any new Government thinking about the financial obligations of British Rail and whether a different principle has been considered since the Minister met the chairman immediately after Question Time last week. The Parliamentary Secretary was clearly pointing out that there is a difference between British Rail as it is at present financed and a future approach to that financing. We await with interest further developments in the Conservative approach to the financing of British Rail.

    The new clause is largely concerned with showing the contradictions in the obligations and duties placed upon the authorities in relation to trial areas. The legislation gives a rather lax interpretation of the word "duty". I always thought that duty had something to do with responsibility. This is not a recommendation; it is a duty clearly imposed by the legislation. I cannot accept that it can be dismissed in such a cavalier manner.

    The trial area argument will be judged by experience. It is a matter of judgment between the two sides of the House. The unfortunate thing is that if we on these Benches are right, it will have been at considerable expense to many people in those areas, and that is our major fear.

    When I accused the Minister of being somewhat timid and cautious, I was referring to the fact that he was not prepared to experiment with the system beyond two or three areas. Undoubtedly, the implementation of the trial area scheme is a considerable and fundamental change in our transport system, and I would be the last to condemn a really challenging fundamental change. In fact, I hope to see a great deal of such change in the future.

    Nevertheless, our concern about the trial areas is based on the judgment of the consequences. I note that a considerable amount of praise has already been given to the existing licensing system. There is a reliance on the licensing system to maintain in other areas outside trial areas, within the 30-mile area, a basically similar transport system to the one we have at present. It might be a good idea to maintain the licensing system with commissioners and so on until we have witnessed the achievements of the experiments in the trial areas. It could be an extension of the previous Government's ideas of having experiments in certain areas but maintaining them against the background of commission control. To a great extent, that is the difference between us in our approach to the experiments. We like to have the safety of the backdrop.

    The services in rural areas are far from satisfactory and tend to reflect the competition aspect that has crept in during the last 20 years under a number of Governments. This has led to an unfortunate reduction in the extent of services. That must be seen against the background of the increase in the number of cars. The problem with the rural areas is that only a few people are dependent on the transport system and, whether these transport services are private or public, there is no way in which they can pay commercially.

    All sorts of minibuses and different kinds of vehicles have been tried, and the reports of the experiments conducted so far have not necessarily shown them to be a considerable financial success. Indeed, a number of them show quite clearly that if these services are breaking even at present, that is happening without the money for investment. The recommendation is that the Government should provide money for investment in vehicles and then have a kind of break-even system on the operation of the vehicles. That is clearly not envisaged in the trial area experiments, and to that extent we feel strengthened in our view.

    We have concentrated a considerable amount of time on the rural areas—and rightly so—but I am still a little confused about the position of rural taxis. I understood that taxis outside London were not controlled by the Home Office. I might be wrong, but I thought that we had a Bill not so long ago which gave control of taxis outside London to local authorities. I thought that the Home Office's jurisdiction applied only to the London area.

    In so far as there is a sponsoring Department, the Home Office is the relevant Department, just as the Ministry of Transport is the sponsoring Department for bus services even though it does not run any.

    Then, presumably, any kind of policy for rural taxis would be determined not by the Home Office but by the Ministry of Transport, which has established the experimental areas under the 1978 Act.

    The fact of the matter is that the Home Office is now fully responsible for taxi drivers in the cab service in London, and local authorities are now responsible for taxi drivers in their areas. While it is true that the Home Office is the overall sponsoring body, in effect the Home Office supervises London cabs but it does not supervise provincial cabs.

    Yes, and the Home Office is not very effective at that. The demands for changes in that area have come over a period of time from the taxi drivers themselves.

    Nevertheless, we are convinced about our case in making the judgment by the fact that there is a combined alliance of opposition. All the established operators appear to be against the trial area principle. Also, the districts are very much against the imposition of a trial area.

    We note the point made by the Minister that money will be available for these services and, therefore, there will not be a difference in that sense. The operator may be different. He may no longer be the network public transport operator; he may be "Jones the Bus" or whatever. The Minister may find that he may be able to produce a service more cheaply under the present economics, but that may not necessarily be so when the new National Bus Company and the new operators adjust to the changes which will inevitably mean fewer buses, and these will be concentrated on profitable areas.

    We have made great play of profitable routes, because we do not believe that bus operators will want to look for unprofitable routes. The Minister answered that by saying that money will be provided by subsidies. Therefore, presumably, the competition will now be between companies for the subsidy, and the one that applies for the lowest amount of subsidy will get the bus. That begs the question as to the fare policy in those areas. There is a considerable correlation between fares and the number of journeys that people make by bus.

    The point was made earlier in the debate that if the Hartlepool authority found that cowboy operators were coming in and undermining the present network system of the district authority, this would be extremely disadvantageous. Whether that is right or wrong, it is clear that if the scheme were to collapse the licence presumably would go to the existing operator. Therefore, we are likely to replace the old-established operator, for one reason or another, and to remain with the one-man company or the two- or three-bus companies which come in to take these routes. These are not the people who co-ordinate transport services, nor are they the people who provide network services.

    My hon. Friend has mentioned the objections of the district councils, but will he confirm that the Association of District Councils, the official representative of all district councils, has protested and proclaimed its opposition to the proposal and that that formal opinion represents the great body of local authority opinion, as well as public opinion?

    8 pm

    We have constantly made that point to the Minister in representations and debates.

    The Minister mentioned the case of a new operator receiving subsidies but, pre- sumably, offering cheaper fares. He will have to agree that, if companies are prepared to operate services and profit from them, though they may need a subsidy in order to do so, the profits of "Jones the Bus" will presumably not be used to subsidise the overall service.

    The Parliamentary Secretary seemed to indicate that if new operators started up with two or three buses they might be able to offer a network service, and the local authority could say that although it would not subsidise one route it would be prepared to give subsidies on the basis of three or four routes. That is basically the system that we have at present. Is the Minister saying that the profits made on the profitable route will be used, as the NBC uses the gains from its profitable routes, as a contribution towards revenue and as part of the information given to local authorities when the operator applies for a subsidy? If so, that is similar to the existing situation, except that we should be exchanging one operator for another. It is a matter of judgment. We shall have to see what happens. The question before us is whether we should repeal the duties imposed on operators in trial areas.

    The Minister said that the co-ordination role of local authorities would remain the same and, therefore, there was no need to remove that. There are a number of arguments on that matter, particularly if we take into account the definition of integration of public services. We dealt with that in Committee, and the question turns on the interpretation of "network" and "integration".

    A requirement under the Transport Act 1978 makes clear that the NBC and other operators have an obligation to provide such information concerning their services, including the cost of providing them, as may be reasonably required by the local authority. That causes considerable concern to the operators, and we share that concern. The operators feel that they will be severely disadvantaged by that requirement and they ask us to put the issue of those obligations and duties before the House. We intend to do that by voting on the new clause.

    Question put, That the clause be read a Second time: —

    The House divided: Ayes 144, Noes 189.

    Division No. 238]


    [8.03 pm

    Adams, AllenGrant, George (Morpeth)Park, George
    Allaun, FrankHamilton, W. W. (Central Fife)Parker, John
    Archer, Rt Hon PeterHardy, PeterPowell, Rt Hon J. Enoch(S Down)
    Ashton, JoeHarrison, Rt Hon WalterPowell, Raymond (Ogmore)
    Benn, Rt Hon Anthony WedgwoodHaynes, FrankPrescott, John
    Bennett, Andrew (Stockport N)Heffer, Eric S.Race, Reg
    Booth, Rt Hon AlbertHolland, Stuart (L'beth, Vauxhall)Radice, Giles
    Bottomley, Rt Hon Arthur (M'brough)Home Robertson, JohnRees, Rt Hon Merlyn (Leeds South)
    Bradley, TomHomewood, WilliamRoberts, Albert (Normanton)
    Bray, Dr JeremyHooley, FrankRoberts, Ernest (Hackney North)
    Brown, Hugh D. (Provan)Horam, JohnRobertson, George
    Buchan, NormanHowell, Rt Hon Denis (B'ham, Sm H)Rodgers, Rt Hon William
    Callaghan, Jim (Middleton & P)Janner, Hon GrevilleRoss, Ernest (Dundee West)
    Campbell-Savours, DaleJay, Rt Hon DouglasRoss, Wm. (Londonderry)
    Cartwright, JohnJohn, BrynmorRowlands, Ted
    Clark, Dr David (South Shields)Johnson, James (Hull West)Sever, John
    Cocks, Rt Hon Michael (Bristol S)Johnson, Walter (Derby South)Shore, Rt Hon Peter (Step and Pop)
    Cohen, StanleyJones, Barry (East Flint)Silkin, Rt Hon John (Deptford)
    Coleman, DonaldJones, Dan (Burnley)Silverman, Julius
    Cowans, HarryKilroy-Silk, RobertSnape, Peter
    Cryer, BobLeadbitter, TedSoley, Clive
    Cunliffe, LawrenceLeighton, RonaldSpearing, Nigel
    Cunningham, George (Islington S)Lestor, Miss Joan (Eton & Slough)Spriggs, Leslie
    Cunningham, Dr John (Whitehaven)Lewis, Ron (Carlisle)Stewart, Rt Hon Donald (W Isles)
    Dalyell, TamLofthouse, GeoffreyStoddart, David
    Davidson, ArthurMcElhone, FrankStott, Roger
    Davies, Ifor (Gower)McGuire, Michael (Ince)Strang, Gavin
    Davis, Terry (B'rm'ham, Stechford)McKay, Allen (Penistone)Summerskill, Hon Dr Shirley
    Dean, Joseph (Leeds West)McKelvey, WilliamTaylor, Mrs Ann (Bolton West)
    Dempsey, JamesMacKenzie, Rl Hon GregorThomas, Dafydd (Merioneth)
    Dixon, DonaldMaclennan, RobertThomas, Dr Roger (Carmarthen)
    Dobson, FrankMcMillan, Tom (Glasgow, Central)Tinn, James
    Douglas, DickMcWilliam, JohnUrwin, Rt Hon Tom
    Dunnett, JackMarshall, David (Gl'sgow,Shettles'n)Weetch, Ken
    Dunwoody, Mrs GwynethMarshall, Dr Edmund (Goole)Wellbeloved, James
    Eadie, AlexMarshall, Jim (Leicester South)Welsh, Michael
    Eastham, KenMaxton, JohnWhite, Frank R. (Bury & Radcliffe)
    Edwards, Robert (Wolv SE)Mellish, Rt Hon RobertWhitehead, Phillip
    Ellis, Tom (Wrexham)Mitchell, Austin (Grimsby)Whitlock, William
    Evans, Ioan (Aberdare)Molyneaux, JamesWilliams, Rt Hon Alan (Swansea W)
    Ewing, HarryMorris, Rt Hon Charles (Openshaw)Williams, Sir Thomas (Warrington)
    Faulds, AndrewMorton, GeorgeWilson, William (Coventry SE)
    Flannery, MartinMoyle, Rt Hon RolandWinnick, David
    Fletcher, Ted (Darlington)Newens, StanleyWoolmer, Kenneth
    Foot, Rt Hon MichaelOakes, Rt Hon GordonWrigglesworth, Ian
    Foulkes, GeorgeOgden, Eric
    George, BruceO'Neill, MartinTELLERS FOR THE AYES:
    Golding, JohnOrme, Rt Hon StanleyMr. James Hamilton and
    Gourlay, HarryPalmer, ArthurMr. John Evans.
    Graham, Ted


    Adley, RobertChalker, Mrs LyndaGriffiths, Eldon (Bury St Edmunds)
    Alexander, RichardChapman, SydneyGriffiths, Peter (Portsmouth N)
    Alton, DavidClarke, Kenneth (Rushcliffe)Grimond, Rt Hon J.
    Ancram, MichaelClegg, Sir WalterGrist, Ian
    Aspinwall, JackColvin, MichaelGummer, John Selwyn
    Atkins, Robert (Preston North)Cope, JohnHamilton, Hon Archie (Eps'm&Ew'll)
    Atkinson, David (B'mouth, East)Corrie, JohnHamilton, Michael (Salisbury)
    Beaumont-Dark, AnthonyDover, DenshoreHannam, John
    Bendall, Viviandu Cann, Rt Hon EdwardHaselhurst, Alan
    Benyon, Thomas (Abingdon)Dunn, Robert (Dartford)Havers, Rt Hon Sir Michael
    Berry, Hon AnthonyDykes, HughHawkins, Paul
    Best, KeithEden, Rt Hon Sir JohnHawksley, Warren
    Bevan, David GilroyEggar, TimothyHeddle, John
    Blackburn, JohnFaith, Mrs SheilaHenderson, Barry
    Blaker, PeterFenner, Mrs PeggyHicks, Robert
    Body, RichardFisher, Sir NigelHiggins, Rt Hon Terence L.
    Boscawen, Hon RobertFletcher, Alexander (Edinburgh N)Hill, James
    Braine, Sir BernardFletcher-Cooke, CharlesHogg, Hon Douglas (Grantham)
    Bright, GrahamFookes, Miss JanetHooson, Tom
    Brinton, TimFowler, Rt Hon NormanHordern, Peter
    Brocklebank-Fowler, ChristopherFox, MarcusHowell, Ralph (North Norfolk)
    Bruce-Gardyne, JohnFreud, ClementHunt, John (Ravensbourne)
    Bryan, Sir PaulFry, PeterHurd, Hon Douglas
    Buchanan-Smith, Hon AlickGardiner, George (Reigate)Johnston, Russell (Inverness)
    Buck, AntonyGarel-Jones, TristanJopling, Rt Hon Michael
    Butcher, JohnGorst, JohnKaberry, Sir Donald
    Cadbury, JocelynGow, IanKershaw, Anthony
    Carlisle, Kenneth (Lincoln)Gray, HamishKing, Rt Hon Tom

    Kitson, Sir TimothyMurphy, ChristopherSpicer, Michael (S Worcestershire)
    Knox, DavidMyles, DavidSproat, Iain
    Lang, IanNeale, GerrardSquire, Robin
    Latham, MichaelNeedham, RichardStainton, Keith
    Lawson, NigelNelson, AnthonyStanbrook, Ivor
    Le Marchant, SpencerNeubert, MichaelStanley, John
    Lennox-Boyd, Hon MarkNewton, TonySteen, Anthony
    Lester, Jim (Beeston)Nott, Rt Hon JohnStevens, Martin
    Lewis, Kenneth (Rutland)Page, John (Harrow, West)Tebbit, Norman
    Lloyd, Peter (Fareham)Page, Rt Hon Sir R. GrahamTemple-Morris, Peter
    Loveridge, JohnPage, Richard (SW Hertfordshire)Thomas, Rt Hon Peter (Hendon S)
    Luce, RichardParris, MatthewThompson, Donald
    Lyell, NicholasPatten, John (Oxford)Thome, Neil (Ilford South)
    Macfarlane, NeilPenhaligon, DavidTownend, John (Bridlington)
    MacGregor, JohnPercival, Sir IanTownsend, Cyril D. (Bexleyheath)
    MacKay, John (Argyll)Peyton, Rt Hon JohnTrippler, David
    McNair-Wilson, Michael (Newbury)Pollock, AlexanderTaylor, Teddy (Southend East)
    McQuarrie, AlbertPorter, Georgevan Straubenzee, W. R.
    Marshall, Michael (Arundel)Prentice, Rt Hon RegViggers, Peter
    Mather, CarolProctor, K. HarveyWaddington, David
    Maude, Rt Hon AngusRaison, TimothyWainwright, Richard (Colne Valley)
    Mawby, RayRathbone, TimWakeham, John
    Mawhinney, Dr BrianRees-Davies, W. R.Walker, Rt Hon Peter (Worcester)
    Maxwell-Hyslop, RobinRenlon, TimWalker, Bill (Perth & E Perthshire)
    Mellor, DavidRhodes James, RobertWalker-Smith, Rt Hon Sir Derek
    Meyer, Sir AnthonyRidsdale, JulianWaller, Garry
    Miller, Hal (Bromsgrove & Redditch)Royle, Sir AnthonyWatson, John
    Mills, Iain (Meriden)Scott, NicholasWells, Bowen (Hert'rd & Stev'nage)
    Mills, Peter (West Devon)Shaw, Giles (Pudsey)Wheeler, John
    Miscampbell, NormanShaw, Michael (Scarborough)Wickenden, Keith
    Moate, RogerShelton, William (Streatham)Wilkinson, John
    Montgomery, FergusShepherd, Colin (Hereford)Wolfson, Mark
    Morgan, GeraintShepherd, Richard(Aldridge-Br'hills)
    Morris, Michael (Northampton, Sth)Silvester, FredTELLERS FOR THE NOES:
    Morrison, Hon Charles (Devizes)Speed, KeithMr. Peter Brooke and
    Morrison, Hon Peter (City of Chester)Speller, TonyLord James Douglas-Hamilton.
    Mudd, David

    Question accordingly negatived.