My Lords, I beg to move that this Bill be now read a second time. The Local Transport Bill is an important part of the Government’s strategy to improve public transport and tackle congestion. This is a very significant piece of legislation: local transport matters to millions of people in their everyday lives; an efficient transport system lies at the heart of a productive economy; and our local transport choices also affect our environment.

Before I get into the main body of my text, I would like to record my thanks to all noble Lords who have taken part in briefing sessions over the past week. I also thank the many organisations which kindly circulated briefing documents on the Bill—they have been unusually helpful and they suggest that we will have very constructive debates today, in Committee, on Report and at Third Reading. I pay particular tribute to the RNIB, the LGA, the Countryside Alliance, Help the Aged, the CBI and National Rail, which very kindly circulated their thoughts and comments—most of them positive—on the content and progress of the Bill so far.

Bus services are a key part of our local transportation system. More than 4 billion bus journeys are made each year, or two-thirds of all journeys by public transport. They play a key role in connecting people to essential goods and services, to jobs, to leisure, and to friends and family.

The Government are therefore investing substantially in local bus services: government spending on buses is expected to reach some £2.5 billion this year, up from around £1 billion a decade ago. The Concessionary Bus Travel Act, which received Royal Assent earlier this year, will guarantee free off-peak bus travel for older and disabled people throughout England from April 2008. As a result of these and other steps, we have at last seen the long-run historic decline in bus patronage level off in recent years, but we still need to do more.

The Bill includes various proposals aimed at delivering bus services that are more closely aligned to passenger needs, building on the lessons learnt from an extensive review of bus policy led by Ministers and officials in the Department for Transport. It is clear that in certain parts of the country bus services are improving and patronage is rising. But in too many places these successes are not being replicated, patronage remains on a downward trend, and services risk falling into a spiral of decline.

More often than not, successful outcomes have been delivered through strong voluntary partnerships that have been forged between local authorities and bus operators. But some authorities and operators have found themselves constrained in what they can achieve under existing competition law. What becomes a particular concern for some local authorities is when they wish to enter into discussions with more than one bus operator.

The Bill therefore includes a revised competition test for these voluntary partnership agreements, specifically designed to give greater clarity and certainty to participants. It also removes the threat of financial penalties where the Office of Fair Trading finds that an agreement, although entered into in good faith with a local authority, breaches competition law. These measures should increase the potential for voluntary partnership agreements to be entered into, particularly in areas where there is more than one incumbent operator.

The Bill would also strengthen the framework, established in the Transport Act 2000, for quality partnership schemes. It would remove existing restrictions, so as to allow these schemes to include provisions about frequencies, timings and maximum fares—things that matter a great deal to passengers—while stopping short of enabling authorities to impose unreasonable requirements on operators. It will enable facilities and standards of service in a quality partnership scheme to be phased in over a period of time, and also includes measures to help prevent quality partnership schemes being undermined by destabilising competition from operators who are not participating in the scheme.

The Government recognise that partnership arrangements will not work everywhere. In some circumstances, it may be in the public interest for local authorities to take greater control over local bus services. The Transport Act 2000 included provisions for local transport authorities to make quality contracts schemes—essentially the London-style model of bus franchising. The Bill sets out a series of public interest criteria which would need to be met in place of the existing “only practicable way” test that has proved too high a hurdle in practice. The intention is to ensure that quality contracts schemes are a realistic option where they are in the public interest.

Punctuality and reliability also matter a great deal to passengers, and traffic commissioners have an important role to play in monitoring performance and taking action where services are not operated as registered. The Bill would strengthen the traffic commissioners' role in a number of important ways. First, it would enable local authorities, as well as bus operators, to be held to account for their contribution to punctuality performance. In some cases, action—or inaction—by the local authority can be a contributor to poor bus punctuality through, for example, poorly planned roadworks or inadequate enforcement of bus lanes. Secondly, it would allow the traffic commissioners to impose a broader range of penalties where bus operators demonstrably failed to provide a punctual service. The Bill would allow the traffic commissioners to order an operator to invest a given sum, equivalent to the fine that would otherwise be imposed, in improving services or compensating passengers. That will preserve a clear financial incentive for operators to maintain good performance, while allowing financial penalties to be applied in a way that benefits passengers.

The Bill also includes provisions to modernise the traffic commissioner system, through the appointment of a senior traffic commissioner with statutory powers to issue general directions and guidance to other commissioners. That would help to ensure consistency of approach across the traffic commissioner network. The Bill would also provide for greater flexibility in the deployment of traffic commissioners, and would make them more accountable for their work and the way in which they carry out their duties.

The Government believe that there is also a need to give bus passengers a stronger voice. In the rail sector, the Rail Passengers' Council provides a high-profile commentary on the performance of the industry and handles individual complaints. Although a number of non-statutory bodies represent the interests of bus passengers, often at a local level, responses to the consultation on the draft Bill indicated broad support for the principle of stronger passenger representation. The Bill would therefore pave the way for the introduction of a more prominent and influential voice for the bus passenger—a statutory body with a strong public role in promoting the interests of passengers across the country.

The community transport sector plays an important role in the provision of transport services where there is insufficient demand to sustain a conventional bus service. The Bill will relax existing constraints on the size of vehicles that may be used by operators under community transport permits, and will allow drivers on local services provided under Section 22 permits to be paid. In response to the views of the community transport sector, the Bill now retains the existing system whereby Section 19 community transport permits may be issued by designated bodies. It also includes measures to strengthen the permit system for all community transport permits.

The strengthened powers for local authorities to improve bus services in their areas will be most effective if they are supported by the right arrangements for taking decisions at a local level. There is a clear consensus that, in our larger urban areas outside London, the current leadership and delivery arrangements for transport do not work as well as they might, and need to be updated to reflect changing patterns of transport. The barriers to effective transport planning and delivery in these areas include: the lack of a single focus for leadership of city-region transport; the difficulties in co-ordinating different transport modes, particularly given the split between passenger transport authorities and metropolitan district council responsibilities for public transport and roads; and the complex and sometimes unwieldy structure and membership of passenger transport authorities and executives.

The Bill would enable local areas to review their existing local transport governance arrangements, and to develop proposals for reform. In contrast to previous legislation in this area, the Bill does not take a prescriptive approach. Instead, it would allow individual areas to develop their own proposals, taking account of their particular local needs and circumstances. Following a locally led review, the Secretary of State would have the power to bring forward secondary legislation covering a variety of matters, including the existing transport responsibilities of passenger transport authorities and executives, metropolitan district councils and the Secretary of State.

The Bill would also enable secondary legislation to cover the establishment of new passenger transport authorities—or integrated transport authorities, as they would in future be called. It would enable the boundaries of existing integrated transport authorities to be changed; for example, to reflect the changing patterns of travel since they were first established.

Rising congestion on our roads is a consequence of a strong, vibrant and growing economy. However, congestion could have a significant impact on our future prosperity, environment and quality of life. Sir Rod Eddington, in his study into the links between transport and the economy, said that without further action there will be a 30 per cent increase in congestion on our roads by 2025. It is for that reason that the Government are encouraging local authorities to bring forward local road pricing schemes to tackle local congestion problems, as part of a wider package of measures. We have taken no decisions on whether to move towards a national road pricing scheme, but we can learn from the development of local schemes.

The Greater London Authority Act 1999 and the Transport Act 2000 established the legal framework for local road pricing schemes in England and Wales. Those Acts provide the basis of the existing pricing schemes in London and Durham. The Bill includes proposals to update that existing legal framework. It would place decision-making clearly at the local level by removing the existing requirement for schemes to be approved by the Secretary of State. It also provides that the net proceeds of all schemes are retained by the local authority and must be applied to local transport for the lifetime of the scheme. It also contains provision to help ensure that any schemes are consistent and interoperable to avoid unnecessary complexity for road users.

The Bill would confer a new framework power on the National Assembly for Wales consistent with the devolution arrangements under the Government of Wales Act 2006. That would enable the Assembly to make provision for the making, operation and enforcement of pricing schemes in respect of trunk roads in Wales. The provision has been included in the Bill specifically at the request of the Welsh Assembly Government, who wish to have the powers available that would allow them to adopt a coherent approach towards any proposals within Wales or any future national scheme. It will be for the Assembly to consider whether—and, if so, how—it would be appropriate to exercise those powers.

The Bill also includes a provision to allow the Driver and Vehicle Licensing Agency to retrieve data from its foreign counterparts, linking foreign vehicle registration numbers to their registered keepers, and to disclose that data to local authorities and other bodies. That will help in particular with the enforcement of local road pricing schemes and parking and moving-traffic offences.

The Bill would extend significant powers to local authorities to deliver transport that better met the needs of their local communities. It has already benefited from a full public consultation, based on a draft version of the Bill published in May, and from extensive pre-legislative scrutiny in another place. We are grateful to all those who have contributed to that process, because the Bill has, in our view, been improved in a number of respects as a result, and has been widely welcomed by local authorities, transport providers, transport users and others. I look forward to today’s debate and I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Bassam of Brighton.)

My Lords, I am grateful to the Minister for his detailed and careful explanation of the Bill. The Bill has indeed had the benefit of proper consultation and pre-legislative scrutiny, and it now falls to your Lordships to start the formal parliamentary process today. As the Minister explained, the intention of the Bill is to reinvigorate local transport arrangements. I am sure that all noble Lords will recognise and accept the need for change.

As I see it, the Bill proposes change in three main areas. First, it seeks to improve local bus services, whose patronage has in the main remained stubbornly low outside London despite the increased usage of other forms of transport. Secondly, the Bill seeks to address some of the historic anomalies in the UK’s transport governance arrangements, which have too often proven an inflexible hindrance rather than a help. Finally, and perhaps most controversially, the Bill seeks to bring forward local road pricing schemes. I will turn to each topic in turn.

The Minister sought to place the Bill in the proper context of the Government’s overarching transport strategy: to reduce congestion and to improve public transport. Those are laudable aims, especially considering the cost implications and the frustration caused by congestion, which shows no sign of abating. Indeed, it is worth remembering that total car traffic has increased by 850 per cent since 1955. I can remember when I used to park my car in Barnet High Street in order to go to the café—how things have changed now. Unfortunately, the Bill lacks the vision required for such revolutionary speak. What is needed is a holistic approach to the whole issue of congestion and public transport, with attention paid to all the constituent causal elements, rather than just to those that the Bill seeks to address. The Bill is a mere tweaking at the edges and will not serve the Government well in the long run.

It is clear that the existing arrangements for buses have room for improvement. Bus patronage is declining in many areas and shows little sign of improving without a dose of good management and effective legislation. Agreements between authorities and operators to devise services and timetables with the reasonable aim of providing a better service to the public can sometimes be viewed as collusion rather than co-operation. It is evident that full advantage of the provisions of the Transport Act 2000 has not been taken. The Bill seeks to make it easier for local authorities to draw up partnerships and contracts with bus operators, as explained by the Minister.

I am not confident that quality contracts are necessary for an effective local transport system. The lowering of the bar for the introduction of such schemes through proportionality criteria, as the Bill proposes, interferes with the market and risks allowing regulation by the back door. Harmonious working relationships ought to be available without franchising and a partnership approach should suffice. We will be pressing this view in Committee. Even if quality contracts were desirable, local authorities could be discouraged by the significant resources inevitably required to demonstrate and meet all of the new public interest criteria, both when setting up new arrangements and, subsequently, during potential appeals from operators. There is a lack of precedent for the quality contracts. I understand that no local authority has changed its arrangements since the Transport Act 2000. Perhaps that situation will persist.

The proposals to improve both voluntary and quality partnerships are rather more promising and worthy of development. They seek to allow authorities greater powers to enhance partnerships. We will be aiming to refine the proposals to ensure that partnerships are fair, genuine and balanced for all. Your Lordships will want to clarify the definition of “admissible objections” from bus operators, which is a bit ill defined at present. However, the real and perceived restrictions imposed by the Competition Act, which will discourage the proposed multi-operator voluntary partnership agreements, undermine the need for change. If a scheme is evidently in the public interest, common sense should prevail. Only then will partnerships have the desired result.

Punctuality is one of the public’s main criteria in assessing the utility of their bus service; the Bill’s acknowledgement of this is welcome. Proposals for local authorities to share the responsibility with operators are fair. However, the use of traffic commissioners for this purpose will require further consideration.

The existing local governance arrangements for transport in the UK need reform. That is particularly so in large PTA-governed urban areas outside London. The arrangements in those areas are outdated and do not make much sense. The inflexibility of current legislation prevents rational changes to reflect modern patterns of transport needs. It is right that local areas should be able to decide on the most appropriate governance arrangements for themselves. The bottom-up reforms proposed to allow improved governance are welcome. It is crucial, however, that these changes arise from local action as intended. In addition to allowing local areas to initiate a review of their governance arrangements, the Bill retains the ability for the Secretary of State to do so. We need to avoid situations where this direction becomes unnecessary interference. If change is to be effective, that must not happen. Local authorities need to be partners in the recognition and implementation of change.

The Bill also makes changes to the traffic commissioner structure. While not as prescriptive as the draft Bill proposed, the Bill expands the role of traffic commissioners. In Committee, we shall seek to ensure that the proposed structure and role of the traffic commissioner is appropriate and does not become another layer of bureaucracy, while still achieving the objective that we all desire.

Perhaps the most controversial proposals concern local road pricing schemes. As the Minister explained, the proposal is to make the introduction of local road pricing schemes easier, removing the requirement of approval from the Secretary of State and ostensibly putting the power of decision into the local domain. Why? National road charging schemes have been shelved and the Bill does not make provision for the introduction of such a scheme. That has been made clear many times. The removal of the Secretary of State's approval for local schemes could, perhaps, be viewed as distancing central government from potentially controversial decisions, while leaving local authorities to gauge the acceptability of charging schemes. That is hardly leading from the front. The use of the Transport Innovation Fund, seemingly to encourage and to coerce local authorities to adopt road pricing schemes, demonstrates that all too often devolution is accompanied by terms and conditions given from the centre.

My noble friend Lord Glentoran, who speaks for Welsh affairs on these Benches, will be making important observations about the Welsh provisions with regard to road pricing and my noble friend Lord Roberts of Conwy will be adding his own perspective. I will not steal their thunder, but I recommend that the Minister listens to them with great care.

The removal of the absolute requirement to consult the public before introducing a scheme, as the Bill proposes, is unacceptable. The opacity that this could bring undermines the advantage of holding such decisions locally, and public support is paramount if a scheme is to be successfully introduced. Polling shows that the primary concern of British motorists appears to be the cost of motoring, and the public will not support a scheme—local or otherwise—that serves to increase significantly the cost of motoring and bring about another stealth tax. As no reference is made in the Bill to the reduction of other taxes or charges, the public cannot be assured of that at present. This is especially true in the proposals for Wales, as my noble friends will explain. Additionally, the use of pricing to bring benefits with regards to climate change is given the briefest of mentions, and should be expanded on if the Bill is serious about this issue rather than using it as an afterthought.

The Bill makes a welcome attempt at resolving the very real problem of collecting charges from foreign registered vehicles. That issue will become more apparent should local pricing schemes become widespread, and we will seek to investigate how best to refine the proposals to ensure it becomes a reality. However, as it has been demonstrated that the DVLA estimates that its records for UK drivers are only 81.5 per cent accurate, more attention needs to be given to this concern if road pricing of any sort is to be introduced successfully.

In conclusion, I believe that the objectives of the Bill are reasonably clear and agreed. I look forward to hearing your Lordships’ views on how the proposals contained within the Bill can be refined for the benefit of passengers, car drivers and the wider economy.

My Lords, like the noble Earl, I pay tribute to the Minister, to the Minister in another place and to officials, who have been very patient. There has been a lot of consultation and pre-legislative scrutiny. We have a fairly clear understanding of what the Bill is about. My noble friend Lady Scott of Needham Market will address the issues of governance, because many of them are important, and my noble friend Lord Mar and Kellie will talk about the effects on the devolved administrations.

I want to talk first about congestion, because it is by far the worst enemy of the bus. A number of seminal papers on the subject have shown that congestion is a self-exciting phenomenon—which means that as it gets worse, it gets even worse. Something has got to be done to break the deadlock in our cities; otherwise they will grind to a halt. That is why I am particularly pleased that, regarding inquiring into the poor quality of bus services, local authorities will be asked—in fact, required—to appear before the traffic commissioners to give an account of their stewardship of the roads, a power conferred by the Traffic Management Act 2004. I am pleased that the traffic commissioners are to be reinvigorated. I would ask the Minister to give particular account to the status of the people who will be appointed to these jobs, which have to be of sufficient status to attract people of quality. They should not be part-time jobs that you can do after you have retired from the Army. You should need some background in the industry to be able to do the job properly.

In particular, the traffic commissioners’ powers over registration of services need to be fairly wide, a point made by the noble Earl, Lord Attlee. At the moment, traffic commissioners have no power whatever to reject a registration made under the 1985 Act. They should exercise some judgment as to what is in the public interest. If one person operates a service on the hour and someone else registers a service at 55 minutes past the hour there will be no buses for the next 55 minutes. That is clearly not in the public interest. We want the public interest to become the paramount consideration.

On local transport plans, Clause 8 states that local transport authorities should “take into account” the directions of the Government on environmental matters. I would like to think that that could be slightly rephrased to take into account “as a minimum” the Government’s guidance on environmental matters, because I believe—and the Prime Minister acknowledged this yesterday—that environmental targets will be raised substantially. I am sure that local authorities involved in this will have to work with those increased standards.

I am very interested in the question of highway powers. Who is going to exercise them? Will the integrated transport authorities do it? Will authorities with highway powers, such as county councils which have responsibility both for the bus service and the highway, do it? What happens in a place where there is an integrated transport authority but two districts decide that they do not want the bus lanes, integrated traffic lights or enforcement? In those circumstances, will two of the constituent authorities be able to vitiate the policies advanced by the integrated transport authority? Will the consent of constituent councils be required? That is particularly important in any road pricing scheme. It would be nonsense to have a 10-district area where two of the districts decided that they did not want to be part of the road pricing scheme. In fact, that would torpedo the whole scheme.

Like the noble Earl, Lord Atlee, I want to know what admissible objections to quality partnerships are. I would not want bus operators, or anybody else, to have a veto over a quality partnership. Their objections must be considered but they should not be in a position to undermine what there is general consensus to achieve. While we are getting clarification in describing quality contracts—which I think are going to be difficult to achieve—the meaning of the words “economic, efficient and effective” in Clause 18 needs to be spelt out. How is somebody going to judge whether a scheme is economic, effective and efficient?

The Bill refers to an approvals board chaired by a traffic commissioner. Who constitutes the board? Is it an employer or a trade unionist, or is it somebody who has some expertise in the subject? The material put before them will be very technical and it needs to be judged by people with technical knowledge, as well as the traffic commissioner who we assume is competent in such things.

The competition test is extremely important. I can single it out as one thing in the 1985 Act and the Competition Act 1998 that is necessary. I could quote from my own knowledge, but I am quoting from the brief from the Campaign for Better Transport:

“We commissioned an opinion from John Swift QC (a pre-eminent authority on competition law) … on the exercise of powers under the Competition Act with respect to the bus industry. They concluded that the revised schedule 10 criteria could be applied to all agreements between operators, rather than … those involving local authorities”.

Outside quality contracts, if a number of bus operators—two or three—get together and bring forward proposals which may involve recognising one another’s tickets—it is one of the biggest annoyances to passengers when they do not—or combining their timetables to provide a better service, somebody ought to be able to say that it is in the public interest to accept that and it should be exempt from inquiries by the Office of Fair Trading.

I know that the noble Lord, Lord Cameron of Dillington, will speak about services in country areas. I cannot understand why there is a distinction between Section 19 and Section 22 services. Parish councils which might run community transport need as much freedom as possible to operate in the best way that they can. Transport in rural areas is never going to be covered by the normal bus service network. I am talking about country areas that are away from the major routes. People there need to get to employment and training. The Bill allows for the driver to be paid. I would like there to be no restriction on what type of vehicle is used or, indeed, whether separate fares are collected.

In Clause 46, I should like to see considerable stringency attached to whether private hire vehicles are allowed to carry passengers at bus stops, as that could undermine parts of the industry. I hope that the private hire vehicles concerned will have to register with the traffic commissioners, that their drivers and vehicles will be suitable and that they will work to a timetable; otherwise—I speak from a lot of experience in Belfast—taxis can very much undermine the quality of bus services.

I am pleased that the subsidised service agreement has risen from five to eight years. Any franchising or tendering system is highly disruptive, whether in the rail or bus industries. It costs a lot of money both from the authority’s point of view and from the point of view of those who are tendering. An eight-year tender will encourage people to invest in new buses, which will benefit, for example, the disabled, about whom we were talking earlier.

I turn briefly to the question of bus-user representation. There is an organisation called BUS USERS UK and another called the Bus Appeals Body, on which the noble Lord, Lord Hogg of Cumbernauld, sits as chairman and of which I was a previous chairman. It is a non-statutory body but it works. If it were given a little money and if bus operators were required to exhibit information about this committee on their vehicles, that could be very effective. In addition, the Government must realise that in many PTA areas—I cite Liverpool as an example—and in every district council there is a bus users body, there is a body for the disabled at the centre and there is a body that covers the whole area.

One of our major queries concerns the integrated transport authorities. At the moment, they are all elected but the Bill provides for there to be elected members and other members. We are very interested to know who the other members will be, whether they will have voting powers and whether they will be able to decide the precept.

Like the noble Earl, Lord Attlee, I am very pleased to see something being done about overseas vehicles and drivers, and I shall explain later why drivers are important. I hope that the fees to be charged by the department for passing on information will be modest, as that will allow some abuses of the law in this country, including road safety law, to be followed up.

In Clause 111, I am pleased to see something being done about situations in which the owner of a lorry or the person with the operator’s licence is able to get out of the penalty of having the vehicle detained because a hire company owns it and someone else operates it. The vehicles have to be returned because they belong to a hire company, although the operator is at fault. This matter requires attention and should be dealt with.

Generally, this is a very good Bill, and I shall mention just two or three other things. Concessionary bus fares, to which the Minister referred, are causing huge trouble for a lot of councils. Far more people are using concessionary bus fares than was previously the case, and local councils are trying to reduce the amount of money that they give the bus operator for each person they carry. The whole issue needs urgent examination. If a bus operator appeals, he is largely successful, but the money to pay for that is not available.

The opportunity could have been taken to do something about licensing pedicabs, which are a big problem. I am also sorry that nothing has been done about introducing a national lorry pricing or road-charging scheme because I believe that that is the essential first step to getting foreign lorries to pay to use our roads. Can something be done about the sat-nav devices which are sending heavy lorries along country roads and causing a lot of damage? Also, operating centres are being established along country lanes because, although the traffic commissioners can rule on the suitability of an operating centre, they cannot rule on whether the roads leading to it are suitable.

I turn, finally, to foreign drivers, many of whom cannot speak English. They rely on sat-nav devices because they cannot read our road signs and I am afraid a large number of accidents, particularly with cyclists, take place because lorries are going along roads that are quite unsuitable because their drivers cannot read the signs.

The Bill is very welcome and we support most of it but I think that one or two other things could be added at this stage.

My Lords, as was heralded by the noble Lord, Lord Bradshaw, I come to this Bill from the perspective of rural dwellers and providers of rural transport. Residents of rural villages travel nearly twice as far by car as their urban counterparts and although one-third of adults in rural areas do not have personal access to a car, rural people take one-third as many bus journeys as those in towns. The reasons for this include the fact that less than half of rural residents live within 13 minutes of an hourly bus and for many countrymen there are no local buses at all. This can be a major barrier to participating in everyday activities, such as education, training, health services, shopping, leisure and, particularly, employment.

Having said that, large—or even small—buses running around the countryside with hardly anyone in them are a waste of public money. Very often it is not more bus services that are required but more flexible, smaller, on-demand services, run by local voluntary groups or in partnership with other service deliverers, such as the ambulance service or even the post bus. Flexibility is the name of the game.

There is much to welcome in this Bill from the point of view of flexibility and freedoms, but my overall impression is that it deals largely with urban public transport. Maybe this is intended, which is fair enough, but I hope that public transport in rural areas is of importance to the Government, in terms of both overall carbon footprint and equity of treatment when it comes to access to services. However, I suspect that this Bill is not the right vehicle to make the major improvements to rural public transport and its funding that are needed. We have lost the rural transport partnerships, the community transport fund and the rural bus challenge. With the demise of the Countryside Agency, few of these ground-breaking schemes have survived as there is no real rural transport champion on a national scale.

Setting that aside, some minor improvements could be made to this Bill which would help. For instance, Clause 8 requires each local transport authority to develop policies,

“for the promotion and encouragement of ... transport to, from and within their area”.

I particularly like the “to, from and within” bit of that quote, as all too often the catchment area of a market town does not fall neatly into a local authority area. Perhaps the Bill could be improved if local arrangements were made in rural areas which allowed for the boundaries of PTAs to be different to local authority boundaries. As I understand it, such arrangements are currently possible only in metropolitan areas. For example, Yeovil is a large market town in my county of Somerset but it sits right on the Dorset border. Somerset subsidises the rural bus service into Yeovil on its side of the border, but Dorset does less so, if at all. It would probably be to Somerset's overall economic advantage if it could assist the people of Dorset to come and shop in Yeovil; it could do so by contributing to a quality bus service on the Dorset side. But, as I understand it, at present it cannot do so. I would like to hope that this could change.

On the question of consultation, Clause 9 outlines the process of preparing a local transport plan which should be consulted. These plans are very important for rural areas, especially when catering for needs identified by the accessibility planning process. In terms of the consultation process, it seems to me vital that parish or community councils should be specifically mentioned in the Bill. District and county councillors, who are mentioned, are often not the ones who use public transport. In fact, in my part of the world they would not be able to do their duties without a car. So it is crucial that a picture is built up by asking questions at a parish, or even more local, level. It would also seem sensible that the approval boards must satisfy themselves that the views of parish councils have been sought.

As I have already indicated, perhaps the most useful aspect of the Bill from the rural point of view is the new flexibility introduced concerning the use of taxis, private hire vehicles and small buses, and the relaxation in Clause 50 relating to community bus services and allowing drivers of such services to be paid. However, I endorse the point made by the noble Lord, Lord Bradshaw, about the need for these services to be able to make a charge for the ride. The charities, which are often running these services, should be able to charge what the market can bear to enable them to keep reinvesting in the service under arrangements in Clauses 19 and 22.

Still in the context of flexibility, I endorse Clause 86, which gives PTAs powers and encourages them to work in partnership with other bodies to assist them to discharge their functions and vice versa. There is much that can be done to access services, by PTAs working with others such as the health authority, the local education authority, school buses, the Post Office or even jobcentres and magistrates’ courts. I hope that this clause will encourage such co-operation.

The scope for statutory quality partnerships and quality contracts in the rural context is restricted by both the volume of truly commercial operations and the inability of local authorities to offer sufficient infrastructure investment, the opportunities for which are pretty rare in rural areas. Bus lanes, for example, are not suitable in small towns, particularly those with narrow streets. Other sticks used to punish the motorist, such as exorbitant parking charges or congestion charges, go against the grain for rural market towns that are often desperate to encourage customers. Many visitors to market towns just do not have the option of a bus. Thus, in order to achieve the necessary investment in market town bus routes, I propose that it be made possible for a rural PTA to enter into a long-term—say, 10-year—franchise agreement with a commercial operator which incentivises the operator to invest in the route, with newer and more frequent buses for example. In other words, we achieve the necessary investment without the required punishment of the motorists. I hope that this might be made possible.

All this points, in general, to the case for a different approach to bringing about an improvement in the quality of services in rural areas. There is a requirement for a strategically planned network that harnesses all the available resources: bus services, community transport, taxis and so on. One way forward would be to give local authorities the powers to franchise a whole network of services in rural areas that would incorporate any existing commercial services and, of course, include full inter-availability of ticketing between operators.

I have misgivings about the potential effects of road charging schemes. While I am all in favour of reducing congestion and discouraging people from using their cars, in order to minimise their carbon footprint, road charging schemes in rural areas could have severe downside social effects. It is already hard for deprived rural people to get to everyday services in their local market town, especially healthcare. There is rarely a suitable bus, and a car is often the only possible solution. Any unthought-out charging scheme could have a devastating effect on these people, without them having any real say in the matter. Clause 98 is pretty vague about who has to be consulted over the introduction of such schemes.

Another issue of concern to rural communities is the allocation of revenue from any urban road pricing scheme. If, as seems to be currently planned, the revenue raised is used entirely in the urban area itself, it would mean those travelling from and to rural areas would receive no direct benefit from the charges they pay. There is therefore an argument that the adjacent rural areas faced with road charges when entering their town should also receive their share of revenue to spend in their area.

Finally, although there are no proposals at present for a national road pricing scheme, there is concern that if pricing were introduced on major through routes it would encourage drivers to divert on to adjacent rural roads that are not designed to carry such a volume or type of traffic. That would add to road safety concerns in rural areas by increasing accidents and causing environmental damage. These issues need to be taken into consideration when such schemes are proposed.

I am aware that I have raised a series of rather specialist rural points, some of which may be outside the scope of the Bill, and I do not expect the Minister to answer every one in his reply, but it would be good to receive comments from his department before I am tempted to take them forward at the next stage of the Bill.

My Lords, I support the principles behind the Bill and welcome its introduction. Many local authorities have a good track record on supporting and promoting bus services. However, I will confine my comments to the specific points relating to the bus aspects of the Bill.

If we are to give local transport authorities greater powers to determine the level and quality of bus services in the context of an overall transport strategy, there is an issue about what could prove to be a somewhat complex, time-consuming and potentially costly procedure for examining, challenging and presumably amending or halting local transport authority proposals. Under the Bill, a network of services can be franchised out in a similar way to bus services in London and the national rail network. These quality contracts would allow the local transport authorities in question to specify and regulate bus networks which bus companies could then bid to operate. Once a company was appointed, it would face no on-road competition for the period of that contract.

The Bill proposes that an approval board, chaired by a traffic commissioner, will determine an application for a quality contract. The decision of the approval board can then be appealed to a transport tribunal on any matter by any consultee on the original quality contract application. The decision of the transport tribunal can then be appealed to the Court of Appeal on a point of law. I am not clear for whose benefit this potentially lengthy process has been proposed. Is it for the benefit of passengers or of those who may not be unhappy to see a lengthy and expensive decision-making process imposed on local transport authorities? The procedure looks likely to be time-consuming and costly.

I would be grateful if in reply my noble friend could say why a three-tier process is necessary and whether it could become even longer by going beyond the Court of Appeal. I would like my noble friend to spell out for whose benefit or protection the procedure has been introduced and, in particular, why the proverbial passenger on the Clapham omnibus should be grateful that it is there. I would like my noble friend to say what adverse or damaging actions could be perpetrated, by whom and to whom, which only these procedures in the Bill could address. Perhaps my noble friend could also give some idea of what the Government envisage could be the costs involved in pursuing or opposing challenges being pressed right the way through the procedure set out in the Bill. Could it run into tens of thousands of pounds or hundreds of thousands of pounds, and who pays the bill?

It is clear that if it is a potentially lengthy and costly procedure, it would be a deterrent to a small bus operator. But, equally, if confronted by one of the major bus and rail companies, it could lead to a transport authority not pursuing a quality contract scheme or heavily amending it to buy off objections if there was a possibility of the transport authority being left with a substantial bill for costs. Running the risk of having transport strategies for the benefit of communities determined not by the merits of the proposal, but by the financial clout of the parties involved does not seem to be a particularly effective process. Perhaps my noble friend could also give some idea of the maximum time the Government think it could take to determine an application that goes through all the stages of the process set out in the Bill. It will not be very helpful if the process can be strung out for so long that it can be used as a delaying tactic by those opposed to what is proposed and acts as a block on speedy and decisive action by local transport authorities. Are these, in terms of delay and costs, the Terminal 5 clauses in the Bill?

I appreciate that traffic commissioners and transport tribunals have expertise in vehicle safety and operational issues, but the powers they appear to be being given under the Bill will, in practice, enable them to decide whether a local transport authority or city region’s transport strategy should be allowed to be implemented. Perhaps when my noble friend responds he will say whether this is the case and, if so, why it is felt that unelected bodies, with no responsibility or accountability for transport strategy, or, I would suggest, current expertise in this field, should be able to thwart elected bodies with that expertise, responsibility and accountability. If the principle is that power should be devolved as far as possible to local transport authorities for matters that relate to their particular area and do not affect national policy or strategy, or impact on other areas, why are decisions on whether and in what form local or conurbation transport strategies should be implemented being devolved down to traffic commissioners and traffic tribunals?

If unacceptable or defective strategies are drawn up and implemented, why should redress be through an external, unelected body rather than through the ballot box as it is in respect of other areas of local government activity—including, as I understand it under the terms of the Bill, in respect of any decisions by local authorities on whether to exercise the power given to them in the Bill to introduce road-user charging schemes?

I turn now to the situation which appears to exist for the staff affected if the right to operate bus services under a quality contract is transferred from one operator to another. I have read the relevant clause in the Bill, which appears to provide for protection of existing terms and conditions of employment for staff transferred from one operator to another in such circumstances. However, I am not sure whether the clause means that all staff employed in the operation of services so transferred will be transferred, or whether the new operator can decide not to take on all staff involved. It would be helpful if my noble friend could clarify that position and also the position on protection of the existing and future pension entitlements of staff affected.

I am aware that this could be a difficult area. Obviously if a transport authority letting a contract wants to reduce the number of operators running services and instead have only one bus company running all the routes in question, then it may be that not so many staff will be required as an element of duplication may be removed. Thus the new single operator may not need all the staff previously employed in running the services when there were a number of different operators involved. On the other side of the coin though, the measures in the Bill on quality contracts are hardly likely to be received with enthusiasm if staff see them as a potential threat to their jobs and their pensions. There is a turnover of staff in the bus industry through which adjustments can be made to new staffing levels, and if the package is attractive enough some staff might take genuine voluntary redundancy. I hope my noble friend will be able to give some reassurances on the point of job security in respect of both the initial introduction and the transfer of quality contracts.

There are also questions relating to physical assets and infrastructure arising from the introduction or transfer of these quality contracts. The owner of a very large bus and rail company was quoted in a Sheffield paper just over a year ago as saying:

“If franchising or Quality Contracts are brought in we will put our depots up for sale in South Yorkshire. That is not a threat, it’s just that we don’t think it is the way to make the system work”.

So, under quality contracts, what will be the position in regard to the transfer or non-transfer of, for example, vehicles and depots? Is it the intention that the transport authority letting the contract should own the vehicles or the depots; or will it be for a new operator to include the provision of such assets in any bids they submit?

If voluntary partnership arrangements cannot be agreed—the provision in the Bill for “admissible objections” from relevant bus operators to stop such arrangements makes it appear more than likely—it is essential that we have a process and procedures for quality contracts that enable decisions to be made without undue delay by accountable bodies, and that allow for the voice of interested parties to be heard before final conclusions are reached. We also need to ensure that the introduction or retendering of quality contracts cannot be used as a basis for issuing redundancy notices to some of the staff affected. I hope that my noble friend will provide some assurances on the points that I have raised when he responds.