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Bus Services Bill [HL]

Volume 773: debated on Monday 4 July 2016

Committee (2nd Day)

Relevant document: 1st Report from the Delegated Powers Committee

Clause 4: Franchising schemes

Amendment 21

Moved by

21: Clause 4, page 14, leave out lines 36 and 37

My Lords, our Amendments 21, 38, 39 and 40 go to the heart of the concerns that we raised at Second Reading about the restrictions on local authorities being able to access the new franchising model set out in the Bill. As it stands, a mayoral combined authority can automatically opt for a franchise scheme if it feels that it is right for its locality. However, all other categories of single or combined authorities must first seek the permission of the Secretary of State. Their decision would then need to be endorsed by affirmative regulation. Our amendments simplify and streamline that process, taking the Secretary of State out of the equation and creating a level playing field for local authorities.

We share a common purpose in wanting to improve the number of passenger journeys and drive up standards. We know that the franchising model works; the statistics for bus use in London are testament to that. No doubt this is part of the reason that the Government have finally embraced it as appropriate for mayoral authorities. However, no one has satisfactorily explained why, if it is good for one model of local authority leadership, it should not work equally well in other areas. It is not at all clear what the unique wisdom of mayoral authorities is. As I said at Second Reading, there is a wider game of politics going on here. Clearly, the Government are scratching around to find incentives for local authorities to adopt their preferred model of local leadership. This has been alighted upon as a bargaining chip; it has nothing to do with improving bus provision.

The threat of Secretary of State interference in local authority decisions, as set out in this Bill, surely runs counter to the shared aspiration of both the Government and the Opposition to devolve more power to localities and let local communities shape the services that are right for them. Our view is shared by the Local Government Association, which has endorsed our amendments. It takes the view that all areas should be given automatic rights to bus franchising powers, with the decision taken locally, based on robust evidence and taking into account the needs of passengers, local residents and other circumstances such as the performance of local bus markets. Its view is shared by many other smaller bus operators. For example, Dai Powell, the chief executive of HCT, which provides more than 20 million passenger journeys a year said:

“The power for Local Authorities to franchise their local bus services has the ability to revolutionise the UK bus industry. It’s pretty clear that franchising has the capability to bring significant benefits to the travelling public through enabling network development that meets the needs of communities”.

The only group that seems to be lukewarm about the franchising model and our proposals to streamline and extend the model are the existing local large bus operators. However—being realistic—they would say that, wouldn’t they? The existing arrangements have, of course, served them well. They may result in a poorer bus service, but they have also delivered large profits for them. A recent Competition Commission investigation concluded that bus operator profits are higher than in any other business sector deploying comparable levels of capital at equivalent risk. Across Britain, bus companies’ average operating profit in the 10 years to 2013 was £297 million a year. Bus companies in the unregulated big cities made average profits of 8%, whereas profits in London are less than 4%. So we can see why they may be reluctant to embrace change and support the franchising model. However, we do not accept that position. It cannot be right that around 10% of public money going into bus subsidies is ending up being paid out in profit dividends rather than improving the local bus service. Our amendments would make it clearer for local authorities as a whole to do what is in the best interests of their local community, without bureaucratic, costly and lengthy interference from the Minister.

Meanwhile, as the noble Lord the Minister has been made aware, the Delegated Powers and Regulatory Reform Committee has also raised its own concerns about this clause. It has flagged up the inadequate explanation in the Explanatory Notes as to why different rules are being applied to mayoral and non-mayoral authorities. It says:

“We have therefore found it difficult to assess, on the basis of the explanation in the memorandum, whether it is appropriate to delegate to the Secretary of State a power to allow the authorities referred to in section 123A(4)(b) to (f) to become franchising authorities, instead of this arising immediately upon the commencement of clause 4. The House may therefore wish to ask the Minister to provide a fuller rationale for the power in new section 123A(4)”.

I think that we would all like to have an explanation for the Government’s discrimination against the non-mayoral authorities in the Bill. The noble Lord has said that he intends to respond to that committee. We would all be interested in that response, so perhaps the noble Lord can let the Committee know when it will be available. In the meantime, regardless of that, we believe that these amendments are crucial to making the Bill a success. I beg to move.

My Lords, while it is clearly right to explore these issues, I strongly urge the Minister to resist these amendments. The noble Baroness, Lady Jones, mentioned London, but she will know that London is almost a city state. The circumstances are very different, and with very different funding arrangements. She mentioned the lower profit available to operators in London, but the reason for that is that they are taking less risk than in a non-regulated service.

This is all about accountability. If we are not careful, we might well find ourselves hurtling down the same avenues as we did during the debates on the Cities and Local Government Devolution Bill last year. Combined authorities with elected mayors, or any other local authority with an elected mayor, are very different beasts from local authorities that have not gone down the route of having an elected mayor. The appointment of a directly elected mayor provides those authorities with a considerable battalion of powers where they have agreed devolution deals with the Government. That of course includes the power to franchise local bus services.

Authorities with agreed devolution deals already have the necessary consent to pursue their new bus franchising powers and will be allowed to do so when the relevant parts of this Bill are brought into operation. However, I do not believe that that should be the case for other local authorities. They have not been through the process of acquiring what could be said to be a higher status in terms of local accountability. It is a fact that those authorities with elected mayors and agreed devolution deals already have the powers by virtue of that process. We know that the process is not necessarily straightforward and requires hard-fought agreement between the authorities that comprise those areas.

The noble Earl emphasised mayoral combined authorities and mayoral powers. Why, then, has Cornwall—which is not going for a mayoral model—been promised franchising powers?

My Lords, I do not know that, but I expect the Minister will tell us.

The agreement between the authorities that comprise those areas is hard fought. Some tough battles are still extant where devolution deals just could not be worked through. Through their earlier legislation, the Government have established a process for a new kind of local authority, which has wide-ranging powers but first has to satisfy the Government that the right kind of structures and accountability are in place. The amendments would give the same wide-ranging powers to local authorities that have not taken those brave and often difficult political steps.

I am afraid therefore that I disagree with those noble Lords who say that this Bill treats local authorities without elected mayors or an agreed devolution deal differently from those who have. There is no unfairness here. It is a simple fact that authorities with elected mayors and agreed devolution deals already have government approval to introduce bus franchising; other local authorities do not. What would be unfair, I believe, is allowing any local authority access to bus franchising powers without having gone through the democratic process of electing a mayor and acquiring government agreement to a devolution deal. I am not at all convinced by the arguments put forward for these amendments and the Minister has my full support should he ask the Committee to resist them.

My Lords, the amendment to which I have added my name, along with the noble Baroness, Lady Jones, would remove the power of the Secretary of State to decide what other local authorities, along with mayoral authorities, may have franchising powers. The report of the Delegated Powers and Regulatory Reform Committee states that it is,

“puzzled by the implication in the memorandum that mayoral combined authorities have expressed an interest in pursuing a franchising approach, given that there are currently no combined authorities with a mayor”.

Although an order has been made preparing Greater Manchester for this situation, its mayor will not be elected until 2017. I would be interested to hear the Minister’s response on exactly what the provision in the Explanatory Memorandum refers to. Does it refer to Manchester or other areas? Even more fundamentally, why should a mayor be any better at running bus services than a designated executive member within a transport authority? After all, the previous Mayor of London did not have a glorious record when running the buses. A great deal of resources were wasted on the “Boris bus”, and the fact that London buses run very well is down to the experience and expertise built up over many years by Transport for London. Compare the record to which I have just referred with that of Reading, which has an excellent municipal bus service run on a traditional civic structure, and has had the wisdom to invest well in its bus services over the years and maintain its municipal service operating at arm’s length from the council.

I give another example: the Mayor of Liverpool, in his wisdom, shut all the bus lanes. I do not think those are examples of mayors’ wonderful wisdom trumping other forms of local government organisation. I am puzzled about the position in which this Bill puts Cornwall, because, as the noble Lord said, Cornwall was promised franchising as part of its devolution deal but now, according to the Bill, has to get the Secretary of State’s permission to go ahead with franchising. Previously in Committee, My noble friend Lady Scott referred to Jersey as an excellent example of how franchising can work, even with small authorities. Jersey has 80 buses and a population of 100,000, but has increased bus passenger usage by 32% since it had franchising, saved more than £1 million a year in public subsidy, added five routes and increased the frequency of its buses. That is an example of franchising working in a very small locality. Therefore, I very much hope that the Secretary of State will accept our arguments, agree to look at this issue and consider whether the need for the Secretary of State to intervene can be removed from the Bill. I hope the Minister can give us hope in this regard.

My Lords, I have given notice to my noble friend on the Front Bench that I strongly disagree with what was said by my noble friend Lord Attlee and strongly support the principle of Amendment 21. I spoke on this matter at Second Reading. I declare an interest as an elected leader of a local authority. I suggest to my noble friend that if I were suddenly told that I had to become an elected mayor overnight, I would be no better or no worse at my job than I am now. I do not understand why this obsession—and it is an obsession—with mayoral authority continues.

I venture to suggest that, in the light of recent events, whatever else has happened—and one does not know from hour to hour what is going to happen next—it is the idea of imposing mayors that many of us object to. If local authorities wish to come together, have combined arrangements and do things together, that is fine; we have recently agreed a shared staffing arrangement with our neighbouring authority in Wandsworth. But it is a denial of local democracy in any place to insist, from the centre, for whatever reason, that a local authority, or group of authorities, may only have something on the condition that they do the bidding of central government and have a mayor whom nobody wants. This had led us to the absurdity of a Conservative Government proposing and requiring that there should be a mayor of East Anglia. Not even Mr Edward Heath suggested that. It may be that the local authorities in East Anglia will come together and say that it is a great idea and that they want it. That is fine; let them do so.

However, this is just a small example of a wider policy. Let us not beat about the bush: this policy is coming down from Her Majesty’s Treasury, where it is being actively encouraged by my noble friend Lord Heseltine. In the light of changed circumstances—in the next few months we will have a new Prime Minister and many other new Ministers—I hope that the next Government team will take a look at this policy of imposing mayors. I concentrate on the word “imposing”. It has been done by a form of blackmail from the centre: you can have more money if you do what we want. I dislike that: we want dispersed power in this country, dispersed choice and dispersed opportunity, not single models handed down from above.

This is a small example of a policy which I believe to be wrong democratically and in principle. I could not sign the amendment because the Marshalled List was full, but unless I get some assurances from the Front Bench that the Government will think again about this principle, I might be tempted to support such an amendment on Report. I see absolutely no reason why competent authorities that come together should not be treated in the same way as competent authorities that come together with a mayor on top. The first version might actually be rather cheaper than the second, given all the stuff that comes with a mayor.

I am very sorry to speak in these terms; they are addressed not to my noble friend on the Front Bench, but to rather more senior people in government than him or me. This is one stage too far in the policy of imposing mayors on unwilling communities and authorities. I suggest that the policy should be paused, then stopped.

My Lords, I support these amendments and am grateful to my noble friend Lady Jones for setting out the arguments so clearly as to why we do not need the Secretary of State’s approval for any authority that does not have a mayor. Let us be clear about Cornwall. It is not mentioned by name in the Bill, but we have heard lots of statements from Ministers that this one authority—which does not have a mayor and probably never will—will be allowed to have a franchising service. This is quite surprising. Devolution for Cornwall has involved a lot of proposed changes in health and social security. There is no money there, but they are going along with it. However, as I mentioned on the first day in Committee, they are going ahead now as if they had a franchise, but on a voluntary basis. The bus companies concerned are fully supportive—I talked about integrated ticketing, timetabling, routes and so on—but they are doing it without the need to apply for franchising because it is going to happen anyway. That is the impression I get. So why do the Government believe that they have to impose this ridiculous approval process, as the noble Lord, Lord True, outlined, for authorities that do not have mayors? It seems a complete waste of time. Since it is being done on a voluntary basis, at least in one county, to achieve what I believe will be a very successful outcome, I will be interested to hear the Minister’s explanation of why mayors are good and everybody else is bad. It is a bit like Animal Farm in the early days but I will not go on about that.

My Lords, I agree that there is no distinction, really, in accountability terms between a mayor and a councillor who is considering these matters. I strongly agreed with the remarks of the noble Baroness, Lady Jones, about London and London franchising. I live in London and I can certainly attest that what she said about that is entirely correct. London buses are, frankly, marvellous. Whether you congratulate Boris—poor chap, he is receiving rather a bad press at the moment so I might as well praise him for his new buses—or Thomas Heatherwick, who actually designed them, they are absolutely superb. Whether you praise Thomas Heatherwick, Boris Johnson or Ken Livingstone, London really works from a bus point of view. In fact, my wife said to me the other day, “You’re becoming a bus junkie”. I actually took a bus to go one stage because the bus routes give you priority over cars, et cetera, so it really does work. Therefore, I am emphatically in favour of the Bill, which tries to extend franchising to the rest of the country, which I think badly needs it.

However, I am, frankly, horrified by Clause 4, which submits everything—apart from the one aspect of mayors with combined authorities—to the requirement that the Secretary of State should process it. It means that a council which wants to put on a new bus service from, let us say, Little Dribbling to Nether Wallop has to take it to the Secretary of State. That is absolute nonsense. I was a Minister of Transport in a Labour Government a long time ago and this system does not work. You need to get somebody who knows the situation locally, understands it well and can take a decision. Okay, there are always a few problems and occasionally things go wrong, but pushing it up to a civil servant and then to a Minister, who probably has no knowledge of the situation you are talking about, does not work. All it does is congest the Government at the top level.

I saw the other day that Prime Minister David Cameron was complaining that in comparison with Angela Merkel, he had much more to do because he had to take decisions about education, transport, the NHS and so forth and she did not; in Germany it was all farmed out to the Länder. This is why. We are taking all these absurdly detailed decisions at government level. Although my experience is quite different from that of the noble Lord, Lord True—his is extensively in local government, mine is not—from the point of view of a government Minister, it is nonsense, frankly. It simply does not work.

The noble Earl, Lord Attlee, tried his best to give a reason, which was about accountability. There is no difference between the accountability of an elected mayor and that of an elected councillor. It is a simple fact. They are both elected; they are both responsible to the local electorate. There is no distinction that I can see. I am not surprised that the Delegated Powers Committee said that there was no adequate explanation. I looked through the Explanatory Notes, hoping to find some rationale for this procedure, and there is none. Therefore, we have a real problem here and the Government really have to think again.

Another difficulty is that quite apart from overcentralisation, the British Civil Service seems to go in for too much complexity. If we raise the bar too high, either because things have to be processed up or because we put in a lot of regulations, which are sometimes unnecessary—they are no doubt sensible in some ways and no doubt advisable; none the less there is more and more regulation—it becomes likely that lots of local authorities which could use these powers will simply say, “Oh, it’s too much trouble. We don’t want to bother with all that. We won’t do it”. There are easy ways to get out of it and then blame the Government. When people ask, “Why isn’t there a decent bus service here?” they can say, “Because the Government made it so complicated”. It is an easy way out for them.

Therefore, while, like my noble friend Lord True, I am in no way criticising my noble friend on the Front Bench, who has his job to do and who does it extremely well, I believe that between now and Report in September the Government should look at this and extensively modernise it. If they do not, I do not think, frankly, that they have much chance of getting it through this House.

My noble friend Lord Horam observed that the Explanatory Notes do not justify the policy, but my understanding is that that is not the purpose of Explanatory Notes. Explanatory Notes, as I understand it, tell us what the Bill does and how it works and do not seek to justify the policy.

It is not just that the Explanatory Notes, which should explain what each clause does, do not explain why this does what it does; the overview, which we also get, does not explain it either.

My Lords, I am not getting involved in the squabble between noble Lords opposite, because I want to start one of my own, on this side. The fact is that I have never been in favour of franchising and I do not think that the proposals for franchising in the Bill are particularly sensible either.

I listened with interest to the view of the noble Lord, Lord True. I know that he is enormously talented, but I am not sure that he is qualified to run a bus company—although, obviously, as the leader of a council, he feels that he should. I share his view that elected mayors are not capable of running bus companies either, but we all know why they are being given that responsibility. Having created these large authorities against the wishes of the electors in cities such as Birmingham and Manchester, they have to give them something to do—and I am sure that letting them run the buses seemed to the Treasury to have been a good idea at the time.

I have asked Ministers about this and, indeed, the Minister here today indicated that the extra money needed to run those bus services in our large cities will be provided by the Treasury. That is not normally the way that the Treasury goes about things and it seems to me that these responsibilities are being passed on to big-city level without the resources to deliver them adequately.

Again, I have to say to my noble friend on the Front Bench that I do not share her view of the bus industry as it used to be. It is a bit like British Rail: everybody tells me how wonderful it was. Actually, I used to work for it and I did not think that it was particularly wonderful at the time. Now it is implied that the bus industry, when it was under municipal control, was a picture of tranquil harmony, with lots of satisfied passengers. I have bored your Lordships before with my own career, such as it was, in the bus industry, but, when I worked for Travel West Midlands, it was a group of municipal undertakings that were put together as a result of the 1968 Act, semi-privatised by the Conservative Government of the 1980s and actually acquired by its employees.

When I became a director of the company I did not think for a moment that it was due to my talent: I was told afterwards that I was the one person who both management and staff could agree on at the time. I am not sure whether that was praise or condemnation, but I became a director of the company in 1992. Many of its buses were quite ancient. The average age of the bus fleet of Travel West Midlands in 1992 was nine and a half years. After we, the employees, voted in 1997 to join the National Express Group, the age of the bus fleet when I stepped down as chairman in 2000 was just over six years. That was a quite dramatic reduction and indicates the amount of investment that was put into new vehicles during that period.

If bus services are franchised, what will happen to that investment? I have to say to my noble friend that, because we were a subsidiary of the National Express Group, it was my job and the job of the other directors to make a case for investment to the main board. We actually invested around £30 million during the time I was directly involved, in tranches of around £10 million each time. We had to convince the board of the National Express Group that it was sensible to invest that sort of money in bus services in Birmingham.

Does my noble friend think for a moment we would have got the go-ahead from the National Express Group if the idea of franchising was being held over the company’s head at that time? I will answer my own question: the fact is that we would not have got the go-ahead, because the view of the National Express board would have been, “We are not prepared to spend £10 million of our assets on buses when someone else—whether it is the noble Lord, Lord True, or someone else—will tell us where to run them, when to run them and how much to charge”.

Again, reverting to those so-called halcyon days of municipal control, my noble friend talked about the amount of profit that was made by the five major bus operators. As I have indicated, many of them operate new fleets. As far as wages are concerned, I will confine my remarks to Travel West Midlands, where I was chairman of the board. We paid our drivers the best rates in the United Kingdom, so those profits were not made off the sweat of the brow of our employees, although of course some went to shareholders. I know that we have some disagreements at the moment about the leadership of my party, to say the least, but I do not think that we are entirely anti-profit-making yet. We will have to see what happens in the next few days and weeks, but I do not think we object to companies paying their shareholders a dividend and paying their staff an adequate wage.

I have been listening to my noble friend’s rant, and I have to say that he is completely misrepresenting the point that I was making. I am not advocating a return to the old days, and he is rehearsing the history of things that were probably before my time. First, municipal services, as it happens, now have some of the highest satisfaction levels, so I am not saying that there is anything wrong with municipal services. That is a debate for another day, and we will return to it. Secondly, we are here today because, having allowed the free market that he is advocating to thrive, passenger numbers and satisfaction levels are going down. That is why the Government brought this Bill forward in the first place. To be absolutely honest, I am not sure that my noble friend has addressed that. We are considering options such as franchising because it is considered that it will drive standards up again, which is what we all need.

Passenger numbers are indeed going down—they are going down in London, as a matter of fact—as is passenger satisfaction. I do wish that my noble friend, instead of relying entirely on the Local Government Association and what used to be called the Passenger Transport Executive Group, would actually look at the facts. Passenger satisfaction in London, according to the most accurate survey, by Passenger Focus, is currently less than that in Birmingham, for example. Passenger numbers are also going down in London, and they are going down for one simple reason: it is nothing to do with franchising, private ownership or whatever but because of congestion. We all know how bad congestion is in London, and it is getting worse, which is impacting on passenger carryings at present.

I have been trying to find out how many staff are employed in Transport for London exclusively on franchising matters. I am told that it is some hundreds, but I cannot get anything more accurate than that. This is not going to be a cheap operation if the noble Lord, Lord True, and his colleagues are going to run the buses in his part of the world. Despite his talent, he is not going to do it on his own; presumably there will be a director of franchising, perhaps a couple of assistant directors and other staff. Lots of money that perhaps could and should be spent on improving bus services will be spent on the bureaucracy that is necessary—I am not complaining; it is a fact—to run a franchising operation. I have to say to my noble friend that it is not just in London where the operation is run like that; Belfast has a franchising system, and, of course, due to congestion in Belfast, passenger carryings are falling there too.

If my noble friend had stood at that Dispatch Box and advocated the rest of the London experience such as sensible traffic control, the proper maintenance and policing of bus lanes, and perhaps even a congestion charge—or car park charges, as introduced in Nottingham—there would be some sense in that, but we are getting none of that. We are told that if we go to franchising, somehow the situation for the bus passenger, who rarely gets a mention when we discuss these matters, will magically improve. I do not believe a word of it.

As far as my noble friend’s, and my party’s, amendments are concerned, will the rest of the bus operators invest in new bus services or new vehicles in the county areas if it becomes possible under these amendments to introduce franchising virtually overnight on the whim of the leader of the council perhaps or the change of political control in the local authority? What will that do for bus investment in the United Kingdom as a whole? It is not just the big five—as they are called—bus operators which are against franchising. On 29 June, the Competition and Markets Authority sent a letter to the department and publicised it. It is fairly long, so I will not bore the House by reading it, but a couple of extracts might be useful:

“The CMA recognises that the introduction of franchising may be appropriate in specific circumstances”—

well, so say all of us—

“but believes that on-road competition should only be abandoned in favour of competition for the market in circumstances where it is clear that this is the only way to secure better outcomes for the travelling public”.

It goes on to say that a deregulated market risks,

“being more harmful to competition and passenger interest”.

It is not a wicked capitalist or a big five bus company; it is an undertaking whose job it is to look at these matters and what is proposed.

I do not believe that franchising is necessarily the way forward. I understand why the Government have decided to take that particular approach as far as big cities are concerned. Having wished the mayors on the larger conurbations, against the will of most people in those conurbations, I repeat that they have to find them something to do, but I do not think that extending and spreading that system outside the major cities would help the bus passenger and the bus services one iota.

My Lords, before I turn to the detailed issues that I want to raise with the Minister, I will say a word or two in response to my noble friend Lord Snape. The Bill does not insist that local authorities introduce franchising; it gives them the option. My noble friend’s arguments to your Lordships appear to be that if they are given the powers they will use them. It will be a matter for individual authorities to assess the risks, the benefits and so on, and the Bill itself spells out a considerable number of assessments that they would need to make. So here we are really talking about whether franchising is an option that should be available if a local authority wished it. I have heard nothing from my noble friend, other than the feeling that he was against franchising in any circumstance, that would gainsay that.

I turn to the details in this clause and its subsections. I will seek clarification from the Minister and conclude with some observations about the amendments. First, new Section 123A(4)(b) to (f) refers to the range of different types of local authorities, which is the subject of my noble friend’s amendment. It is not clear from the wording in the Bill whether it is a category as a group or individuals that might fall within that category. Paragraph (f), for example, refers to,

“a combined authority which is not a mayoral combined authority”.

Does that mean that the Secretary of State would need to consider whether any combined authorities that are not mayoral should be a franchising authority, or could the Secretary of State authorise or approve one individual one? That is really rather important.

The wording is very vague. The only time one sees wording that appears to make that clear is in the memorandum on delegated powers, where it appears to make it clear that new Section 123A(4) relates to categories of local authorities. If that is the case, how could the Secretary of State provide regulations that would enable every authority that fell within the category to become a franchising authority? It might not make sense for some of them. What if it made a lot of sense for one out of five? Would that individual authority not be able to be a franchising authority because the Secretary of State felt that four others should not?

This is a very confusing part of the Bill, so I would be grateful if the Secretary of State could make it clear and, if need be, clarify in due course with his own amendments whether the categories in new Section 123A(4)(b) to (f) relate to individual authorities that fall within a category or to a whole category. This is relevant because, in order to authorise an individual or a category to become a franchising authority, the Secretary of State has to provide regulations. Will those regulations apply to all parties in the category—that is, even if not all of them have asked to be franchising authorities, they will get it because someone did—or would the Minister refuse to authorise one individual authority on the grounds that some others in that category did not meet whatever his criteria were?

That leads me to the question of criteria. What criteria would the Minister apply in considering whether any of these categories—or individual authorities within the categories, because I am not clear on that—could become a franchising authority? It is extremely important for transparency purposes that local authorities know what the criteria are. Will the regulations include the criteria, or will they be set out in some kind of advice or guidance? Will the House have the benefit of the draft regulations before Committee, and will the criteria be set out before then? If not, we will have no idea what the Secretary of State’s intentions are, which would be very unhealthy—effectively, your Lordships’ House would be giving the Secretary of State carte blanche.

If an individual authority within a category wished to obtain franchising powers—should they so wish to use them, and they may not wish to in the event—does it have to get all the other authorities in that category to put in a joint proposal that that category be approved, or could it alone make a proposal? In which case, would the Secretary of State be judging the individual authority’s proposal to become a franchising authority, rather than the group as a whole? If so, what criteria would the Secretary of State apply to an individual authority?

Noble Lords can readily see the problem for an authority—in my case, the West Yorkshire combined authority, which is not a mayoral authority. If it wishes to have franchising powers, should it wish to use them, how does it get them? It cannot apply to have them because its group has not been approved as a category that can have franchising powers. What would West Yorkshire do? How would it proceed? That is very puzzling and it would be certainly be very helpful to me to understand it. The Secretary of State might say, “Well, West Yorkshire, you might have a good case but actually we don’t want this whole category to be approved because too many are being granted franchising powers”. There is a hint in some of the clauses and subsections that they are about spinning this out. I forecast now that no franchising powers will be granted to any authority outside mayoral authorities this side of the next general election.

As with HS2, HS3 and the northern powerhouse, I have to say that we in the north of England are slightly fed up with hearing Governments announce not that they may do something but that they will do it, just as they announced that local authorities will get franchising powers. People think they are going to get such powers, but the Bill does not say that at all. It says, “Well, if you are in a certain category, you probably won’t get them. If you do, we are not sure what the criteria are, so you’ll have to wait for others to want them as well, and then we’ll consider it. We will have to get regulations through, and that will take time.”

On the evidence of the Bill, I am pretty sure that that is the case, which is a great disappointment to me. When I first looked at it I was encouraged to see that it was giving powers to local authorities, but the proposed new sections in effect set out the detail of the obstacles and the unknown difficulties being placed in front of local authorities wishing to seek franchising powers.

If a category of authority or an individual authority within a category—the Minister will enlighten the House about that—becomes a franchising authority, that does not mean it will be able to have a franchise. To have a franchise, the individual authority putting forward proposals will of course have to do all its homework and, if it wishes to go forward, it will have to make various assessments and so on, as set out in the Bill. Under proposed new Section 123C, the Secretary of State has to consent to a franchising authority even preparing a proposed assessment. The authority would have the power in principle, but if it wanted to develop a proposal, it would need the Secretary of State’s consent. That is the second consent. Will that consent fall within regulations, where is the power to grant consent and what criteria would the Secretary of State apply in deciding whether to give consent?

It would be ironic if the criteria for an individual authority to have the power to develop a proposal were exactly the same as those applied to becoming a franchising authority under proposed new Section 123A. That would mean going through exactly the same hoop twice, which is nonsense. However, if the criteria are not the same, why are they different? Why does an authority have to prove that it can have a franchise, and then have to meet different criteria if it wants to bring forward a proposal? I would be grateful to the Secretary of State if he expanded on that.

To conclude on the details of the Bill, it would be helpful to me, at least, and I hope to your Lordships, if the Secretary of State set out his understanding of the process by which a non-mayoral authority can acquire franchising powers and seek to implement them. What is the process, and what is his reasonable estimate at the moment of how long it would take? He must have some idea of how many authorities are interested in having franchises, and he must have thought through how long each of these of steps will take—the process of setting out regulations, and of developing and defining the criteria in the two cases—so how long will it take?

To come back to my earlier point, as I have examined the Bill in more and more detail, I have gained the distinct impression that obstacles are being put in front of local authorities. I think the noble Lord, Lord Snape, would be delighted, because the obstacles seem to me to protect large bus companies from having to compete for franchises. I fear that he may be able to reassure his colleagues that this will not happen this side of a general election, and then goodness knows what will happen.

The Minister—unless he surprises me—has disappointed me badly so far on the detail of the Bill. I look forward to hearing his response.

My Lords, I will respond to one of the points made by my noble friend Lord Snape, who implied—I think my noble friend Lord Woolmer of Leeds also pointed it out—that the big bus companies do not like franchises because they involve competition. However, I think that most of us think that competition is quite a good thing. Apart from anything else, if you have a free-for-all in London like there used to be in Manchester, you have even worse traffic jams and probably less investment, although that is a different issue. However, I again point out that in Cornwall one of the bus companies, which is without competition, is voluntarily introducing a new set of double-deck buses on the main spine route. They are very smart buses, as they even have tables on the top deck, so that you can get your laptop out, as well as chargers for your laptop and wi-fi. The bus company sees this as a good investment which will attract more passengers. If this can be done voluntarily, I suggest that it could also be done in a franchise, if franchise terms are set out to encourage quality as well as the most important thing of the lot, which is the timetable to link with other services—trains, ferries, planes and whatever—which you will not get in a free-for-all around the country. Sometimes the bus companies seem to do it on purpose so that you do not make a connection.

My Lords, I thank all noble Lords who have taken part in the discussions. Several times in his contribution the noble Lord, Lord Woolmer, referred to me—I am flattered by the suggestion—as the Secretary of State. I know that there are certain unpredictabilities in government as we move forward into what I said earlier today in answer to a PQ are unpredictable times, but perhaps he is party to something I am not.

I shall respond to a number of issues which noble Lords have raised. I thank the noble Baroness for laying down a series of amendments. As she illustrated, her amendment would enable all authorities listed at proposed new Section 123A(4), rather than just mayoral combined authorities, to access franchising powers without the need for regulations or for the Secretary of State’s consent to be given. Several noble Lords spoke in favour of this, but I also recognise that some voices were not in favour of the amendment. I know from previous meetings with noble Lords that queries have been raised regarding the Government’s stance on mayoral combined authorities and the policy that such authorities should be given automatic access to franchising powers while others would require regulations and the consent of the Secretary of State. It may be helpful if I say a bit more about the Government’s rationale for favouring the mayoral combined authority model, then I will answer some of the specific questions and issues that have been raised.

As I have said before, moving to a model of franchising is a big decision which is likely to have implications for passengers, bus operators and the local authority itself. Our view is that strong governance and accountability are key to making franchising a success, together with a commitment to improving transport and a coherent economic geography. Mayoral combined authorities, when established, will provide centralised decision-making for transport across a relatively wide local geography, be that city areas such as Greater Manchester and Sheffield or regions such as East Anglia. The mayor will be the individual responsible for deciding whether to implement franchising and can be held accountable for that decision. Those factors, together with the fact that transport will be considered at a strategic level, mean that the mayoral combined authority model is well suited to making franchising a success.

However, as the noble Baroness, Lady Jones, noted at Second Reading, the Government do not want to preclude other types of authority becoming franchising authorities in future if there is a compelling case for doing so—I will come on to Cornwall in a moment. The Bill enables other authorities to access franchising powers if regulations so provide and the Secretary of State provides his consent.

The noble Lord, Lord Snape, rightly raised the impact on the bus industry. We are concerned about the impact of uncertainty on the bus industry and want to ensure that bus operators continue to invest and develop services to the benefit of passengers. There were some suggestions during the debate that by establishing the mayoral combined authority model as the preferred model and limiting access in the first instance—I stress that—somehow we are excluding all other authorities. We are not. By limiting access in the first instance to the category of authorities, the bus industry will have greater certainty as to the areas that will have access to franchising powers and will be able to take commercial decisions accordingly.

In addition, as noble Lords have noted, the Secretary of State will also need to provide his consent before any individual authority can access franchising powers. Franchising is a big step which will have implications for local passengers, bus operators and the authority itself, so we want to ensure that franchising is pursued only where it makes sense to do so.

I shall answer some of the specific questions and then come back to any other issues I wish to raise at this juncture.

Before the Minister moves on, will he clarify something for me? I am struggling to understand why the question of certainty for the bus industry has been raised in this context. It seems to me that if we have the situation as pertains in this Bill there will be a raft of local authorities around the country which may at some point have access to these powers, but only if the Secretary of State says so. I am not sure how that adds to certainty. Would it not be more certain if all local authorities had the potential powers to bring this in?

It is not just about local authorities. I have already alluded to other factors. I state again that the geographical nature of the authority applying for franchising powers is important. The noble Baroness’s important point about the Secretary of State approving access to the powers was perhaps not covered in the debate. There would, of course, be instruments introduced in both Houses to allow for discussions on the particular models. I stress that this is an enabling Bill that allows all authorities to have access. It is the Government’s view—noble Lords have expressed views to the contrary—that mayoral authorities are best suited in terms of their governance models and their geography for franchising, which, as I have said, is a big step. At the same time, we have to balance that with the nature of the bus operators. That is the Government’s view. I am not saying that all noble Lords will immediately subscribe to it. That is why we are pursuing the mayoral combined authorities model, but not to the exclusion of others.

The noble Baroness, Lady Jones, raised the response to the Delegated Powers Committee. It is fresh off the press. I know my honourable friend in the other place has today written to the committee outlining the Government’s proposals and I will ensure that full details are made available to all noble Lords. To avoid prolonging this debate if there are specific questions on the letter, I will be pleased to answer either later in Committee or through correspondence, but I think that what I will say will deal with some of the issues and concerns that the DPRRC’s letter raised. The Government’s response from my honourable friend sets out the issues around access to franchising. It also goes further and mentions that the Government are looking to accept the proposals raised by the committee on open data. I am sure the detail is in the letter.

The noble Baroness, Lady Randerson, also mentioned the memo about mayoral combined authorities and said that they have expressed interest. She raised a very valid point about whether they actually exist. The noble Baroness and the Committee were right to pick this up, but I am sure that she will accept that we have been referring to areas which have agreed deals—I referred to Manchester and Liverpool as two examples. We have made it clear in response to previous questions raised by the noble Lord that the deals would be issued in time for those new governance procedures to come on board. Cornwall, where devolution deals are being discussed, illustrates the Government’s willingness to allow the devolution debate to take account of what we are looking to do in terms of bus services. In our discussions to date with Cornwall, franchising is something that it has indicated it would seek to pursue. That is why the Cornwall example has come to the fore, although it would still need to go through the same process that we have illustrated for non-mayoral authorities.

The noble Baroness, Lady Jones, referred to London. As several noble Lords acknowledged, London is very different, and the local government role has been defined for the past 30 years in terms of devolution of powers and financial and investment risks. These have been the major differences between London and other parts of the country.

The noble Baroness talked about the concerns raised by the LGA about the franchising model and whether it makes sense locally. As I have already said, we need to address the concerns. This is about providing access to all authorities, but we need to balance that against the need to provide certainty to the bus industry and to ensure continued investment. I stress again that the Bill provides the ability for other local authorities to access the powers if there is a strong case for doing so.

I have already said that we are in discussions with Cornwall on its devolution deal. The noble Lords, Lord Woolmer and Lord Berkeley, both raised issues pertaining to Cornwall. Cornwall is committed to improve local transport in the wider area, and it has made a strong case for having access to franchising powers. If Cornwall decides that it wishes to pursue franchising, the regulations will be brought forward for discussion via the affirmative procedure. As I have already said in response to the noble Baroness, Lady Scott, it is important to note that in laying out the intent behind the proposals in the Bill the Government have been very clear that they believe that mayoral combined authorities provide a model which is able to take forward the proposals around franchising. However, that does not preclude others doing so. By making the provisions subject to the affirmative procedure, with applications subsequently made to the Secretary of State, we are providing the locks, the vehicles and the necessary checks and balances to ensure that the best deal is done for all local authorities. I shall respond shortly to questions relating to specific procedures relating to the Secretary of State.

My noble friend Lord True asked why competent authorities cannot come together when they have franchising powers. I assure him that nothing in the Bill prevents this. They can make their case, and the Government will listen. Whether it is me or Ministers at a more senior level, we want to ensure that the competence powers needed are in place to make franchising accessible to whatever type of authority. I stress again that the economic geography of the authorities coming together is an important and attractive part of this. I assure noble Lords that we have no intention of excluding any particular local authority in this respect.

The noble Lord, Lord Snape, asked what would happen to investment under franchising. I have already talked about the concerns of bus companies. When franchising is implemented, authorities will be able to specify things such as vehicle age, but they will need to ensure that a scheme remains affordable. The noble Lord also asked about the Competition and Markets Authority. We have received several recommendations from the CMA. We are considering them and will respond shortly.

The noble Lord, Lord Woolmer, asked about the regulations to allow certain categories of authority. I have answered this in part already. We want to make franchising powers available only where there is a real desire to use them. Regulations will be made only if at least one authority from that category makes its case to government. The Secretary of State will then need to give consent to individual authorities which want to use the powers.

We have talked, to some degree, about criteria, and I am conscious that in response, to the noble Baroness’s question, and I think, to the noble Lord, Lord Woolmer, who also asked about this, I gave a commitment at Second Reading to publish the criteria which the Government and the Secretary of State will use. We will make the detailed criteria available before Report. At this juncture, I can share some of the headlines. There will be, in essence, four key factors that the Secretary of State will consider: first, the powers the authority has; secondly, the governance arrangements which are in place; thirdly, the economic geography of the area; and fourthly, the track record and ability of the area to deliver upon this. There is further detail to follow and, as I have said, I will seek to ensure that that is published before Report.

During this debate, I have talked about a number of factors, including the importance of powers of governance, the arrangements the authority has in place, the economic geography of the area and the track record which I have just alluded to. I hope that, in part, this has helped reassure noble Lords that the Government’s policy has been determined with the interests of passengers and the continued health of the bus industry in mind. It is about balancing and ensuring that local authorities that we believe have the governance arrangements in place and are able to take forward franchising are able to do so, but not to the exclusion of others. I believe that with the measures we have in place, the affirmative procedures of debate in this House about other authorities that seek to apply and the criteria that the Secretary of State will apply in decisions, I have been able to reassure some noble Lords that the Government’s policy has been determined with the interests of passengers in mind. With those reassurances, I hope the noble Baroness will withdraw her amendment.

My Lords, I am, of course, grateful for what my noble friend has said about competent authorities. I know that he has a great knowledge of, and esteem for, local government. My problem remains, although I have studied carefully what he said. I should say to the noble Lord, Lord Snape, that I have no vested interest in this, because my council is a London area council and we come within the London arrangements, although I will have some points to make on Clause 21. In his opening remarks, my noble friend talked about the advantage of mayoral arrangements; there is a centralised decision-making element—I think that probably came in guidance or advice he had received. This is the problem, because, as I said in my previous intervention, this is a small part of a wider policy; there are certain people inside government who wish to create centralising models. It is an idea of managing the country by larger functions, which are responsible to, and look upwards to the Treasury and the Government for guidance—we see it in education, with the emergence of regional schools commissioners. That is not the philosophy I believe in, as a Conservative; I believe, as I said earlier, that we need more dispersed authority.

My noble friend is right that it is clearly open to any sort of authority to go ahead; however, there are more obstacles put it in the way of other authorities, whereas the mayoral authority can leap forward. My noble friend Lord Horam must be right: the Government cannot keep taking on these functions to take all these decisions. I do not want to stray into education, I know we are in Committee, but can the Government and their institutions make every decision for every school or group of academies around the country? We do not have enough civil servants to do that. We do not have enough civil servants with the competence to take decisions about transport in different counties all over the country. Devolution is a marvellous idea, which I strongly support, but what creeps into legislation time and again is not devolution but control masquerading as devolution. So when I hear talk of centralised decision-making, I believe that I am looking at the tip of the iceberg of a philosophy of government which is not one I share.

Although I am extremely grateful for what are in many ways the reassuring and typically courteous remarks of my noble friend, I would still find it very difficult to support any legislation that gives an advantage to a putative mayoral authority, not just an existing one, above any other form of authority. It would mean that someone in a department somewhere can say, “Look, you guys. You can have what you want if you do what we say”. Power should come from the people through local government and through local authorities coming together. I give notice to my noble friend that I am still uneasy about these proposals.

Of course I will reflect on the thoughtful remarks made by my noble friend, but let me reassure him that from my perspective and indeed of those within the Department for Transport, the view is very much based on all authorities having access if they have not only the governance models but, as I said, the other criteria on geographical coverage as well to ensure that they can make franchising a success. Ultimately the Government’s intent behind this enabling Bill is to ensure that bus services work for local people.

Let me give a specific example. If West Yorkshire Combined Authority agreed tomorrow to have a mayoral structure, presumably that would immediately parachute it from one part of this Bill into another. I agree with the noble Lord in his remarks that that is bizarre. It would be very welcome, but as I say it is bizarre. That is not transport policy, it is a political policy on mayoral authorities.

Perhaps I may respond to that. As I am sure the noble Lord appreciates, every devolution deal involves detailed discussions between the Government and those proposing the deal. No doubt if a particular area, wherever it may be, wishes to go down that route, it would be subject to discussions around the devolution deal.

I thank the Minister for his response and I thank noble Lords around the Chamber for their support, particularly that of the noble Lords, Lord True and Lord Horam, which I welcome. The noble Lord, Lord True, has done half of my summing up of the debate for me which I would otherwise have done. I want to look carefully at the Hansard report of this debate because I am still not clear about what is so special about mayors. I was really hoping that the Minister would explain what is so unique about that particular model. My noble friend Lord Woolmer made the point that you could have two adjoining authorities with the same geography, the same population and income, but one of them would have a fast track to automatic franchising purely because of the fact that it has a mayoral system rather than another one while the other would have to go through a very convoluted process.

I do not understand what it is about the mayoral model that is so important. It is not just about the geography and economics or even the strategic role, as the Minister has suggested; there is something much more singular about a particular local government structure. The fact is that we trust local authorities with making very serious decisions already. We entrust social services issues to them where they make life-or-death decisions about child protection. We trust them to take serious decisions in the commissioning of all sorts of services. It is not as if they do not already commission services and of course they have the expertise to do so. Running a bus service does not require particularly special skills which authorities do not already have. Some might not choose a franchising model, which is perfectly understandable, while others may want to have it. I do not quite understand what is so special about having a mayor in charge that would qualify them in this way.

My noble friend mentioned the special skills of local authorities, which certainly exist. But, with respect, they do not have any franchising skills because that is not the way we operate bus services at present. Does she agree that setting up franchising in a big-city area would be an expensive and bureaucratic process? I have no idea how many people it would take, but it could not be done by one person or even a small department, could it?

Of course, the provisions in the Bill allow for all that, and that is one factor that needs to be taken into account. But the local authority would not do it unless it thought that the outcome would be better than the current provision. If the authority did a cost-benefit analysis and decided that the cost outweighed the benefits, it simply would not do it. All that we are asking for is for authorities to have the flexibility to do that analysis and then decide whether it is in their interest to go ahead.

Another thing that I was going to pick up on was what the noble Lord said about providing certainty to the bus operators. Franchising also provides some certainty; the operators’ profits may not be as high but they would certainly have a guaranteed long-term contract. That outweighs the higher-risk, more market-driven decisions that the operators would otherwise take.

I think that everyone in the Committee knows that the Minister cannot make a decision on this today. We have all talked about the current political uncertainty. We all know where this is coming from and I do not expect for one minute that the noble Lord will say today that he will overturn the decisions of the higher authorities in the Conservative Party on this. But perhaps at some point before Report he could take back a message to whoever is calling the shots and say that there is a strong feeling in the Committee on this and that there should be an opportunity for a rethink. On that basis, I do not wish to say any more and I beg leave to withdraw the amendment.

Amendment 21 withdrawn.

Amendments 22 to 24 not moved.

Amendment 25

Moved by

25: Clause 4, page 15, leave out line 22 and insert—

“(3) In making an assessment of the proposed scheme, a franchising authority or authorities must be satisfied that—”

My Lords, the Committee will be relieved to know that I will spend considerably less time on this group of amendments than I did on the previous one. These amendments are designed simply to ensure that any franchising arrangement is brought in only after other avenues have been explored and that it would be for the benefit of passengers in a particular area.

In the debate on the previous group of amendments, my noble friend on the Front Bench said that she did not know why big companies were against franchising. I declare a non-interest—I have no shares in any bus company, nor am I paid by any. I base my prejudices entirely on my own experiences, rightly or wrongly. But I have to say to my noble friend that what she said was not quite true, was it? It is all very well to say that a franchise operation would mean continuity. Of course it would, for the length of time laid down in the franchise, for the company chosen as the franchisee, but there would be no guarantee.

Let us take Birmingham, the area where I worked in the bus industry and where, incidentally, it has been made plain by the local authority that it is not interested in franchising because it has a good partnership arrangement. But suppose that Stagecoach won the franchise in Birmingham. From memory, it does not have any garages nearer than Coventry. Would Travel West Midlands be expected to hand over the keys to one of its garages, take its bus fleet elsewhere and bid for another franchise? The issue is not as simple as my noble friend makes out. She said in her previous speech that local authorities would not seek franchising arrangements if they were happy with the current standard of service—and that is true as far as Birmingham is concerned. But who judges the happiness?

One of the problems of local government being offered services is that it finds it very difficult to turn them down. In my 40 years in local and national politics, I have known few democratic organisations that would refuse powers offered to them. If they are offered the opportunity of franchising, I should think that many local authorities would say, “That sounds like a good idea. Let’s give it a try”. It would be understandable if they did, but to suggest that we could move towards a system of franchising comparatively painlessly and that it would be in the interests of the franchisee is a mistake.

My noble friend Lord Woolmer is shaking his head. I am always very diffident about falling out with my noble friend as he and I share an office, and he is bigger than me—and a Yorkshireman to boot. But I have to say to him that in a short intervention when we debated this Bill a couple of weeks ago, he indicated that he was in favour of franchising—he is nodding, so I take that as assent. I do not know whether he reads the Times on Saturdays, but in an independent supplement, entitled Super North, there was an article headed:

“On the road to new success”.

I do not think that it was written by anybody in the bus industry. It mentions his part of the world and states:

“Today, Park and Ride services offered by First Bus with Leeds City Council and West Yorkshire Combined Authority have achieved a recommendation rating of more than 99 per cent”.

This is Korean or Chinese Communist stuff—99%. Let us find the other 1% and make them walk in future: that would be my answer to that. The article goes on to say that,

“the introduction of partnership agreements in South Yorkshire have helped deliver the right framework to attract customers”.

As is plain in the Bill, if we have franchising in the West Yorkshire area, the partnership agreement that I have just outlined, and which has just been praised by the Times, could not operate because we cannot have franchising and a partnership together. It is one thing or the other. So, at great risk to my personal safety tomorrow, I have to ask my noble friend—I will give way a moment when I get far enough away from him—what does he want: partnership or franchising, bearing in mind that the consequence of franchising would be the withdrawal of that partnership?

My Lords, my noble friend yet again sets up a straw man. I am simply in favour of local authorities having the power to have franchising, not that they must use it. It should be an option available to them. My noble friends talks as if I am saying that they must. That would be silly. If bus services can be adequately provided in the way in which a local area wants without franchising, I am sure that no one would disturb it. I am certainly in favour of having that option, but not that it would be compulsory to use it.

I am grateful to my noble friend for that definition of his view. However, that view would pertain only between reasonable people. We have to bear in mind that not all people—some of them elected—are necessarily reasonable.

In Tyne and Wear, for example, the passenger transport authority went to court to try to get what was called a quality contract under the previous legislation. A considerable amount of public money was spent, and eventually the people appointed to rule on these matters said that the existing service should be continued and denied the PTA the right to a quality contract. As I said, Tyne and Wear PTA went to court, and spent a considerable amount of public money, despite satisfaction ratings of more than 80% with the current services, as set out by Passenger Focus, of thousands of bus passengers countrywide, including in the north-east. We are not dealing entirely with completely reasonable people. I hope that I can convince my noble friend. I repeat that the temptation for any democratic body when being offered extra powers is not to turn them down.

The amendments are designed to ensure that the question of a franchising agreement is a last resort rather than a first one. The consequential amendments follow on from that. I hope that the Minister will feel that they are both sensible and reasonable and will be inclined to accept them. I beg to move.

My Lords, I will be brief. I have listened carefully to the contribution of my noble friend. As he indicated, he is making these proposals in the context of being against franchising. On that basis, we are not convinced that these amendments are necessary.

As it stands, the Bill requires those considering a franchise scheme to prepare an assessment that considers the merits of franchising weighed against other options. My noble friend is suggesting that they would just steam ahead regardless, but the checks and balances in the Bill make that unlikely and, indeed, impossible. We would expect there to be a detailed, thoughtful piece of work by the local authority that genuinely balances the different options in the context of what is in the best interest of the local community.

As it stands, the Bill requires the assessment to consider affordability, value for money and how it would apply to wider authority policies. We believe that that is the right tone to adopt when making an assessment. My noble friend’s proposals would go further than that and require greater certainty that all the conditions are met at that stage. We believe that that would go too far and discourage authorities from going through that appraisal and assessment process before making any decisions, which is the important point.

Therefore, we believe that the checks and balances in the Bill are the right way to go forward. There are many stages in the assessment process that would allow the proposal to be fully scrutinised, including a full audit, which we are going to talk about later. We want authorities to consider all that in an open and thoughtful way and go through what is in the best interests of the locality, taking into account all the factors and complexities of moving to a franchise situation, which my noble friend has identified—but it must be done in a balanced way. We believe that the provisions in the Bill should be supported.

My Lords, I thank the noble Lord for tabling his amendment. He proposes a series of amendments that would change the nature of the assessment that franchising authorities must prepare for their proposed franchising scheme before determining whether to introduce franchising.

In thanking the noble Lord, let me assure him that we recognise the importance of ensuring that decisions to move to a model of franchising are taken on the back of a robust assessment. In developing the Bill we have been keen to move away from the processes set out in the Transport Act 2000 that must be followed before a quality contract scheme can be established. That legislation required authorities to be satisfied that a number of tests had been met before introducing such a scheme. As was touched on at Second Reading, only one authority ever attempted to use the quality contract scheme legislation to introduce a quality contract scheme. In part I think this was because the “must pass” tests proved to be too restrictive.

I agree entirely with the noble Lord that authorities looking to franchise must consider whether the scheme is affordable, represents value for money and contributes to the implementation of relevant policies. But I think that devolved decision-making must be respected, with the mayor or authority considering the issues listed in Section 123B and any other relevant issues when assessing their scheme, and then taking reasonable decisions with their eyes wide open. I do not want to repeat the failings of the quality contract scheme legislation, and I want to ensure that franchising is a realistic option where it makes sense locally. I am concerned that the amendments as proposed would unnecessarily restrict mayors and authorities by requiring them to be satisfied about a number of issues, rather than requiring them to set out their thinking and rationale. I agree entirely, though, that I would expect authorities to proceed with franchising only where there is a strong case to do so. However, I do not want to rule out, for example, an authority proceeding with franchising where a scheme contributes hugely to its transport policies but not necessarily to its other published policies affecting local services.

The noble Lord raised a specific issue about operators having assets such as bus garages being taken away or awarded to winning bidders. It is important to note that the Bill does not give authorities powers to acquire bus operators’ assets. Authorities could potentially come to agreements with operators or lease new depots or garages to those winning businesses.

I trust that this short debate has helped to assure the noble Lord that the Bill as drafted will ensure that authorities consider a number of specific factors in their assessment of whether to move to a franchising model and allow decisions to be taken in the light of local circumstances. I hope that the noble Lord is reassured to the extent that he feels able to withdraw his amendment.

Of course, I listened with care to what both Front Benches said but was not entirely surprised at the contribution from either side. I can envisage a situation where a company based in a city loses a franchise. The Minister said that there is no power for the local authority to commandeer a particular garage or vehicles. However, they are not much use based in the middle of Birmingham if, for example, there is no franchise to operate in the middle of Birmingham. Presumably, we could build another tower block in the centre of Birmingham and move the buses elsewhere. Again, that rather places a darker cloud on the somewhat optimistic view from my own Front Bench that all these matters can be agreed by civilised discourse between two people, and that everything in the garden can be rosy, if I may mix my metaphors.

However, having listened to what the Minister had to say, I beg leave to withdraw the amendment.

Amendment 25 withdrawn.

Amendments 26 to 32 not moved.

Amendment 33

Moved by

33: Clause 4, page 15, line 43, at end insert—

“(g) how the operators of the franchise will seek to increase passenger representation through the life of the plan.”

My Lords, as this is the first time I have spoken in today’s Committee debate, I declare that I am an elected councillor in the London Borough of Lewisham.

The two amendments in this group are in my name and that of my noble friend Lady Jones of Whitchurch. As regards franchises and enhanced partnerships respectively, they would require operators to set out how they will seek to increase passenger representation. As I said in previous debates, this Bill is very technical in parts but the issues we are talking about today, and that of buses in general, are about people and delivering a reasonably priced local service which delivers for them and their local communities, and keeps places alive and vibrant by connecting communities with other communities and enabling people to travel to work, go to school and enjoy leisure activities. For all that to happen in a responsive manner, we need mechanisms in place to hear the voice of the passenger at a local level. I am fully aware that we have a body—Passenger Focus—which provides a voice for England outside London, but I am talking about what happens at a very local level. It is important that people and communities are able to discuss their experiences face to face and say what they want. That can include working with Passenger Focus at a local level or perhaps other arrangements.

Operators and local transport authorities often carry out surveys and other work and meet local councillors and MPs. That is always very welcome. However, what is proposed in these amendments is the need to ensure that the views of passengers are taken into account, and to make provision in the Bill for the planning of these services. I beg to move.

My Lords, I shall try to be brief. These amendments are what are often termed “no-brainers”. As the noble Lord, Lord Kennedy, explained, the purpose of these amendments is to ensure greater participation and involvement with passenger groups in the process for developing a franchise scheme and the consultation and throughout the life of an enhanced partnership scheme. During Second Reading, a number of noble Lords commented that there was little mention of passengers in the Bill, so these amendments address that point.

I know that bus operators do a huge amount of work to ensure that they engage with the people who actually use their services. After all, who are they providing their services for? They are for passengers. On what basis would bus operators, and local authorities for that matter, not want to seek the views and opinions of the people who will be using their services?

Organisations such as Bus Users UK exist for the very purpose of giving passengers a voice, and do great work with operators, including holding local bus surgeries where passengers can engage directly with operators. Together with operator and local authority open days, these events are invaluable. Passengers are able to give solid feedback to those actually running the services, and in turn operators can inform and explain their decisions. Those decisions may not always be popular, but to my mind people are much more likely to accept a decision if the reasons for it are helpfully and properly explained.

I hope that my noble friend has a piece of paper in front of him marked: “Agree to consider”, or something similar. Even if he cannot advise the Committee to accept the amendments in the form that we see them today, I hope he will agree with the sentiment and spirit in which they have been brought forward so that we might see some government amendment which would achieve the same effect, at a later stage.

My Lords, I support Amendment 33. I have tabled other amendments which will make a similar point. I also raised the issue in our previous sitting. It amazes me that the Bill specifies bus operators and a number of other organisations for consultation on a regular basis, but not bus users. Bus users are specified in that way in one place; the rest of the Bill refers to “such other persons” as local authorities think fit. That is not good enough for a Bill which purports to put the passenger at its heart. The point of the Bill is supposed to be to increase the number of passengers and improve bus services. You will not, of course, improve bus services if you cannot increase the number of passengers. To be able to do that, bus services have to be more sensitive to the needs of passengers. The difference between a good, effective bus service and one which is trotting along almost empty is how much you have consulted people about where and when they need the service.

I draw the Committee’s attention to the latest report from Passenger Focus. As a result of its survey, it makes the point:

“At present, passengers believe they have no involvement in determining how bus services are provided; few could think of any examples where they had been given the opportunity to be consulted, and therefore even fewer where they had been actively engaged”.

It goes on to say that they could all “recall significant changes” to bus services but had no recollection of being asked about them. Many years ago, I was a local councillor. I clearly recall how important it was to get the details of bus services right: where the bus stops were, the timing so they fitted in with local trains, and so on. Those are crucial decisions which passengers—who are, after all, the ones doing the journeys—are able to advise on.

I urge the Minister to listen to this plea, which has already gone out in previous debates and will go out again on a number of other amendments: please specify bus users; be precise about this; and enshrine in the Bill a role for bus passengers and their representatives at whatever level. Even down at the lowest and most informal level, bus passengers need a voice. The amendment talks about an increasing voice for bus passengers. We need a good, strong voice there right from the very start.

My Lords, I too have a later amendment which deals with this subject, so I will be brief. I agree with what my noble friend and the noble Baroness have said. What ought to be in the mind of the Government is the kind of bus service and its relationship, not only with those who currently use buses, but with those who might do so if the service was significantly better and integrated with other means of transport. My noble friend Lord Berkeley spoke about plans in Cornwall to link together the train and bus timetables more effectively. I have to tell him that in my area of Dorset they are not integrated at all. Quite frequently, even in the main part of the day, you get off the London train and there are no buses for another hour and a half.

It ought to be a precept from the word go for these new and enhanced arrangements that there is effective passenger representation in the decision-making process. I quibble slightly with the noble Baroness in that I think that probably has to build up over time. You need an organisation in there right at the beginning, but the way in which my noble friend has phrased the amendment puts an obligation in the new contract or the new franchise for the operator to make part of that improved performance be an improvement in taking into account the views of passengers. As Transport Focus—as it is now called—surveys have shown, there is a pretty pathetic level of trust and appreciation among bus passengers about services at present. So we are starting in most parts of the country, outside London, at a pretty poor low. It is therefore important that this is there in the Bill and that it underlines the whole philosophy of the management approach of the new operator, and that ought to be specified at this early stage of the Bill.

My Lords, I thank the noble Lord for moving Amendment 33. My noble friend Lord Attlee behind me referred to summary sheets that may or may not exist on the Front Bench. I am becoming increasingly conscious that telepathy is at work.

Moving on to the amendments, as I have said before—and I agree with all noble Lords who have spoken in this short debate—improving bus services for passengers is one of the key aims of the Bill. The amendment in the name of the noble Lord, Lord Kennedy, relates to increasing passenger representation through the life of franchising and enhanced partnership schemes. I sympathise with his aims and agree that one of the issues that authorities and bus operators should be considering is how passenger representation can be increased. Hearing from passengers helps authorities and operators understand the needs of their local communities and encourages meaningful engagement in the future.

Many noble Lords—the noble Baroness, Lady Randerson, in particular—spoke about passenger representation at Second Reading and in earlier Committee debates, particularly the need for passenger groups and representatives to be fully consulted on any proposed changes to bus services in their area. I too would like greater passenger representation across the board—I share the intent behind the amendment—particularly in areas where partnerships are established or where the status quo remains, as well as where franchising is implemented. I encourage bus operators and authorities to work with local people and community groups to design services that are attractive to users.

However, the amendment as drafted—and I am sure this was not the intent of the noble Lord when he tabled it—may not fully address those aims in particular circumstances. It addresses the issue of considering passenger representation in the context of franchising and enhanced partnerships, rather than where other partnership proposals are put in place or where the status quo is felt to be the most sensible way to deliver local bus services. It also refers to operators increasing passenger representation during the life of the franchise or the enhanced partnership plan, rather than the authority involved engaging with passenger groups directly as the schemes and plans are developed.

I assure noble Lords, especially the noble Baroness, Lady Randerson, that the Government are committed to ensuring that passengers have a say as plans for bus services are developed, and we welcome further debate and thought on this matter as we consider how we can best deliver this through the Bill.

Is the Minister willing to give a commitment that the Government will consider bringing forward amendments that actually place the phrases “bus users” or “passenger groups” within the Bill, to counteract the balance of power whereby it mentions operators and local authorities but not passengers?

I have already said that I am open to discussing how we move this matter forward. I hope that I am indicating that I believe we should proceed in a collaborative way on the passage of the Bill through Committee and Report. I am happy to discuss with the noble Baroness and the noble Lord, Lord Kennedy, how we can develop this amendment to reflect the intent behind it, which I share and which I am sure she shares, and also incorporate the issues raised by the noble Baroness. On that basis, I hope that the noble Lord is minded to withdraw his amendment.

I thank the noble Lord for that very helpful response. When we tabled the amendments we should have included the advanced partnerships and the current arrangement, as the noble Lord mentioned, but is he saying that, through the discussions that will take place over the coming days and weeks, we will seek to agree an amendment that will deal with the issues raised here?

It is certainly my intention to discuss with the noble Lord and the noble Baroness how best to take this forward. Yes, if it needs to be in the Bill, that is something we can discuss. I am sure we can overcome the drafting issues and it is important to reflect the points raised by the noble Baroness, Lady Randerson, in any amendment that comes forward.

That is very helpful. I am very happy to get involved in discussions on an amendment that we are all happy with and can work with, and which delivers the aim expressed across the Committee today of making sure that passengers are properly involved. However, what I do not want to see at the end of those discussions is a note in guidance, because, importantly, that does not have the same strength as something in the Bill.

Will the Minister take great care to make sure that everyone who has an interest in the Bill is included in these discussions? Sometimes it is possible for people to fall out of the loop and not be fully involved.

I give my noble friend that assurance. I will go further and say that I never forget my noble friend when it comes to such discussions. He has made a very valid contribution throughout this debate and I am sure he will continue to do so in debates going forward. Any noble Lord has an open invitation to meetings, as I have said, as we look to strengthen the provisions of the Bill and the services it provides.

I thank the noble Lord for those very helpful responses. I am very pleased to have received support from the noble Earl, Lord Attlee, and the noble Baroness, Lady Randerson. It is beneficial that local transport authorities and operators seek the views of their passengers, who are, in fact, their customers. Being sensitive to the needs of your customers is usually good practice for any business or public service and benefits everybody concerned, particularly the providers of the service. A role for bus passengers, as the noble Baroness, Lady Randerson, said, is important and needs to be in the Bill. I am very pleased with the comments of the noble Lord, Lord Ahmad of Wimbledon, and look forward to our discussions. I hope that we can agree an amendment we can all be happy with during Report.

Before the noble Lord sits down, let me assure him that that is the Government’s intention with all the provisions we have discussed. Putting passengers at the heart of what we seek to do is a key part of delivering either the franchising model or the partnership model. Importantly, as I said, the current amendment does not incorporate, for example, the issues around the status quo.

I know the noble Lord is working with me to ensure that that is what we do. That is certainly the intention—one that is resonating around the Chamber. Given that assurance and the positive nature of the debate, I think the noble Lord is moving towards formally withdrawing his amendment.

Amendment 33 withdrawn.

House resumed.