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Lords Chamber

Volume 773: debated on Monday 4 July 2016

House of Lords

Monday 4 July 2016

Prayers—read by the Lord Bishop of Ely.

European Union


Asked by

To ask Her Majesty’s Government what role they see for the United Kingdom in relation to the European Union.

Following the decision by the British people to leave the European Union, the Prime Minister has been clear that the nature of the relationship we secure with the EU will be determined by the next Government, but we must not turn our back on Europe nor on the rest of the world. While we are still a member of the EU, we will continue to engage with EU business and decision-making in the usual way.

Can we now focus on process? We will presumably have to start talks with individual countries, but also with the European Union centrally. First, how will that be structured, and what is the European Union going to do in response? Secondly, and very importantly, how will we ensure that our well-known diplomatic skills are still engaged with the European Union to deal with the wider world in the interests of both the European Union and Britain? At the end of the day, both of us must end up being winners in this process, not losers.

Indeed, my Lords, the fact that there is a formal process does not exclude the possibility of informal talks. One talks to colleagues around Europe: it has already happened and it will continue to happen. The European Council has appointed a Belgian diplomat, Didier Seeuws, to lead a Brexit taskforce, which will negotiate the terms and conditions of withdrawal with UK Government officials. That has been announced by the European Council, but Seeuws’s appointment is reported to have created what I might call some tension between the Council and the Commission over who should lead the withdrawal negotiations.

The noble Lord draws attention to the importance of diplomatic skills. I can assure him that on the Friday the result was known, our Permanent Under-Secretary called an all-staff meeting to impress on them exactly that point, and to reinforce the undertaking that we would continue to develop diplomatic skills and the strength of the Diplomatic Academy to take account of the decision by the British people.

My Lords, is it not crucial that we have a British Government who are effective in office as soon as possible, and should not the members of the Conservative Party in the country bear that in mind?

My Lords, when the Prime Minister announced his intention to stand down, he suggested that, pending the election of his successor, he would do everything to “steady the ship” over the coming weeks and months. Does this commitment mean that every Minister has to come to the Dispatch Box with the same ministerial briefing—that this is a matter for the next Prime Minister or the next Government—and if so, is this really steadying the ship, or has the ship run aground with the Prime Minister as the first leader overboard?

As a maritime nation with a proud history in international relations and trade, this ship is not only afloat but is avoiding the Dogger Bank and negotiating a way forward. It will of course be a matter for the next Prime Minister and the next Government to agree on the details, but this Government are putting in place the processes by which information can be gathered to inform the next Government and ensure the success of this great country.

My Lords, do not the actions of the leaders of the leave campaign demonstrate that now, they have no idea how to take Britain forward?

My Lords, it is important that we listen to the views of all. The people decided that they wished to leave the European Union. When we have our two-day debate tomorrow and Wednesday, I and my officials will be listening very carefully to the views of all Peers on all sides of the argument. That will inform our way forward, just as constituents can inform the way forward of their Members of Parliament.

Whatever happens in the long term, in the meantime will the Government speak up trenchantly against the ugly and unseemly behaviour of some of our fellow citizens in the way they speak to and are violent towards citizens from the EU who are resident here, and who are productive citizens in our midst?

The right reverend Prelate is of course not only right but clearly has the complete agreement of this House. This country has proved throughout its history that it not only tolerates but welcomes those who come here to contribute to our society. I deplore attacks upon them.

My Lords, the noble Baroness stressed the role of the Government in the negotiations, but she has failed to mention the role of this sovereign Parliament in that process. Will she indicate just how Parliament will be involved in the process of negotiations?

My Lords, last week the Leader of the House repeated the Prime Minister’s Statement, in which he said that,

“we have now got to look at all the detailed arrangements, and Parliament will clearly have a role in that in making sure that we find the best way forward”,

and that, as we move ahead towards leaving the EU, it will be important to,

“ensure that the interests of all parts of our United Kingdom are protected and advanced”.—[Official Report, Commons, 27/6/16; cols. 23-27.]

That still stands.

My Lords, to what extent will the Ponsonby rule or its successor arrangements under the constitutional change brought in in 2010 be applicable to this process?

My Lords, apart from the vote to leave, how do we ascertain what the British people—or, at least, the 36% of the electorate who voted to leave—really want? We cannot negotiate with the people.

My Lords, in a democracy the people negotiate with government when they express their view at the ballot box, which they have done. It is then the duty of the Government to take into account the security and interests of the whole of the British people when putting together proposals for negotiation. I suspect that we will have an opportunity in this Chamber further to discuss these matters. It will of course be a matter for the usual channels to determine how that happens, both within the Chamber and outside it in a more informal way.

My Lords, my noble friend indicated that informal talks can go on with the EU. Is she happy that that can happen without our triggering Article 50?

My Lords, my noble friend raises an important point. In any event we have discussions with the other 27 countries outside the European Council; that will not only happen but has already started. I hope that that will continue to ensure that our relationships are firm and good, which will help when we come to the formal negotiations.

My Lords, I thank the Minister for reminding the House that we are a maritime nation, and I ask her to remind the Treasury and the MoD that perhaps we should buy some ships. However, my question relates to the important role we play as the bridge between the North American and European parts of NATO. Does she agree that we still absolutely have to carry out that role for the security of our part of the world?

That is a crucial point and I feel sure it will be very much in the mind of the Foreign Secretary when he attends the NATO summit this weekend.

Landfill: Textile Waste


Asked by

To ask Her Majesty’s Government what action they are taking to reduce the amount of textile waste sent to landfill.

My Lords, we are working with the Waste and Resources Action Programme—WRAP—and organisations from across the clothing life cycle to reduce of amount of textile waste sent to landfill and minimise environmental impacts. This includes action with designers and manufacturers to increase clothing durability, work to promote greater reuse and recycling of textiles and action to influence consumer behaviour through the Love Your Clothes campaign.

My Lords, we can all do more to make our clothes last longer and look at innovative ways to do so. To that end, all noble Lords are invited to a swishing event tomorrow in Committee Room G, 5 pm to 7 pm, hosted by the APPG on Ethics and Sustainability in Fashion. I declare an interest as a trustee of WRAP, which leads the Sustainable Clothing Action Plan—SCAP—which is focused on diverting textiles from landfill. Can my noble friend inform the House what progress SCAP is making?

My Lords, my noble friend’s initiative sounds very interesting and noble Lords, including those who are not in the Chamber, may well want to go. So far as SCAP is concerned, I am very pleased to say that only last week Primark, one of the UK’s largest clothing retailers, became the latest business to sign up to SCAP. This means that SCAP now represents 65% of clothes sold in the UK by volume. This clearly shows the enormous potential for this agreement.

My Lords, lower prices and reduced demand are lessening incentives to collect used textiles. Will the Minister say what plans the Government have to introduce extended producer responsibility, as they have done in France, to stimulate demand for sustainable markets?

My Lords, I certainly will look into what the noble Baroness has said in greater detail, but what we are seeking to do through SCAP is to ensure that there is a greater reduction in textiles going to landfill. Obviously, clothing is the most important area but there are a number of innovative initiatives with the use of textiles, for instance carpets, going into roofing, road surfaces, equestrian surfaces and engineering plastics. So there is a lot going on in both the clothing and non-clothing textile sectors.

My Lords, is my noble friend the Minister aware of research that suggests that synthetic fleeces, when they are washed, are responsible for a significant proportion of the microplastics that end up in the sea and inside the bodies of mussels and other things such as that?

My Lords, I think I am safe in saying that wool is a very good alternative to synthetic products and also that we are very keen indeed to ensure that microbeads and marine litter are much reduced. On that subject, the United Kingdom will consider acting separately if we need to, but I am pleased to say that many of the manufacturers of UK cosmetics are no longer using microbeads and I hope that that will increase dramatically.

My Lords, is the Minister aware that a number of companies belonging to the Textile Recycling Association have gone out of business recently? This is the result partly of a lack of sustainable markets for used clothing and partly of downward pressure on prices. Given that it is in all our interests to help this market thrive and to avoid clothing going into landfill, should the Government not be doing more to work with this sector to create new markets, including putting more money into investment and innovation where that would make sense?

My Lords, it is very clear that this is an innovative area where we need to do more and where as we increase the capability of recycling there will be some great and continuing successes. I understand that, with the issues particularly in east Africa and Ukraine, where there has been a reduction in the reuse of clothing and also a reduction in prices, this is a challenge that we need to work on, and it is one of the things I very much hope we can work with WRAP on.

My Lords, to follow up the question from the noble Viscount, Lord Ridley, the mix of artificial and natural fibres is a real problem for recycling in the textile industry. I am old enough to remember when we had a thriving shoddy industry in Yorkshire—but that was wool, not wool mixed with polypropylene and all sorts of other things. Will the Government in this deregulatory age consider the virtue of some regulation of mixtures between artificial and natural fibres to assist in recycling?

What the noble Lord has said is very interesting. Just as anaerobic digestion is one of the issues with energy, the problem with many textiles is the non-biodegradable nature of the material. So although what the noble Lord suggested may present some complications, this is an area where we need to think much more freshly and in an innovative manner.

Immigration Officers


Asked by

To ask Her Majesty’s Government what are the qualifications of those whose job it is to assess and review applications for non-European Union citizens seeking leave to remain in the United Kingdom.

My Lords, while there are no formal qualification requirements, the recruitment and selection of staff to these roles follows a standard process based on the Civil Service core competency framework. A comprehensive training and mentoring programme is in place for all staff recruited to these roles.

I thank the Minister. Given the serious shortage of expertise in academe and in the health and care sectors, will the Minister consider revising the provisions that prevent graduates in this country who are from abroad working in these sectors to help out? Even if such graduates offer their work free of charge, they are limited to a number of hours of service, which deprives communities of freely available and badly needed help. Will the Government reconsider this provision?

My Lords, I believe that the noble Baroness is referring to the issue of students working here. The main purpose of the tier 4 visa, the arrangements under which she refers to, is that students should be able to maintain themselves for the duration of their course without resorting to employment in the UK. However, as noble Lords will know, students are permitted to supplement their income and can work for up to 20 hours a week.

My Lords, whatever the outcome of the EU negotiations on immigration referred to earlier, does my noble friend agree that it is the skills of migrants, from Commonwealth countries particularly, on which we heavily depend and that these should be encouraged rather than penalised in the new situation which we are moving into? Does he further agree that, if the 183,000 students who are classified as migrants were looked at slightly differently from the overall migrant figures, it might clarify and ease what is otherwise a very misunderstood situation?

My noble friend raises two important points. On the first, the UK is committed as a member of the European Union until the decision is taken formally to invoke the appropriate articles, but in our future negotiations with our European partners and with the world in general it will be important that we look at the skills requirements of the nation to ensure that we fulfil them. On my noble friend’s second question, it would be remiss of me at this point to start changing immigration policy, but, as I always do, I have listened to him with interest and will take back his comments.

Can my noble friend say what help can be given to British citizens living in Europe? I have a daughter and two grandchildren living in Spain; they have been there 22 years.

The advice is very clear. We remain members of the European Union and nothing changes. I know that this issue has come up in your Lordships’ House previously and I shall repeat an Answer to an Urgent Question on it later today. It is important to remember in the new world that we find ourselves in that Britain always has been, and will remain, a nation which is compassionate in welcoming people from around the world. Certainly, that will be the basis of any discussions with European partners and nations beyond Europe.

Is either the number of applications seeking leave to remain in the UK from non-EU citizens or the percentage of such applications that are accepted projected to increase or decrease between 2015 and 2020? If so, to what extent are they projected to increase or decrease?

I am not going to speculate on what will happen over the next five years. The important thing to remember, when it comes to immigration and applications for leave to remain, is that we look at the best interests of our country, but also at the best interests in regard to what we are on the global stage. We are a welcoming nation to people from all around the globe, and long may that remain so, to ensure that Britain continues to prosper and grow on the global stage.

My Lords, while I would like to encourage the noble Lord to change immigration policy from the Dispatch Box, I will restrain myself. With regard to the officials who are the subject of this Question, I understand that there is a difficulty with retention. Is that correct, and if it is, are the Government aware why there is a problem with retaining the officers?

We currently have 1,280 full-time equivalent staff who are undertaking this casework. The noble Baroness talks about retention; there is normal turnover of staff. We are also enhancing some of the requirements, particularly on English language, for such staff, which will come into play in this area, and across the public sector, from October 2016. It is important in any role undertaken within government and the public sector that career paths are pointed out to people—the mentoring scheme we deploy for such staff is a valuable asset in this regard.

My Lords, I have several friends from different parts of the EU who have indefinite leave to remain and have lived in this country for many years. They are now asking me whether they are safe to stay here in the future. Will the Minister make it clear, through the Government, that those people will be able to remain, regardless of what the details regarding the EU are?

As we have previously heard from this Dispatch Box, the Leader of the House, the Prime Minister as well as others, the position of EU nationals within the United Kingdom who have indefinite leave to remain does not change. In any future discussions we have with our European partners, the important thing is the need to reflect that fact and also—as my noble friend raised in an earlier question—the needs and requirements of those UK citizens who have made their home in the member states of the European Union.

My Lords, is the Minister aware that what he has just said is significantly at odds with what his right honourable friend the Foreign Secretary said today on the “Today” programme? Could he clarify, between the two of them, who is right?

I do not think there is an inconsistency. The important thing in this issue, which the Government have made clear, is that first and foremost we remain members of the European Union. The position of those citizens of the European Union who are residing in the UK does not change until such time as negotiations begin. I say that because it is important to have a factual reality check as to what the situation is. However, I would add that the position of European Union nationals here who have indefinite leave to remain, much akin to those from other parts of the world who have indefinite leave to remain, remains a vital part of the discussions we will have with our European Union partners. Prevailing within that is the importance of recognising that this is about providing stability and security to all citizens who chose to make the UK their home.

My Lords, I know my noble friend will be ashamed at the racist and ethnic bullying that has resulted from the referendum vote. Should we not also be ashamed that nobody in government seems to be able to reassure those victims in the way that they require? People who are already settled here, legally and responsibly, are our friends and neighbours and should not be used as bargaining chips in the Brexit negotiations. Will the Minister please make sure to remember that any Government who come back from Brexit negotiations with a result saying these people will have to be forcibly removed from this country would very soon be out of time and out of a majority?

My noble friend has made a valid point very well. Let me assure him that no Government moving forward in the unprecedented circumstances we find ourselves in would in any sense be looking at any citizen in the way that has been suggested by some. The important thing is to provide reassurances at this juncture because there is uncertainty and to ensure that to deal with the attacks we have seen up and down the country being perpetrated by those who are using this opportunity to divide us, we send a simple and straightforward message: those who incite hatred against any community or person for whatever reason will be dealt with using the force of the law.

Let me provide once again some comfort to my noble friend because this is an important point. As we move forward in what as I have said is an unprecedented situation, we must ensure that the rights, security and safety of all citizens who have made Britain their home are fully protected. They make Britain what it is and I am sure that they will be at the forefront of the mind of whoever emerges as the Prime Minister and the new Government of our great country as they lead on the negotiations.

Health: HIV


Asked by

To ask Her Majesty’s Government whether they will instruct NHS England to commission the use of pre-exposure prophylaxis (PrEP) for patients with HIV.

My Lords, after taking legal advice, NHS England has concluded that it has no legal power to commission pre-exposure prophylaxis. NHS England’s decision is currently subject to judicial review by the National AIDS Trust and we are therefore unable to comment further on the legal position. We will consider the options available following the outcome of the legal review.

My Lords, this is a perverse decision on a ground-breaking drug that could save many people’s lives. Essentially, NHS England is hiding behind the responsibilities of local authorities in relation to sexual health services. How long must we wait before the public get the use of this drug, which is widely available in other countries? The Government should instruct NHS England to get on and make it available.

My Lords, the judicial review is being held next Wednesday, which is only 10 days from now, at which point we will know the exact legal position. I really cannot comment further on it today. As far as this drug being widely available as a prophylaxis, it is widely available only in some countries for very specific groups of people. If we commission it in the future, it is important that we are clear about where we can get the most benefit from it.

My Lords, the PROUD study reported in the Lancet last year showed that the PrEP use of Truvada in high-risk groups reached nearly 100%. Are there any other preventive treatments for life-threatening diseases which are 100% effective but for which NHS England is refusing to take responsibility?

It is true that in the control group used in the PROUD trial there was a very high level of success—85% or 87%, I think—but it is critical to identify the right group of people. That is why NHS England is providing £2 million to test Truvada as a prophylactic among a wider group of people to see whether it is equally efficient.

My Lords, I declare my interests as a member of the All-Party Parliamentary Group on HIV and AIDS and as a patron of many HIV organisations. Further to the Minister’s last reply and to the fact that trials are going to take place, will he indicate what action the Government are taking to ensure that there is no gap in the provision of Truvada—PrEP—for those who are on the PROUD trial? Those people will be in great difficulty if they have to stop taking the drug. Will they be included in the trial, how are the trials going to be determined and who is going to decide how the money is going to be spent? Lastly, we think the trial will be a two-year process, so it will be 2019 before we get a decision. Will the Minister say how the decision is ultimately going to be taken?

I can confirm that all the people who are receiving PrEP as part of the PROUD trial will continue to receive it going forward, which I think answers the main point made by the noble Baroness. In terms of the conduct of the trials that I referred to earlier, they will largely be organised and shaped by Public Health England.

My Lords, I have to declare an interest because my husband chaired the Medical Research Council committee that oversaw the original trial on this. The trial was suspended because it was so successful. It was suspended on ethical grounds because it was thought that the people in the control group must receive the drug. Do the Government agree that it is unethical, whatever the legal or financial situation, not to make the drug more available now, particularly given the alarming rise in new cases of HIV in gay men?

I am not an expert in this area, but having thought and read about this issue a lot over the past few days, it seems to me that the number of people who have not been diagnosed with HIV is a critical issue. As those people are not aware that they have HIV, their behaviour is not adjusted and because they are not taking treatment, they have a greater amount of the HIV virus. It is estimated that 18,000 people have not been diagnosed so, if one had to make a choice, increasing our rate of diagnosis must be crucial. However, I do not disagree with the noble Baroness that the evidence around PrEP as a prophylaxis is strong.

My Lords, I have a simple question. Does the Minister agree that we cannot afford not to provide PrEP on the NHS, given that it saves lives and prevents HIV infection?

The critical issue is: to whom do we provide it? The whole purpose of the trials that NHS England is now funding is to ensure that when we provide PrEP, we do so for those who can most benefit from it.

Do the Government recognise that the number of new cases in London is not falling, despite all the public health measures, and that there is therefore an urgent need to address the continuing at-risk behaviours? Will the Government also consider a trial of PrEP in the prostitute population, in which heterosexual transmission can occur and who are often not spoken about in relation to HIV, partly because all their activities are underground?

That is a good point. I am sure that Public Health England is aware of the risks to sex workers and that it will factor them into the trials it is devising over the next two years.

Bus Services Bill [HL]

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.

EU Nationals: Legal Status


My Lords, I beg leave to repeat an Answer to an Urgent Question given in the other place by my right honourable friend.

“EU nationals make an invaluable contribution to our economy, our society and our daily lives. They should be assured that, as the Prime Minister and the Home Secretary have repeatedly said, there will be no immediate change in their status in the UK. The Prime Minister has been clear that decisions on issues relating to the UK’s exit will be for a new Prime Minister. I am therefore not in a position to make new policy announcements in this area.

The discussions that we have with the EU to agree the arrangements of the UK’s exit will undoubtedly reflect the immense contribution made by EU citizens to our economy, to our NHS, to our schools and in so many other ways. But they must also secure the interests of the 1.2 million British citizens living and working elsewhere in the EU. The Home Secretary was clear yesterday when she said we seek to guarantee that the rights of both groups are protected, and that this is best done through reciprocal discussions with the European Union as part of the negotiations to leave the EU.

It has been suggested that the Government could now fully guarantee EU nationals living in the UK the right to stay. This would be unwise without a parallel assurance from European Governments regarding British nationals living in their countries. Such a step might also have the unintended consequence of prompting EU immigration to the UK. It is in the best interests of all that the Government conduct detailed work on this issue, and that the new Prime Minister decides the best way forward as quickly as possible.

In the meantime, I would like to stress that EU nationals continue to be welcome here. We have seen some truly abhorrent hate crimes perpetrated against EU nationals in the past week or so. We will not stand for these kinds of attacks. They must be, and will be, tackled in the strongest possible terms.

EU nationals can have our full and unreserved reassurance that that their right to enter, work in, study in and live in the UK remains unchanged. But to pre-empt future discussions at this point risks undermining our ability to protect the interests of EU and British citizens alike and to get the best possible outcome for both”.

My Lords, I thank the noble Lord for repeating the Statement. I declare an interest in that my husband is Spanish and I have just returned from a brief weekend to visit our family in Spain.

In the debate on your Lordships’ EU Committee report, I asked the Minister what plan B was if the UK voted to leave. The committee highlighted the acquired rights of the 2 million or so UK citizens living in other members states and, equally, those of EU citizens living in the UK. Bearing in mind the importance to our economy, as the noble Lord said, and to our health service, I am shocked that no contingency plans appear to have been made.

The Minister, and of course the Minister in the other place, say that the Government’s position must be seen in the round and that their interest is to protect all citizens. Well, I fear that by putting in doubt the rights of EU citizens here, it will have the complete opposite effect from protecting UK citizens in the EU. As I say, I have just come back from Spain; Rajoy’s recent statement and those of the Spanish Foreign Minister are not giving people much comfort either; they repeat the same sort of statement the Government are making. Rajoy says, “Don’t worry, nothing will happen, at least for the next two years”. Two years is an incredibly short period when people have made their lives, bought homes, got jobs, and contributed to the economy. Earlier the Minister explained—as did the Minister in the other place—that there are existing rights, such as the right to remain after five years. But how are people made aware of this? They have never needed to exercise it. So how will the Minister explain that that right exists and people need not worry as they have that protection? How are people going to follow through? Would it not be better, both in terms of protecting our own citizens abroad and our economy, if we removed the uncertainty now?

My Lords, I thank the noble Lord for his remarks. The Government, of course, are listening carefully. As I have done on a couple of occasions from this Dispatch Box, let me reassure noble Lords that it is the Government’s intent to provide reassurance to all our citizens. It is right that we protect the rights of EU citizens in the United Kingdom and provide them with the security of knowing that they can continue to practise, work, live and study in the UK. The issue now arising is one of great uncertainty. As I said earlier this afternoon, we are going through unprecedented circumstances. As we reflect on the situation in which the country has now voted—in the referendum the country voted by a majority to proceed to leave the European Union—it is important that in the discussions we are taking forward with our European partners we protect the interests of British citizens who are working and living, and have done so for many years, in the European Union, and at the same time, put at the forefront the very valid discussion and concern that the noble Lord has just raised again about EU citizens who have made their lives in the UK and who contribute to the UK and its progress.

I can give the reassurance that exactly those sentiments, thoughts and principles are very much in our minds. It is not for me to speak about the future Prime Minister specifically, but I am sure that all those candidates putting themselves forward for Prime Minister, and indeed the new Government, will reflect very strongly about this, because it is central to our future relationship. We may choose to leave the European Union—the people have elected to leave it—but we have not left Europe. Our relationship with Europe will continue.

My Lords, it would appear that the people of the United Kingdom have rejected the Kantian ideal of perpetual peace and the European Union. Are Her Majesty’s Government determined also to walk away from the categorical imperative that people be treated as ends in themselves, not as means? The idea that EU nationals resident in this country should be used as pawns in the negotiation seems to be wholly wrong. Can the Government not commit to assuring those EU nationals who were here at least at the time of the referendum that they can have their rights assured? Surely it is right to respect the dignity of EU nationals resident here and the benefits that they have brought to this country.

I share the sentiments expressed by the noble Baroness. Let me assure her that the Government are looking at this situation. It would not be appropriate to put down a particular marker as to which point, but there are legal considerations to take on board. Of course, the noble Baroness makes a very valid point. We will continue to put the concerns about the security of EU citizens here and UK citizens in the European Union at the centre of discussions as we move forward.

My Lords, for the second time in a week I say to my noble friend that while his credentials are beyond question, it is possible for us to come to some basic agreements before we invoke Article 50, and this should be one. I urge him to talk to the Home Secretary after this Statement and say, “Can we not agree a reciprocal arrangement with our European friends and neighbours that will not threaten the security of those who are living here and those of our citizens who are living there?”.

I will certainly take that back. My noble friend has spoken about this before. I assure him and indeed all noble Lords on this point, which has been raised before: before invoking that particular article, it is important that the terms of negotiation are determined and we know exactly what position we are negotiating from. One important thing to retain in all this is that it is clear that the citizens of the United Kingdom as one nation voted to leave the European Union. That is a fact. We need to ensure that we secure the best possible arrangements across the board. I am sure that the protection of the rights of those who live in the UK as EU nationals and those British nationals who live in the EU will be at the heart of those discussions, both from our perspective and from those of our European partners.

My Lords, when the Minister was speaking a moment ago, he said we must get the agreement of member Governments. I am slightly worried as to whether the negotiation—because that is what it is going to be—about EU citizens living here and our citizens living in the EU can take place at a European level, or whether we are not going to have to negotiate with each member state of the EU separately about their arrangements for continuing to receive our citizens and for our citizens to continue to live there. In other words, will we not have to have separate negotiations with Spain, France and each other country individually, and are we not likely to get different receptions depending on which country we are negotiating with? If so, how on earth are the Government going to do it?

My understanding, and I think I am clear on this, is that the negotiations we will have across the range of different areas regarding the single market, trading arrangements and so on will be with the EU. We continue to be part of the EU and will continue to have those discussions once we have established our negotiating criteria with the EU.

My Lords, I suspect we are going around in circles, but is not a perfectly reasonable solution to this whole problem, for those who are properly registered in individual countries of the EU and may well be taxpayers, to have the uncertainty removed and, possibly prior to a certain date, have permission just to remain where they are and get on with it?

The noble Viscount talked about those who are properly registered and who pay tax. Those phrases underline some of the important discussions that we need to have, without putting down some markers just for the sake of clarifying one point or the other. The central point that must be at the heart of all the negotiations, which I clarify again will be between the UK and the EU, will be ensuring and protecting the rights of all EU nationals here and UK nationals in the EU.

My Lords, my noble friend on the Front Bench talked about someone who was very close to him. Is the Minister aware that there are staff in this House who are now questioning all the time what is going to happen to them? There are Italians and Portuguese, for example, who look after us so well. There is uncertainty surrounding their children who have been born here, while they themselves came here from European countries. This is totally unacceptable. These people are really worried while trying very hard to make our lives as easy as they can.

My Lords, I reiterate that I respect the sentiments and facts that have been presented today in your Lordships’ House, and I shall of course share them with colleagues across government.

I shall end on this point because I am conscious that we have reached our time: this country has always been compassionate in dealing with people irrespective of whether they are from the EU or outside it. Those are guiding principles that define us as a nation and I believe they will be what define us as a country. I am reminded of what Archbishop Desmond Tutu said:

“My humanity is bound up in yours, for we can only be human together”.

Surplus Target: Corporation Tax


My Lords, I shall now repeat as a Statement the Answer to an Urgent Question made by the Chancellor in the other place.

“Mr Speaker, I have always sought to level with the British people about the economic challenges we now face, but to mix that realism with reassurance that we can rise to those challenges. The financial contingency plans that the Governor of the Bank of England and I put in place have proved effective to date. Financial markets have adjusted, but I can report today that they have shown no signs of disorder.

The next task is to be ready to respond to the developments in the real economy. This will require a supreme national effort. Here are the five steps we should now take. First, we need to look to support demand and make sure credit flows freely in our economy. The governor said on Friday that,

“some monetary policy easing will likely be required over the summer”.

Thanks to the reforms that I have introduced, the independent Bank has the tools it needs to act against the cycle and support lending in the economy. The Financial Policy Committee will publish its decisions tomorrow, and we stand ready in the Treasury to act in concert with the Bank should more need to be done to support funding for lending.

The second part of our national effort must be to maintain Britain’s fiscal credibility. Eight years ago, people questioned Britain’s ability to pay its way in the world. Eight years later, British gilts are seen as a safe haven and funding costs have fallen to record lows. We should maintain the fiscal consolidation measures we have announced, but our rules were always explicit that in the face of what the charter calls a “significant negative shock”, we should allow the automatic stabilisers to operate. With the consensus of economic forecasters now lowering the forecast growth for the UK next year from close to 2% to 0.4%, that we will do. We have to be realistic that the target for a surplus is unlikely to be achieved in 2019-20. The OBR will conduct a formal assessment when it produces a new independent forecast in the autumn, and then we will have a clear idea of what additional measures are required to maintain fiscal credibility.

Thirdly, we should broadcast loud and clear the message that Britain remains the best place in the world to do business. Over the past six years, I have reduced Britain’s corporation tax from 28% to 20% today and 17% in the future. I did that at the same time as taking difficult decisions elsewhere to balance the books. In my view, the strongest signal we could send to the world that Britain, after this referendum, is open to the world and ready to do business would be to cut corporation tax still further. We should aim for a rate of 15%, and preferably lower, because if you are pro-business, you are pro-jobs, pro-living standards and pro-working people.

Fourthly, the referendum result revealed a deep-seated feeling of disfranchisement in too many of our communities, especially in the Midlands and the north of England. As I said in Manchester on Friday, devolving power and building a northern powerhouse is the right response, and we need to double down on those efforts. We will have new elected mayors, and new transport and science investments, and projects such as HS2 and HS3 are more necessary than ever. Once both parties have determined who their new leaders will be, we should take the decision quickly on where to build a new runway in the south-east. Britain cannot be open to the world if we cannot fly there.

Fifthly and finally, while we must seek the best possible terms of trade in goods and services, including financial services, with our European neighbours, now is the time also to redouble our efforts to promote trade with the rest of the world. I have already spoken to my US counterparts. Later this month I will travel to China to build on our important new partnership.

This is a blueprint to meet our economic challenge. Nothing positive will come from looking back in anger. We must lift our eyes to the horizon ahead and make the best of what is to come”.

My Lords, I will make four quick points. Does this announcement not show a woeful lack of contingency planning? How could any reasonable man who threatened a £30 billion punishment Budget a few weeks ago turn round today and say that what is needed is a corporation tax giveaway? Why was this announcement not made to Parliament and accompanied by a proper OBR appraisal? Given last week’s abandonment of the 2020 surplus, of which we approve, how can the Chancellor claim to be maintaining the UK’s financial credibility? Has a single target he has set since 2010 been met? Why has the Chancellor started a negotiation with the EU by declaring a tax dumping war? As the former World Trade Organization chief Pascal Lamy said,

“if you want a proper balanced, win-win relationship in the future, starting with tax competition is not the right way psychologically to prepare this negotiation”.

My Lords, in the interests of time, I shall try to be brief. In the framework that has existed over the past six years there has been a well-identified escape clause in the event that GDP is foreseen to go below 1% for four consecutive quarters. That is the circumstance in which our decision within the country last week has left us, hence the Chancellor’s Statement. On corporation tax, it is intended and recommended that that is an appropriate response to show to the world at large that Britain remains open for business.

My Lords, I will pursue the response the noble Lord just gave. First, the week before the referendum result the Chancellor talked about an emergency Budget; now he is talking about a tax giveaway. Are any fiscal rules still in place? Secondly, the aim is to reduce corporation tax to at least 15%. Current government plans are to reduce it to 17% by 2020. By what year does the Chancellor intend that a 15% rate might be introduced? Finally, does the Minister accept that there will now be immediate problems for many small and medium-sized businesses, which will see many of their purchasers’ decisions put on hold while we have this tremendous uncertainty in the economy? Will he therefore ask the Chancellor to provide a line of funding to the British Business Bank to provide lending, overdraft facilities and other support to small and medium-sized businesses, particularly innovative companies, which, frankly, simply will not be around to receive any corporation tax benefits in years to come unless they are given support now?

My Lords, in repeating the Chancellor’s Statement I clearly said that tomorrow the Financial Policy Committee will report on its recommendations and the Treasury remains in a position to act on whatever advice is given with respect to support for whatever area of business—small, large or otherwise—that may or may not require additional help. On corporation tax, as I also said, that is a recommendation of an appropriate policy response in the event of the decision we have made to send a message to the world that Britain remains open for business. I imagine that a specific policy will be put in place in line with the Autumn Statement plan as envisaged previously, once we have a new Prime Minister in place.

My Lords, it is fortunate that the Chancellor has remained in post, since it would have created enormous trauma in financial markets if not only the Prime Minister but the Chancellor had decided that he would not continue to deal with the immense problems we face. Can I ask two simple questions? First, as far as the corporation tax cut is concerned, will my noble friend tell us—I am sure he ought to do so—whether the Treasury estimates that this will increase or decrease revenue in the immediate future? Secondly, as far as the abandonment—I think that is the right word—of the target on the deficit reduction is concerned, that is clearly necessary to have greater flexibility in fiscal policy, but does he agree that it is essential that none the less the long-term objective of reducing the deficit is maintained?

My Lords, in response to my noble friend’s question, let me repeat that the fiscal charter, including all its rules, allowed specifically that if an external shock—in this case one that we essentially brought upon ourselves—would result in a four-quarter basis GDP forecast of less than 1% the framework could be adjusted. That is the environment in which the Chancellor made his comments in the other place, and that is what I am repeating here. With respect to the comments on corporation tax that are receiving so much attention, the Treasury will—as it always does—indicate what any cost or benefits revenue-wise or otherwise might be as and when a specific policy proposal is brought to Parliament.

May I correct the noble Lord? Brexit was not an external shock. It was an internal shock. It was a policy shock. Does the noble Lord think it is serious that we have lost our AAA credit rating? What is his estimate of the increase in borrowing costs we will face as a result of that?

My Lords, I notice to my right some noble Lords with strong views on and experience of these kinds of events. Let me just reflect on my own judgments, including some from my past life. Let me also quickly state that in the last week our long-term borrowing costs have gone down. It is the job in terms of policy to focus on doing what is right in the circumstances. I do not believe that we should react to or be excessively focused on what a rating agency may say one way or another. It is important that we do the right thing.

My Lords, can my noble friend help those people in the country who might be a bit puzzled as to why the Chancellor said a few days before the referendum that if we voted to leave the European Union interest rates and taxes would have to go up? Now we are faced with the proposition that taxes should be cut and interest rates might go down. Why did that strange transformation take place over such a short time in the Treasury?

My Lords, forecasts are forecasts and I have spent a considerable part of my life having that dubious challenge. We are dealing with an outcome as opposed to a forecast. From what I remember of the specifics, I do not remember a statement that interest rates “will” rise, I thought it was more that they “could” rise. Importantly, while the Chancellor has responded with the appropriate flexibility for the new circumstances we may find ourselves in, based on what the OBR comes up with in its new forecasts for the Autumn Statement, it may well be that there are still difficult choices to be made.

My Lords, is it not clear that the Government are not going to meet their borrowing targets? The Chancellor has said that. Is it not ludicrous against that background to be announcing today that there is going to be a cut in corporation tax costing £4 billion to the Exchequer? Can the Minister tell us what the position is going to be in the autumn? We will have a new Prime Minister, a new Chancellor of the Exchequer and a new OBR forecast. Can he guarantee that this announcement today will ever be carried out?

My Lords, I could give a very brief answer and say, “No, I can’t tell you what is going to happen in the autumn”. It is pretty hard these days to tell people what is going to happen next week.

Or tomorrow even. The process by which the Government’s fiscal position is influenced by the forecasts of the independent OBR is one of the few things that do not appear to have changed in the past week or so. That will set out the circumstances in which fiscal policy choices will be made by a new Prime Minister and the team under them.

My Lords, the Chancellor mentioned in his Answer disenfranchised people in the north and elsewhere. Will he give some thought to the idea that now is not the time to cut taxes, which may lead to loss of revenue, but to increase expenditure inasmuch as the fiscal charter allows us to break rules as long as we break them in the right way?

My Lords, I was very pleased to hear the Chancellor refer to that. We will indeed endeavour to put even more effort into rebalancing the economy of this country, including in the north, in the Midlands and possibly in other parts of the country as well.

Bus Services Bill [HL]

Committee (2nd Day) (Continued)

Amendment 34

Moved by

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

“(g) the extent to which not-for-profit bus operators can be integrated into a proposed scheme in order to contribute to the long term sustainability of the scheme.”

My Lords, Amendment 34 is proposed by me and my noble friend Lady Jones of Whitchurch. It would require the franchising authority or authorities to give consideration when drawing up a scheme to how the not-for-profit sector could be involved, the purpose being to contribute to the long-term sustainability of the franchising scheme, which, one hopes, will give local people a better bus service than they enjoy at present. The not-for-profit sector is thriving in a variety of areas. Expanding this model in the delivery of bus services is one way to contribute to ending the decline in bus services and routes that we have seen over many years, especially outside London, and which has been the subject of discussion during consideration of this Bill. It can complement other providers and deliver on a smaller scale bus routes that really benefit local communities and that can boost the local economy, connecting people with jobs, shops, schools and other services that they may not have had access to in recent years. Our amendment would require any assessment to include such proposals.

I hope that the noble Lord, Lord Ahmad of Wimbledon, does not have “resist” in his notes against this amendment. He has been very responsive today and in our previous day in Committee, and I hope he continues in that vein. Perhaps he will say to us that the amendment is not necessary, or suggest that it might be included in guidance. Of course, it could be in guidance, but as I hope he can see, that would not have the weight of its being clearly in the Bill.

We all want to see better bus services, and this Bill is a very positive step forward, but we need to go a little further to strengthen the proposals in some areas, as this amendment would certainly do. It would make it easier for different models of service to come into play and give a better bus service for all. I beg to move.

My Lords, not-for-profit bus services, or community transport, cover a wide spectrum of services, including those operated by charities. I am the first to praise the extraordinary work the sector does for people who need a lot of support in their daily lives—drivers who walk users to their door to make sure they have not lost their keys and then carry their shopping into the hall are local heroes. The sector can also plug a few gaps in services for the general public where there are not enough passengers to make a route a commercial proposition and the hard-pushed local authority does not have sufficient resources to fund a standard bus service.

However, I urge my noble friend the Minister to resist the amendment. Community transport services are not subject to the same regulatory regime as local bus services. Their drivers are not subject to the same stringent training regime as those driving registered services, nor do they need to satisfy many of the other compliance requirements set down by the traffic commissioner.

Services operated under Section 19 of the Transport Act 1985—it is mainly this type of service we are talking about with this amendment—are exempt from many safety and fair competition rules so long as they are not provided to the general public. So how on earth can they contribute to the success or otherwise of a franchise?

The whole issue of services operated under Section 19 and indeed Section 22, permits has been a bone of contention for many years with the EU. If community transport operators were required to enter the local bus market and operate under the same rules as operators of registered services, it would be a different matter, but they are not. There is no level playing field and, at the moment, community transport operators are able to operate more cheaply but without the regulatory safeguards in place for other operators. I therefore urge my noble friend to resist the amendment as gently as he can.

My Lords, in contrast, I support the noble Lord, Lord Kennedy, in his amendment, because I believe strongly that there is a valuable role for community transport and not-for-profit operators. That role is particularly important in rural areas. I take this opportunity to thank the Minister for the very useful letter that I received today, which gives great detail about the Government’s approach to rural areas. I regret that the information is not in the formal impact assessment; nevertheless, it is now publicly available and useful to us all.

It is important not just that not-for-profit operators work in rural areas but that we look at the widest possible range of community-based schemes in urban areas as well. I give as an example Hackney Community Transport, which operates commercial services for Transport for London, and Ealing Community Transport, which runs buses in Dorset with Go-Ahead. Those are urban examples that have spread out from the area where they started, but the point I am making is that community-based and not-for-profit transport services are part of a flexible mix. If we are truly to improve bus services, we must have more variety: we must have an alternative to the big five bus companies which effectively run the vast majority of bus services outside London. Although they compete, in most cases they do not do so on the ground—they rarely compete against each other service to service. We need an alternative to that if we are to have a flourishing bus service throughout Britain.

My Lords, I support the comments of my noble friend. I had not intended to speak, but the noble Earl, Lord Attlee, slightly provoked me into it when he commented that not-for-profit services “plug a few gaps”. I can tell him that in areas such as mine, in Suffolk, they are the service. Almost all rural areas in Suffolk now have no bus service.

I agree with the noble Earl that I would not want community transport schemes to be tied up in a whole plethora of red tape, but nor would I want emerging franchising models to ignore the opportunities provided, in the way that my noble friend Lady Randerson has described, or inadvertently to disadvantage smaller community services. It is easy to see how you could do that—by cherry picking parts of their routes and not linking with others, you can affect their viability. Whether it is an urban or a rural area, but particularly in the rural area I know, it is important to understand and get the ecology of the bus industry right: to understand that something you do to one part is going to impact on another.

My Lords, if I can stimulate a contribution from the noble Baroness, I have done the Committee a great service.

My Lords, I thank the noble Lord, Lord Kennedy, for his amendment, which would require franchising authorities to consider, as part of the assessment of their proposed franchising scheme, the extent to which not-for-profit bus operators can be integrated into a franchising scheme to contribute to its sustainability. Let me say at the outset that I sympathise with the aims of his amendment. I recognise the good services that community bus service operators and other not-for-profit bus operators deliver to our communities across the country and know that they often provide flexible and bespoke services which act as a lifeline to many. The intervention from the noble Baroness, Lady Scott, underlined that element.

The Bill recognises the important role that community transport operators play in providing local public transport. Provisions have been included in the Bill to ensure that services operated under community bus permits will not be affected by the introduction of franchising or enhanced partnerships. This will enable them to continue to run their services unaffected by these schemes. I hope noble Lords will agree that these provisions are sensible and that they will help ensure that community bus providers can continue to deliver their valuable services to our local communities.

Even with these protective provisions in the Bill, I recognise the valid point the noble Lord, Lord Kennedy, raises, and agree that authorities looking to improve local bus services should consider how services provided by community transport operators can be best integrated to deliver a better overall network of services for passengers.

Let me assure noble Lords that the Bill does not preclude authorities, as they develop their franchising or enhanced partnership proposals, working with community transport and not-for-profit operators to determine how they can best be integrated into the wider network of services, but I agree with the noble Lord that this approach should be encouraged. I am, therefore, of the view that these issues are best covered through further guidance that will be published to complement the provisions of the Bill. I hope the assurances I have given in this contribution enable the noble Lord to withdraw his amendment.

Will the Minister say a little more about why he thinks that this should be in guidance? He says that authorities can do this, and that is all well and good. Why then is it not going to be in the Bill? Why should it be in guidance? My worry is that guidance is not legislation. Guidance is forgotten over time, things get moved on and revised, and all of a sudden it is not there and gets forgotten about. Why is guidance better than the Bill?

My Lords, I have already said that there are provisions within the Bill that protect that element of community transport and not-for-profit operators. While the noble Lord feels that the guidance is not sufficient, it forms part and parcel of the guidance in support of the Bill, on which these new proposals go forward.

I am not sure the Minister answered the point I was making there. I am thinking of organisations such as Hackney Community Transport. If it wants want to provide services elsewhere in the country, like it currently does for TfL, why should that not be in the Bill, rather than in guidance?

I do not think I can add any more. If the noble Lord feels that the strength of what the Government are presenting does not meet what he is suggesting, I suggest we discuss this issue. At the moment, we are minded that existing provisions within the Bill, with the assurance of including such provisions in the guidance, provide the necessary safeguards alluded to by the noble Lord. I hope, with this assurance and the continuing discussions we are having on various aspects of the Bill, that he will be minded to withdraw his amendment.

I thank the Minister for that contribution. I will take up his kind offer to have a discussion outside the House. He has been very generous with his contribution today and with his time. I appreciate that very much. I thank all noble Lords who have spoken in this short debate. I do not agree with the remarks of the noble Earl, Lord Attlee, as I want to see the not-for-profit sector being able to provide bus services, as elsewhere. I thank the noble Baronesses, Lady Randerson and Lady Scott, for their support. The noble Baroness, Lady Randerson, was spot on in speaking about the needs of rural areas and the widest range of schemes available to deliver those services. As she said, Hackney Community Transport delivers services for TfL, so why cannot it, or other providers in the not-for-profit sector, deliver bus routes elsewhere, in urban or rural areas? This Bill is about improving bus services and my amendment helps in that respect, improving the Bill further and giving further options for the provision of bus services. I will leave it there and look forward to talking it over outside the Chamber, but I may well bring the amendment back on Report. I beg leave to withdraw the amendment.

Amendment 34 withdrawn.

Amendment 35

Moved by

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

“(g) whether the proposed scheme would be more efficient, effective and economic than any other option, taking into account any compensation payable to bus operators whose businesses would be wholly or partially expropriated by the scheme.”

My Lords, this amendment is all about compensation for loss of business, and its purpose is to make it a requirement on a franchising authority to factor in the cost of compensating bus operators as part of the assessment of a proposed franchise scheme.

I can anticipate the Minister’s response, but I would still like to explain my concerns. If the state needs to remove something from a person for the public good, then the state should compensate that person. It is quite simple: if land is purchased under compulsory purchase power, the owner of that land gets paid for it. I am fully aware that compensation would not have been payable under a quality contract scheme, although the days of quality contracts are severely numbered, and that when toes were dipped in that particular pool of water it ended rather badly, but it does not make it right, which is why my party was not keen on it.

The cost of compensating a bus operator who has to close his business, having failed to win a contract bid, could well run into millions of pounds, taking into account the physical assets—vehicles, depots and land—and the good will that the business enjoys. In one of our previous debates, the noble Lord, Lord Snape, asked what would happen to garage premises in the city centre, and would they be redeveloped and lost, and about all sorts of complications. I will speak about good will again when we reach Clause 5.

If that is not bad enough for the large plcs which would have to redeploy—hopefully—their staff and assets, we should consider the position of SME operators. These businesses will have been established on the back of solid hard work and with considerable financial risk and energy on the part of private individuals, who will have invested their life savings to see their company grow. They stand to lose all that not because they have performed badly, not because they are bad companies and not because their passengers have decided they no longer want to use their services. They stand to lose it all simply because they lost out on a bidding process for the franchise. Apparently, all their endeavours are worth nothing.

The Bill is currently silent on the matter of compensation, which I believe is wrong. I was really quite alarmed by the comments made by my noble friend Lord Young of Cookham at Second Reading, when he said that foreign owners of bus companies, but not British ones, might be entitled to compensation under the TTIP agreement, currently being negotiated at European level. I suggest that the whole issue of compensation needs to be revisited. Is it right that a foreign company could be paid millions of pounds of taxpayers’ money, because its local authority has decided to take control of its local bus services, while a British company is left high and dry with no business and no compensation? The Minister will have to answer this point. I hate to say it, but this all sounds rather unconservative.

It is vital that when a local authority pursues a bus franchising scheme, the process, including a detailed assessment of the scheme, must be as robust as possible. The assessment must look at every single aspect of the proposed scheme, including whether the franchise scheme stacks up financially and represents good value for money because whose money will it be? It will be local taxpayers’ money, so the compensation to bus operators who are put out of business must be an important part of the mix. I beg to move.

My Lords, I am interested in the noble Earl’s comments about the poor small investor who has put their life savings into a bus company which is then put out of business because exactly the same thing happens on the railways, where most passenger services are franchised. I suppose the difference is that it is usually large bus companies making the bid. Some of them are owned by foreign state-owned enterprises, which means that the Government allow foreign state-owned enterprises to bid and operate train franchises but they do not allow British state-owned franchises to do the same. However, that is a slightly different matter.

Surely this is a question of which end of the telescope you are looking at. If it is question of small shareholders running a bus company in an area, they may well be worthy of sympathy in a different way from what might be called the big multinationals, but either way, experience on the railways shows that while the top management does not usually remain when a franchise changes, everyone else generally retains their job if they want it. In some cases there may be TUPE arrangements in place, but they may not be appropriate here. However, I am not convinced that the arguments for and against franchises are particularly affected by this because in practical terms many members of the workforce of a franchise of, say, a small bus company might think that they are losing their jobs, but they might well be taken on by the people running the franchise because they have local knowledge, they live locally and so on.

I have great sympathy with the amendment moved by the noble Earl, Lord Attlee. I have also listened carefully to my noble friend Lord Berkeley. He commented when speaking to an earlier amendment that there is not a great deal of competition in the bus world. There was competition immediately after deregulation when there were lots of small companies, many of which were perfectly reputable but some not quite as much. My noble friend mentioned the difference between franchising on the railways and franchising for buses. The difference between them is quite simple: we are against one and in favour of the other. I am not quite sure why or how, but that is the situation we find ourselves in as a party.

I suspect that when we come to debate the future of the railway industry I will be speaking for my party, which is against franchising. And, as I currently understand it, the party wishes to see the railways back in some degree of public ownership. However, let us not get bogged down in the differences within our party between the two industries otherwise we could be on this amendment for a lot longer than we should be.

On the previous amendment, we talked about not-for-profit companies making a bid for franchises. The problem with that reflects directly on Amendment 35. If a successful franchise bid depends on a lower bid, and there is every chance it will given the shortage of cash in local government and the cutbacks that have been made so far as support for bus services is concerned, obviously some of the smaller and perhaps less reputable companies will start out with an advantage. If you are running a major operation that recognises trade unions, pays trade union rates, provides proper canteen facilities, uniforms and so on, you are not in a particularly advantageous position when bidding for a franchise against a smaller company that does none of those things.

Again I remind the Minister that over the years a lot of these companies have come and gone. The bus industry has rather settled down, and although we deplore the lack of competition, when we had lots of it, it was often denounced as wasteful and unnecessary. Speaking specifically to this amendment, if a company large or small loses its assets as a result of measures inherent in the Bill, surely it is only fair that it deserves to be properly compensated.

My Lords, I say in response to the noble Lord, Lord Snape, that of course the arguments he makes about less reputable companies fortify my argument that a lot of these things need to be set out in the Bill, so that we can ensure that only the more reputable companies—those that observe those aspects important to passengers and indeed to our environment—are able to win a franchise.

I say in response to the noble Earl, Lord Attlee, that I cannot understand why bus companies should be immune to the usual rules of business in this country. Increasingly local government services are run through commercial companies in various forms. Many commercial organisations are involved in the provision of a range of local authority services right down, for example, to care for children, the elderly and so on. Local authorities franchise services or commission them and from time to time they will change the companies they are working with; someone loses the contract. There are well-known procedures throughout our public life which account for that to happen, thus enabling a service to be handed over from one organisation to another. I cannot see why bus companies should be exempt from that general run of business.

My Lords, Amendment 35, which has been proposed by the noble Earl, Lord Attlee, is not one that I can support today. As we have heard, the amendment puts a requirement into the Bill that would require the taking into account of any compensation payable to bus operators whose businesses are wholly or partly expropriated by the scheme. I do not think that there are any plans in the Bill to expropriate anyone’s business. The franchising model will work on similar terms to those which presently operate in London, where private bus operators happily deliver services on routes laid down by TfL. They make profits and the service works well.

I agree with the comments made by the noble Baroness, Lady Randerson, who asked why the bus industry cannot be aligned with the rest of the public sector in terms of contracts being tendered for and then won or lost. People move on and things change. That works in the whole of the rest of the public sector and is certainly the case in local government; I have said before that I am a councillor in Lewisham. I am sure that the noble Lord, Lord Ahmad, will advise the Committee, but I think I am correct in saying that the Government do not anticipate any compensation being required if a franchising authority follows the process as set out in the Bill. For me, the Bill is about improving bus services for passengers and increasing the number of bus journeys being taken by people, thus halting the decline in bus routes and journeys over recent years, and that should be embraced by bus operators. Indeed, they may find that they actually make more money if they increase their routes and more people use them.

I look forward to the Minister’s response and I hope that he will allay the concerns raised by the noble Earl and thus demonstrate to the Committee that the amendment is not necessary.

My Lords, I thank my noble friend Lord Attlee for his amendment, which would require franchising authorities to consider as part of the assessment of their franchising scheme whether it will be,

“more efficient, effective and economic than any other option, taking into account any compensation payable to bus operators whose businesses would be wholly or partially expropriated by the scheme”.

I recognise my noble friend’s desire to ensure that impacts on bus operators are fully considered as franchising schemes are developed. The Bill already addresses many of his concerns, and it may be useful at this point to provide a fuller explanation of proposed new Section 123B, which requires franchising authorities to conduct an assessment of their proposed franchising scheme. I fully acknowledge that moving to a model of franchising is a big decision that will impact on bus operators in the area. That is why the Bill requires authorities that are considering franchising to conduct a thorough assessment of their proposed scheme, including comparing their proposals with other options, which could include partnership proposals and the status quo.

The Bill also requires franchising authorities to think about the effects of the proposed scheme and whether it represents value for money. This will include, of course, consideration of the impacts of the proposal on passengers and bus operators, together with any wider impacts. I hope my noble friend agrees that the provisions in the Bill will require authorities to think carefully about their franchising proposals, compare them to other options and then take a well-reasoned and well-evidenced decision.

I turn to the issue of compensation payable to bus operators that my noble friend referred to. I fully recognise the years of hard work that many bus operators have put into growing and operating their businesses and their concerns about the future. As I have said, the Bill requires authorities to consider both the benefits that franchising could bring for local people, as well as the potential impacts, including those on bus operators. If franchising authorities follow the processes set out in the Bill, local bus operators will have plenty of notice that a franchising scheme is being considered, will be aware of a decision to introduce franchising, and will have more than six months’ notice that services are to be provided under local service contracts. This will enable operators to take any action they think appropriate and to plan ahead in the light of the decision to make a franchising scheme. Incumbent operators will, of course, be able to bid for contracts in any area that decides to move to franchising, and I should reflect that those operators’ knowledge of the local area and local customers is likely to stand them in good stead. In addition, the Bill does not provide franchising authorities with the power to take over the property of any bus operator if a scheme is made—a point made in an earlier debate.

In summary, I am therefore of the view that the Bill already addresses many of my noble friend’s concerns regarding the assessment of the franchising scheme and the need to compare it with other options. He raised the issue of compensation being available to those who do not win contracts, and referred to other schemes, not just franchising. While he makes a valid point, I note that authorities have been able to introduce quality contracts since 2000. This potential risk and impact on bus operators has been around for a significant period. I hope that he has been assured and reassured by some of my comments on the existing provisions in the Bill. I disagree that consideration of compensation should form part of franchising assessments—a point made by other noble Lords—but I hope that this debate has assured him that the Bill includes a thorough and comprehensive assessment process, and that he can withdraw the amendment.

Can the Minister say more about something I find hard to understand about the amendment? I am a councillor in a London borough and services are tendered for all the time, whether in relation to road repairs, street lighting, refuse collection and so on. People bid for contracts, win them and lose them. If they lose them, the new company takes them on and we do not have debates about paying companies compensation because they have lost their contract. They bid for a price, the council assesses it and a number of factors and makes what it believes is the best decision. I do not see why we are having this dispute or debate. If a company loses a bus route, I do not see why it should be paid compensation. It must have tendered for that route but has lost out in the process to another company that has been deemed to offer better value for money. This is a strange debate.

My noble friend tabled an amendment and it is right that we have a discussion in Committee. I hope that through the provisions in the Bill that I have highlighted—for example, the requirement to give ample notice—his fears are allayed as regards compensating a business franchise that goes out of operation. The Bill contains proper provisions in relation to, for example, giving notice. The noble Lord, Lord Kennedy, and I are on the same page on this.

My Lords, if I have brought both Front Benches together, I have achieved something. Some noble Lords talked about disreputable operators. If, as a result of a franchising scheme, a disreputable operator goes out of business, no one would be happier than me.

The noble Baroness, Lady Randerson, and the noble Lord, Lord Kennedy, picked up on the fact that local authorities are currently putting services out for bid and that operators are either successful or unsuccessful. Noble Lords are right but the difference here is that an operator can be sure that, so long as he has a good commercial model and keeps his customers happy, he can stay in business. However, if he gets hit by franchising, he will be out of business through no fault of his own.

The noble Lord, Lord Berkeley, made an interesting comparison with the railway industry, but he will know that that is on a different scale and people in the railway industry know that that is the name of the game. They will bid for the franchise and amortise all the costs of their investment over the length of the franchise, whereas the operators that I am concerned about at the moment have no risk of being put out of business by franchising because that simply cannot be done. It is therefore a new situation that they could not have planned for.

No noble Lord has explained away my TTIP problem. Regarding facilities for operators, franchising may well provide efficiencies because perhaps fewer workshops and garages are needed. The problem is that someone ends up holding redundant facilities that they used to have a commercial use for. I am not convinced by the response of my noble friend but I will read Hansard carefully and, subject to the usual caveats, I will come back on this. Oh, the Minister wants to have another go at me.

I would never dream of having a go at my noble friend; I am merely thankful that he has given way. It was remiss of me not to mention the TTIP issue. I understand that investor-state dispute settlement does not prevent a current or future Government who act in accordance with due process changing their laws or policies. My noble friends Lord Attlee and Lord Young referred to this point and it is my understanding that this element is still being negotiated between the European Union and the US.

I thank my noble friend for that response and I beg leave to withdraw the amendment, subject to the usual caveats.

Amendment 35 withdrawn.

Amendments 36 to 40 not moved.

Amendment 41

Moved by

41: Clause 4, page 16, line 26, after “an” insert “independent”

My Lords, the amendment stands in my name and those of my noble friends Lady Randerson and Lord Shipley.

It really does not matter which side of the great debate noble Lords are on—whether they favour franchising, as I do, or whether they are fundamentally opposed to it, as we have heard. Both sides agree that the proposal represents a significant risk of a transfer of risk from the bus operators to the local authority. That risk will be carried by local council taxpayers and, in the new regime, local business ratepayers. I should say from the outset that I am perfectly confident in the ability of local government to manage these processes. The noble Lord, Lord Snape, is right to say that this will not come cheap. Local authorities will need sufficient expertise in order to carry out the proposals, and I think that they will be able to, should they choose to invest that expertise. My concerns are about the mayoral model in this regard. It seems to me that what the Government see as the strengths of the mayoral model—a single point of centralised decision-making and a single point of accountability—can also very quickly turn into a disadvantage. Strong leadership can very quickly turn into headstrong leadership. Therefore, it seems to me that robust oversight is key.

In the past few years the LGA—I declare an interest as a vice-president—the Institute for Government and the Centre for Public Scrutiny have all done quite a lot of work on this. The amendment is in line with that sentiment and seeks to ensure that there is independence in terms of the information that is given out and against which a local mayor can be accountable.

I would be the first to admit that I am a bit of a governance geek. That probably comes back to having served on the Audit Commission. However, just to make it clear that this is not just some odd preoccupation of mine, on Friday the Public Accounts Committee in another place published its document about cities and local growth. It is going through these devolution proposals and its intention is to contribute to the public debate and to government thinking at this early stage. Its report raises many of the same concerns that I have just raised. I shall read out a few lines from one of the recommendations because they are important. It states:

“We are not confident that existing arrangements for scrutiny at local level of devolved functions are either robust enough or well supported. Robust and independent scrutiny of the value for money of devolved activities is essential to safeguarding taxpayers’ money, particularly given the abolition of the Audit Commission. Local scrutiny committees are an important mechanism; however, given resource constraints and the absence of independent support”,

there is a limit to what they can do. It then goes on to talk about the absence of “independent institutional scrutiny”, and recommends that by November 2016 the Government should come forward with plans to ensure that local scrutiny of devolved functions will take place and will be robust.

While I confidently expect the Minister to resist this amendment, I hope that he will commit at least to making sure that this report of the Public Accounts Committee is read, understood, and, more importantly, taken into account as this Bill progresses. It is always easier to get it right at the beginning that to retrofit these things into something once it is passed into law. I beg to move.

I rise to speak to Amendment 43 in this group, which seems to do something similar to the amendment so ably moved by the noble Baroness, Lady Scott.

Like the noble Baroness, I am not quite as sanguine about a local authority deciding to set up a franchise scheme, appointing someone to look at it, and then having the ability, regardless of what he says, to go ahead. That smacks a bit of the people’s courts in Germany towards the end of the Second World War. Surely we ought to have something more democratic than that on these somewhat controversial matters. The traffic commissioners, who are widely regarded throughout the transport industry—although under successive Governments, they have been sadly underresourced—ought to be the people who appoint a proper independent arbiter to look at any such proposal. It seems to me to offend natural justice for a local authority wishing to have a franchise scheme to appoint a referee to decide on the merits of that scheme and, regardless of his or her conclusion, to go ahead anyway. I hope that the Minister will look carefully at these amendments and think about toughening up the Bill considerably.

My Lords, I shall speak briefly to Amendment 42 in my name and that of my noble friend Lord Berkeley. I understand that the amendment may not be perfectly drafted—it may be more appropriate to have “of” rather than “and to”, but we can deal with that when the Minister gives me comfort that he accepts its basic direction of travel.

The amendment’s purpose is to look at the role of the auditor. It would ensure that that role is restricted to areas that are both within the auditor’s competence and entirely focused on the matters set out in proposed new Section 123D(2)(a) and (b), which states:

“The auditor’s report must state whether, in the opinion of the auditor … the information relied on by the authority or authorities in considering”,

whether the authority or authorities would be able to afford, make and operate the scheme and whether the proposed scheme would represent value for money, is of sufficient quality and that the analysis of the information is also of sufficient quality.

Without this amendment, proposed new Section 123D(2) could be interpreted as giving the auditor a wider remit, given that, as drafted, the auditor must give an opinion on whether the authority,

“had due regard to guidance under Section 123B”.

This guidance covers a much wider range of topics than those set out in proposed new Section 123D(2)(a) and (b), including the effects of the scheme, comparison of the proposed scheme to one or more courses of action and the scheme’s contribution to the implementation of wider plans and policies. As such, the current drafting risks giving the auditor a role which is beyond their professional expertise as well as creating conditions whereby a third party is second-guessing a locally accountable authority’s assessment. This in turn could introduce the kind of hurdle that led to the failure of the 2000 and 2008 Acts in creating a simpler route to franchising for those authorities that wish to pursue—I stress those that wish to pursue—this option.

The Government have committed to introducing a practical and efficient method of introducing bus franchising and this amendment, as redrafted, looks to assist them in that process.

My Lords, I should first declare my vice-presidency of the Local Government Association. In principle, I am in favour of the right of local authorities to franchise bus services. However, I expressed concern at Second Reading that the audit and scrutiny of proposed franchises needed to be tightened up, and I remain of that view.

I also said at Second Reading that the Cities and Local Government Devolution Bill required substantial amendment to improve the effectiveness of audit and scrutiny to ensure public confidence in the financial robustness of franchising arrangements. Now, as the noble Baroness, Lady Scott of Needham Market, has pointed out, on Friday the Public Accounts Committee in its sixth report of this Session expressed some serious concerns about the extent to which consideration by central government of the local scrutiny arrangements had been adequate.

I quote, in particular, from its summary, which states:

“There has been insufficient consideration by central government of local scrutiny arrangements, of accountability to the taxpayer and of the capacity and capability needs of local and central government as a result of devolution”.

I have absolutely no doubt that local government may have the required capacity and capability—certainly in a number of places with which I am familiar. That is not to say that it cannot gain the capacity and capability to undertake successful franchising. However, I subscribe to the view that there has been insufficient consideration of this issue by central government and it really does matter.

In consideration of previous amendments, I noted that the Minister said that mayoral combined authorities were appropriate for taking forward the policies in this Bill and would have the necessary checks and balances in place. These amendments improve the checks and balances that the Government seek. If the Government listen very carefully to what is being said across your Lordships’ House, it is much more likely that franchising will succeed, and I am very keen that it should do so.

There are three amendments in this group. The one to which my name is attached tries simply to make it clear that the auditor should be independent of a local authority or a combination of local authorities. The other two amendments are in the same area, but address issues around affordability, value for money and the role of traffic commissioners. There are various ways in which that could be progressed. The Minister may say that this can all be addressed in regulation. However that is done, I hope that the Minister will be able to come back on Report—if he is not able to do so now—to explain that there is an understanding of the issue that the auditors’ scrutiny function in this case must be robust and seen to be robust and how the Government plan to take this forward to ensure that the public can have confidence in franchising arrangements.

My Lords, on the amendments that we have discussed in Committee, many noble Lords have said how important it is for devolution to happen and for local authorities around the country to be able to operate franchises without too many controls from central government. Whether that happens or not, the importance of independence in the audit is vital, as other noble Lords have said. It would be so easy for some local authorities in the future to get it wrong and then for a rather nasty article to appear in Private Eye, suggesting that the leader’s brother-in-law was the auditor. I am sure that would never happen, but we do need independent checks. My noble friend Lord Snape’s suggestion of traffic commissioners appointing the auditor has enormous merit. The two issues in Amendment 42 in the name of the noble Lord, Lord Bradley, and myself, about the affordability of the scheme and whether it represents value for money, are the two most important ones that should be focused on by the auditor. Then we would all feel comfortable that it would probably work very well.

My Lords, we very much support the intent of the first amendment introduced by the noble Baroness, Lady Scott, and of Amendment 42, which was introduced by my noble friend Lord Bradley. It is important that the audit process is properly independent and provides a trustworthy external scrutiny—that makes perfect sense. It also makes perfect sense to ensure that the proposals are properly costed and that we can have confidence that they are affordable.

However, regrettably, we do not feel able to support the amendment of my noble friend Lord Snape—we seem to be making a habit of that. We believe that his amendment is too specific and restraining and we hope that, on reflection, he will feel able to support Amendments 41 and 42, which we believe would achieve the additional reassurance he seeks and ensure that a fair, independent assessment process takes place. I hope that my noble friend will reconsider and that the Minister will feel able to support the first two amendments.

Before my noble friend sits down—I am sorry that she finds herself unable to support what is, in my view, a well-intentioned and well-meaning amendment—perhaps she can tell us why she objects to the traffic commissioner and why that is too specific. After all, by the very nature of his or her job, the traffic commissioner knows the business inside out and is widely trusted by all sides in the industry. Surely to have someone like that appointing an auditor is a very sensible way forward.

Without wishing to get into a dialogue, I think that we felt that as long the role was prescribed to be independent, different authorities will have different arrangements for appointing independent auditors. We do not feel that we need to be that prescriptive in this piece of legislation. I would not go any further than that.

My Lords, there are a number of amendments in this group, all related to the audit function required as part of the franchising provisions. The noble Baroness, Lady Scott, proposes an amendment to state explicitly that the auditor, whose role is to issue a report to the franchising authority on certain aspects of the assessment of the proposed franchising scheme, must be independent. The noble Lord, Lord Snape, proposes an amendment that would require the auditor to be appointed by a traffic commissioner. The noble Lord, Lord Bradley, proposes an amendment that would require the auditor to consider matters relating to an authority’s consideration of affordability and value for money. I thank all noble Lords for their amendments, and will turn to each one.

Before I go into those details, the noble Baroness rightly talked about the Public Accounts Committee’s report on local scrutiny, and I thank her for bringing that to the Committee’s deliberations. We are of course ensuring that we consider its recommendations very carefully as the Bill moves through Parliament, and we will respond during the course of the Bill.

Turning to the amendments, I recognise the importance of ensuring that decisions to move to a model of franchising are taken on the back of quality information and robust analysis. As I have explained previously, in developing this Bill we have been keen to move away from the quality contract scheme processes set out in the Transport Act 2000, which, in particular, included the need for independent scrutiny by a “Quality Contract Scheme Board”. While I agree entirely that there is a need for a level of independent assurance, I do not think that devolved decisions should be second-guessed by an independent panel. We introduced the role of the auditor to ensure that an independent third party provides assurance that certain information used in the assessment is of sufficient quality, that the analysis of that information is robust and that relevant guidance has been followed. It is not the auditor’s role to take a view on the decisions taken by the franchising authority. As I am sure that noble Lords agree, its role is to provide a quality check.

The Bill requires any auditor to have a “recognised professional qualification” and to be eligible to act as the local auditor of the authority’s accounts. As such, we would expect any auditor to be suitably qualified and able to provide independent assurance.

Does the noble Lord accept that it is not just a case of qualifications but of perceptions? It is only too easy for a situation to arise within a public body where an auditor’s assurance has been given but is not seen as good enough or independent enough by critics of the scheme. Therefore, the arm’s-length rule is the safe way of going forward.

I agree with the noble Baroness inasmuch as it is important that it is not just the process, but the perception—and the perception in the mind of the public, too—that there is scrutiny, and effective independence in the auditor role. However, I believe that any auditor, on the basis of what we have suggested of having professional capacity, would be able to show that level of competence and, indeed, address the issues of perception. As such, it would be reasonable for the franchising authority to appoint such an auditor. That applies as much to the suggestion by the noble Lord, Lord Snape, that it should be the auditor rather than the traffic commissioner, particularly as it would be the franchising authority that paid for the services of the auditor.

Coming back to the point raised by the noble Baroness and also by the noble Lord, Lord Shipley, I do understand that an auditor could be perceived as more independent if they are appointed by a third party—indeed, the noble Lord, Lord Snape, used the example of a traffic commissioner—or if the Bill specifically stated that they must be independent. However, I would argue, again, that any auditor with an established reputation would be mindful to protect their own role and independence in any report they provided.

On the amendment proposed by the noble Lord, Lord Bradley, it might be worth saying up front that I do not think the amendment as proposed quite addresses his intent, but I understand his concerns in this respect. The audit provisions in the Bill are not intended to replicate the quality contract scheme board process, but the auditor plays an important role both for the authority and for those that will be impacted by the scheme. As I have said before, the auditor will provide a quality check, and will provide assurance to the franchising authority that it has taken account of the guidance in developing its scheme. This provides a helpful check for the authority by assuring it that it has followed the necessary processes and addressed the relevant issues, while also safeguarding the interests of local passengers and bus operators. Again, I reiterate that the decision to move the franchising is the decision of the mayor or local authority alone.

I hope that this discussion has reassured noble Lords that the Bill as drafted ensures that there is a level of independent assurance while not undermining the role of the authority to take relevant decisions. That said, I note that the noble Lord, Lord Shipley, and others, including the noble Baroness, said that the auditor process should be robust and perceived to be robust. I am happy to speak further with noble Lords to understand their concerns more clearly and decide how we can move forward. However, the Government feel that the issues raised by noble Lords have been addressed in the Bill. I hope that the noble Baroness will withdraw the amendment.

I am grateful to all noble Lords who have taken part in the debate on this set of amendments, and to the Minister for his customary care and courtesy. However, I am afraid that I am not entirely reassured, as I think that there is a fundamental misunderstanding about what constitutes being independent. I recognise that you would, of course, go to a reputable firm of auditors. However, the person who sets the contract and pays the bill for the audit retains ultimate control. That is always the way. Anyone who has worked in this area knows that there are all sorts of ways in which the process can be subverted. This is a very important issue and involves great risk for the taxpayer, particularly in these mayoral models, where we know that the oversight of the mayoral function is not as strong as it used to be in the old days when people like me had committees which spent a lot of time going through these things. Given particularly the concerns expressed in the Public Accounts Committee report published on Friday, I think there is a need to return to this question, at least informally.

The noble Baroness again raises a very valid point. Once we have established our full response to the concerns of the Public Accounts Committee, we will be in a better position. As I said, I welcome further discussions in this respect, because I do not think that we disagree; to use the words of the noble Baroness, Lady Randerson, this is a matter of perception which can be addressed. Once we have responded more formally, I am happy to have those discussions with the noble Baroness.

It is certainly an issue of our time that perception is pretty much everything.

With that, I look forward to future discussions and beg leave to withdraw the amendment.

Amendment 41 withdrawn.

Amendments 42 and 43 not moved.

Amendment 44

Moved by