Considered in Grand Committee
My Lords, I beg to move that these regulations be considered. This instrument amends legislation governing the goods vehicle operator licensing regimes in Great Britain and Northern Ireland. The changes must be implemented, as they are commitments included in the EU-UK Trade and Cooperation Agreement, or TCA, which come into effect during 2022. The changes contained in this SI reflect new requirements for transporting goods to, through or within Europe. These changes will also come into force for EU member states by May 2022. They ensure continued and reciprocal access for goods transport between the UK and the EU.
The primary objective of this instrument is the extension of the goods vehicle operator licensing regime to include some light goods vehicles, or LGVs, such as vans or pickup trucks. The vehicles involved weigh between 2.5 and 3.5 tonnes in maximum laden weight, either alone or as combined weight when used with a trailer, and operate internationally for hire or reward. These regulations also introduce minor changes to the wider goods vehicle operator licensing regime, affecting operators of heavy goods vehicles, or HGVs.
There are three principal areas of change within the instrument. First, these regulations will potentially bring an estimated 21,000 LGVs, spread across 4,200 operators, into the scope of the operator licensing regime. From 21 May 2022, if these vehicles are used to transport goods to, through or within the EU, including Ireland, they will need to be listed on an operator licence. However, to be clear, these changes do not affect vehicles used domestically. Furthermore, they will affect only commercial hire or reward goods transport and not, for example, moving equipment or materials used by an individual or organisation in the ordinary course of business internationally using a van.
Secondly, these regulations will create a distinction in the existing operator licensing regime between a heavy goods vehicle operator licence and a light goods vehicle operator licence. To avoid imposing a disproportionate burden, we have chosen to extend to LGVs only those aspects of the HGV regime required by the TCA. However, taking this approach has meant that the instrument is long—perhaps longer than might be expected
Thirdly, the regulations will introduce changes relating to the role of a transport manager, which is a requirement of operator licensing. This will be required for the new LGV operator licences. To reduce this immediate burden, we are allowing a temporary exemption from the requirement to hold a transport manager certificate of professional competence for those who can show that they had been managing light goods vehicle fleets continuously for 10 years in the period up to 20 August 2020, as specified in the TCA. For those who qualify, the application service is already open and is intended to close in May 2024.
Once granted, these “acquired rights” will be valid for up to three years, expiring on 20 May 2025. The exemption is time-limited to ensure that standards of professionalism within the industry are maintained, while also allowing a transition period to enable qualifications to be undertaken. The limits applicable to external transport managers for HGVs, namely a maximum of 50 vehicles between up to four operators, will also apply to LGVs. Transport managers must also reside in the jurisdiction, UK or EU, where the fleet they are managing is based, as per the TCA. There is a transitionary provision ensuring that those who live and work in different jurisdictions can continue in their current jobs.
At this point, I draw the Committee’s attention to an error in these regulations, leading to a disconnection between the policy intention and the legislation as laid. While the instrument is correct in so far as it is legally effective, it goes beyond the policy intentions. The SI was intended to apply only to the operation of goods vehicles, but one provision inadvertently also applies to the operation of passenger vehicles. In doing so, it disrupts the Public Passenger Vehicles Act 1981, making the regulation of the industry more complex. As a result, we laid a second, correcting instrument using the draft negative procedure on 25 February. This is of course subject to the views of the sifting committees and, while I hope it will not be necessary, the correcting instrument may need to be debated if it is decided that the affirmative procedure should be followed.
As I have communicated to the noble Baroness, Lady Randerson, and the noble Lord, Lord Rosser, I am profoundly disappointed that such an error has occurred, and I assure them and all noble Lords that the causes are being addressed urgently as part of our wider review of SI processes.
The final element of these regulations introduces minor changes affecting both HGV and LGV operators in the following areas: cross-border transport management; record-keeping; advertising requirements for licences; availability of vehicles and drivers; and conformity with tax legislation. Most operators already comply with these requirements so there should be minimal impact on the industry.
These regulations are necessary to ensure that the UK upholds a key element of the EU-UK Trade and Cooperation Agreement, thereby ensuring that UK-EU trade flows can continue. I commend these regulations to the Committee. I beg to move.
My Lords, perhaps I could ask for a point of clarification. I am here for the next business; I was not intending to speak. My noble friend the Minister eloquently moved the regulations, for which I am grateful. If we are going further than was originally intended, does this put us out of kilter with the flow of traffic across to the EU or is it neutral in that regard? That is my only question.
My Lords, I start by thanking the Minister for her explanation, including of the error. I am happy to accept that it will be corrected in due course.
The Government are going to some lengths here to comply with the terms of the TCA—but only just. This SI certainly follows the letter of our obligations under the TCA but does the absolute minimum required to do so, and in doing that, actually creates a more complex situation. As with so much associated with the post-Brexit legislation, it makes life more difficult and complex for small businesses.
The new EU regulations are tightening road safety requirements—that is obviously the intention of all this—by applying licensing to heavy goods vehicles that are less heavy than was previously the case. The Secondary Legislation Scrutiny Committee notes that this will apply to around 4,200 goods vehicle operators. It also notes that the legislation applies to Northern Ireland, too. In the case of Northern Ireland, the realities of the situation include, of course, not just the protocol but the fact that, in practice, goods vehicles cross and re-cross the border all the time, and can do so even if, for example, they start out in Northern Ireland to deliver goods to Northern Ireland, going east to west and west to east; the route can take them across the border several times. That is the way the road runs. So this could be a requirement for Northern Ireland operators a great deal more often than it will be in GB as a whole. So my question to the Minister is: am I right to assume that the vast majority of operators in Northern Ireland will have to adopt these new licences, at least as a precautionary principle?
In Britain as a whole, people will not need the licence for passenger vehicles—or they will not once the Minister has corrected the legislation. That seems simple enough, but it will also not be needed if the vehicle is not to be used internationally for hire or reward. That is a more complex issue. It is quite obvious if the vehicle you are running is a passenger vehicle, but it is less obvious if it is going to travel abroad. If you are running a Tesco delivery vehicle, you will know that it is not going abroad. But suppose you do small-scale removal of domestic equipment; you might operate for months or years without ever going abroad, then suddenly get a job that involves doing so. For a long time, you would have assumed that you do not need this licence, but that might prove a mistake and you might need to get it. That is why transport managers are so important. As the people responsible for licensing and insurance, it is their job to make sure that that sort of error does not happen, but there are some very small companies in which this kind of role might be overlooked.
The SI allows for a period of exemption so that companies and their managers can gain the required certificates. The Explanatory Memorandum says that efforts have been made to do this in time to allow companies to prepare, but in fact it comes into force on 21 May, which is a very short time span. I accept that the Government will do their best on this from this day onwards, because it comes into force tomorrow, but it is not long for people to prepare.
I welcome the limitation on who can take up acquired rights based on their previous experience. From paragraph 7.18 of the Explanatory Memorandum, it is obvious that training for transport managers increases safe working practices. I welcome the much more stringent requirement for transport managers generally, such as the limitation on the number of vehicles they can supervise, but it is illogical that they can operate an unlimited number of domestic vehicles. If you run a company with hundreds of vehicles, you will have little time to deal with the relatively small number of vehicles that are used internationally. My question to the Minister is: does the nation have a ready supply of properly qualified and experienced people for the role of transport manager, as it will obviously become more complex? Will the lack of transport managers be yet another hurdle for the freight industry to face this year?
I have a question to the Minister about paragraph 7.30 of the Explanatory Memorandum, which says that there will not be local advertising of the need for the new licences. So how will the industry know about them? What are the Government doing to inform freight operators in general, especially small companies? The big companies will know, but the small companies will need help.
I have another question for the Minister, about the enhanced role for traffic commissioners that comes from this legislation. They clearly have an important regulatory role, but what additional resources are they being allocated for this important additional work?
Finally, paragraph 7.35 sets out a new requirement for operators to try to prevent “bogus operations”. This is clearly informed by bitter experience of the past. I do not think it is necessary for the Minister to explain it to us here, but there is clearly a problem. As this is obviously a significant and specific problem that is being dealt with in this legislation, can the Minister tell us how such activities will be inspected to ensure that the requirement in paragraph 7.35 is as effective as the Government clearly hope it will be?
I too thank the Minister for her explanation of the content and purpose of these regulations. I take the same view as the noble Baroness, Lady Randerson, does about the error. I thought I heard the Minister say that a wider review of the SI process is taking place. The only comment I would make is that this is not the first time we have had an error in a Department for Transport SI. I am sure that is much to the Minister’s frustration. Perhaps it is understandable that a wider review of the process is going on. I do not wish to say any more about that subject than that.
I noticed that the Explanatory Memorandum says, under the heading “Purpose of the instrument”:
“The UK is obliged to implement these changes following commitments included in the … Trade and Cooperation Agreement”.
I suppose that is an effort by the Government to make it clear that they are not really doing it willingly; it is because they have to. But some of us thought, perhaps incorrectly, that the trade and co-operation agreement had been freely entered into—in the way that the Northern Ireland protocol was freely entered into—and that the Government thought it was a good agreement. Judging by the Prime Minister’s comments at the time, he thought that was a pretty good deal. I only make the comment—I think this is something the noble Baroness, Lady Randerson, alluded to—that whenever we come across anything to do with the EU there is always wording that makes it fairly clear that if the Government had their way they would not be doing anything along the lines of that particular instrument, which is perhaps unfortunate.
As I understand it, the Government are not introducing environmental requirements for HGV operators that stem from UK law. In the Commons, the Minister said that these
“are not required by the TCA.”
Is that now the test when it comes to environmental requirements: it is not whether they are desirable or needed, but simply whether they are “required”? Should environmental issues not be looked at on the basis of whether they are desirable or needed, rather than whether you are required to do it in some agreement or another? Perhaps I misunderstood the point that appears to have been made.
As has been said, these requirements apply only to LGVs on international trips, primarily to the EU. They do not apply domestically in the UK market. It is clear that the UK Government have no plans to regulate further, yet I think I am right in saying that the Minister in the Commons said that the operator licensing system
“continues to be vital to properly manage the use of large vehicles within the UK market.”—[Official Report, Commons, Second Delegated Legislation Committee, 28/2/22; col. 4.]
I am just interested to hear the response. Why do the Government think that the licensing system would not be needed for LGVs in the UK market? Which parts that are needed for LGVs for international trips are deemed unnecessary and bureaucratic to apply within the UK markets? I presume that that is the Government’s argument for them not wanting to apply in the UK markets, because the Government consider them bureaucratic but are obliged to apply them because of the trade and co-operation agreement, which the Government freely entered into.
I believe the Government have also indicated that these regulations will not impose any particular burden on business. I simply ask how the Government came to that conclusion when, if I have understood the Explanatory Memorandum properly, 12 organisations responding to the consultation that currently operate light goods vehicles said it was likely that they would have to cease or reduce operations due to these regulations. I do not particularly square that statement—unless, again, I have misunderstood it—with a view that these regulations do not impose any particular burden on business. Could the Minister clarify what the financial cost will be each year to operators coming into scope of these regulations for the first time?
The regulations come into force on the day after the day on which they are made, which, as I understand it, is a date that has passed. From that date, there will be some three months to apply for new licences to become compliant, which on the face of it seems quite tight. Can the Minister say—if I am right in saying that the regulations are already in force, in that sense—how many have applied so far, and what percentage of the estimated total of those who need to apply that represents?
Finally, the Explanatory Memorandum says that 18 respondents to the consultation
“approved of the measures, arguing that the sector required better regulation”,
and that “several of these”—that is, of the 18—
“also felt that these changes should be extended more widely to apply to national operations.”
The EM then goes on to say:
“However, to do so would go beyond the scope of the TCA requirements.”
So once again, we are back to this idea that the only thing that matters in looking at it is not the merits of it but whether or not it is required within the scope of the TCA requirements. Is that the only argument that the Government can produce to answer those consultees who thought that the changes should be extended more widely to apply to national operations in the UK?
My Lords, as ever, I thank the noble Lord, Lord Rosser, and the noble Baroness, Lady Randerson, for their contributions to this DfT SI. Once again, I express my regret that an error has occurred; as the noble Lord, Lord Rosser, pointed out, the department is very aware of recent errors. This SI was drafted long before the reform programme within the department was under way, and I shall do my absolute best to ensure that errors do not happen again in future.
I shall briefly cover some of the questions raised. My noble friend Lady McIntosh wanted reassurance that the flows of traffic would be maintained. Indeed, this is precisely what we are doing here—making sure that measures in the EU are reciprocated in the UK, so that there is a level playing field and international traffic can continue as we would expect.
The noble Lord, Lord Rosser, made quite a significant point about this being linked to the TCA, and the noble Baroness, Lady Randerson, said that it was the minimum required—doing what was set out in the TCA. The noble Lord asked whether we felt obliged to do only what is in the TCA. At this moment in time, to be honest, that is absolutely right. Standing here as a Transport Minister, I would not want to put this additional burden on the domestic industry knowing what is going on in the logistics sector, so we are in a situation whereby we are doing what we are required to do in the TCA to maintain the flow of international traffic. I am not considering extending this domestically; I do not think that the logistics sector needs it right now.
The noble Lord, Lord Rosser, said that some of the organisations which responded to the consultation wanted it. Some of them did indeed: a handful. I also note that there are 4,200 operators which operate internationally and of course many tens of thousands more which operate just domestically. I am not entirely sure that that is a representative sample of people who would want this sort of regulation extended domestically at what is a challenging time for our nation.
The noble Baroness, Lady Randerson, mentioned Northern Ireland. She is right that operators in Northern Ireland will need to be licensed. We have had many conversations with Ministers and their officials in the Department for Infrastructure in Northern Ireland and they have an entire communications strategy setting out how to make sure that their operators are fully aware of the requirement. However, the major courier companies in Northern Ireland and the Republic of Ireland tend to have separate distribution networks within each particular area. Therefore, parcels tend to be moved in bulk through the land border and then more localised distribution networks are used. But it is the case that anybody going across the border in Northern Ireland would need to have one of these new licences.
The noble Baroness, Lady Randerson, then talked about it being a much more complex situation and could people cope, et cetera. I do not see that as an issue because these international journeys are happening already and transport managers already exist. What we are doing is potentially formalising the role of those transport managers that already exist in the system. What is our alternative here? We could have done nothing and that would have stopped all the international journeys, which I am fairly sure no noble Lord would want to see happening.
I think we have reached the right balance here. I accept that transport managers who have many years of experience will now need to take their certificate of professional competence. That will be a cost, probably, to their business. The noble Lord, Lord Rosser, asked how much it costs. It depends on the sort of training one does: it can be online, materials or face to face. For an HGV transport manager, it goes up to about £1,300. We would have thought for LGVs it would be lower than that but, of course, this is an industry that will grow and develop as these transport manager qualifications come on stream. It is something that we will keep an eye on, but it is a one-off cost to train somebody in some skills to get a licence. It will be a burden on business, but not an insurmountable one, I think. The lack of qualified or potentially qualified people is not something that has been particularly raised by industry. I think the cost is a greater concern because people see that there is a cost of having the licences.
The noble Baroness asked how we are going to communicate with the industry. I have quite a lot of information about that because we have done a lot. We started communicating about this to make sure that we hit both the large and the smaller operators back in August last year. We have had advertising campaigns on Facebook, Instagram, Twitter and government channels—DVSA Direct has been doing industry updates—and obviously GOV.UK has set out exactly what is required. We employed a commercial agency and worked with partners such as Biffa, John Hudson Trailers and DAF Trucks and Moto, Roadchef and Welcome Break motorway services. I think they know. We have done everything we possibly can to make sure that people who operate LGVs internationally know that they will need a transport manager if they have a single journey or more.
Traffic commissioners are already well versed in the provision of licences, the maintenance of the fit and proper test, and taking to tribunal or equivalent those people who do not meet the fit and proper test. I am content that they are appropriately resourced to ensure not only that the licences can be issued in a timely fashion but that the licensees are fit and proper and are held to account if they are not. However, should it not be the case that licences are issued in time, we are looking at providing interim licences at a cost of £68, which will tide over whatever bow wave of applications comes through. I believe we have the right arrangements in place, but I would not want any operator to be held up because it does not have a licence, whether an interim licence or a full licence.
The noble Lord, Lord Rosser, mentioned environmental issues and of course we take them seriously, but we will look at them on their merits and at the right time. As I said, they will probably not be at the top of my inbox right now, but we are considering all manner of environmental interventions on vehicle standards. There will be more on that in due course.
One reason why there is no urgency to extend these regulations to LGVs domestically is that from an economic perspective it would not be brilliant, but another is because HGVs need a firm operating licensing system because the vehicles are far more dangerous. They have strict maintenance regimes. It is essential that those vehicles are in tip-top condition and are kept by fit and proper people. The LGV system is slightly lighter-touch in that, for example, the level of financial standing an operator must have is less than for HGVs. The system is slightly different from that for HGVs.
This is my last point, I promise. The noble Lord, Lord Rosser, said something about the SI not being in force and asked how many applications we have had so far. If he does not mind, I shall go back to Hansard to try to understand the point a bit better and will write. In the meantime, I commend these regulations to the Committee.
One of the environmental aspects that are being disapplied by these regulations is the requirement to have an appropriate place to park vehicles. The Government have made great play in recent months of the importance of having good facilities for lorry drivers. Does the same argument not apply to the drivers of these vehicles, who might be part of the same workforce? Is this not cutting across the Government’s declared policy on improving conditions for drivers?
The noble Baroness is covering a point that I deleted from my briefing, sadly, because I did not think it would come up, and therefore it is not at the top of my mind. There are two issues here. One is where the vehicles are parked overnight in storage by the operator and the other is where they are parked when they are on the road and making journeys. I will write to the noble Baroness with more details on that because unfortunately I do not have them to hand.