Bus Services (No. 2) Bill [ Lords ] (Third sitting)
(1 day, 10 hours ago)
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The Committee divided: - Ayes: 2 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 2 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 2 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 10 - Question accordingly negatived.
The Chair
I remind the Committee that with this we are discussing the following:
Amendment 47, in clause 7, page 3, line 26, leave out “may” and insert “must”.
Amendment 48, in clause 7, page 3, line 27, leave out from “there” to end of line 34 and insert—
“is a benefit to persons making journeys on the proposed service.”
Amendment 49, in clause 7, page 3, line 36, leave out “may” and insert “must”.
Amendment 50, in clause 7, page 3, line 37, leave out from “that” to “will” and insert—
“the proposed service has benefits to the economy of the area to which the scheme relates, or to persons living in that area,”.
Government amendments 4 and 5.
Clause stand part.
Clauses 8 and 9 stand part.
The Parliamentary Under-Secretary of State for Transport (Simon Lightwood)
It is a pleasure to serve with you in the Chair, Sir Desmond.
The Bill recognises that commercial operators can play a key role in providing commercial services that complement franchising schemes and add value to the overall bus offer for local transport users. That includes cross-boundary services, which provide crucial links between communities. That is why we are legislating to introduce new tests that franchising authorities can use in determining whether to grant service permits. The tests allow authorities to consider a much wider range of benefits that services proposed by commercial operators could provide. The new tests will also allow authorities to tolerate some adverse effects to franchised services if they are outweighed by the benefits. Overall, franchising authorities will have greater scope to grant service permits and harness the additionality of the market in delivering great bus networks.
The amendments tabled by the hon. Member for Broadland and Fakenham would, however, undo many of the improvements we are making, and undermine the service permit regime as well as local transport authorities’ ability to franchise. The amendments would largely remove franchising authorities’ ability to even consider whether a commercial service would have an adverse effect on franchised services, while compelling them to grant service permits in the vast majority of cases. In practice, that would mean that commercial services could compete directly with franchised services, undermining the service finances and goals, and ultimately making franchising unworkable.
In direct response to the hon. Member’s comments, the Bill gives greater scope for authorities to grant these additional services. However, as he acknowledged, it cannot be a free-for-all, which is what the amendment would in effect cause. We understand that in Greater Manchester the vast majority of service permits have been granted under the existing test, and the Bill’s measure will allow franchising authorities even more flexibility to grant service permits with applications from operators or in the interest of passengers and local people.
Addressing the claim of the hon. Member for Isle of Wight East that franchising is unattractive to smaller rural local transport authorities, the Bill aims to give local leaders greater flexibility to determine how best to plan and deliver bus services to meet the needs of local transport users. There is no one-size-fits-all approach. Consideration has been given to rural modes of franchising, and there are plans to pilot models better suited to rural areas, as I have touched on in the past.
While it is for local transport authorities to decide the best option to manage their services, franchising can be an attractive option in a rural setting. It can be used to support a fully integrated network, combining core franchise routes with commercial services operating under a service permit awarded by the authority, ensuring strong branch connections to main corridors.
Simon Lightwood
I am going to try and make some progress. We have spent a significant amount of time on this.
The hon. Member for Broadland and Fakenham once again raised Manchester’s experience with bus franchising. He again quoted figures on the cost of franchising in Manchester. On the first day of the Committee I explained that the figures referred to the level of investment being made to improve Greater Manchester’s bus network. The adoption of franchising in Greater Manchester has resulted in little additional cost, and evidence to date shows that the model is more efficient and effective at delivering value for money.
Another franchising model in Jersey encourages both operators and local transport authorities to reinvest into the bus network. The operator keeps fare revenue, and profits that go over a certain set limit are shared between the LTA and the operator. Money is then reinvested by the LTA to improve services. The model adds flexibility and actually supports innovation and draws on the experience of the operator. This model has been tested in other areas through our franchising pilot programme.
The Bill makes some limited changes to the role of traffic commissioners in England, including changing the default position for the registration of services operating under the service permits within a franchised area. The traffic commissioner will also have powers to act against operators who breach the Bill’s mandatory training requirements; we will come on to that later in the Committee’s debates.
The presence of traffic commissioners across the regions and countries of Great Britain means that they are well placed to make decisions about the operation of bus services in different places. The responsibility of traffic commissioners extends beyond buses. To mention just a couple, it includes the licensing of operators of heavy goods vehicles and other service vehicles, and the granting of vocational licences. These responsibilities clearly extend beyond the Bill’s purpose; this Bill is not the place for a wider debate on the role of traffic commissioners.
I reiterate that passengers are at the very centre of this Government’s bus reform agenda. This is about delivering better buses, and people taking the bus more because they offer better connections and are reliable, safe, affordable and integrated into the transport network. Given that, I would ask the hon. Member for Broadland and Fakenham not to press his amendments.
Government amendments 4 and 5, tabled in my name, are intended to provide clarity on the type of services considered “cross-boundary” under clause 7. This means that any service that has at least one stop in an area with a franchising scheme, and at least one stop outside of the franchised area, will be considered a cross-boundary service. This change is logical, simplifies matters for franchising authorities and operators, and will ensure that the benefits of cross-boundary services to multiple communities can be considered, regardless of where the service starts and ends.
Clause 7 gives local authorities greater flexibility in how they access service permit applications from operators. These permits allow bus operators to run services into, or within, a franchised area on a commercial basis, rather than as a franchised service. The Bill introduces new tests that local authorities can use when deciding whether to approve a service permit. These tests allow them to consider a wider range of factors, such as whether the proposed service would benefit passengers outside the franchised area in the case of cross-boundary services.
It is important that franchising authorities are able to benefit from the opportunities that the commercial sector can provide in franchising areas, including for cross-border services, which are those serving a franchising area and nearby areas. These services are important, as the bus journeys that passengers want to make are not necessarily defined by scheme boundaries. This measure aims to give franchising authorities greater flexibility to provide better overall outcomes for passengers.
Clause 8 reapplies the requirement for bus services operating under a service permit in a franchised area to register their routes and timetables with the traffic commissioner. For cross-boundary services, the section of the route outside the franchised area already needs to be registered. The Bill clarifies that the part inside the franchised area also needs to be registered. This keeps the requirements consistent and easier for bus operators to follow.
In addition to the registration requirements, cross-boundary services and any services operated, under permit, wholly within the franchised area, such as sightseeing tours, must also still comply with the conditions of their service permit. This lets franchising authorities maintain control through existing regulations. However, the Bill also gives franchising authorities the power to exempt certain services from registration inside the franchised area if they would prefer to manage them solely through the service permit. Overall, these changes provide clearer rules for operators and authorities, and greater flexibility for authorities, helping to improve service delivery for passengers.
Clause 9 automatically exempts temporary rail and tram replacement services from the requirement to obtain a service permit when operating within a franchised area. As I am sure Members will understand, these services often need to be introduced quickly and to adapt to changing circumstances, so flexibility is essential. By removing the permit requirement, this measure reduces administrative burdens and saves both operators and franchising authorities the time and costs associated with applying for and issuing permits.
Jerome Mayhew (Broadland and Fakenham) (Con)
It is jolly nice to see you in the Chair, Sir Desmond. As I spoke to the amendment before lunch, it falls to me now only to press it to a vote.
Question put, That the amendment be made.
The Chair
As amendments 49 and 50 are almost identical to the previous amendments, my discretion is not to proceed to a vote.
Amendments made: 4, in clause 7, page 4, line 10, leave out “but” and insert “and”.
This amendment and Amendment 5 widen the category of services that are capable of being cross-boundary services.
Amendment 5, in clause 7, page 4, line 11, leave out
“begins or ends, or begins and ends,”
and insert
“has one or more stopping places”.—(Simon Lightwood.)
This amendment and Amendment 4 widen the category of services that are capable of being cross-boundary services.
Clause 7, as amended, ordered to stand part of the Bill.
Clauses 8 and 9 ordered to stand part of the Bill.
Clause 10
Report on assessment of proposed scheme
Mr Paul Kohler (Wimbledon) (LD)
I beg to move amendment 57, in clause 10, page 6, line 6, at end insert—
“(A1) Section 123B of the Transport Act 2000 (assessment of proposed scheme) is amended in accordance with subsections (A2) to (A4).
(A2) In subsection (2)(a) omit ‘and’;
(A3) In subsection (2)(b), after ‘action’ insert—
‘, and
(c) assess the adequacy of central government funding to support the provision of bus services under the scheme.
(2A) The assessment under subsection (2)(c) must include—
(a) an evaluation of whether available funding is sufficient to meet the projected costs of the franchising scheme, and
(b) an analysis of the funding required to maintain or improve service levels across all affected communities.’
(A4) After subsection (6) insert—
‘(6A) An assessment under this section must be made publicly available and submitted to the Secretary of State.’”
This amendment to the Transport Act 2000 would require the Secretary of State to assess the adequacy of central government funding to support the provisions of bus services under franchised schemes.
The Chair
With this it will be convenient to discuss the following:
Amendment 59, in clause 10, page 6, line 37, at end insert—
“(11) The Secretary of State must, no later than three months after the day on which this section comes into force, lay before Parliament regulations specifying the qualifications and criteria required for a person to be considered an ‘approved person’ for the purposes of section 123D of the Transport Act 2000.
(12) A statutory instrument containing regulations under subsection (11) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
This is a probing amendment to inquire whether the Secretary of State intends to issue the criteria for the “approved persons” role in the near future. A report from an approved person must occur before a franchised scheme can go ahead.
Clause stand part.
Clause 11 stand part.
Government new clause 4—Miscellaneous amendments.
New clause 15—Franchising scheme: restriction—
“Where a franchising authority, or two or more franchising authorities acting jointly, prepare an assessment of a proposed franchising scheme under section 123B of the Transport Act 2000 but fail, for any reason, to make and publish a scheme under section 123H of the Transport Act 2000, they must not initiate another franchising assessment for the same area, or a substantially similar area, for a period of five years from the date on which the assessment was prepared.”
This new clause prevents franchising authorities from repeatedly conducting franchising assessments for the same or substantially similar areas within a five-year period if they do not proceed to make and publish a franchising scheme.
New clause 36—Franchising assessments to consider integration of public transport—
“In section 123B of the Transport Act 2000 (assessment of proposed scheme), at the end of subsection (3) insert—
‘(g) how the proposed scheme will allow for or facilitate integration across modes of public transport.’”
This new clause would require an assessment of a franchising scheme to include an assessment of the impact on integrated transport.
Mr Kohler
It is a pleasure to serve under your chairship, Sir Desmond. While I am broadly supportive of much of the Bill, we must not lose sight of the fundamental challenge—the lack of sufficient funding and expertise in local authorities to fully take advantage of the powers that it provides.
Steff Aquarone (North Norfolk) (LD)
It is a pleasure to serve under your chairship, Sir Desmond. I rise to speak to my new clause 36, but I will first touch briefly on my concerns about new clause 15, tabled by the hon. Member for Broadland and Fakenham.
I can see the case that the hon. Member and his colleagues are trying to make about the importance of periods of stability for bus operators. However, as my hon. Friend the Member for Wimbledon says, the timeframe proposed does not strike the right balance. Five years would be longer than the term of a metro mayor or local authority, meaning that the bad work of a previous mayor or administration could tie the hands of their successor and, most importantly, could leave residents stuck with the same problems for half a decade. Given the timeframes at play, I think a better compromise could be found. It would be bad news for democratic accountability if a previous administration’s botch job—or even intentional mismanagement, perish the thought—of a franchising assessment could prevent its newly elected successor for taking action over the entire course of its term.
I also have concerns about the impact of local government reorganisation under the current drafting of the new clause. It says that
“the same area, or a substantially similar area”
could be covered by a whole new authority or administration within the timeframe, where a franchising assessment is prevented. That means that a body that has been wholly abolished could leave its successors hamstrung.
I appreciate the intention behind the clause, and I am grateful to my constituency neighbour the hon. Member for Broadland and Fakenham and his team for raising the concerns of the industry about the timeframes. However, I wonder whether a compromise could be found on Report that better balances operators’ concerns with democratic accountability.
My new clause 36 would make a very simple addition to the assessments for franchising schemes, ensuring that we look into how a new scheme can lead to better integration for different modes of transport. People feel that there is a lack of joined-up thinking between our bus and train networks in many rural areas. Arguably, that is down to the current set-up, with two private companies responsible for services but under no requirement to consult or collaborate on delivering more linked-up services.
Joe Robertson
I take the hon. Member’s point about joining up buses and trains. As I am on the Committee, might he also include ferries in that analysis?
Steff Aquarone
I thank the hon. Member for his astute point. I would be glad to include ferries. After all, the new clause proposes better-integrated transport across all modes and modalities. We do not have any ferries other than river-crossing ferries in my constituency.
My constituents have found the issue of lack of co-ordination so frustrating that they have carried out research into it themselves; I thank David and James for furnishing me with the statistics. The first bus to arrive misses the first train of the day from Sheringham by a mere six minutes. For those who are not familiar with the Bittern line, it does not quite have central London regularity, which means that it is roughly an hour until the next possible train arrives. At other points during the day, there is either a 45-minute wait or hoping for a delay so that the bus arrives before the train departs.
A more joined-up approach would benefit both bus operators and train companies, allowing seamless integration of travel and reducing the miles in the journey to be carried out by car. My new clause would add to the franchising assessment the ability to see how franchising could make that transport integration a reality.
I do not think that franchising is a silver bullet to create integrated transport, which is why we will later consider an amendment that I have tabled that would add the enhanced partnership model. However, while we are expanding how franchising works, it would be remiss of us not to add common-sense thinking about integrated transport for those who are embarking on franchising for the first time.
I hope that the Government will accept the new clause. I add my support to what my hon. Friend the Member for Wimbledon said about amendment 57. We have got to fund it, too.
Jerome Mayhew
I will start with clause 10, to which explicit reference has not yet been made, and under which section 123D of the Transport Act 2000, which refers to auditing, is to be amended in accordance with subsections (2) to (8). Subsection (2) sets out that a franchising authority may not proceed with a proposed franchising scheme unless it has obtained a report from an “approved person” on the assessment of the proposed scheme.
The approved person—this is important—will replace the requirement to obtain a report from an auditor. We read, under the new drafting, that the approved person must be independent, but based on that drafting we have no idea what other qualities the approved person may or may not have.
Subsection (3)(c) requires the report to state whether the information relied on in the authority’s or authorities’ assessment is of sufficient quality for the purposes of the subsections, which I will not go into. Subsection (4) will replace section 123D(3); it states that the Secretary of State must issue guidance as to when it is appropriate to appoint an approved person and what the franchising authority needs to take into account when selecting an approved person, including in relation to whether a person is independent. Subsection (7) sets out that an approved person means a person specified in regulations by the Secretary of State.
That raises the question whether the local transport authorities have the technical know-how and/or financial competence to create and then run these franchises. That is the big question that we have been debating backwards and forwards over the past few days. We know that they are expensive; we know that they are complex. I will not rehash arguments that I have made already, which we can take as read. We know that it is crucial that any plans be fully developed, properly costed, stress-tested for viability and generally fit for purpose before we press go on an entirely new system.
The requirements of clause 10 are important in facilitating that stress testing. On the face of it, the clause appears to water down the independent oversight, particularly on financial management. One of the core risks of franchising, as we have discussed, is the transfer of commercial risk from the operator to the local authority. That is a very significant change—one of the most significant changes.
Here we are, having a report on the plans: we no longer need an auditor who is financially qualified. Instead, we have an approved person. It could be an auditor, but we just do not know. The only qualification that we are told the approved person will have is their independence. That is a good thing, but subsection (7) writes a blank cheque to Ministers:
“‘approved person’ means a person specified…in regulations made by the Secretary of State.”
We have not seen those regulations; I assume that they have not yet even been drafted. Perhaps the Minister will clarify the point. What specifications will he seek to put into the regulations?
If the Government want the Committee to vote in favour of substituting an approved person for an auditor, it behoves the Minister to tell us the kind of people who would qualify as an approved person, beyond their mere independence. I look forward to his detailed response, so that members of the Committee can feel satisfied that we are discharging their duty properly by understanding at least the direction of travel of the regulations.
I want to know what qualities, qualifications or expertise will be required. I question why the term is not defined in the Bill, but instead left to future regulations. It cannot be beyond the wit of man to sit down now and decide what kind of person we wish an approved person to be. It is not dependent on future information becoming available. It seems to be slightly sloppy drafting to define a term in reference to a future regulation—that is no definition at all.
Simon Lightwood
I will start with amendment 57, tabled by the hon. Members for Wimbledon and for North Norfolk, which would require the Secretary of State to assess the adequacy of central Government funding to support the provision of bus services under franchised schemes. Under the Transport Act 2000, franchising authorities are already required to undertake a rigorous assessment to determine whether bus franchising is feasible, affordable, and deliverable in their area. The franchising assessment and the independent assurance report must then be published alongside the franchising consultation, ensuring transparency regarding the local transport authority’s decision. That comprehensive planning and assurance process significantly reduces the likelihood of needing central Government oversight and intervention, making the amendment unnecessary.
The hon. Member for Wimbledon asked for an update on my Department’s engagement with relevant stakeholders to identify approved persons. Bodies in the accountancy sector could include the Chartered Institute of Public Finance and Accountancy, the Association of Chartered Certified Accountants and the Chartered Institute of Management Accountants. To identify who else may qualify as an approved person, the Department intends to hold discussions with other stakeholders, including the Chartered Institute of Logistics and Transport, the Chartered Institution of Highways and Transportation and industry bodies such as the Confederation of Passenger Transport.
My Department will also look at whether those with senior and extensive experience in either the bus sector or local government could provide assurance. Guidance will be provided to franchising authorities, setting out considerations to be taken into account when selecting an independent approved person. The reason why the clause is subject to future regulations is that qualifications will change over time, so it is right to have the flexibility to respond to those changes.
The core principle underpinning the Bill is that decisions should be made at the most appropriate level, specifically by devolving to local transport authorities the power to manage bus services within their area. The amendment would undermine the intention of the Bill. For those reasons, I hope that the hon. Member for Wimbledon will withdraw it.
Amendment 59, also tabled by the hon. Members for Wimbledon and for North Norfolk, is a probing amendment on whether the Secretary of State intends to issue the criteria for the approved person role within three months of Royal Assent. The Department intends to introduce secondary legislation defining “approved person” alongside updated bus franchising guidance to facilitate implementation of the new measures. That work cannot be completed within three months of Royal Assent, as it requires thorough engagement with the sector and the progression of a statutory instrument. The existing legislation will remain in force until secondary legislation is delivered; I hope that gives some reassurance. The Bill gives franchising authorities significant flexibility to specify services in ways that are tuned to the needs of local bus users. More detail on how franchising authorities can use that flexibility will be set out in guidance.
The purpose of clause 10 is to broaden the pool of persons able to conduct assurance reports of proposed franchising schemes. Under current legislation, authorities that have developed an assessment of a proposed franchising scheme must obtain an independent assurance report that looks at whether the assessment has been developed with robust financial and economic information and whether the analysis is sufficient. However, the requirement that the report be conducted by an “auditor” has meant that very few people are willing and able to carry out that assurance.
The clause seeks to remove the bottleneck and make the franchising process quicker and less costly and, by enabling expertise to be brought in from the wider industry, increase the quality of the independent review. It will also give a franchising authority more flexibility to decide when to appoint an independent assessor, allowing the assessor to provide informal feedback to the authority much earlier in the assessment process, potentially saving both time and money. The Department intends to set out further qualifications and experience in secondary legislation, which will enable a greater number of professionals to undertake assurance and remove the bottleneck that currently exists.
Clause 11 requires franchising authorities to consult disabled bus users, prospective users or representative organisations before making a franchising scheme.
Dr Allison Gardner (Stoke-on-Trent South) (Lab)
I am really heartened by clause 11 and I welcome it. I am sure the Minister agrees that consulting people who live with disabilities is vital for any future public transport service. Even with the best of intent, one cannot plan accessible services without understanding the lived experience of disabled users and the associated infrastructure.
Simon Lightwood
I completely agree.
The clause is intended to ensure that local transport authorities understand the perspective of disabled people and make franchising schemes that are better informed by the priorities of disabled passengers and take account of their needs more effectively. The clause sits alongside the schedule, which will introduce similar consultation requirements when authorities vary existing franchising schemes.
Government new clause 4 first corrects an issue in the Transport Act 2000. The Act currently states that when preparing a franchising assessment, authorities must consider the local transport plans of any neighbouring Scottish councils, which is unnecessary because Scottish councils do not have local transport plans. The new clause addresses the matter, while maintaining a requirement for franchising authorities to consider bus-related policies adopted by councils in Scotland. It will also require franchising authorities to consider whether a proposed franchising scheme would support the implementation of bus-related policies adopted by neighbouring Scottish transport partnerships, and require franchising authorities to consult Welsh Ministers and Scottish transport partnerships, where appropriate, as part of a consultation on establishing a franchising scheme. Finally, the new clause makes a technical change to define the term “council in Scotland” for the purposes of part 2 of the Transport Act 2000.
The Chair
With this it will be convenient to discuss the following:
Government amendments 7 to 16.
The schedule.
Simon Lightwood
Clause 12, alongside the schedule to the Bill, sets out new, bespoke variation procedures for authorities to follow when they wish to make changes to a franchising scheme. The procedures are clear and simple, to address the difficulties that franchising authorities have faced in interpreting existing legislation. They are also streamlined to enable franchising authorities to make minor changes in a more nimble way, balancing appropriate levels of consultation and transparency. This measure will reduce costs and timescales for franchising authorities in meeting the needs of local bus users.
Government amendments 7 to 10 to the schedule relate to the procedure for varying franchising schemes. Amendments 7 to 9 would have the effect of confirming that the requirements to consider the local transport plans of neighbouring authorities apply only where an authority is required to have such a plan. Scottish authorities are not required to have local transport plans. The amendments, however, clarify that a franchising authority must consider whether expanding the area of their franchising scheme would support the implementation of any other bus-related plans and policies adopted by Scottish councils. Amendment 10 will ensure that franchising authorities consider Scottish transport partnerships’ transport policies when assessing a variation to a franchising scheme, where relevant.
Government amendments 11 to 16 also amend the schedule and will require franchising authorities to consult with Welsh Ministers and Scottish transport partnerships before varying a franchising scheme that would affect them. In the case of Wales, that is in addition to the requirement already in the Bill for Welsh local transport authorities to be consulted, where relevant. It is also appropriate to consult Welsh Ministers in the light of the Welsh Government’s Bus Services (Wales) Bill, which is before the Senedd. The amendments future-proof the Bill, given the Welsh Government’s ambitions to franchise their entire bus network.
The schedule sets out the detailed procedures for varying an existing franchising scheme. There are separate procedures for variations to extend the geographical area of a scheme, reduce the area of a scheme, and other types of variation. There are three parts to the schedule, setting out the specifics of the different procedures, depending on whether a variation is expanding or reducing a scheme.
Jerome Mayhew
Clause 12 amends the Transport Act 2000 to set out the new process for varying a franchise scheme. In particular, subsection (2)(b) removes the minimum notice period of six months before a variation can come into effect. I will not seek to divide the Committee on this, but what assessment has been undertaken of the impact of a reduced notification period on service providers? What confidence can the Minister give current service providers that the impact will be minimised? What was the original rationale for the six-month delay, and what has changed to remove the need?
Government amendments 7 to 10 are sensible clarifications to ensure that the requirement to consider policies under section 108(1)(a) of the Transport Act applies only where such policies are mandatory. I fully agree with them. Government amendments 11 to 16 tidy up the requirement for consultation with the devolved Administrations in Wales and Scotland, where a proposed franchising scheme under amendments 11 and 12, or a variation of an existing scheme under amendments 13 to 16, would affect the devolved area. Again, that is a sensible clarification that needs no further elaboration.
Simon Lightwood
I have already explained our position.
Question put and agreed to.
Clause 12 accordingly ordered to stand part of the Bill.
Schedule
Procedure for varying franchising scheme
Amendments made: 7, in the schedule, page 44, line 29, leave out
“by neighbouring relevant local authorities of”.
This amendment, together with Amendment 8 and Amendment 9, ensures that the requirement to consider policies under section 108(1)(a) of the Transport Act 2000 applies only where authorities are required to have such policies.
Amendment 8, in the schedule, page 44, line 30, before “those” insert
“by neighbouring local transport authorities of”.
See the statement for Amendment 7.
Amendment 9, in the schedule, page 44, line 31, before “other” insert
“by neighbouring relevant local authorities of”.
See the statement for Amendment 7.
Amendment 10, in the schedule, page 45, line 14, at end insert—
“(ba) a Transport Partnership created under the Transport (Scotland) Act 2005,”.
This amendment requires a franchising authority to consider the policies of a neighbouring Scottish Transport Partnership when assessing a proposed variation of a franchising scheme.
Amendment 11, in the schedule, page 46, line 39, at end insert—
“(ea) the Welsh Ministers if, in the opinion of the authority or authorities, any part of Wales would be affected by the proposed variation,”.
This amendment requires consultation with the Welsh Ministers before a franchising authority varies a franchising scheme where the variation would affect any part of Wales.
Amendment 12, in the schedule, page 47, line 13, at end insert—
“(ea) a Transport Partnership created under the Transport (Scotland) Act 2005,”.
This amendment requires consultation with a Scottish Transport Partnership before a franchising authority varies a franchising scheme where the variation would affect any part of the Partnership’s area.
Amendment 13, in the schedule, page 49, line 22, at end insert—
“(ea) the Welsh Ministers if, in the opinion of the authority or authorities, any part of Wales would be affected by the proposed variation,”.
This amendment requires consultation with the Welsh Ministers before an authority varies a franchising scheme where the variation would affect any part of Wales.
Amendment 14, in the schedule, page 49, line 38, at end insert—
“(ea) a Transport Partnership created under the Transport (Scotland) Act 2005,”.
This amendment requires consultation with a Scottish Transport Partnership before a franchising authority varies a franchising scheme area where the variation would affect any part of the Partnership’s area.
Amendment 15, in the schedule, page 51, line 11, at end insert—
“(ai) the Welsh Ministers if, in the opinion of the authority or authorities, any part of Wales would be affected by the proposed variation;”.
This amendment requires consultation with the Welsh Ministers before an authority varies a franchising scheme where the variation would affect any part of Wales.
Amendment 16, in the schedule, page 51, line 39, at end insert—
“(ea) a Transport Partnership created under the Transport (Scotland) Act 2005,”.—(Simon Lightwood.)
This amendment requires consultation with a Scottish Transport Partnership before a franchising authority varies a franchising scheme where the variation would affect any part of the Partnership’s area.
Schedule, as amended, agreed to.
Clause 13
Direct award of contracts to incumbent operators
Siân Berry (Brighton Pavilion) (Green)
I beg to move amendment 34, in clause 13, page 8, line 5, after “operators” insert—
“or local government bus companies”.
This amendment, along with Amendments 35, 36 and 37, would mean that franchising authorities may directly award public services contracts to local government bus companies.
The Chair
With this it will be convenient to discuss the following:
Amendment 72, in clause 13, page 8, line 7, leave out paragraphs (a) to (c) and insert—
“(a) either the contract is a local service contract in relation to a franchising scheme, or
(b) the contract is awarded to a local authority bus company.”
Amendment 35, in clause 13, page 8, line 12, after “operator” insert—
“who is a local government bus company or”.
Amendment 36, in clause 13, page 8, line 27, after “operator” insert—
“or local government bus company”.
Amendment 37, in clause 13, page 8, line 37, after “regulation,” insert—
“‘local government bus company’ has the meaning given in section 22 of the Bus Services (Amendment 2) Act 2025 and”.
Clause stand part.
Siân Berry
It is a pleasure to serve under your chairmanship today, Sir Desmond. I am delighted to present a number of amendments to clause 13. The clause should be in the Bill; I can clearly see why we would want to directly award a contract to an incumbent to keep an existing contract going. This seems to me to be the ideal place to insert the opportunity to make a direct award to a local government bus company, the new type of body set out in clause 22—I believe that would be a really good move.
I have tabled several amendments to add the words “or a local government bus company” in order to make the whole thing make sense. Amendment 34 would add “local government bus companies” to the title of the proposed new regulation in the Public Service Obligations in Transport Regulations 2023; amendment 35 would add the choice of a “local government bus company” to the direct award options; amendment 36 would add the name of the local government bus company to the information required; and amendment 37 would add reference to the definition of a local government bus company as set out in clause 22.
We need these changes to help make integrated local transport planning simpler and less bureaucratic. There are many examples of hugely successful publicly owned bus companies across the UK, including Lothian Buses and Reading Buses. The publicly owned Nottingham City Transport bus service is consistently ranked one of the best in the country.
Councils operate very differently from the wider market. They have strict budgetary restrictions and costly rules of commissioning. That means that, without explicitly making it easier for local authorities to take advantage of the new powers in the Bill, we might just be going through the motions. These changes are necessary in order to really incentivise local authorities to get involved in providing transport, not just in planning for it. To have real weight, the Bill must make it easier for local councils to make direct awards. That would mean that they could transform local services more efficiently for the passengers who need them, which would be of real public benefit.
The tools for local authorities to do this actually already exist in secondary legislation. Regulation 13 of the Public Service Obligations in Transport Regulations states:
“(1) A competent local authority or a group of authorities providing integrated public passenger transport services may—
…(b) award a public service contract directly to an internal operator.”
If we made these amendments to the Bill, I believe that the wording in the regulations would automatically change to include the terminology “a local government bus company”.
I would really like the Government to consider making the amendments, or to take up the point in some other way. In order to plan and deliver local public transport, councils and local transport authorities must be able to act in this way. We should not simply rely on the existing regulations; we should state the powers explicitly in the Bill.
Amendment 72 is not in my name, but I note that it covers much the same ground.
Jerome Mayhew
Clause 13 amends the Public Service Obligations in Transport Regulations 2023 to allow franchising authorities to make a direct award for the first local service contract under a franchising scheme to the “incumbent operator”—that is the important phrasing. The intention, as I read it, is to allow for a smooth transfer of operations to the new scheme, where the qualifying conditions are met. Proposed new regulations 16A(1)(a) and (b) specify that the award must be of a local service contract within the franchising scheme and where no local services are currently provided. Proposed new regulation 16A(1)(c) sets out that the operator must have provided the same or similar services for at least three months prior to the new contract.
I acknowledge the objectives of the clause, but I am concerned that it raises more issue than it addresses. The approach could look like a cosy agreement, which is a theme that I have addressed a couple of times today. Where we are awarding a further contract to an existing contractor, without going to market or tendering more widely, there is a perception, if not a reality, of a cosy agreement. It cuts out competition and favours one operator over the others, and it is not just for a short period; it is for a period of up to five years, as set out in clause 13(3).
The likelihood of a challenge from other bus operators in the area, who are angry about being excluded, may well be quite high, yet proposed new regulation 16A(2) requires the local transport authority to publish information relating to the contract only within six months of granting the direct award. We therefore have a transfer that may look like a sweetheart deal between the local transport authority and the existing service provider, which may be the municipal bus company but could equally be a private provider, while the judicial review, which is the mechanism by which an external aggrieved party can challenge that decision, has an application deadline of three months—12 weeks. Under the clause, the requirement to publish the information on which that judicial review could be based falls fully three months after the judicial review deadline, so there is a problem with the timings set out in the Bill.
What is the point of publishing the information in subsection (3) six months after the date of the award? Other operators cannot go to judicial review, because the deadline has already passed, so what use is it and to whom? I have a simple question for the Minister. What process should operators follow to challenge a sweetheart deal, as they obviously should be able to do? If the information is six months’ old, it cannot be through judicial review, because they will not have been provided with the information before the three-month deadline.
What process do the Government recommend that operators should follow, and what information will be available to them? What is the reason for such a long delay in providing information? The information is there from day one, because the local authority and the existing provider will have signed a contract, so all that needs to be done is publish it. What governance provisions will be in place to guard against improper preference, because it may well feel like that has been involved to excluded competitors looking in from the outside? They need to have extra special confidence that there is sufficient governance in place to guard against that, especially if the provider is a municipal bus company, for the obvious reason that they have skin in the game—I will not rehearse that argument.
Amendment 72, tabled by the Green party, would have an effect similar to amendments 34 to 37 by removing the ability to grant a contract to a private operator working outside a franchising scheme—for example, in an enhanced partnership.
Jerome Mayhew
I am so sorry—it is in the name of the hon. Member for Middlesbrough and Thornaby East (Andy McDonald).
I will therefore address amendments 34 to 37, which would allow for a direct award to local government bus companies. I fully understand the rationale behind the Bill, but looking at clause 13, I do not think that that award is excluded by the current drafting, because the term of art is “operator”, and a public bus company could be an operator.
Siân Berry
For clarity, the intention behind my amendments is not to allow for incumbent operators that are local government bus companies to be added to the Bill; it is to ensure, completely separately, that any local bus company at any time, or an incumbent operator, can be given a direct award.
Jerome Mayhew
That was absolutely not clear from the drafting, and I do not feel able to support such opaque drafting. It would not be right to slip in five words and change the whole meaning of the clause. Perhaps it would be better to draft a new clause; I suspect the hon. Lady has time to do so before the end of the Bill’s consideration.
Simon Lightwood
I thank the hon. Member for Brighton Pavilion for tabling amendments 34 to 37, but the Bill already enables the direct award of franchising contracts to local authority bus companies.
Clause 13 allows for the direct award of franchising contracts to incumbent operators under specific conditions that are set out in the Public Service Obligations in Transport Regulations 2023. It would reduce transitional risks for local government authorities and operators when moving to a franchised network. It applies equally to private operators and LABCos. If a LABCo is an incumbent operator, it could absolutely be directly awarded a franchised contract under the clause, as could a private operator, if that was desired by the franchising authority. Clause 13, therefore, already allows franchising authorities to direct awards to LABCos.
Amendment 35 would allow a franchising authority to direct awards to a LABCo that is not an incumbent operator. For good reasons, clause 13 includes a restriction on direct awards to incumbent operators—that is, that any operator providing local services in an area immediately before a franchising scheme is made has been doing so for at least the three months prior. Those reasons include providing a stable and controlled contractual environment for staff and assets during a transition, while providing continuity of services to passengers. It also means that operators are established in, and familiar with, the area. That greater operational knowledge will help to drive more effective long-term procurement of competitive franchise contracts through data collection and sharing.
Those benefits are most likely to be achieved by franchising authorities working in areas with operators that have an established and reliable presence in the network and with whom they have established effective working relationships. I therefore hope the hon. Member for Brighton Pavilion will withdraw her amendment. Clause 13 already provides most of the powers she seeks, and keeping the incumbent element is an important part of ensuring some of the core benefits of the measure.
Siân Berry
I very much appreciate that my amendments would do different things from clause 13, and I also appreciate that the Public Service Obligations in Transport Regulations 2023 provide the ability to make a direct award to an internal operator at other times. However, I worry that if we do not make sure that we have that ability in primary legislation—I cannot find it elsewhere in the Bill—there is a risk that private companies will issue legal challenges against direct awards. That is the key thing that I would like the Government to address, potentially in a different clause.
Simon Lightwood
I simply do not feel that that is necessary. The way in which it is set out is clear enough.
I thank my hon. Friend the Member for Middlesbrough and Thornaby East for tabling amendment 72. Clause 13 allows for the direct award of initial franchising contracts to incumbent operators under specific conditions that are set out in the Public Service Obligations in Transport Regulations 2023. In doing so, we aim to reduce transitional risks for local transport authorities and operators when moving to a franchised network.
Clause 13 applies equally to private operators and LABCos. If a LABCo is an incumbent operator, it could be directly awarded a franchised contract under the clause. For good reasons, clause 13 includes a restriction on direct awards to incumbent operators only—that is, that any operator providing local services in an area immediately before a franchising scheme is made has been doing so for at least the three months prior. Those reasons include providing a stable, controlled, contractual environment for the transition of staff, as I have mentioned.
Clause 13 enables franchising authorities to directly award the first franchising contracts to incumbent operators. That is not about shutting out competition; it is about providing a stable, controlled environment to manage the transition to a franchising model. Long-term franchise contracts will be competitively tendered in the usual way.
Franchising authorities may wish to use the direct award measure to help to manage the transfer of staff and assets, gather data to inform future franchise contracts, and provide flexibility to stagger the tendering of competitive franchise contracts at different times. It may also help to support small and medium-sized enterprise operators to gain experience in a franchising model.
Direct award can be used only under specific conditions. For example, direct award contracts have a maximum duration of five years and are only for net cost contracts. In many cases, a shorter duration will be appropriate. Further, only the incumbent can receive a direct award contract for the same or substantially similar services.
Siân Berry
I do not; I just hope that the Government realise what I was trying to do. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 13 ordered to stand part of the Bill.
Clause 14
Socially necessary local services
Mr Kohler
I beg to move amendment 66, in clause 14, page 9, line 23, at end insert—
“(4B) When the list of socially necessary local services required by subsection (3)(ba) is reviewed or amended, the relevant authority or authorities must—
(a) assess the overall adequacy of the existing network of local services in their area or combined area in enabling passengers to access essential health settings, education, goods and services, economic opportunities, and social activities;
(b) identify any gaps in the provision of socially necessary local services across the network and where existing services are insufficient, absent or cause a material adverse effect on passengers' ability to access those goods, services, opportunities, or activities;
(c) describe what further action the authority or authorities intend to take to address any identified gaps including, where appropriate, proposals for new or altered services, with timelines for implementation, and consideration of funding or alternative delivery models.
(4C) The authority or authorities must publish any assessment and proposals made under subsection (4B) after consulting—
(a) persons operating local services in the area or combined area;
(b) users of local services;
(c) NHS providers;
(d) education providers;
(e) local employers and businesses;
(f) people with disabilities; and
(g) any other persons whom the authority or authorities consider it appropriate to consult.”
This amendment would insert into the Transport Act 2000 a requirement for local transport authorities to review the adequacy of local services when considering changes to the list of socially necessary local services.
The Chair
With this it will be convenient to discuss amendment 64, in clause 14, page 10, line 34, at end insert—
“(7) The Secretary of State must, at intervals not exceeding six months, lay before Parliament a statement setting out—
(a) the number of socially necessary local services in England;
(b) the number of socially necessary routes that have their whole service cancelled;
(c) the average frequency of buses on socially necessary local services;
(d) the average number of days a week that socially necessary local services are in operation;
(e) total ridership on socially necessary local services; and
(f) the steps the Government is taking to improve the provision and reliability of socially necessary local services, their frequency, and bus ridership.
(8) For the purposes of subsection (7), ‘socially necessary local service’ has the same meaning as in section 138A of the Transport Act 2000.
(9) Each statement laid under this section must include data covering the six-month period immediately preceding the date of the statement.”
This amendment would require the Secretary of State to provide Parliament with a bi-annual statements including information of socially necessary local bus services and steps the Government plans to take to address any identified issues.
Mr Kohler
Clause 14 is a vital provision in the Bill that seeks to strengthen the provision and protection of routes that are deemed socially necessary. I will begin by addressing the amendments tabled by the Liberal Democrats, before turning to others.
Although I fully support the principle behind clause 14, there are several areas where it can and must be strengthened to ensure that it functions as a genuinely effective tool for safeguarding essential bus services. Under the clause, the Transport Act is amended to require that local transport authorities maintain a list of socially necessary routes and review it from time to time. Crucially, there is no detail on how that review should be conducted. That lack of clarity risks rendering the duty vague and unenforceable.
Amendment 66 seeks to address that gap. It sets out how the review process should work, requiring that gaps in network coverage be identified and that changes to improve the network are actively considered. Importantly, it would also ensure that reviews and amendments take place in consultation with relevant stakeholders. That would embed transparency and accountability into the process.
Amendment 64 would require a biannual review by the Secretary of State of the level and condition of socially necessary services across the country. Given that local authorities will already be maintaining those lists, it is not an unreasonable burden. Rather, it would create national oversight and parliamentary scrutiny—something currently missing from the system. Having consistent data on ridership, frequency and cancellations would greatly improve transparency, inform better decision making, and keep socially necessary services at the forefront of Government planning and funding.
Amendment 39, tabled by the hon. Member for Brighton Pavilion on behalf of the Green party—
Steff Aquarone
I rise to speak to clause 14 and amendments 66 and 64, tabled by me and my hon. Friend the Member for Wimbledon.
I warmly welcome the clause’s protection of socially necessary services. I have spoken before about how important local bus services are for our rural areas, and I want to bring that to life because the term “socially necessary” does not do justice to the significance of those services. For many, a more accurate term would be “lifeline” services. They are absolutely vital for many small villages, and they are often far from profitable. Although they may not bring a grand economic boost to the operator or local authority, they bring a huge social benefit to the communities that they serve.
Jerome Mayhew
I rise to speak briefly in support of Liberal Democrat amendment 66, which inserts a requirement for local transport authorities to review the adequacy of the existing network of local services—through proposed new subsection (4B)(a)—and the requirement to identify any gaps in provision, through proposed new subsection (4B)(b). Proposed new subsection (4B)(c) states that what further action the local transport authority intends to take to address the gaps identified must be set out.
Proposed new subsection (4C) would require the authority to publish both the assessment and the resulting plan after the relevant consultation. It is clearly a good idea to identify the scale of opportunity in the local area as well as what is already available. Such good information would inform good future decisions, so I have no hesitation in supporting the amendment.
Amendment 64, which was also tabled by the Liberal Democrats, would require the Secretary of State to provide Parliament with a statement every six months with information on socially necessary services across a county and the number of whole routes cancelled, as well as frequency and days of the week. I am not supportive of it. Although I understand the rationale behind the amendment, and it would be interesting to have that information on a regular basis, it would be truly onerous to require the Secretary of State to provide that every six months for services right across the country. As with all things, when we are trying to design effective government, we have to balance benefit and cost. In my respectful view, such a requirement tips into being simply too onerous.
Assessments are, by their nature, local or regional, and I do not understand the practical utility of national reporting when the people who really need to know the information are in the local transport authority that would be providing the information in the first place. I therefore confirm my support for amendment 66 and my opposition to amendment 64.
Simon Lightwood
I thank the hon. Members for Wimbledon, for North Norfolk and for Chesham and Amersham (Sarah Green) for tabling a series of amendments to the clause. Amendment 66 would ensure that local transport authorities review their current local bus network to identify any gaps. I agree with hon. Members that it is important for local transport authorities to understand and know their networks. However, the desired effect of the amendment is already covered by the Transport Act 2000, which places a requirement on an authority to meet the needs of people living or working in their area. The local transport plan, which must be prepared by a local transport authority, is an important document that establishes the transport needs of local communities. Indeed, the existing measures in the Bill go even further than the 2000 Act by ensuring that members of the enhanced partnership work together to identify key socially necessary services, and to develop a robust plan in case any changes are proposed to them.
I turn to amendment 64. The Department already publishes large amounts of bus data through both the Bus Open Data Service and bus statistics on gov.uk. The Bill provides for even more data collection under clause 24, which specifically ensures that data collected by the traffic commissioner is shared with the Secretary of State. I therefore believe that the amendment is unnecessary. We already deliver a large amount of information to the public that can help them to understand all services operating in their area—not just socially necessary services—and may include many of the details listed in the amendment.
Siân Berry
I beg to move amendment 39, in clause 14, page 9, line 32, after “activities,” insert—
“(iv) health care services, or
(v) schools and other educational institutes,”.
This amendment would include services which enable people to access health or educational services in the definition of ‘socially necessary local services’.
The Chair
With this it will be convenient to discuss amendment 38, in clause 14, page 9, line 35, after “activities.” insert—
“(16) A service which was abolished in the 15 years before the day on which the Bus Services (No. 2) Act 2025 was passed may also be considered a socially necessary local service for the purposes of this section and section 138C.”
This amendment would mean that previous bus services could be considered as socially necessary local services.
Siân Berry
I am pleased to move an amendment that both I and Liberal Democrat colleagues had the idea of. The Liberal Democrats have withdrawn their version of the amendment, but we are essentially aiming at the same thing: to be specific in proposed new section 138A of the 2000 Act by specifically naming healthcare services, schools and other educational institutions as activities that we as a Parliament consider to be essential. I believe that that would really help transport planners to focus their efforts on those particularly essential services. It would strengthen the clause considerably.
In the past, I have worked with many young people who value bus services and feel undervalued when those services are not helping them to get back and forth to school. When they are not able to take part in after-school activities in the same way as their peers at the school whose parents can drive them back and forth, there is a social justice issue that deserves its own bullet point, as part of the clause.
I do not need to tell Members about the importance of public transport access to hospitals and other healthcare services. Later, we will discuss amendments pressing for the timing of older and disabled people’s bus passes to be extended so that they can access healthcare services with their free cards. The actual provision of the services is the absolute bottom line here, and they should be named. There is absolutely no reason for the Government to oppose my amendment.
Amendment 38 was originally proposed by my Green party colleague, Baroness Jones of Moulsecoomb, in the other place. It aims to include clearly in the definition services that have been cancelled. If this aspect of the Bill is to work effectively, it is essential that it works to undo the damage caused by cuts made in bus services, particularly local authority-supported ones since the start of the enormous austerity squeeze on local councils.
The proposed time period of 15 years in amendment 38 is no accident—it goes back to the start of austerity. Many figures show the loss of bus services around the country since the beginning of that period. For example, a Campaign for Better Transport figure shows that from 2012 to the second year of the pandemic, 2021, more than a quarter of all bus services across England, measured in vehicle kilometres, were lost. For the number of regulated services, which is a different measure of service capacity, the loss was 29%.
It will come as no surprise to my colleagues from the east of England that one of the regions with the biggest losses was the eastern region, alongside the north-west of England. The services lost were socially necessary, and they ought to be able to be defined as currently socially necessary, even if they do not exist. I commend both amendments to the Committee.
Jerome Mayhew
Amendment 39 would add healthcare services, schools and educational facilities to the list of socially necessary local services. The hon. Lady is, of course, right that those are important destinations for bus services—so important that they would without doubt come under the services side of the definition. Since the clause as drafted refers to enabling
“passengers to access…essential goods and services”,
the amendment is otiose.
I understand the political point that the hon. Lady is seeking to make through amendment 38 but, as drafted, nothing could be done with that information under the clause. In fact, the amendment would have a negative effect, because it would simply muddy the waters with historical data without being helpful in establishing the future direction of travel for local transport authorities.
Joe Robertson
It is a pleasure to serve under your chairmanship, Sir Desmond. I was planning to say a few words about amendment 39, but the shadow Minister has really said it: it not necessary to include healthcare services, schools and other educational institutes in the definition. Of course, I agree with the hon. Member for Brighton Pavilion that those things are important. I can think of dozens of important and socially necessary places where buses might go, but I would not propose to add them all to clause 14(2)(c), not least because when attempting to make an exhaustive list, it is always possible to leave things out, and there is great scope for argument over issues on the periphery that some people think are important and others do not.
The measure’s wording is broad. A “social necessary local service” is defined as one that allows passengers to access: “essential goods and services”, which is very wide; “economic opportunities (including employment)”, which is very wide; or “social activities”, which is also very wide. Plainly, healthcare services, schools and other educational institutes fall within those definitions, so the amendment is unnecessary. However, I welcome the hon. Lady’s highlighting those things, because healthcare and schools plainly rank very highly.
Mr Kohler
The Liberal Democrats strongly support amendment 39, which was tabled by the hon. Member for Brighton Pavilion. As has been said, it is remarkably similar to, if not the same as, an amendment that we tabled in the House of Lords. It rightly proposes to expand the definition of “socially necessary local service” to include routes that serve healthcare facilities. I recognise the argument that the existing definition already covers them, but we think it is important to explicitly include hospitals, GPs and clinics. Accessing healthcare is a social necessity that should be explicitly recognised in law.
The same is true of education. From conversations with my hon. Friends the Members for Westmorland and Lonsdale (Tim Farron), for Esher and Walton (Monica Harding) and for North East Hampshire (Alex Brewer), to name a few, I know that there are growing concerns about school and college bus routes being cut, leaving students unable to travel independently to their places of learning.
The Government may argue that such services are already included under the definition but, if that is the case, why not make that explicit? Clarifying it in statute would only strengthen the Bill and provide clearer guidance for local authorities.
Simon Lightwood
Amendment 39 is not necessary as this issue has already been addressed during debates on the Bill in the other place. At the time, my noble Friend the Minister for Rail made a statement on the Floor of the House to the effect that the definition of a socially necessary local service encapsulates access to healthcare and schools as “essential goods and services”. I hope that that reassures the hon. Member for Brighton Pavilion about the Government’s intention. That being said, the Government will produce official guidance for local authorities on the issue of socially necessary local services. That guidance will refer to healthcare services and educational institutions as constituting “essential goods and services”.
Amendment 38 would expand the definition of socially necessary local services to include services that have been abolished in the past 15 years. In addressing it, we should consider the practical issues. A service that has been cancelled in the past 15 years may no longer meet the current needs of the community, which change over time. Furthermore, it is possible that previous services may have been folded into newer and more relevant bus routes. For those reasons, the amendment might not yield the expected beneficial outcomes.
That is by no means a prohibition or limitation on the powers of local transport authorities, however. As local transport authorities continually evaluate the needs of their communities, they still retain the power to consider implementing services along former routes, if they believe that doing so would address the needs of their communities. The amendment is therefore not necessary, so I ask the hon. Member for Brighton Pavilion not to press it.
Siân Berry
On a point of clarification, clause 14 adds proposed new subsection (15)(b) to section 138A of the Transport Act. The measure is quite specific that a current service is envisaged—it refers to a service “if cancelled”. Amendment 38 would respond to that by making sure that recently cancelled services were covered. Such services might have been taken away because operators anticipated the risk that they would be defined as “socially necessary”. Can the Minister reassure us on that point?
Simon Lightwood
I did not give way, but I appreciate the hon. Member’s additional comments.
Simon Lightwood
It is fine. I do not believe that the amendments are necessary.
Siân Berry
I do not. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr Kohler
I beg to move amendment 54, in clause 14, page 10, line 26, at end insert—
“(4A) Where a socially necessary route has been identified in accordance with section 138A(15) of the Transport Act 2000, and no alternative operator has implemented the service within a period of six months, the relevant local authority must take reasonable steps to implement a service on the socially necessary route as far as is reasonably practicable.
(4B) Where a local authority has established a socially necessary service in the absence of alternative operators, the local authority must publish a report on the establishment and operability of the service within six months, which should include, but not be limited to—
(a) the scope and nature of the service;
(b) the estimated operating costs of the service and any identified funding gaps;
(c) the impact of the service on local accessibility and transport needs;
(d) a timeline for the operation of the service;
(e) where the local authority is unable to meet the financial burdens of operating the service within six months of establishing that service, a statement specifying the extent of the financial shortfall.
(4C) Where a local authority makes a statement under subsection (4B)(e), the new burdens doctrine applies to the provisions of this section and the Secretary of State must consider providing appropriate financial support to the local authority to ensure the service can be delivered.
(4D) Within six months of the passing of the Bus Services Act 2025, the Secretary of State must publish guidance on what funds will be available for the purposes of subsection (4C).
(4E) A service established under these provisions is a local service operated by a local government bus company as defined by section 22(5).”
This amendment would place a duty on a relevant local authority to implement a socially necessary service should alternative operators fail to do so, with provisions for financial support if needed and the possibility of transferring responsibility to an alternative operator once the service is established.
The Chair
With this it will be convenient to discuss amendment 74, in clause 14, page 10, line 34, at end insert—
“(7) The Secretary of State must, within 12 months of the passing of this Act, lay before both Houses of Parliament proposals for a scheme that would guarantee a service for socially necessary services where—
(a) no operator has implemented the service for a period of six months, and
(b) the local transport authority is unable to run the service.
(8) The Secretary of State must, when publishing their proposals for a scheme under this section, also provide guidance on how the scheme would be funded, including the criteria which would be used for assessing qualification for the scheme.
(9) Within a month of producing the proposals, the Secretary of State must ensure that time is made available in both Houses of Parliament for a substantive debate on the proposals.”
This amendment would require the Secretary of State to bring forward proposals for a scheme that would guarantee services for routes identified as socially necessary where no operator has implemented the service and the local transport authority does not have the capacity to do so.
Mr Kohler
Amendments 54 and 74 would establish a real safety net for socially necessary routes. Amendment 54 would place a duty on local authorities to step in to deliver a service when no commercial operator will do so, while placing a reciprocal duty on the Government to provide financial support to enable it. Amendment 74 would complement that by requiring the Secretary of State to create a formal funding mechanism for such services. The mechanism would include clear eligibility criteria, ensuring that local authorities could not designate routes as socially necessary arbitrarily, but must demonstrate clear social need. Together, the amendments would ensure that essential routes do not disappear due to market failure. They offer a practical, balanced solution to a growing problem, and I urge the Committee to support them. If we believe that these routes are socially necessary, we must find a mechanism to ensure that they are provided.
Jerome Mayhew
The Liberal Democrats’ amendment 54 would place a duty on local transport authorities to identify and then satisfy the need for all—and I stress “all”—socially necessary services, irrespective of supply, under an enhanced partnership. The amendment does not explain how the services would be supplied by the local authority—presumably, there would be a tender process—but it would require the authority to produce a report within six months. That report would identify the need, estimate the costs of provision and associated funding gaps, estimate the impact of a new service
“on local accessibility and transport needs”,
provide
“a timeline for the operation of the service”,
and specify local funding shortfalls. That measure, if adopted, would be a truly revolutionary departure for the identification of local need and subsequent funding, because it would hand demand assessment to the local authority, but the cost of provision to the Secretary of State. What could possibly go wrong? I genuinely look forward to the Minister supporting the amendment and explaining how he will fund that.
The Liberal Democrats’ amendment 74 would require the Secretary of State to advance proposals within 12 months to
“guarantee a service for socially necessary services”,
where that service has been absent for six months and
“the local transport authority is unable to run the service.”
That is a second extraordinary proposal, because it would again place identification of need—according to the highly subjective definition of social necessity—in the hands of the local authority, but would give the Secretary of State a legal duty to supply that assessed need. It envisages the Department for Transport directly running individual routes that have escaped the design of the franchise network or the enhanced partnerships. Presumably, since the Department for Transport has to supply for that need, it will be liable for procuring, right across the country, individual routes that are not part of a wider contractual arrangement. There we have it: the Department of Transport directly running individual routes, spread across the country, independent of wider bus provision. It sounds to me like a recipe for disaster.
Steff Aquarone
Amendment 54 is a really important protection for the safe and necessary services that I described. The shadow Minister’s points perhaps highlight the issue of funding more generally in bus franchising and enhanced partnerships.
The amendment would ensure that steps are taken within six months of identifying a route as socially necessary to ensure that the route actually runs. It would also enable the Government to provide them with support and funding to ensure that the route is available, if the financial burden on the local authority is deemed too great. This is another useful protection for the socially necessary services to ensure that they are not another victim of the funding crisis in local government. I have already made clear how important these services are and why we have to ensure that they are protected.
Looking at the perilous financial position of our county council in Norfolk, I fear that there could come a point where that spectacular fiscal mismanagement means that they cannot afford to keep these services going. In that instance, I do not think that my constituents should be the ones who are punished. The Government should step in to protect their access to all the services and opportunities that a socially necessary service provides.
To conclude, I am pleased that the importance of bus services has been truly recognised in law. I am supportive of the sentiment and much of the drafting of the clause. However, if we accept the importance of these routes, we should not make a half-baked attempt to protect them. We should ensure that all important services are considered when deciding on socially necessary routes, and that there are strong protections for both these services and our communities that they serve.
Simon Lightwood
Amendment 54 seeks to establish a process for local transport authorities to implement a socially necessary service where no operator has decided to do so. However, I believe it is unnecessary, because legislation already exists to address that issue. Under section 63(1) of the Transport Act 1985 and section 9A of the Transport Act 1968, local authorities are already under a duty to secure public passenger transport services that they consider appropriate to meet the requirements of the area, and which would not otherwise be met. Clause 14 also sets out that enhanced partnership schemes must include a requirement to investigate alternatives that can be provided if a socially necessary service is cancelled or varied in such a way as to have a materially adverse effect on the ability of passengers to access necessary goods and services.
The amendment also places an obligation on local authorities to fund specific bus services. However, as I set out before, how local authorities choose to spend their funding is a matter for them. I reflect on previous comments from the Liberal Democrats about being all for devolution, but also liking to stipulate exactly how to do it from the national centre. Local authorities are best placed to make decisions on how and where to prioritise their local bus grant. Restricting the range of choices for how an LTA does so would go against the spirit of the Bill, and it is our aim to give more control to local leaders. I have outlined why I believe that the amendment is not needed, and I ask the hon. Member for North Norfolk to withdraw it.
Steff Aquarone
I am a little disappointed that the Minister did not address the shadow Minister’s accusation of passing the financial buck directly to Government in his response. The measure is fundamentally about funding to protect services. If the Minister is relying on sections in previous Acts of Parliament, the interpretation of those sections is not a given without specific reference, which the Bill does not make. I do not share the Minister’s confidence that those obligations will be upheld.
Simon Lightwood
I think it is sad that the hon. Gentleman does not share my confidence in local areas being able to shape their services.
I now turn to amendment 74, which is the final non-Government amendment tabled to clause 14. It seeks to ensure that there is a Government-backed scheme that will guarantee that all socially necessary local services continue to operate. As I am sure I have mentioned before, this Government have reaffirmed our commitment to bus services in the recent spending review by confirming around £900 million each year from 2026-27 to maintain and improve vital bus services. Allocations for that fund will be made through the bus funding formula, which already takes account of local need. The Department is also committed to review the current formula and ensure that it is allocated as fairly as possible. That will take place in due course.
Simon Lightwood
Again, it is local areas that are best placed to use the resources given to them. We do not have a magic money tree. I know that the Liberal Democrats have a supply of those, but unfortunately we do not. The Department is also committed to reviewing the formula and ensuring that the money is allocated as fairly as possible. That will take place in due course. Once the allocations are made, it is then for local transport authorities to prioritise their funding according to the needs of their communities. It is right that they make those decisions and Government should not be asked to intervene. I therefore ask the hon. Members to seek to withdraw this amendment.
Question put, That the amendment be made.
Simon Lightwood
I beg to move amendment 6, in clause 14, page 10, line 27, leave out subsections (5) and (6).
This amendment removes the requirement for the Secretary of State to carry out an assessment of the impact of ending the £2 bus fare cap and of the level of employer’s national insurance contributions.
Simon Lightwood
Subsections (5) and (6) of clause 14 were inserted by non-Government amendments in the Lords. This amendment seeks to remove those subsections. Clause 14(5) places a statutory duty on the Secretary of State to undertake an assessment of the implications of ending the £2 national fare cap on passengers’ ability to access socially necessary local services, as proposed in the Bill. Assessing the impact of the withdrawal of the previous fare cap on specific routes would be pointless while the current cap is in place. At the spending review, the Government took the decision to extend that cap to March 2027. Moreover, in February 2025, the Department published an evaluation of the first 10 months of the £2 fare cap. That showed that the cap delivered low value for money. Work is already under way to undertake a review of the £3 bus fare cap. Therefore, a legislative requirement for further evaluative work is duplicative and unnecessary. That subsection is also impractical. Socially necessary local services are a new measure introduced by this Bill; they were, therefore, not in place at the time of the £2 bus fare cap and could not, therefore, have any measurable effect on it. It will also take some time for local transport authorities to identify socially necessary local services.
Clause 14(6) places a statutory duty on the Secretary of State to undertake an assessment of how the level of employee’s national insurance contributions may impact on the provision of socially necessary bus services. That includes an assessment of how transport services for children with special educational needs and disabilities are affected. That subsection cuts across existing work of the Department for Education, which has committed to reform the special educational needs and disabilities system. It is also impractical because it is seeking to review three months after Royal Assent. Socially necessary local services are likely to take some time to be identified and agreed, making that assessment premature. I have explained why the Government are seeking to remove both subsections. Having explained why the Government are seeking to remove subsections (5) and (6), I turn to the remainder of clause 14.
Clause 14 introduces requirements in relation to socially necessary local services in areas with enhanced partnerships. Enhanced partnerships are statutory partnerships where local transport authorities and bus operators agree on binding goals to improve bus services in their area. This measure will require local transport authorities to identify the services that they consider socially necessary local services as defined in the Bill, and include them as a list in the enhanced partnership plan. Enhanced partnership schemes will need to specify requirements that apply when the operator of a socially necessary local service proposes to cancel or vary the registration of a service in such a way as is likely to have a material adverse effect on the ability of passengers to access essential goods and services, economic opportunities or social activities. Schemes must also require local transport authorities to consider whether any alternative arrangements may be made to mitigate the effects of cancellation or variation.
This will not require additional funding. In practical terms, local transport authorities and bus operators will be incorporating the measure into their established processes. Once the legislation has passed, we will be working with stakeholders to implement the measure. Local transport authorities must vary their enhanced partnership plans and schemes to comply with clause 14 within one year of its coming into force. We will be publishing guidance in due course to help local transport authorities and bus operators with the implementation of the measure.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
I support clause 14 and the Government’s proposed measures. Good decisions depend on good information, and in the East Cleveland part of my constituency we have seen far too many decisions made in a black hole of information, which has seen many routes disappear over many years. I now have many villages left in isolation.
It has fallen to local campaigners to step up and make the case that such routes are socially necessary, including through protests, rallies and so on, to try to save them. That is exactly what happened in the case of the Stagecoach 1 and 2 in my constituency, which was created as a result of a sustained campaign. However, that route is not sufficient, because it misses out certain villages and does not go down the high street in Brotton, for example. It also misses out several residents, of which one example is a lady called Norma Templeman who I promised I would mention in the House. She lives in North Skelton and is 87 years old. She said a few months ago:
“You have no idea how isolated this makes us golden oldies feel.”
I would never use such language to refer to her, because I think she is full of energy, even if she is 87. It should not fall to an 87-year-old lady to campaign to save and extend routes like the Stagecoach 1 and 2, or the demand-responsive transport service that she benefits from, which, again, runs out of money every few months, and there has to be a sustained campaign to try to save it. The entire model is inefficient.
I hope that the mayor in our region will seek to use the powers in the Bill and introduce a franchising model. So far, he is resistant to do that, so I ask for some clarity from the Minister on devolution—which we covered in the previous debate—with reference to clause 14. The principles set out in the various pieces of legislation on combined authorities, particularly the Local Democracy, Economic Development and Construction Act 2009, set out that the role of a combined authority is to act as it says on the tin: to be a combination of the local constituent member councils and their leaders. We have an odd situation in Teesside wherein the councils and their leaders want to have a franchising system but the mayor is resistant to doing so.
In the House on 14 May, I asked a Minister from the Ministry of Housing, Communities and Local Government whether the Government accept the principle of subsidiarity, wherein power should sit in the lowest possible tier of government and local communities should have the strongest say. The Minister accepted that principle in his response. He said that devolution should not just be
“a shift of power from Whitehall and Westminster to a regional or sub-regional body that is far away from communities and the local authority.”—[Official Report, 14 May 2025; Vol. 767, c. 135WH.]
He said the transfer of power is a good, but it is not the “whole job”, and communities should be able to “take control for themselves”. I hope that that is also the case when it comes to these powers. We should not have a mayor sitting above the community—above even the local authorities, which make up the LTA—and not using the powers and the funding that this Government are giving him to act.
For Norma’s sake, and the many Normas in all my communities and communities across the country, I support the clause and the Bill.
Jerome Mayhew
With your permission, Sir Desmond, I will deal with this in a slightly different order from that in which the Minister addressed it. I will deal with clause 14 in toto, and then look at Government amendment 6, which removes two subsections from the clause.
Clause 14 amends the Transport Act 2000 by requiring local transport authorities to identify and list services in the enhanced partnership area that are “socially necessary local services”—we have already discussed this at some length this afternoon—and then to specify requirements that must be followed if a bus operator of those services wishes to vary or cancel them. Subsection (2) amends section 138A of the Transport Act 2000, which talks about enhanced partnership plans and schemes, and it requires local transport authorities to identify and list socially necessary local services within their enhanced partnership plans—so far, so sensible.
The term is defined in subsection (2)(c), which inserts proposed new subsection (15) into section 138A and provides a definition of “socially necessary local service” as,
“a local service which—
(a) enables passengers to access—
(i) essential goods and services,
(ii) economic opportunities (including employment), or
(iii) social activities, and
(b) if cancelled, is likely to have a material adverse effect on the ability of passengers to access those goods, services, opportunities or activities.”
That is not necessarily a problem, but it is worth noting that this definition is quite subjective in its application. It is not easily measurable what such a service is, nor is it standardised between local authorities. The Minister will say, “Devolution will allow a thousand blossoms to bloom,” and I conceptually agree. However, I wonder whether, if we have different interpretations of the same term—“essential goods and services”—in different parts of the country, that raises a question about how the provisions will be applied across the board.
I understand the desire to devolve assessments to local need, but the determination does, after all, have commercial consequences for operators. As ever, where commercial opportunities are challenged or threatened, that brings with it a risk of legal challenge. That is why I raise the flag with the Minister—I am not going to do anything about it—that this is a potential future pitfall, where different local transport authorities apply the same definition differently.
If the Minister recognises that the definition is subjective, is he concerned about the risk of challenge? The route to formal challenge within an enhanced partnership structure would typically be by judicial review. Is there another form of challenge that the Minister would recognise as part of this process? What guidance will be given to local transport authorities in the assessment process? He referred to some guidance in his earlier responses; I saw him glance towards his officials. I would be grateful for more detail.
I think the issue can be dealt with through guidance, so it would be helpful to understand what form it will take for local transport authorities. Has that already been formulated? Either way, do we have an indication of when the guidance will be published? It is clearly an important document when looking to turn these concepts into practical policies.
Clause 14(2)(a) inserts new paragraph (ba) into section 138A(3) of the Transport Act 2000, requiring local transport authorities to identify which local services in their area are socially necessary services and to list those services in the enhanced partnership plan. Clause 14(2)(b) inserts new paragraph (4A) into section 138A of the 2000 Act, requiring local transport authorities to keep the list of socially necessary services under review and amend it as necessary. The idea here is presumably to ensure that the list of socially necessary local services reflects any sudden network changes in an enhanced partnership area. So far, so good.
Jerome Mayhew
No, I am pleased to say that I am not, Sir Desmond. Clause 14(6) makes specific reference to this. It was a requirement that was inserted into the Bill by the other place. I will read it to you:
“The Secretary of State must undertake an assessment of the impact of the level of employers’ National Insurance contributions on the provision of socially necessary bus services, including transport services for children with special educational needs and disabilities…and lay it before both Houses of Parliament within 3 months of the day on which this Act is passed.”
As such, this is fairly and squarely in the scope of not just the Bill, but this clause. Government new clause 6 would specifically remove that subsection, so I am setting the scene as to why that is a very bad idea.
We understand the effect, which will be a 15.2% increase in employment costs. If an employee works 780 hours on the minimum wage, they earn around £8,923, which is currently below the minimum threshold. In that instance, following the increase, the employer’s national insurance contribution will go from £0 to £678. That is the additional cost of that employment. Who will pay for that in a SEND contract?
The Chair
We are talking about the impact on the provision of necessary bus services, but you have strayed into taxis.
Jerome Mayhew
Thank you for that indication, Sir Desmond, but exactly the same arguments that apply to the providers of bus services for a fee also apply to taxis. You can insert the word “bus” whenever I have said “taxis”; exactly the same argument applies for both providers.
The additional cost of employing a part-time worker, such as a bus driver, in a bus company would be £1,303 per employee per annum, so we have a real problem. Bus providers—and others—are being swept up in the net of increased employer national insurance contributions. It is simply a fact that a large number of the school contracts will become unsustainable under the current format, yet no payments have been offered, either as part of this Bill or elsewhere, to compensate local transport authorities, county councils or whichever authorities are responsible for the provision of bus contracts for education and special education needs, even though the actions of this Government are making these contracts unsustainable.
Thousands of these contracts around the country will need to be handed back to local education authorities. Staff will be made redundant, causing a further shortage of drivers for passengers, and thousands more schoolchildren will be left without transport unless there is movement on this. There needs to be movement of one form or another. In an ideal world, bus SEND provision would be excluded from employer national insurance contributions. However, in the absence of that, an alternative form of funding must be provided, if it is still the Government’s desire that provision be made by local authorities for bus services for SEND children.
For this reason, subsection (6), which mandates a review of how the increase in national insurance contributions from 6 April will affect socially necessary bus services, including SEND transport services for children, is so important. The provision would mandate that the review be laid before Parliament within three months of Royal Assent. This is urgent. The negative impact has already started. We need movement from the Government, or there will be real problems that affect real people. Again, these are the most vulnerable in our society. I therefore oppose Government amendment 6, which inexplicably seeks to remove this necessary assessment from the Bill.
Ordered, That the debate be now adjourned.—(Kate Dearden.)