Bus Services (No. 2) Bill [ Lords ] (Third sitting)

Siân Berry Excerpts

Committee stage
Thursday 26th June 2025 Public Bill Committees

[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.

[Siân Berry]

To clarify, amendment 72 is not my amendment.

[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.

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[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.

[The Chair]

Siân Berry, do you wish to press the amendment to a vote?

[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.

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Division 6

Ayes: 5

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Liberal Democrat: 2
Conservative: 2
Green Party: 1

Noes: 10

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Labour: 10

[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.

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[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?

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[Simon Lightwood]

I did not give way, but I appreciate the hon. Member’s additional comments.

[Siân Berry]

Oh, apologies.

[Simon Lightwood]

It is fine. I do not believe that the amendments are necessary.

[The Chair]

Does Ms Berry wish to press the amendment to a Division?

[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.