Bus Services Bill [HL] — House of Lords, 2016-07-04
Topic: Transportation
Margaret Beryl Jones (Labour, Centre-left): My Lords, our Amendments 21, 38, 39 and 40 go to the heart of the concerns that we raised at Second Reading about the restrictions on local authorities being able to access the new franchising model set out in the Bill. As it stands, a mayoral combined authority can automatically opt for a franchise scheme if it feels that it is right for its locality. However, all other categories of single or combined authorities must first seek the permission of the Secretary of State. Their decision would then need to be endorsed by affirmative regulation. Our amendments simplify and streamline that process, taking the Secretary of State out of the equation and creating a level playing field for local authorities We share a common purpose in wanting to improve the number of passenger journeys and drive up standards. We know that the franchising model works; the statistics for bus use in London are testament to that. No doubt this is part of the reason that the Government have finally embraced it as appropriate for mayoral authorities. However, no one has satisfactorily explained why, if it is good for one model of local authority leadership, it should not work equally well in other areas. It is not at all clear what the unique wisdom of mayoral authorities is. As I said at Second Reading, there is a wider game of politics going on here. Clearly, the Government are scratching around to find incentives for local authorities to adopt their preferred model of local leadership. This has been alighted upon as a bargaining chip; it has nothing to do with improving bus provision The threat of Secretary of State interference in local authority decisions, as set out in this Bill, surely runs counter to the shared aspiration of both the Government and the Opposition to devolve more power to localities and let local communities shape the services that are right for them. Our view is shared by the Local Government Association, which has endorsed our amendments. It takes the view that all areas should be given automatic rights to bus franchising powers, with the decision taken locally, based on robust evidence and taking into account the needs of passengers, local residents and other circumstances such as the performance of local bus markets. Its view is shared by many other smaller bus operators. For example, Dai Powell, the chief executive of HCT, which provides more than 20 million passenger journeys a year said: "The power for Local Authorities to franchise their local bus services has the ability to revolutionise the UK bus industry. It’s pretty clear that franchising has the capability to bring significant benefits to the travelling public through enabling network development that meets the needs of communities" The only group that seems to be lukewarm about the franchising model and our proposals to streamline and extend the model are the existing local large bus operators. However—being realistic—they would say that, wouldn’t they? The existing arrangements have, of course, served them well. They may result in a poorer bus service, but they have also delivered large profits for them. A recent Competition Commission investigation concluded that bus operator profits are higher than in any other business sector deploying comparable levels of capital at equivalent risk. Across Britain, bus companies’ average operating profit in the 10 years to 2013 was £297 million a year. Bus companies in the unregulated big cities made average profits of 8%, whereas profits in London are less than 4%. So we can see why they may be reluctant to embrace change and support the franchising model. However, we do not accept that position. It cannot be right that around 10% of public money going into bus subsidies is ending up being paid out in profit dividends rather than improving the local bus service. Our amendments would make it clearer for local authorities as a whole to do what is in the best interests of their local community, without bureaucratic, costly and lengthy interference from the Minister Meanwhile, as the noble Lord the Minister has been made aware, the Delegated Powers and Regulatory Reform Committee has also raised its own concerns about this clause. It has flagged up the inadequate explanation in the Explanatory Notes as to why different rules are being applied to mayoral and non-mayoral authorities. It says: "We have therefore found it difficult to assess, on the basis of the explanation in the memorandum, whether it is appropriate to delegate to the Secretary of State a power to allow the authorities referred to in section 123A(4)(b) to (f) to become franchising authorities, instead of this arising immediately upon the commencement of clause 4. The House may therefore wish to ask the Minister to provide a fuller rationale for the power in new section 123A(4)" I think that we would all like to have an explanation for the Government’s discrimination against the non-mayoral authorities in the Bill. The noble Lord has said that he intends to respond to that committee. We would all be interested in that response, so perhaps the noble Lord can let the Committee know when it will be available. In the meantime, regardless of that, we believe that these amendments are crucial to making the Bill a success. I beg to move.