Local Transport Bill [HL]

My Lords, I do not want simply to repeat what I said before but I have not heard anything new in the argumentation put forward by my noble friend Lord Rosser. There are essentially two issues here: first, the length of schemes; and, secondly, the length of individual contracts. I shall deal with them in reverse order. I take the point that in some restricted circumstances European Community law would allow contracts to be let for up to 15 years, although in most cases 10 years would still be the maximum. We could, therefore, set no limit in our own legislation and simply rely on the Community regulation to set the limit. However, we must not overlook the fact that the recently adopted regulation does not come into force until December 2009. The real question is whether it would be the right policy to do so. I have little doubt that my noble friend could cite precedents where contracts have been let for longer periods than 15 years for the provision of infrastructure—light rail would be one example—where considerable investment is needed to get the project off the ground. But one advantage of buses over light rail is that most of the infrastructure is there already in the form of public highway; any improvements that may be desirable are not particularly expensive, relatively speaking, or necessarily difficult to provide. This also means that a bus network can be provided on a more flexible basis and can more easily be varied in line with changing journey patterns, demographic changes, growths in new communities and so on. So there is a real danger that a 15-year contract could create a real disincentive to responding flexibly to change in demand and could undo many of the advantages inherent in buses over tracked systems of public transportation. A 15-year contract would also place a great deal of power into the hands of the contracted operator. The longer the period of the contract, the more difficult it would be to promote genuine competition for a successor, particularly if contracts are let over a wide area to a single operator. Even 10 years carries that risk and should be regarded as a maximum rather than the norm. It should require the operator to do something more than simply provide a basic level of service over that time. Nor am I certain whether the difference between 10 and 15 years would be sufficient to persuade an operator to invest in capital projects such as bus stations. Many PFI contracts have been for much longer periods than that, though 15 years would still be the limit for bus services under community legislation. In any case, I can see no reason why a contract to build and manage a bus station should not be left as a separate measure, unrelated to contracts to operate bus services. That contract would then not be subject to the time restrictions in this Bill or the community regulation. If we were to accept that there could be contracts for up to 15 years, we would have to extend the duration of the quality contracts schemes themselves, either to 15 years or, as in my noble friend’s amendment, for as long as the transport authority wishes, which in practical terms might as well mean for ever. Again, I am not attracted to that for the same reason; it could create the rigidity and inertia that many of us believe were in the pre-1985 set up. The Transport Act 2000 has rightly required local transport authorities to make long-term plans for the public transport in their areas, and that was a necessary and long overdue reform. Yet it also obliged them to review these plans at five-year intervals. There may be a stage at which the only way of getting a decent bus service in an area is to go for the quality contract option. The Bill will make this option more realistic than it is at present, but that does not mean it is the right option for eternity. Since this option places a lot of power in the hands of the local transport authority, there will be understandable pressure to keep it in place long after it has served its purpose. We think it is in the public interest that these schemes should be subject to a formal review process at least once in 10 years, and measures in this Bill will enable a local transport authority to provide for a scheme to continue in force beyond 10 years without having to start again at the beginning where it has been successful. Without a process for review after 10 years, there is a danger that they will simply carry on, for better or worse, because there is insufficient motivation to suggest otherwise. I am not persuaded by these amendments and hope my noble friend can feel his way to withdraw them. My noble friend asked me to reflect more on the Transport for London position, where there is no 10-year limit. The situation is different in London; its services were never deregulated in the same way as services outside the capital. They have been shaped and configured in a different way, subject to different pressures and demands, as well as pressures for innovation.