Local Transport Bill [HL]

My Lords, we have not had a full discussion on these points, and I did promise in Committee to look at them again. There are two separate issues: the leasing of vehicles to community transport groups and whether the PTE should have the power to operate the vehicles as a ““last resort””. I shall deal with these in reverse order. I apologise for not dealing as properly as I should have with the first of the two issues, which is why I shall spend a little more time on it towards the end. We said that we would reflect on the issue of operating powers for PTEs, even in the narrow terms set out in Amendment No.70. Indeed, the more we think about it, the less convinced we tended to be. In Committee, noble Lords referred to the comparable case of rail franchises, and my noble friend Lord Berkeley mentioned that the Strategic Rail Authority had kept a team of qualified people at the ready in case it was necessary to step in to prevent a service being disrupted by the failure of a contractor. No doubt that piece of information was provided to support the need for such a measure, but in fact it also brought home to us just what an enormous commitment it would be for a PTE to profess to be the ““operator of last resort”” and to have the necessary legal powers. For the powers to be of any use it would have to be possible for the PTE to exercise them at a moment’s notice, otherwise they might as well let an emergency contract. My noble friend Lord Snape has made quite a lot of that argument. I agree with him: it would be very difficult to acquire that level of expertise in that sort of timeframe. The practicalities of it are that they would need a public service vehicle operator’s licence, the necessary financial standing and a professionally competent transport manager available at any time the emergency might arise. They would also need the vehicles and drivers. Arguably those of the failed company would be available, but they would not necessarily fall into the PTE’s lap. What is more likely to happen, particularly if we are talking about a company of any size, is that receivers or administrators would be called in and would continue to run the company’s affairs as best they could until a buyer was found. In particular, they would be likely to want to keep services going as these would bring in revenue to abate any unfortunate losses. Maintaining contractual obligations would take precedence over discretionary activities, so services outside quality contracts schemes may be more at risk. That might not happen in the case of small operators, particularly sole traders, but they would generally be managing small contracts, and I think that one could fairly argue that it should be easier to replace them on the open market. I am told that where, for example, a contractor defaults on a schools contract, there is little difficulty in finding another operator to step in, even at very short notice. Local transport authorities with a quality contracts scheme have powers to let emergency contracts under Section 131 of the Transport Act 2000 until a new permanent contractor is found. The PTEs, I understand, are more worried about what would happen if a big contractor should fail and, for any reason, the administrators were unable to keep the company trading, or chose not to do so. In that case it is hard to see how a PTE could step in more effectively than another operator, or several other operators, each taking a slice. The PTE would need a very large operator’s licence, say for as many as 200 or 300 vehicles, and a means of getting hold of those vehicles and the people to drive them. One assumes that they would not have them on permanent standby. I find it surprising that this argument has been put forward as robustly as it has. I do not think it is a practical proposition; I am not sure that PTEs would welcome these powers in the long run; and I think it would be onerous to require them to set up a permanent shadow organisation which had little to do for most of the time. Finally, I doubt whether it would provide what we could reasonably envisage as good value for money. I have rather more sympathy for the other proposition contained in the group of amendments. This is a separate issue. Again I reiterate my apology to my noble friend that in Committee we were so exercised about the ““operator of last resort”” issue that we rather overlooked this one. I am sorry about that because it is clear that there may be some merit in this amendment which was not fully exposed in that debate. I fully understand that one practical way in which a PTE could help the community transport sector, particularly dial-a-ride services for older or disabled people, is by purchasing suitable vehicles and leasing them, perhaps for a nominal fee. This may be a more cost-effective way of supporting these services than other forms of grant aid—and it appears that, unlike local authorities, they may be prevented from doing so because of the effect of the disapplication of the leasing power in Section 10 of the Transport Act 1968. I am not certain whether the amendment would entirely achieve what my noble friend is arguing for. It would seem to extend only to services aimed at elderly or disabled people. That is because it would be caught by the words ““public passenger transport services”” which appear at the end of the paragraph in Clause 58. Services provided under Section 19 permits—the permits used by community transport bodies—are not included in that term unless they are, "““provided wholly or mainly to meet the needs of members of the public who are elderly or disabled””." I am not sure whether my noble friend intended the leasing power to be restricted in that way. I suspect that he did not. I also suspect that the PTEs may want the power to extend more widely, even if their main concern is to support services for older or disabled people. My commitment today is simply this: we can see merit in the amendments. We are happy to take away this issue and see whether we can move in the direction indicated in my noble friend’s amendment and better perfect it to fit the purpose which I think he probably intended for it. I hope on those terms that the noble Lord will be able to withdraw this amendment and to not pursue the others in the group.