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Lord Dixon-Smith: Once again I am grateful to the Minister for his reply. He has filled in a great deal of background detail which helps my understanding of the circumstances. I shall need to study the reply with care, but it seems most helpful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 117 agreed to.

Clauses 118 to 120 agreed to.

Clause 121 [Regulations about schemes]:

[Amendment No. 137 not moved.]

Clause 121 agreed to.

Clause 122 agreed to.

Lord Bach: This may be a convenient moment for the Committee (on Re-commitment) to adjourn during pleasure. I suggest that the proceedings begin again at precisely 8.30 p.m.

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[The Sitting was suspended from 7.30 to 8.30 p.m.]

Clause 123 [Quality contracts schemes]:

[Amendment No. 137A not moved.]

Lord Dixon-Smith moved Amendment No. 137B:

    Page 74, line 40, leave out paragraph (b) and insert--

("(3A) Other local services may be provided in the area described in a quality contracts scheme if they have been in operation for at least twelve months before the quality contract scheme comes into operation.
(3B) The operators of these services must submit an annual review of the quality of the services provided and a plan to achieve the levels of service that are set out in the quality contracts scheme.").

The noble Lord said: This amendment is grouped with Amendments Nos. 138A and 144. The amendments deal with quality contracts as opposed to quality agreements; therefore the issue is different from that in earlier debates. However, reading into what was said previously, I believe that I shall receive the same kind of response to this group of amendments. The amendments seek to preserve the rights of people who already provide a service on a particular route if a local transport authority decides that it should be subject to a quality contract.

This is a necessary step. Here we are dealing with a mechanism which, subject to ministerial approval, could be seriously anti-competitive. One could envisage circumstances in which some local authorities--which, to my great regret, do not always behave in the most responsible and proper way--might come to an agreement with a particular service provider to provide a service to the exclusion of all others. If someone is already providing the service and it is already in a competitive position, we do not think that that is quite right. The rights of the competing organisations to provide a service, in a situation where they have already provided that service for some considerable time, should be preserved.

This is a fairly straightforward issue. I have heard the Minister's replies to earlier debates in respect of quality agreements as opposed to quality contracts. However, it is still worth considering this point. The right to deprive someone of his living by contract is a dangerous thing--but that is in effect what the Bill permits. I beg to move.

Lord Whitty: There is a clash of principle here. The noble Lord is arguing that operators who previously offered services in an area should continue to be allowed to operate them once a quality contract is agreed. The Government believe that that seriously undermines the whole principle of quality contracts. The contracts will signify an arrangement under which a local authority determines the bus network frequency and fares and lets a contract to a single operator or to a consortium of operators.

The presumption in those circumstances must surely be that the local authority decides what bus service is needed and secures that by means of a contract with the operator. If it were open to other bus operators, whatever their history, to have the freedom to continue to operate within a quality contracts area, they might

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well compete directly with the contracted service, probably concentrating in a cherry-picking way on the more profitable of various routes. That would be an odd situation, given that a quality contracts scheme is designed to be all-embracing and is an arrangement to cover the whole area. Frankly, it is not possible to run a quality contracts system in parallel with a partially deregulated regime for buses.

I understand the concern for the pre-existing operator. But that operator will have had the opportunity of bidding for the quality contract and his organisation will have lost the bid. That is a natural feature of commercial life. In this situation it means that the operator will no longer have the right to run those routes. That is the logic. I do not believe that the noble Lord's logic, anxious as he is to protect the previous operator, is sensible. It would undermine the whole concept.

I believe also that the noble Lord's amendments are technically defective; however, I do not expect that he wants me to go into that at this time of night. I ask him to withdraw the amendment.

Lord Dixon-Smith: I hear the Minister's explanation, and it does not surprise me. I had anticipated his response. The proof of the pudding will be in the eating. The mechanism of quality partnership is likely to be a very satisfactory one. The mechanism of quality contract may be satisfactory, if it is used in a very limited way. But if a service is in effect being run by two competing companies, both of which are contributing to and operating a service that is satisfactory to the public, and in that situation the local authority decided that it preferred a "quality contract", one or other of the two operators currently making a living out of that route would be deprived of that living.

I accept that this provision is subject to ministerial sanction and, because the provision of moneys through grant is involved, that is a significant fact. However, I am not sure I am completely satisfied with the Minister's answer. I shall consider what he has said, and then consider what I wish to do about it. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 138 and 138A not moved.]

Clause 123 agreed to.

Clause 124 [Notice and consultation requirements]:

[Amendments Nos. 139 and 140 not moved.]

Clause 124 agreed to.

Clause 125 [Approval of proposed scheme]:

Lord Dixon-Smith moved Amendment No. 140A:

    Page 76, line 10, after ("scheme") insert ("indicating the target for passenger miles in the scheme and what number of passenger miles travelled will be regarded as "scheme failure" under which the scheme shall cease").

The noble Lord said: This amendment seeks to include in the principle of quality contracts some definition of use and benefit to the public; and, if those criteria are subsequently not met, the recognition that

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the quality contract scheme is failing and should therefore be regarded as a failure, and that the scheme will then cease.

I accept that in such a situation there are all kinds of difficulties. But people's public transport needs evolve, as so many things do in life. When one begins a subsidised service one cannot tell with certainty, however optimistic one may be, exactly what will happen to it two or three years down the road. My amendment provides a mechanism to deal with failure so that public money, which comes out of the pockets of taxpayers up and down the country, does not continue to be paid to the operator of a bus service that no one wishes to use. I would have thought that that was a simple and reasonably acceptable principle. The wording of the amendment may not be perfect but I hope that the principle is. I beg to move.

Lord Whitty: As the noble Lord has explained, the amendment requires a local transport authority which approaches the Secretary of State for approval of a scheme to submit specific information about targets for bus passenger mileage. If those targets are not met, effectively the scheme is abandoned. That is a little too prescriptive. The Bill already lays down a test for making and approving a quality contract scheme in the first place. It includes the requirement in Clause 123 that the authority must be satisfied that it is the only practicable way to implement its bus policy so that it meets the best value test of economy, efficiency and effectiveness. The appropriate national authority--the Secretary of State or the National Assembly for Wales--must additionally satisfy himself or itself that the whole scheme is in the public interest.

Once the scheme is up and running it is for the local authority to ensure that the arrangements achieve what is intended. It would not be appropriate to take one aspect of the scheme--namely, the level of patronage in terms of passenger miles--to define when a contract should be ended. Other local authority objectives which relate to congestion, pollution or accessibility may not necessarily be subsumed within the passenger mileage index. It does not seem sensible, therefore, to define a single criterion whereby the system, not the local authority, cuts off the quality contract and decides that the scheme has failed. The Bill already contains suitable powers to revoke or vary schemes in circumstances where there is a problem. I do not believe that an automatic trigger for such a move is appropriate. I hope that the noble Lord will not pursue his amendment.

Lord Dixon-Smith: The Minister's reply is fascinating. I cannot conceive how pollution is reduced if an empty bus runs around the countryside. Apparently, if a particular bus operation is subject to a quality contract it is an environmentally good thing to do, if I slightly misinterpret the reply of the noble Lord. Equally, that same empty bus does nothing to help anyone gain access to anything. This is a serious issue. It may well be that I must think up another amendment. In the light of the Minister's response, it appears that the only quality contract that can

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reasonably be arrived at is one that is subject to a rolling review. There must be some mechanism to prevent the waste of public money on the provision of useless bus services in the countryside. In my somewhat limited experience, local authorities, with the best of intentions, make decisions the results of which subsequently prove to be unfortunate. There must be some mechanism to recognise those circumstances and to deal with them, which means bringing the contract to an end.

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