HL Deb 10 July 2000 vol 615 cc72-87

(" . The Competition Commission may at any time investigate whether the appropriate authority has acted in the interests of the public in connection with a scheme and issue a report setting out any changes to a scheme which it regards as necessary to protect the interests of the public.").

The noble Lord said: Amendment No. 135 seeks to give the Competition Commission an opportunity to look at what is done under quality partnerships. There are a number of arguments in favour of that. However, it appears unnecessary to go over those arguments in view of what the Minister said in his previous response. I do not at this stage wish to take up the time of the Committee on the amendment. I shall need to look carefully at what the Minister had to say in his previous reply. I beg to move.

Lord Macdonald of Tradeston

I submit that the Bill already contains sufficient provisions to promote the public interest. I hope therefore that the noble Lord will feel able not to press his amendment.

Lord Dixon-Smith

I tried to get out of pressing my amendment! I apologise; I tend to muddle the procedures a little every now and then. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 116 agreed to.

Clause 117 [Effect of scheme]:

Lord Dixon-Smith moved Amendment No. 136: Page 71, line 35, leave out subsections (4) and (5).

The noble Lord said: If I have read it correctly, this part of the Bill seeks to bar other operators from using the facilities provided in a quality scheme. We do not think that that is right. If the new quality partnership schemes are to deliver good services, they should be open to all those who wish to become involved.

However, once again, I understand that the Minister may well have covered this area in his previous reply. However, I look forward to receiving an assurance that that is the case. If it is, then I shall be clear about my next action. For the rime being, however, I beg to move.

Lord Bradshaw

Perhaps I may speak to Amendment No. 137. I believe that the noble Lord, Lord McIntosh, has already responded to this point, but for the sake of clarity I should like to cover it briefly. This clause covers the question of enforcement by the traffic commissioners of a quality partnership. Our amendment seeks to establish how those undertakings, which form a part of the quality partnership, will be enforced.

If I have understood correctly what has already been said, the traffic commissioners will have knowledge of the quality partnership in all respects. An operator seeking to register a new service within that quality partnership will need to give an undertaking to the traffic commissioners that the service complies with the quality partnership. The service will then be registered and will be able to run.

However, I am concerned about what will happen if it is found that the service being provided by the new entrant operator does not comply with the details of the quality partnership? Who will bring that to the attention of the traffic commissioners and what action should the commissioners take? Would they deregister the service concerned; namely, take away the licence? Furthermore, does a public hearing need to be held to process this, or would a fine be imposed under the arrangements described later in the Bill which are to replace the withholding of 20 per cent of fuel duty rebate?

Lord Macdonald of Tradeston

Both of these amendments relate to the enforcement of quality partnership schemes. The first amendment, tabled in the name of the noble Lord, Lord Brabazon, and his noble friends, seeks to omit subsections (4) and (5) of Clause 117. Those subsections prohibit a bus operator from using quality partnership scheme facilities unless he has given a written undertaking to the traffic commissioners that he will provide services to the necessary standard, and will do so when using the scheme facilities.

These provisions go to the heart of a statutory quality partnership scheme. They are what crucially distinguishes it from existing voluntary arrangements. Schemes under Clause 113 represent a partnership in which both operators and local authorities agree to enter into commitments. As I said earlier, the authority will undertake to provide certain facilities such as bus lanes or other bus-related infrastructure. In return for using those facilities, the operator will agree to provide services to certain standards which may, as was pointed out by my noble friend Lord Berkeley, involve the bus itself. However, other aspects such as driver training and customer care may also form parts of those services. Once the scheme has been made, those commitments will be binding.

Under the clause, authorities are under a duty to provide and maintain the facilities, while operators must meet the standards if they are to enjoy the use of the facilities. Omitting subsections (4) and (5) would, I believe, negate the whole object of Clause 113.I believe that the noble Lord, Lord Dixon-Smith, anticipated that I would not commend that course to noble Lords. It would critically weaken a central plank in the Bill.

The second amendment, tabled in the names of the noble Baroness, Lady Thomas of Walliswood and the noble Lord, Lord Bradshaw, would extend the regulation-making powers in Clause 121 to include regulations with respect to the means of enforcing such undertakings and enforcement with regard to, operators … excluded from the partnership". I think this may arise from a misunderstanding of the Bill. It may therefore be helpful—the noble Lord, Lord Bradshaw, invited me to do this—if I take a moment to explain exactly how the enforcement mechanism is intended to work. I hope that that will persuade noble Lords opposite that no further provision is needed.

The position is as follows. As I have said, there is a balanced partnership in which both local authorities and bus operators must bring something to the benefit of the travelling public. Once a quality partnership scheme has gone through the consultation process and has been agreed, it is duly made and brought into force under Clause 115. Bus operators can choose to opt in or out of the scheme. If they opt out, they may continue to run bus services in the area, subject to the normal registration process, but they will be denied access to the special facilities provided by the local authority in connection with the scheme. They could not, for example, make use of a new bus lane to avoid traffic congestion on the route, or perhaps they could not use the new quality bus shelters provided with real time information displays about when the next bus is due. If they do, they will be operating in breach of Clause 117(4). That in turn means that they will be open to action by the traffic commissioners. One can imagine that other bus operators, as well as the local authority, would be keen to report any breaches of the prohibition. It would otherwise be a case of one bus operator, who had not invested, trying to steal a march on another who had.

On the other hand, operators choosing to opt in to the quality partnership scheme must give a written undertaking to the traffic commissioners under subsection (4) that they will provide bus services to the necessary standards while using the scheme facilities. If they fail to do so, except in the circumstances set out in subsection (5), they also risk sanction from the traffic commissioners.

Perhaps I may remind noble Lords that the range of sanctions open to the traffic commissioners for breach of a quality partnership scheme is the same as currently applies to breach of the bus registration system. As paragraph 95 of the Explanatory Notes explains, this is secured by virtue of Schedule 11, paragraphs 10 and 22. Those paragraphs apply the relevant powers from the Transport Act 1985. They include the power to levy a financial penalty on the operator, currently in the form of a requirement to repay 20 per cent of the fuel duty rebate received for the preceding three months.

As I explained, in the past the traffic commissioners have shown themselves ready to impose such penalties on under-performing operators. Additionally, Clauses 154 and 157 of the Bill provide for greater flexibility both in the circumstances in which penalties can be paid and in the size of those penalties. They will ensure that the financial penalty available is effective and flexible, and thus capable of being varied to suit the circumstances of a particular case. Beyond that, the traffic commissioners can impose conditions on the operator's "O" licence, limiting the number of vehicles he may operate or, in extreme cases, prohibiting the bus operator from running any local services for a specified period of time or until other appropriate remedial action has been taken.

I hope that that satisfies noble Lords that a wide range of penalties has been provided. In our view, further provision by way of regulations on enforcement are not needed. With those remarks, I hope that the noble Lord will feel able to withdraw his amendment.

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.

[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—

  1. ("(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.
  2. (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 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 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 it self 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 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 he some mechanism to recognise those circumstances and to deal with them, which means bringing the contract to an end.

Lord Beaumont of Whitley

Before the noble Lord delivers his verdict in this case. I believe that he makes a very serious point. I am sorry that I did not intervene earlier. I hope that if at this stage the noble Lord withdraws his amendment he will return with something else at a later stage.

Lord Dixon-Smith

The noble Lord almost takes the words out of my mouth. I must look very carefully both at the response of the Minister and the wording of my amendment to see how it can be improved. The noble Lord will be relieved to hear that at least at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 141 not moved.]

Clause 125 agreed to.

8.45 p.m.

Clause 126 [Making of scheme]:

[Amendment No. 142 not moved.]

Lord Stoddart of Swindon moved Amendment No. 142A: Page 76, line 34, after ("area") insert ("or route or routes").

The noble Lord said: This is really a probing amendment. At present the Bill provides that a quality contract scheme must specify the area to which it relates. However, bus services are organised on a route basis and many different routes can cross the same area. It is also possible that more than one operator will provide services in any particular area. In its current form, therefore, the Bill fails to recognise the complexity of the present bus routes and appears to restrict the scope of quality contracts to a defined geographical area. That may not work.

I believe that a quality contract could and should be considered for one or more routes, not just one particular area. The amendment would allow scope for greater flexibility and innovation. I hope that my noble friend is able either to accept the amendment or reassure me that it is unnecessary. I beg to move.

Lord Whitty

If my noble friend's objective is to achieve flexibility and room for manoeuvre, the clause provides more than would be the case if it was amended in the way he suggests. The clause currently requires the tenderer not only to specify the area but to provide an outline of the local services to be provided. If we went further and required a specification as to routes, the room for innovation would be limited in terms of the tendering. The detailed routes may not be settled at the point of tender. We have deliberately framed the provision in a way which allows a degree of latitude to meet the transport needs of the particular area. If we simply specified pre-existing routes, or those routes plus a few desirable routes, it would place the process into a straitjacket whereas tenderers, particularly in a competitive situation, might well come forward with alternative ways to meet the transport requirements.

I believe that there is a respectable argument for keeping the provision in its present form and allowing the details of particular routes to be left to the tendering process. However, the process already requires a comprehensive outline of the routes to be provided. We believe that the local authority should have freedom of manoeuvre. The tendering process is itself a bit of an iterative process. With that explanation, I hope that my noble friend is content to withdraw his amendment.

Lord Stoddart of Swindon

I thank the Minister for that helpful reply. The noble Lord will understand that we need to think about the matter. We may want to return to the issue at a future stage, but I doubt it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Mackenzie of Culkein moved Amendment No. 142B: Page 76, line 36, leave out ("21") and insert ("12").

The noble Lord said: The amendment deals with the issue of time-scale. Clause 126(2)(b) provides for a 21-month delay in the introduction of a quality contract scheme once approval has been secured. I am not convinced that such a lengthy delay is necessary given that all the parties—they will include the existing operators—will have been consulted during preparatory stages and will appear, therefore, to have had ample time to plan ahead for the introduction of the scheme. I believe that a 12-month period is sufficient unto the day. However, it is a probing amendment. I ask the Minister why such a lengthy delay has been specified in the Bill. I beg to move.

Lord Hogg of Cumbernauld

Amendment No. 143, which stands in my name, is linked with Amendment No. 142B. The purpose of my amendment is to ensure that compensation is paid to bus operators who lose business—no doubt in some cases their entire business—as the direct result of the imposition of a quality contract.

The lack of a clause allowing for the payment of statutory compensation raises a number of issues: moral issues; employment issues; and issues of future investment. On moral grounds, it cannot be right for a business or a part of a business to be taken away as a direct result of a change in the law without some form of compensation being paid. I assume that the reasoning behind the Government's decision was that the 21-month lead-in period prior to a quality contract would be sufficient time for operators to adjust. I am afraid I find that difficult to accept.

Indeed, in the case of smaller operators who cover only a single area and who lose out as a result of exclusion from an exclusive contract, there will be nowhere else for them to go and it is very likely that liquidation, with resultant job losses, will be the only option.

That brings me to my second point concerning employment issues. In the case of larger operators, it is unlikely that all the bus workers could be found jobs in other parts of the country even if they wished to move. The issue of pension rights is one that would need careful consideration; and, at a time when the bus industry is working hard to retain staff through improved conditions of employment for workers, the loss of job security would be a serious blow.

Lastly, I turn to investment. While I am sure that the larger bus operators in the United Kingdom would be able to bear the loss of a certain amount of their business, there will still be an adverse effect on their ability to invest in better passenger services. The Government have a duty to ensure that bus passengers are not penalised as a result of this policy. I hope that my noble friend will clarify the Government's position and give me some assurances.

Lord Bradshaw

I support the noble Lord, Lord Hogg of Cumbernauld. There may be two fairly large bus companies in a town or city both of which have bought the companies, the ownership having passed on since the original days of privatisation. In the event of a quality contract being awarded, one of them could find that a large part of its business disappeared. It has purchased the goodwill of a business as well as the fixed assets such as the buses. It has taken over the labour, often under TUPE regulations. It seems only fair and, as the noble Lord said, natural justice that, provided the people who are dispossessed have been behaving normally, they should receive some compensation.

Is the Minister satisfied that the arrangement conforms with other law? Is the noble Lord satisfied that it is not open to challenge either here or in courts in other places?

Lord Dixon-Smith

Amendment No. 145, which stands in my name, is grouped with these amendments. It is a fortunate grouping. It sets out to achieve the same purpose as the amendment tabled by the noble Lord, Lord Hogg of Cumbernauld. If we were to flip a coin to see which amendment we preferred we might need a two-sided coin. His amendment may be better than mine. However, the principle is the same.

We are discussing the integrity of the process under which quality contracts as opposed to quality partnerships are made and awarded. If a quality contract is made only in those circumstances where nothing else will provide a service, there may not be a problem. The difficulty is that the Bill does not seek to define the circumstances under which a quality contract is appropriate as opposed to a quality partnership.

For perverse reasons, a local transport authority could fall out with someone who is providing bus services. It may decide that the solution is to provide a quality contract scheme and thereby deprive an otherwise reputable company or business of its livelihood. That would not be correct or proper. In that situation, the issue of compensation is entirely appropriate. We are not talking only of compensation for the business. There are questions of redundancy, as the noble Lord, Lord Hogg of Cumbernauld, said. There is the issue of redundant investment, and all those other factors.

If the Minister replies that the appropriate relevant authority approves a quality contract scheme in a situation where there were competitive services, we have no difficulty. But, if he cannot give that assurance, I suspect that we may need to think again. I am happy to support what has been said on the matter.

Lord Whitty

Despite the multi-party approach, I find the basic concepts of noble Lords misplaced. We are talking here about a contract from a public authority. It has changed the nature of the contract; nevertheless there is an open contract procedure. One company may not gain that contract; another company will do so. It is not normal for the public authority in such circumstances to compensate the loser for failing to get that contract. I do not envisage the situation as any different from any other public sector contract in that respect. All bus operators who already operate, or desire to operate, within that area will have been given a chance to bid. They will have had a fair chance. They will have received the invitation to tender; and they will have been able to put in a tender. It will be fair competition at that point. But, as with many other public services, at the point where the contract is awarded that contract becomes exclusive for the period in question.

We recognise that there could be a serious transitional problem in moving from one operator or partial operator to a single operator. There are staff, capital and operational implications. That is why we have provided for a period of 21 months to elapse and why we could not accept a narrowing of that period to 12 months. Clearly, in many circumstances we would need to deal with a transitional period for the transfer of staff, of routes and, in some cases, of buses.

The two issues which have been raised are complementary but in the opposite way to that in which they have been raised. As regards employees, raised specifically by my noble friend Lord Hogg, nothing in the Bill affects the normal application of TUPE regulations. Their broad purpose is to ensure the ordered transfer of employees. Where a quality contract scheme involves any transfer of an undertaking within the meaning of the regulations, as in most cases it would, the protections afforded by TUPE will have direct effect. The situation is more complicated in relation to pensions, but the TUPE arrangements which exist in normal circumstances may in future apply in these circumstances, too.

I therefore believe that Members of the Committee are barking up the wrong tree. The principle of a quality contract is that it becomes an exclusive contract and that compensation is not appropriate.

9 p.m.

Lord Bradshaw

The situation which the Minister described is credible in London where route tendering takes place and somebody loses a route or two as there is a swings-and-roundabout situation within the city. Some people have to move jobs not without disruption to their lives. However, within cities such as Manchester, it is possible that the Government will be taking away whole livelihoods. The opportunity of redeploying is less likely to arise in, say, Manchester than in relation to routes in London.

If quality contracts are let to a consortium of operators, that will not necessarily apply. However, I believe that in some cases a city-wide or PTE-wide quality contract could lead to someone having stranded assets. That would not apply in relation to the letting of contracts in London or to refuse disposal contracts.

Lord Dixon-Smith

The Minister did not pick up the point which I thought I had made plain as regards the circumstances in which the Government might agree to a quality contract scheme. I have every sympathy with a quality contract when there is only one operator or, as in some rural areas, none at all. There, the only way of running a service, for which one would pray there was a level of demand, would be through such a scheme. There is a clear distinction between that situation, which would warrant a quality contract scheme, and the one outlined by the noble Lord, Lord Bradshaw. He pointed out that under the legislation it is conceivable that a passenger transport authority for a metropolitan area might seek to make a single quality contract scheme and thereby deprive a number of people, who are providing a good service and a living for many people, of the ability to make that living. Therefore, there is a distinction.

I wish that the Minister had answered my point but perhaps in the flow of his eloquence he simply forgot.

Lord Whitty

I did not forget it, but the answer is more complex than the noble Lord was looking for. The Secretary of State, when approving a quality contract, will take into consideration everything which surrounds it; for instance, the content and the way in which it has been drawn up. Certain aspects would undoubtedly be possible disruption, the non-optimum use of existing assets and so forth. All those issues could be taken into account in deciding whether to approve.

As regards the noble Lord's second remark, quality contracts come into play when the local authority is satisfied that it cannot reach its transport objectives without going down that road. Therefore, there will have been a failure in the previous system. Whatever the operator was providing or potentially could provide, the local authority will already have judged that it would be better provided on a single arrangement with a single operator or consortium of operators with statutory backing. That judgment will have been made by the local authority before it goes down the quality contract road.

There is a closer analogy with the situation mentioned by the noble Lord, Lord Bradshaw, relating to refuse collection. In most circumstances in which the contractor changes, the majority of staff, and the majority of trucks, are taken on by the new contractor. I suspect that we would see a similar situation were a major local authority such as Manchester to move to a single and new contractor under a quality contract. Therefore, I believe that the degree of disruption has been exaggerated during discussion of the amendment.

Lord MacKenzie of Culkein

I recognise the difficulties and complexities to which my noble friend referred. I shall want to reflect on whether I with others have been barking up the wrong tree, but in the mean time I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 143 not moved.]

Clause 126 agreed to.

Clause 127 agreed to.

Clause 128 [Effect of scheme]:

[Amendments Nos. 144 and 145 not moved.]

Clause 128 agreed to.

Clause 129 [Tendering for quality contracts]:

Lord Dixon-Smith moved Amendment No. 146: Page 78, line 38, at end insert— ("() An invitation to tender under this section may not include conditions with respect to the terms and conditions of employment of persons to be employed in providing any service to which the invitation to tender relates.").

The noble Lord said: I have been trying to decide whether this is the reciprocal of Amendment No. 121A, moved by the noble Lord, Lord Stoddart of Swindon, or whether it is the reverse. But I am afraid that in the end I had to conclude that it was the opposite! However, that gives me cause for hope because, if it is the opposite of that particular amendment, presumably it should support the position that the Minister took in rejecting that amendment. Indeed, I believe that the Minister made the case for this amendment when he rejected that one. I must confess that I had some difficulty in understanding why the two amendments were not grouped together in order that we might have this rather interesting debate at the same time.

However, in response the Minister said that the Bill was about service to the public and not about terms and conditions of employment. He said that one could not legislate in this Bill for the employees of bus companies. In a sense, that makes my case. The history books show that on occasion in the past local authorities—I do not wish to point a finger in any particular direction—were not unknown for slipping clauses into contracts which related to the conditions of service of employees of contracting companies. I felt that that was improper then and I believe that it would be improper now.

I support what the Minister had to say earlier and I hope, therefore, that he might support me in this amendment. I beg to move.

Lord Whitty

The noble Lord, Lord Dixon-Smith, tempts me, but I fear that he misinterprets me. My previous position in relation to the amendment moved by my noble friend Lord Stoddart was that we should not on the face of the Bill require local authorities to be constrained to observe the terms and conditions of the pre-existing contractor. That remains my position. However, the Government would wish to change the situation where effectively there was a blanket ban on local authorities being able to do so, should they wish to and should they regard that as part of the way in which they can achieve better value.

Contrary to the noble Lord's view, we believe that it is perfectly proper for local authorities to do that if they wish to exercise that degree of influence. It may well be, for example, that training provisions and the level of experience of workers is important to the delivery of value for money and performance standards. Local authorities should be able to take such matters into account.

However, to complicate matters further, that is not the position at present. The Government intend to modify the current situation by means of an order under the Local Government Act which would allow local authorities to observe employment terms and conditions on a voluntary basis. I am opposed to that being done, as my noble friend Lord Stoddart argued, on a mandatory basis, but I would allow local authorities to do so. In the meantime, and until I move that order, the noble Lord's amendment is redundant because the current position is that local authorities are banned from so doing. Therefore, I believe that we should have the substantive discussion on an order under local government legislation in a few weeks' time.

Lord Dixon-Smith

I do not wish to enter a debate about when we shall break for the summer. However, it is interesting, to say the least, to see how the ground has shifted between debate on Amendment No. 120 and that on Amendment No. 140, if I may express it in those simplistic terms.

I am quite pleased to hear that my amendment is redundant, although that will lead me to certain conclusions. At the moment I am somewhat disturbed to hear that the matter can be settled in another way under different legislation in a few weeks' time, even if none of us is here. However, I suspect that we shall have to be here in order for that to happen. Clearly, there will be something to say at that point.

I believe that this is an interesting issue. I shall need to consider both what the Minister said and what he considers to be appropriate courses for future action. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 146A: Page 79, line 24, at end insert— (" () If no acceptable tender is received or if there are no tenders for a service, after consultation, the terms of the contract shall be revised and the tender procedure re-started.").

The noble Lord said: This small amendment is intended simply to deal with the situation in which no acceptable tender for a quality contract is received. People may say that that cannot happen because one will never arrive at a quality contract if one does not negotiate it. However, in an open tender process it is conceivable that no satisfactory tender—or no tender at all—will be received. There should be provision to deal with that situation. I should prefer the terms of the contract to be looked at and the tender procedure to be gone through again in full. The alternative appears to be for the authority to come to a negotiated conclusion with someone who had previously not tendered satisfactorily.

Local authorities must have proper tendering processes. An element of negotiation may help to make some complex contracts more satisfactory, particularly for construction projects, but we are not dealing with a situation of that complexity. For the sake of everybody's peace of mind, the Bill should contain a mechanism such as that outlined in the amendment. I beg to move.

9.15 p.m.

Lord Whitty

The Bill already recognises the possibility of there being no acceptable tenders and makes provision for regulations under Clause 130(2)(a) in those circumstances. It is not sensible to prescribe in detail in the Bill what should happen. Local authorities will have a number of options open to them. They might include short-term action, such as the use of emergency powers—which is covered by the same clause—to maintain continuity of service. There might be a retendering exercise, with or without modification to the proposed contracts. A local authority could even fundamentally review the need for a quality contract scheme.

It is not helpful to box local authorities into a single course of action in those circumstances. They should be free to take whatever action is appropriate, subject to any regulations that may be made. We should leave local authorities with that flexibility, given that the Bill already recognises that eventuality.

Lord Dixon-Smith

At least I should be grateful that there is a possibility of regulations rather than guidance. I shall need to consider carefully what the Minister has said. We are discussing people's livelihoods, so the issues involved are important. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 129 agreed to.

Clauses 130 to 133 agreed to.

Baroness Thomas of Walliswood moved Amendment No. 147: After Clause 133, insert the following new clause—