Bus Services (No. 2) Bill [ Lords ] (Third sitting)

The Committee consisted of the following Members:

Chairs: Dr Rosena Allin-Khan, Sir Roger Gale, Carolyn Harris, Sir Edward Leigh, Dame Siobhain McDonagh, † Sir Desmond Swayne

† Aquarone, Steff (North Norfolk) (LD)

† Berry, Siân (Brighton Pavilion) (Green)

† Conlon, Liam (Beckenham and Penge) (Lab)

† Dearden, Kate (Halifax) (Lab/Co-op)

† Egan, Damien (Bristol North East) (Lab)

† Gardner, Dr Allison (Stoke-on-Trent South) (Lab)

† Hack, Amanda (North West Leicestershire) (Lab)

† Hall, Sarah (Warrington South) (Lab/Co-op)

† Kohler, Mr Paul (Wimbledon) (LD)

† Lightwood, Simon (Parliamentary Under-Secretary of State for Transport)

† Mayer, Alex (Dunstable and Leighton Buzzard) (Lab)

† Mayhew, Jerome (Broadland and Fakenham) (Con)

† Myer, Luke (Middlesbrough South and East Cleveland) (Lab)

† Newbury, Josh (Cannock Chase) (Lab)

Race, Steve (Exeter) (Lab)

† Robertson, Joe (Isle of Wight East) (Con)

Smith, Rebecca (South West Devon) (Con)

Simon Armitage and Adam Evans, Committee Clerks

† attended the Committee

Public Bill Committee

[Sir Desmond Swayne in the Chair]

Bus Services (No. 2) Bill [Lords]

Clause 7

Criteria for granting service permits

Amendment proposed (this day): 46, in clause 7, page 3, line 23, at end insert—

“(1A) In subsection (5), omit from “and” to end.”—(Jerome Mayhew.)

Question again proposed, That the amendment be made.

I remind the Committee that with this we are discussing the following:

Amendment 47, in clause 7, page 3, line 26, leave out “may” and insert “must”.

Amendment 48, in clause 7, page 3, line 27, leave out from “there” to end of line 34 and insert—

“is a benefit to persons making journeys on the proposed service.”

Amendment 49, in clause 7, page 3, line 36, leave out “may” and insert “must”.

Amendment 50, in clause 7, page 3, line 37, leave out from “that” to “will” and insert—

“the proposed service has benefits to the economy of the area to which the scheme relates, or to persons living in that area,”.

Government amendments 4 and 5.

Clause stand part.

Clauses 8 and 9 stand part.

It is a pleasure to serve with you in the Chair, Sir Desmond.

The Bill recognises that commercial operators can play a key role in providing commercial services that complement franchising schemes and add value to the overall bus offer for local transport users. That includes cross-boundary services, which provide crucial links between communities. That is why we are legislating to introduce new tests that franchising authorities can use in determining whether to grant service permits. The tests allow authorities to consider a much wider range of benefits that services proposed by commercial operators could provide. The new tests will also allow authorities to tolerate some adverse effects to franchised services if they are outweighed by the benefits. Overall, franchising authorities will have greater scope to grant service permits and harness the additionality of the market in delivering great bus networks.

The amendments tabled by the hon. Member for Broadland and Fakenham would, however, undo many of the improvements we are making, and undermine the service permit regime as well as local transport authorities’ ability to franchise. The amendments would largely remove franchising authorities’ ability to even consider whether a commercial service would have an adverse effect on franchised services, while compelling them to grant service permits in the vast majority of cases. In practice, that would mean that commercial services could compete directly with franchised services, undermining the service finances and goals, and ultimately making franchising unworkable.

In direct response to the hon. Member’s comments, the Bill gives greater scope for authorities to grant these additional services. However, as he acknowledged, it cannot be a free-for-all, which is what the amendment would in effect cause. We understand that in Greater Manchester the vast majority of service permits have been granted under the existing test, and the Bill’s measure will allow franchising authorities even more flexibility to grant service permits with applications from operators or in the interest of passengers and local people.

Will the Minister give way?

I am going to try and make some progress. We have spent a significant amount of time on this.

The hon. Member for Broadland and Fakenham once again raised Manchester’s experience with bus franchising. He again quoted figures on the cost of franchising in Manchester. On the first day of the Committee I explained that the figures referred to the level of investment being made to improve Greater Manchester’s bus network. The adoption of franchising in Greater Manchester has resulted in little additional cost, and evidence to date shows that the model is more efficient and effective at delivering value for money.

Another franchising model in Jersey encourages both operators and local transport authorities to reinvest into the bus network. The operator keeps fare revenue, and profits that go over a certain set limit are shared between the LTA and the operator. Money is then reinvested by the LTA to improve services. The model adds flexibility and actually supports innovation and draws on the experience of the operator. This model has been tested in other areas through our franchising pilot programme.

The Bill makes some limited changes to the role of traffic commissioners in England, including changing the default position for the registration of services operating under the service permits within a franchised area. The traffic commissioner will also have powers to act against operators who breach the Bill’s mandatory training requirements; we will come on to that later in the Committee’s debates.

The presence of traffic commissioners across the regions and countries of Great Britain means that they are well placed to make decisions about the operation of bus services in different places. The responsibility of traffic commissioners extends beyond buses. To mention just a couple, it includes the licensing of operators of heavy goods vehicles and other service vehicles, and the granting of vocational licences. These responsibilities clearly extend beyond the Bill’s purpose; this Bill is not the place for a wider debate on the role of traffic commissioners.

It is jolly nice to see you in the Chair, Sir Desmond. As I spoke to the amendment before lunch, it falls to me now only to press it to a vote.

Question put, That the amendment be made.

2|0|2|11|The Committee divided:|Question accordingly negatived.||0|0

Amendment proposed: 47, in clause 7, page 3, line 26, leave out “may” and insert “must”.—(Jerome Mayhew.)

Question put, That the amendment be made.

3|0|2|11|The Committee divided:|Question accordingly negatived.||0|0

Amendment proposed: 48, in clause 7, page 3, line 27, leave out from “there” to end of line 34 and insert

“is a benefit to persons making journeys on the proposed service.”—(Jerome Mayhew.)

Question put, That the amendment be made.

4|0|2|11|The Committee divided:|Question accordingly negatived.||0|0

As amendments 49 and 50 are almost identical to the previous amendments, my discretion is not to proceed to a vote.

Amendments made: 4, in clause 7, page 4, line 10, leave out “but” and insert “and”.

Amendment 5, in clause 7, page 4, line 11, leave out

“begins or ends, or begins and ends,”

and insert

“has one or more stopping places”.—(Simon Lightwood.)

Clause 10

Report on assessment of proposed scheme

I beg to move amendment 57, in clause 10, page 6, line 6, at end insert—

“(A1) Section 123B of the Transport Act 2000 (assessment of proposed scheme) is amended in accordance with subsections (A2) to (A4).

(A2) In subsection (2)(a) omit ‘and’;

(A3) In subsection (2)(b), after ‘action’ insert—

‘, and

(c) assess the adequacy of central government funding to support the provision of bus services under the scheme.

(2A) The assessment under subsection (2)(c) must include—

(a) an evaluation of whether available funding is sufficient to meet the projected costs of the franchising scheme, and

(b) an analysis of the funding required to maintain or improve service levels across all affected communities.’

(A4) After subsection (6) insert—

‘(6A) An assessment under this section must be made publicly available and submitted to the Secretary of State.’”

With this it will be convenient to discuss the following:

Amendment 59, in clause 10, page 6, line 37, at end insert—

“(11) The Secretary of State must, no later than three months after the day on which this section comes into force, lay before Parliament regulations specifying the qualifications and criteria required for a person to be considered an ‘approved person’ for the purposes of section 123D of the Transport Act 2000.

(12) A statutory instrument containing regulations under subsection (11) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

Clause stand part.

Clause 11 stand part.

Government new clause 4—Miscellaneous amendments.

New clause 15—Franchising scheme: restriction—

“Where a franchising authority, or two or more franchising authorities acting jointly, prepare an assessment of a proposed franchising scheme under section 123B of the Transport Act 2000 but fail, for any reason, to make and publish a scheme under section 123H of the Transport Act 2000, they must not initiate another franchising assessment for the same area, or a substantially similar area, for a period of five years from the date on which the assessment was prepared.”

New clause 36—Franchising assessments to consider integration of public transport—

“In section 123B of the Transport Act 2000 (assessment of proposed scheme), at the end of subsection (3) insert—

‘(g) how the proposed scheme will allow for or facilitate integration across modes of public transport.’”

It is a pleasure to serve under your chairship, Sir Desmond. While I am broadly supportive of much of the Bill, we must not lose sight of the fundamental challenge—the lack of sufficient funding and expertise in local authorities to fully take advantage of the powers that it provides.

Under section 123B of the Transport Act 2000, when a local transport authority seeks to propose a franchising scheme, it must first produce an assessment detailing the likely effects of that scheme and compare it with other courses of action, such as changes to an enhanced partnership. Amendment 57 would strengthen that process by requiring an assessment to also include evaluation of central Government funding. Specifically, franchising authorities would need to assess the level of support available from central Government, to determine whether it was sufficient to meet the costs of delivering the proposed scheme. That information would then be reported directly to the Department for Transport and the Secretary of State herself.

This amendment would be, in my view, a win-win for local authorities and central Government. For local authorities, it would introduce a practical safeguard. They would be required to assess whether they could realistically afford to deliver a franchising scheme before embarking on one. It would help to ensure that councils were not set up to fail by taking on a scheme beyond their financial capacity. Perhaps even more importantly, it would also give central Government and the Secretary of State a direct line of sight into the real financial barriers facing bus franchising at local level. It would provide clear, evidence-based insight into how insufficient funding is limiting the potential for bus reform across the country. That data would be invaluable in justifying and shaping increased investment in our bus networks and informing the Secretary of State’s discussions with the Treasury.

With amendment 59, we seek to gain further reassurance from the Government regarding how an approved person will be defined for the purposes of assessing franchising schemes. Under the current framework in the Transport Act, an auditor must be appointed to evaluate such a scheme. That auditor is defined quite specifically as a local auditor under chapter 2 of part 42 of the Companies Act 2006, as modified by schedule 5 to the Local Audit and Accountability Act 2014. The Government have indicated that the move away from that rigid definition is intended to reduce costs for local authorities. I recognise and welcome that intention. Narrowly defining who can act as an auditor has led to a limited pool of individuals qualified to undertake these assessments, driving up costs and potentially creating delays.

However, although we are now shifting towards a new, more flexible concept of an approved person, we have yet to receive a clear definition of what that means in practice. A few months ago, the Minister’s colleague in the other place, Lord Hendy, stated that the Government were

“engaging with a range of stakeholders to identify appropriate qualifications”.—[Official Report, House of Lords, 28 January 2025; Vol. 843, c. GC43.]

That is a sensible approach, but we are now some six months into the Bill’s passage through Parliament. I would have hoped that by this point we would have greater clarity, so will the Minister update the Committee on what progress has been made in defining an approved person? Furthermore, can the Minister assure us that the definition will be published promptly following the passage of the Bill? Given the state of bus networks across the country, we must move with urgency. Local transport authorities need certainty so that they can begin planning and using these powers without unnecessary delay. The faster we can clarify key definitions, the faster we can deliver meaningful improvements for passengers.

I will speak against Opposition new clause 15. I understand and respect the intention behind it: none of us wishes to see local transport authorities repeatedly pursuing unviable franchising schemes, wasting public money in the process. That concern is valid. However, imposing a blanket five-year ban on reapplying for franchising powers would be overly punitive, undemocratic and unworkable in practice.

First, the restriction would cut across local democratic mandates. If an election took place during that five-year period and the new administration was returned with a clear commitment to pursue bus franchising, it would be entirely wrong that it should be barred from doing so simply because of the decisions of a previous administration. We should not be handcuffing future councils based on the failures or misjudgments of their predecessors.

Secondly, the context in which franchising schemes are assessed is not static. Demographics change, behaviours shift and new housing developments, business hubs and changing patterns of work and travel could all significantly alter the viability of a scheme in a matter of just a few years. A scheme that was not feasible in 2025 may be entirely workable by 2027. By tying the hands of local authorities in this way, we would be limiting their ability to respond dynamically to the needs of their residents. That risks holding back much-needed improvements for passengers, who expect and deserve modern and efficient bus services. The new clause would deter ambition and delay progress. We should be encouraging local innovation and adaptation, not binding it with arbitrary time limits.

I turn to new clause 36. My hon. Friend the Member for North Norfolk will provide a thorough account of the detail behind the proposal, but I will focus on the broader principle. With the Government’s integrated transport strategy currently in development, it is vital that we embed our focus on integration within our bus network. In my constituency of Wimbledon, I see at first hand the benefits of an integrated transport system. Transport for London has rightly been held up as the global gold standard in that regard. At Wimbledon station, a key hub for rail, trams and the underground, bus services connect passengers to harder-to-reach nearby areas such as New Morden, Lower Morden and Merton Park. That seamless multimodal connectivity is precisely what passengers value.

When local authorities embark on franchising, it is essential that integration is not an afterthought, but a core requirement. That means ensuring that franchising schemes actively assess opportunities to improve integration with rail, with active travel and with other bus routes, and that those assessments are built into the planning process from the outset. That would not only deliver better outcomes for passengers, but support and complement the Government’s objectives around integrated, efficient public transport systems. We have an opportunity to build a system that works together, not in silos. I urge the Government to grasp it.

It is a pleasure to serve under your chairship, Sir Desmond. I rise to speak to my new clause 36, but I will first touch briefly on my concerns about new clause 15, tabled by the hon. Member for Broadland and Fakenham.

I can see the case that the hon. Member and his colleagues are trying to make about the importance of periods of stability for bus operators. However, as my hon. Friend the Member for Wimbledon says, the timeframe proposed does not strike the right balance. Five years would be longer than the term of a metro mayor or local authority, meaning that the bad work of a previous mayor or administration could tie the hands of their successor and, most importantly, could leave residents stuck with the same problems for half a decade. Given the timeframes at play, I think a better compromise could be found. It would be bad news for democratic accountability if a previous administration’s botch job—or even intentional mismanagement, perish the thought—of a franchising assessment could prevent its newly elected successor for taking action over the entire course of its term.

I also have concerns about the impact of local government reorganisation under the current drafting of the new clause. It says that

“the same area, or a substantially similar area”

could be covered by a whole new authority or administration within the timeframe, where a franchising assessment is prevented. That means that a body that has been wholly abolished could leave its successors hamstrung.

I appreciate the intention behind the clause, and I am grateful to my constituency neighbour the hon. Member for Broadland and Fakenham and his team for raising the concerns of the industry about the timeframes. However, I wonder whether a compromise could be found on Report that better balances operators’ concerns with democratic accountability.

My new clause 36 would make a very simple addition to the assessments for franchising schemes, ensuring that we look into how a new scheme can lead to better integration for different modes of transport. People feel that there is a lack of joined-up thinking between our bus and train networks in many rural areas. Arguably, that is down to the current set-up, with two private companies responsible for services but under no requirement to consult or collaborate on delivering more linked-up services.

I take the hon. Member’s point about joining up buses and trains. As I am on the Committee, might he also include ferries in that analysis?

I thank the hon. Member for his astute point. I would be glad to include ferries. After all, the new clause proposes better-integrated transport across all modes and modalities. We do not have any ferries other than river-crossing ferries in my constituency.

My constituents have found the issue of lack of co-ordination so frustrating that they have carried out research into it themselves; I thank David and James for furnishing me with the statistics. The first bus to arrive misses the first train of the day from Sheringham by a mere six minutes. For those who are not familiar with the Bittern line, it does not quite have central London regularity, which means that it is roughly an hour until the next possible train arrives. At other points during the day, there is either a 45-minute wait or hoping for a delay so that the bus arrives before the train departs.

A more joined-up approach would benefit both bus operators and train companies, allowing seamless integration of travel and reducing the miles in the journey to be carried out by car. My new clause would add to the franchising assessment the ability to see how franchising could make that transport integration a reality.

I do not think that franchising is a silver bullet to create integrated transport, which is why we will later consider an amendment that I have tabled that would add the enhanced partnership model. However, while we are expanding how franchising works, it would be remiss of us not to add common-sense thinking about integrated transport for those who are embarking on franchising for the first time.

I hope that the Government will accept the new clause. I add my support to what my hon. Friend the Member for Wimbledon said about amendment 57. We have got to fund it, too.

I will start with clause 10, to which explicit reference has not yet been made, and under which section 123D of the Transport Act 2000, which refers to auditing, is to be amended in accordance with subsections (2) to (8). Subsection (2) sets out that a franchising authority may not proceed with a proposed franchising scheme unless it has obtained a report from an “approved person” on the assessment of the proposed scheme.

The approved person—this is important—will replace the requirement to obtain a report from an auditor. We read, under the new drafting, that the approved person must be independent, but based on that drafting we have no idea what other qualities the approved person may or may not have.

Subsection (3)(c) requires the report to state whether the information relied on in the authority’s or authorities’ assessment is of sufficient quality for the purposes of the subsections, which I will not go into. Subsection (4) will replace section 123D(3); it states that the Secretary of State must issue guidance as to when it is appropriate to appoint an approved person and what the franchising authority needs to take into account when selecting an approved person, including in relation to whether a person is independent. Subsection (7) sets out that an approved person means a person specified in regulations by the Secretary of State.

That raises the question whether the local transport authorities have the technical know-how and/or financial competence to create and then run these franchises. That is the big question that we have been debating backwards and forwards over the past few days. We know that they are expensive; we know that they are complex. I will not rehash arguments that I have made already, which we can take as read. We know that it is crucial that any plans be fully developed, properly costed, stress-tested for viability and generally fit for purpose before we press go on an entirely new system.

The requirements of clause 10 are important in facilitating that stress testing. On the face of it, the clause appears to water down the independent oversight, particularly on financial management. One of the core risks of franchising, as we have discussed, is the transfer of commercial risk from the operator to the local authority. That is a very significant change—one of the most significant changes.

Liberal Democrat amendment 57 would require an assessment of the adequacy of central Government funding to support the provision of services under the scheme, an evaluation of whether the available funding is sufficient to meet the projected costs of the franchising scheme, and an analysis of the funding required to maintain or improve service levels across all affected communities. I think the Liberal Democrats are correct to identify that funding is key to this Bill, and that in the Bill’s current state it is totally absent. How can the approved person make a proper assessment of the franchise scheme without having regard to the likely costs, the availability of adequate funding, the fare box and the subsidy to cover the costs and period of the agreement? We will support the Liberal Democrats’ amendment, should they choose to press it to a vote.

The same goes for amendment 59, which would require the qualifications and criteria for a person to be considered an approved person to be laid before Parliament within three months. Given my previous submissions, this amendment is the least worst option. In the absence of a definition within the Bill—although I really see no reason why there is not one—it is sensible to provide a timeous stopgap for the provision of the details of the regulations relating to the definition of an approved person.

Clause 11 will provide a duty to consult persons with disabilities after a local transport authority gives notice of its proposed franchising scheme. We know that the duty to consult persons with disabilities is close to the Government’s heart, particularly as we move towards a vote on Tuesday; I am sure that they are taking a lot of soundings from persons with disabilities at the moment. Clause 11 is an excellent addition from the House of Lords. It was not in the original Bill, but I understand that it was added with the approval of the Government, having taken soundings from bodies representing persons with disabilities. I think it is a very sensible addition.

Government new clause 4 will remove unnecessary provisions from the assessment requirements for franchising schemes relating to the Scottish transport partnerships and Welsh Ministers. I have no objection to that; it seems a very sensible clarification of cross-border duties.

New clause 15, which stands in my name, is about the franchising scheme restrictions. Extending the power to all local authorities without the need for approval by the Secretary of State is a huge extension of franchising power. The impact of a franchise on local or regional bus companies is profound, for very obvious commercial reasons that we have been exploring over the past few hours. Such a decision can clearly undermine a business case, because it would remove the commercial opportunity that would be taken on by the franchise operator or perhaps even a municipal bus company undertaking the activities on behalf of the local transport authority.

The new clause addresses the potential impact on businesses—overwhelmingly, those are small and medium-sized enterprises such as local bus businesses in our constituencies that employ local people and contribute to local society. It is really important that we allow franchising to take place and local democracy to do its work in a way that minimises the unnecessary adverse impact on local buses and local businesses. We have a duty to minimise the negative impact in the consideration of franchise schemes. New clause 15 seeks to balance—I recognise that it is a balance—the Government’s desire to open up franchising to all local transport authorities with the need to limit the destabilising impact to existing businesses. It would introduce a time limit of five years between franchise proposal.

This is not one of those cunning plans that shadow Ministers come up with in their offices late at night when they are trying to think of something to say the following day, although quite a lot of what I have said may have been. This actually comes from the industry. These are genuine and significant concerns. Whether or not the new clause is accepted—I am aware of the parliamentary mathematics—I ask the Minister to take away the issue and think about it carefully. The industry is deeply concerned about the destabilising effect of multiple considerations and franchising operations, making investment decisions impossible.

I take the point that the democratic cycle is closer to four years than five years. One could foresee a situation in which the tail end of an administration makes an assessment, runs out of time and chooses not to do it, and then the next administration is constrained for that period. I recognise that there is a balance, but the capital investment in buses is significant. The infrastructure of operating a bus franchise or service is significant, and it depreciates over a number of years. There needs to be a degree of certainty for the initial decision to invest without it being undermined by multiple assessments and franchise operations.

A better balance needs to be struck somehow. In my new clause, I propose a five-year moratorium, because the current loose drafting would allow for repeat of franchise scheme assessments. I may not win a Division on the new clause, but I ask the Minister to take it away, listen to the sector and see how he can improve the position for it.

Finally, new clause 36, tabled by the hon. Member for North Norfolk, would require an assessment of the impact of a proposed scheme on integrated transport. I recognise that that would add a degree of complexity to the assessment process, but he has persuaded me that the potential benefits of having a more integrated consideration would, on this occasion, make the additional complexity a price worth paying.

I will start with amendment 57, tabled by the hon. Members for Wimbledon and for North Norfolk, which would require the Secretary of State to assess the adequacy of central Government funding to support the provision of bus services under franchised schemes. Under the Transport Act 2000, franchising authorities are already required to undertake a rigorous assessment to determine whether bus franchising is feasible, affordable, and deliverable in their area. The franchising assessment and the independent assurance report must then be published alongside the franchising consultation, ensuring transparency regarding the local transport authority’s decision. That comprehensive planning and assurance process significantly reduces the likelihood of needing central Government oversight and intervention, making the amendment unnecessary.

The hon. Member for Wimbledon asked for an update on my Department’s engagement with relevant stakeholders to identify approved persons. Bodies in the accountancy sector could include the Chartered Institute of Public Finance and Accountancy, the Association of Chartered Certified Accountants and the Chartered Institute of Management Accountants. To identify who else may qualify as an approved person, the Department intends to hold discussions with other stakeholders, including the Chartered Institute of Logistics and Transport, the Chartered Institution of Highways and Transportation and industry bodies such as the Confederation of Passenger Transport.

My Department will also look at whether those with senior and extensive experience in either the bus sector or local government could provide assurance. Guidance will be provided to franchising authorities, setting out considerations to be taken into account when selecting an independent approved person. The reason why the clause is subject to future regulations is that qualifications will change over time, so it is right to have the flexibility to respond to those changes.

The core principle underpinning the Bill is that decisions should be made at the most appropriate level, specifically by devolving to local transport authorities the power to manage bus services within their area. The amendment would undermine the intention of the Bill. For those reasons, I hope that the hon. Member for Wimbledon will withdraw it.

I am really heartened by clause 11 and I welcome it. I am sure the Minister agrees that consulting people who live with disabilities is vital for any future public transport service. Even with the best of intent, one cannot plan accessible services without understanding the lived experience of disabled users and the associated infrastructure.

I completely agree.

The clause is intended to ensure that local transport authorities understand the perspective of disabled people and make franchising schemes that are better informed by the priorities of disabled passengers and take account of their needs more effectively. The clause sits alongside the schedule, which will introduce similar consultation requirements when authorities vary existing franchising schemes.

Government new clause 4 first corrects an issue in the Transport Act 2000. The Act currently states that when preparing a franchising assessment, authorities must consider the local transport plans of any neighbouring Scottish councils, which is unnecessary because Scottish councils do not have local transport plans. The new clause addresses the matter, while maintaining a requirement for franchising authorities to consider bus-related policies adopted by councils in Scotland. It will also require franchising authorities to consider whether a proposed franchising scheme would support the implementation of bus-related policies adopted by neighbouring Scottish transport partnerships, and require franchising authorities to consult Welsh Ministers and Scottish transport partnerships, where appropriate, as part of a consultation on establishing a franchising scheme. Finally, the new clause makes a technical change to define the term “council in Scotland” for the purposes of part 2 of the Transport Act 2000.

New clause 15, tabled by the hon. Member for Broadland and Fakenham, would prevent franchising authorities from repeatedly conducting franchising assessments within a five-year period if they had not proceeded with a franchising scheme. Similarly to previous amendments, the proposed approach is overly rigid and would impose unnecessary constraints on local transport authorities. Many factors might lead an authority to initially decide against pursuing franchising, only to reconsider later. Imposing a blanket restriction would limit their ability to respond flexibly to evolving challenges and opportunities. Assessments are also costly and time-consuming, so they are unlikely to be conducted repeatedly. The aim of the Bill is to simplify the process for authorities wishing to pursue franchising and ensure that decisions are made at the appropriate level and in a timely manner.

New clause 36, tabled by the hon. Members for Wimbledon and for North Norfolk, would require a franchising assessment to consider the impact on integrated transport and other transport modes, to ensure consistency with broader transport plans. Existing franchising guidance includes advice and requirements on assessing how a franchising scheme aligns with broader transport planning and integration with other modes of transport. Franchising authorities should already be considering these matters in their franchising assessment, as part of the existing statutory requirement to consider how the proposed scheme will contribute to the implementation of the policies in the authority’s local transport plan. The new clause is therefore unnecessary and duplicative, and I hope that the hon. Members will not press it to a vote.

Question put, That the amendment be made.

5|0|5|10|The Committee divided:|Question accordingly negatived.||0|0

Clause 12

Variation of schemes

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following:

Government amendments 7 to 16.

The schedule.

Clause 12, alongside the schedule to the Bill, sets out new, bespoke variation procedures for authorities to follow when they wish to make changes to a franchising scheme. The procedures are clear and simple, to address the difficulties that franchising authorities have faced in interpreting existing legislation. They are also streamlined to enable franchising authorities to make minor changes in a more nimble way, balancing appropriate levels of consultation and transparency. This measure will reduce costs and timescales for franchising authorities in meeting the needs of local bus users.

Government amendments 7 to 10 to the schedule relate to the procedure for varying franchising schemes. Amendments 7 to 9 would have the effect of confirming that the requirements to consider the local transport plans of neighbouring authorities apply only where an authority is required to have such a plan. Scottish authorities are not required to have local transport plans. The amendments, however, clarify that a franchising authority must consider whether expanding the area of their franchising scheme would support the implementation of any other bus-related plans and policies adopted by Scottish councils. Amendment 10 will ensure that franchising authorities consider Scottish transport partnerships’ transport policies when assessing a variation to a franchising scheme, where relevant.

Government amendments 11 to 16 also amend the schedule and will require franchising authorities to consult with Welsh Ministers and Scottish transport partnerships before varying a franchising scheme that would affect them. In the case of Wales, that is in addition to the requirement already in the Bill for Welsh local transport authorities to be consulted, where relevant. It is also appropriate to consult Welsh Ministers in the light of the Welsh Government’s Bus Services (Wales) Bill, which is before the Senedd. The amendments future-proof the Bill, given the Welsh Government’s ambitions to franchise their entire bus network.

The schedule sets out the detailed procedures for varying an existing franchising scheme. There are separate procedures for variations to extend the geographical area of a scheme, reduce the area of a scheme, and other types of variation. There are three parts to the schedule, setting out the specifics of the different procedures, depending on whether a variation is expanding or reducing a scheme.

Clause 12 amends the Transport Act 2000 to set out the new process for varying a franchise scheme. In particular, subsection (2)(b) removes the minimum notice period of six months before a variation can come into effect. I will not seek to divide the Committee on this, but what assessment has been undertaken of the impact of a reduced notification period on service providers? What confidence can the Minister give current service providers that the impact will be minimised? What was the original rationale for the six-month delay, and what has changed to remove the need?

Government amendments 7 to 10 are sensible clarifications to ensure that the requirement to consider policies under section 108(1)(a) of the Transport Act applies only where such policies are mandatory. I fully agree with them. Government amendments 11 to 16 tidy up the requirement for consultation with the devolved Administrations in Wales and Scotland, where a proposed franchising scheme under amendments 11 and 12, or a variation of an existing scheme under amendments 13 to 16, would affect the devolved area. Again, that is a sensible clarification that needs no further elaboration.

I have nothing to add.

No answer to the questions?

I have already explained our position.

Schedule

Procedure for varying franchising scheme

Amendments made: 7, in the schedule, page 44, line 29, leave out

“by neighbouring relevant local authorities of”.

Amendment 8, in the schedule, page 44, line 30, before “those” insert

“by neighbouring local transport authorities of”.

Amendment 9, in the schedule, page 44, line 31, before “other” insert

“by neighbouring relevant local authorities of”.

Amendment 10, in the schedule, page 45, line 14, at end insert—

“(ba) a Transport Partnership created under the Transport (Scotland) Act 2005,”.

Amendment 11, in the schedule, page 46, line 39, at end insert—

“(ea) the Welsh Ministers if, in the opinion of the authority or authorities, any part of Wales would be affected by the proposed variation,”.

I beg to move amendment 34, in clause 13, page 8, line 5, after “operators” insert—

“or local government bus companies”.

With this it will be convenient to discuss the following:

Amendment 72, in clause 13, page 8, line 7, leave out paragraphs (a) to (c) and insert—

“(a) either the contract is a local service contract in relation to a franchising scheme, or

(b) the contract is awarded to a local authority bus company.”

Amendment 35, in clause 13, page 8, line 12, after “operator” insert—

“who is a local government bus company or”.

Amendment 36, in clause 13, page 8, line 27, after “operator” insert—

“or local government bus company”.

Amendment 37, in clause 13, page 8, line 37, after “regulation,” insert—

“‘local government bus company’ has the meaning given in section 22 of the Bus Services (Amendment 2) Act 2025 and”.

Clause stand part.

It is a pleasure to serve under your chairmanship today, Sir Desmond. I am delighted to present a number of amendments to clause 13. The clause should be in the Bill; I can clearly see why we would want to directly award a contract to an incumbent to keep an existing contract going. This seems to me to be the ideal place to insert the opportunity to make a direct award to a local government bus company, the new type of body set out in clause 22—I believe that would be a really good move.

I have tabled several amendments to add the words “or a local government bus company” in order to make the whole thing make sense. Amendment 34 would add “local government bus companies” to the title of the proposed new regulation in the Public Service Obligations in Transport Regulations 2023; amendment 35 would add the choice of a “local government bus company” to the direct award options; amendment 36 would add the name of the local government bus company to the information required; and amendment 37 would add reference to the definition of a local government bus company as set out in clause 22.

We need these changes to help make integrated local transport planning simpler and less bureaucratic. There are many examples of hugely successful publicly owned bus companies across the UK, including Lothian Buses and Reading Buses. The publicly owned Nottingham City Transport bus service is consistently ranked one of the best in the country.

Councils operate very differently from the wider market. They have strict budgetary restrictions and costly rules of commissioning. That means that, without explicitly making it easier for local authorities to take advantage of the new powers in the Bill, we might just be going through the motions. These changes are necessary in order to really incentivise local authorities to get involved in providing transport, not just in planning for it. To have real weight, the Bill must make it easier for local councils to make direct awards. That would mean that they could transform local services more efficiently for the passengers who need them, which would be of real public benefit.

Clause 13 amends the Public Service Obligations in Transport Regulations 2023 to allow franchising authorities to make a direct award for the first local service contract under a franchising scheme to the “incumbent operator”—that is the important phrasing. The intention, as I read it, is to allow for a smooth transfer of operations to the new scheme, where the qualifying conditions are met. Proposed new regulations 16A(1)(a) and (b) specify that the award must be of a local service contract within the franchising scheme and where no local services are currently provided. Proposed new regulation 16A(1)(c) sets out that the operator must have provided the same or similar services for at least three months prior to the new contract.

I acknowledge the objectives of the clause, but I am concerned that it raises more issue than it addresses. The approach could look like a cosy agreement, which is a theme that I have addressed a couple of times today. Where we are awarding a further contract to an existing contractor, without going to market or tendering more widely, there is a perception, if not a reality, of a cosy agreement. It cuts out competition and favours one operator over the others, and it is not just for a short period; it is for a period of up to five years, as set out in clause 13(3).

The likelihood of a challenge from other bus operators in the area, who are angry about being excluded, may well be quite high, yet proposed new regulation 16A(2) requires the local transport authority to publish information relating to the contract only within six months of granting the direct award. We therefore have a transfer that may look like a sweetheart deal between the local transport authority and the existing service provider, which may be the municipal bus company but could equally be a private provider, while the judicial review, which is the mechanism by which an external aggrieved party can challenge that decision, has an application deadline of three months—12 weeks. Under the clause, the requirement to publish the information on which that judicial review could be based falls fully three months after the judicial review deadline, so there is a problem with the timings set out in the Bill.

To clarify, amendment 72 is not my amendment.

I am so sorry—it is in the name of the hon. Member for Middlesbrough and Thornaby East (Andy McDonald).

I will therefore address amendments 34 to 37, which would allow for a direct award to local government bus companies. I fully understand the rationale behind the Bill, but looking at clause 13, I do not think that that award is excluded by the current drafting, because the term of art is “operator”, and a public bus company could be an operator.

For clarity, the intention behind my amendments is not to allow for incumbent operators that are local government bus companies to be added to the Bill; it is to ensure, completely separately, that any local bus company at any time, or an incumbent operator, can be given a direct award.

That was absolutely not clear from the drafting, and I do not feel able to support such opaque drafting. It would not be right to slip in five words and change the whole meaning of the clause. Perhaps it would be better to draft a new clause; I suspect the hon. Lady has time to do so before the end of the Bill’s consideration.

I thank the hon. Member for Brighton Pavilion for tabling amendments 34 to 37, but the Bill already enables the direct award of franchising contracts to local authority bus companies.

Clause 13 allows for the direct award of franchising contracts to incumbent operators under specific conditions that are set out in the Public Service Obligations in Transport Regulations 2023. It would reduce transitional risks for local government authorities and operators when moving to a franchised network. It applies equally to private operators and LABCos. If a LABCo is an incumbent operator, it could absolutely be directly awarded a franchised contract under the clause, as could a private operator, if that was desired by the franchising authority. Clause 13, therefore, already allows franchising authorities to direct awards to LABCos.

Amendment 35 would allow a franchising authority to direct awards to a LABCo that is not an incumbent operator. For good reasons, clause 13 includes a restriction on direct awards to incumbent operators—that is, that any operator providing local services in an area immediately before a franchising scheme is made has been doing so for at least the three months prior. Those reasons include providing a stable and controlled contractual environment for staff and assets during a transition, while providing continuity of services to passengers. It also means that operators are established in, and familiar with, the area. That greater operational knowledge will help to drive more effective long-term procurement of competitive franchise contracts through data collection and sharing.

Those benefits are most likely to be achieved by franchising authorities working in areas with operators that have an established and reliable presence in the network and with whom they have established effective working relationships. I therefore hope the hon. Member for Brighton Pavilion will withdraw her amendment. Clause 13 already provides most of the powers she seeks, and keeping the incumbent element is an important part of ensuring some of the core benefits of the measure.

I very much appreciate that my amendments would do different things from clause 13, and I also appreciate that the Public Service Obligations in Transport Regulations 2023 provide the ability to make a direct award to an internal operator at other times. However, I worry that if we do not make sure that we have that ability in primary legislation—I cannot find it elsewhere in the Bill—there is a risk that private companies will issue legal challenges against direct awards. That is the key thing that I would like the Government to address, potentially in a different clause.

I simply do not feel that that is necessary. The way in which it is set out is clear enough.

I thank my hon. Friend the Member for Middlesbrough and Thornaby East for tabling amendment 72. Clause 13 allows for the direct award of initial franchising contracts to incumbent operators under specific conditions that are set out in the Public Service Obligations in Transport Regulations 2023. In doing so, we aim to reduce transitional risks for local transport authorities and operators when moving to a franchised network.

Clause 13 applies equally to private operators and LABCos. If a LABCo is an incumbent operator, it could be directly awarded a franchised contract under the clause. For good reasons, clause 13 includes a restriction on direct awards to incumbent operators only—that is, that any operator providing local services in an area immediately before a franchising scheme is made has been doing so for at least the three months prior. Those reasons include providing a stable, controlled, contractual environment for the transition of staff, as I have mentioned.

Clause 13 enables franchising authorities to directly award the first franchising contracts to incumbent operators. That is not about shutting out competition; it is about providing a stable, controlled environment to manage the transition to a franchising model. Long-term franchise contracts will be competitively tendered in the usual way.

Franchising authorities may wish to use the direct award measure to help to manage the transfer of staff and assets, gather data to inform future franchise contracts, and provide flexibility to stagger the tendering of competitive franchise contracts at different times. It may also help to support small and medium-sized enterprise operators to gain experience in a franchising model.

Direct award can be used only under specific conditions. For example, direct award contracts have a maximum duration of five years and are only for net cost contracts. In many cases, a shorter duration will be appropriate. Further, only the incumbent can receive a direct award contract for the same or substantially similar services.

Siân Berry, do you wish to press the amendment to a vote?

I do not; I just hope that the Government realise what I was trying to do. I beg to ask leave to withdraw the amendment.

Clause 14

Socially necessary local services

I beg to move amendment 66, in clause 14, page 9, line 23, at end insert—

“(4B) When the list of socially necessary local services required by subsection (3)(ba) is reviewed or amended, the relevant authority or authorities must—

(a) assess the overall adequacy of the existing network of local services in their area or combined area in enabling passengers to access essential health settings, education, goods and services, economic opportunities, and social activities;

(b) identify any gaps in the provision of socially necessary local services across the network and where existing services are insufficient, absent or cause a material adverse effect on passengers' ability to access those goods, services, opportunities, or activities;

(c) describe what further action the authority or authorities intend to take to address any identified gaps including, where appropriate, proposals for new or altered services, with timelines for implementation, and consideration of funding or alternative delivery models.

(4C) The authority or authorities must publish any assessment and proposals made under subsection (4B) after consulting—

(a) persons operating local services in the area or combined area;

(b) users of local services;

(c) NHS providers;

(d) education providers;

(e) local employers and businesses;

(f) people with disabilities; and

(g) any other persons whom the authority or authorities consider it appropriate to consult.”

With this it will be convenient to discuss amendment 64, in clause 14, page 10, line 34, at end insert—

“(7) The Secretary of State must, at intervals not exceeding six months, lay before Parliament a statement setting out—

(a) the number of socially necessary local services in England;

(b) the number of socially necessary routes that have their whole service cancelled;

(c) the average frequency of buses on socially necessary local services;

(d) the average number of days a week that socially necessary local services are in operation;

(e) total ridership on socially necessary local services; and

(f) the steps the Government is taking to improve the provision and reliability of socially necessary local services, their frequency, and bus ridership.

(8) For the purposes of subsection (7), ‘socially necessary local service’ has the same meaning as in section 138A of the Transport Act 2000.

(9) Each statement laid under this section must include data covering the six-month period immediately preceding the date of the statement.”

Clause 14 is a vital provision in the Bill that seeks to strengthen the provision and protection of routes that are deemed socially necessary. I will begin by addressing the amendments tabled by the Liberal Democrats, before turning to others.

Although I fully support the principle behind clause 14, there are several areas where it can and must be strengthened to ensure that it functions as a genuinely effective tool for safeguarding essential bus services. Under the clause, the Transport Act is amended to require that local transport authorities maintain a list of socially necessary routes and review it from time to time. Crucially, there is no detail on how that review should be conducted. That lack of clarity risks rendering the duty vague and unenforceable.

Amendment 66 seeks to address that gap. It sets out how the review process should work, requiring that gaps in network coverage be identified and that changes to improve the network are actively considered. Importantly, it would also ensure that reviews and amendments take place in consultation with relevant stakeholders. That would embed transparency and accountability into the process.

Amendment 64 would require a biannual review by the Secretary of State of the level and condition of socially necessary services across the country. Given that local authorities will already be maintaining those lists, it is not an unreasonable burden. Rather, it would create national oversight and parliamentary scrutiny—something currently missing from the system. Having consistent data on ridership, frequency and cancellations would greatly improve transparency, inform better decision making, and keep socially necessary services at the forefront of Government planning and funding.

Amendment 39, tabled by the hon. Member for Brighton Pavilion on behalf of the Green party—

Order. We are debating only amendments 66 and 64.

Okay—sorry.

I rise to speak to clause 14 and amendments 66 and 64, tabled by me and my hon. Friend the Member for Wimbledon.

I warmly welcome the clause’s protection of socially necessary services. I have spoken before about how important local bus services are for our rural areas, and I want to bring that to life because the term “socially necessary” does not do justice to the significance of those services. For many, a more accurate term would be “lifeline” services. They are absolutely vital for many small villages, and they are often far from profitable. Although they may not bring a grand economic boost to the operator or local authority, they bring a huge social benefit to the communities that they serve.

I am sure that Committee members are enjoying the in-depth look at Norfolk’s bus services by me and my constituency neighbour, the hon. Member for Broadland and Fakenham. The No. 54, which serves both our constituencies, journeys from North Walsham to Norwich via a less direct and profitable route so that it can serve rural and poorly connected communities. Without support from local government, no profit-making operator would ever seek to make a journey between those two places that incorporates the outskirts of North Walsham, the villages of Skeyton and Swanton Abbott in my constituency, and the village of Badersfield, which my constituency neighbour and I are pleased to share, and then heads on a tour of many of his rural villages before arriving in Norwich.

I am pleased that the clause now gives such routes the definition and protection that they deserve, and I reassure the residents of rural villages that their lifeline services must be delivered. As the clause stands, it protects,

“(i) essential goods and services,

(ii) economic opportunities (including employment),

or

(iii) social activities,”.

It goes on to note that the service, if lost, would have a material adverse effect on the ability of residents to access all of those things. I support ensuring access to all of those things, but there is a glaring omission in the access that it protects, which is access to health services. I am pleased to support amendment 39, tabled by the hon. Member for Brighton Pavilion, which seeks to ensure that the classification of social necessity includes health services.

I am proud to have, in North Norfolk, the oldest population in the country. Many people in that community do not own a car, can no longer drive, or may require more regular trips to medical appointments. I am concerned that a service that is vital for access to healthcare could fall outside the remit of the currently prescribed reasons for socially necessary classification. I will give the Committee a real example of how that could happen in my area, but first, I reassure my constituents that neither of the services that I am going to mention is currently at risk.

Residents in Blakeney and the surrounding villages recently lost the Blakeney GP surgery, so most patients will now have to travel to a GP surgery in Holt to see a GP. The 46 service is the Coasthopper that allows access to Holt, runs through Blakeney, and can take residents all the way to Wells-next-the-Sea. It could be argued that Blakeney residents can access all three of the Bill’s current criteria in Wells, but Holt is crucial for access to their GP. Without clarity, that GP access is not protected, so someone wishing to withdraw the service could argue that access to the criteria has not been materially adversely affected, according to the Bill.

We are lucky that those important routes are not at risk, nor have I heard any indication that they could be, but I outline a scenario that is not impossible and could be replicated in any other rural community across the country. I am sure there are places where that example sounds familiar, which are currently fighting to save their services.

The Minister may say that “essential services” is a wide, catch-all term that will cover this issue, but I am increasingly concerned that we are using imprecise and wide-ranging terms to avoid making any specifications that ensure important protections. It is irresponsible for us to leave the Bill in that state, and wait for a group of residents to have to challenge a service withdrawal in the courts as they fight for their definition of an essential service. As drafted, I do not believe that the Bill provides an adequate level of protection for access to medical appointments and health services, but we can avoid all that hassle if the Government accept the amendment.

I rise to speak briefly in support of Liberal Democrat amendment 66, which inserts a requirement for local transport authorities to review the adequacy of the existing network of local services—through proposed new subsection (4B)(a)—and the requirement to identify any gaps in provision, through proposed new subsection (4B)(b). Proposed new subsection (4B)(c) states that what further action the local transport authority intends to take to address the gaps identified must be set out.

Proposed new subsection (4C) would require the authority to publish both the assessment and the resulting plan after the relevant consultation. It is clearly a good idea to identify the scale of opportunity in the local area as well as what is already available. Such good information would inform good future decisions, so I have no hesitation in supporting the amendment.

Amendment 64, which was also tabled by the Liberal Democrats, would require the Secretary of State to provide Parliament with a statement every six months with information on socially necessary services across a county and the number of whole routes cancelled, as well as frequency and days of the week. I am not supportive of it. Although I understand the rationale behind the amendment, and it would be interesting to have that information on a regular basis, it would be truly onerous to require the Secretary of State to provide that every six months for services right across the country. As with all things, when we are trying to design effective government, we have to balance benefit and cost. In my respectful view, such a requirement tips into being simply too onerous.

Assessments are, by their nature, local or regional, and I do not understand the practical utility of national reporting when the people who really need to know the information are in the local transport authority that would be providing the information in the first place. I therefore confirm my support for amendment 66 and my opposition to amendment 64.

I thank the hon. Members for Wimbledon, for North Norfolk and for Chesham and Amersham (Sarah Green) for tabling a series of amendments to the clause. Amendment 66 would ensure that local transport authorities review their current local bus network to identify any gaps. I agree with hon. Members that it is important for local transport authorities to understand and know their networks. However, the desired effect of the amendment is already covered by the Transport Act 2000, which places a requirement on an authority to meet the needs of people living or working in their area. The local transport plan, which must be prepared by a local transport authority, is an important document that establishes the transport needs of local communities. Indeed, the existing measures in the Bill go even further than the 2000 Act by ensuring that members of the enhanced partnership work together to identify key socially necessary services, and to develop a robust plan in case any changes are proposed to them.

I turn to amendment 64. The Department already publishes large amounts of bus data through both the Bus Open Data Service and bus statistics on gov.uk. The Bill provides for even more data collection under clause 24, which specifically ensures that data collected by the traffic commissioner is shared with the Secretary of State. I therefore believe that the amendment is unnecessary. We already deliver a large amount of information to the public that can help them to understand all services operating in their area—not just socially necessary services—and may include many of the details listed in the amendment.

I would like to press amendment 66.

Question put, That the amendment be made.

6|0|5|10|The Committee divided:|Question accordingly negatived.||0|0

I beg to move amendment 39, in clause 14, page 9, line 32, after “activities,” insert—

“(iv) health care services, or

(v) schools and other educational institutes,”.

With this it will be convenient to discuss amendment 38, in clause 14, page 9, line 35, after “activities.” insert—

“(16) A service which was abolished in the 15 years before the day on which the Bus Services (No. 2) Act 2025 was passed may also be considered a socially necessary local service for the purposes of this section and section 138C.”

I am pleased to move an amendment that both I and Liberal Democrat colleagues had the idea of. The Liberal Democrats have withdrawn their version of the amendment, but we are essentially aiming at the same thing: to be specific in proposed new section 138A of the 2000 Act by specifically naming healthcare services, schools and other educational institutions as activities that we as a Parliament consider to be essential. I believe that that would really help transport planners to focus their efforts on those particularly essential services. It would strengthen the clause considerably.

In the past, I have worked with many young people who value bus services and feel undervalued when those services are not helping them to get back and forth to school. When they are not able to take part in after-school activities in the same way as their peers at the school whose parents can drive them back and forth, there is a social justice issue that deserves its own bullet point, as part of the clause.

I do not need to tell Members about the importance of public transport access to hospitals and other healthcare services. Later, we will discuss amendments pressing for the timing of older and disabled people’s bus passes to be extended so that they can access healthcare services with their free cards. The actual provision of the services is the absolute bottom line here, and they should be named. There is absolutely no reason for the Government to oppose my amendment.

Amendment 38 was originally proposed by my Green party colleague, Baroness Jones of Moulsecoomb, in the other place. It aims to include clearly in the definition services that have been cancelled. If this aspect of the Bill is to work effectively, it is essential that it works to undo the damage caused by cuts made in bus services, particularly local authority-supported ones since the start of the enormous austerity squeeze on local councils.

The proposed time period of 15 years in amendment 38 is no accident—it goes back to the start of austerity. Many figures show the loss of bus services around the country since the beginning of that period. For example, a Campaign for Better Transport figure shows that from 2012 to the second year of the pandemic, 2021, more than a quarter of all bus services across England, measured in vehicle kilometres, were lost. For the number of regulated services, which is a different measure of service capacity, the loss was 29%.

Amendment 39 would add healthcare services, schools and educational facilities to the list of socially necessary local services. The hon. Lady is, of course, right that those are important destinations for bus services—so important that they would without doubt come under the services side of the definition. Since the clause as drafted refers to enabling

“passengers to access…essential goods and services”,

the amendment is otiose.

I understand the political point that the hon. Lady is seeking to make through amendment 38 but, as drafted, nothing could be done with that information under the clause. In fact, the amendment would have a negative effect, because it would simply muddy the waters with historical data without being helpful in establishing the future direction of travel for local transport authorities.

It is a pleasure to serve under your chairmanship, Sir Desmond. I was planning to say a few words about amendment 39, but the shadow Minister has really said it: it not necessary to include healthcare services, schools and other educational institutes in the definition. Of course, I agree with the hon. Member for Brighton Pavilion that those things are important. I can think of dozens of important and socially necessary places where buses might go, but I would not propose to add them all to clause 14(2)(c), not least because when attempting to make an exhaustive list, it is always possible to leave things out, and there is great scope for argument over issues on the periphery that some people think are important and others do not.

The measure’s wording is broad. A “social necessary local service” is defined as one that allows passengers to access: “essential goods and services”, which is very wide; “economic opportunities (including employment)”, which is very wide; or “social activities”, which is also very wide. Plainly, healthcare services, schools and other educational institutes fall within those definitions, so the amendment is unnecessary. However, I welcome the hon. Lady’s highlighting those things, because healthcare and schools plainly rank very highly.

The Liberal Democrats strongly support amendment 39, which was tabled by the hon. Member for Brighton Pavilion. As has been said, it is remarkably similar to, if not the same as, an amendment that we tabled in the House of Lords. It rightly proposes to expand the definition of “socially necessary local service” to include routes that serve healthcare facilities. I recognise the argument that the existing definition already covers them, but we think it is important to explicitly include hospitals, GPs and clinics. Accessing healthcare is a social necessity that should be explicitly recognised in law.

The same is true of education. From conversations with my hon. Friends the Members for Westmorland and Lonsdale (Tim Farron), for Esher and Walton (Monica Harding) and for North East Hampshire (Alex Brewer), to name a few, I know that there are growing concerns about school and college bus routes being cut, leaving students unable to travel independently to their places of learning.

The Government may argue that such services are already included under the definition but, if that is the case, why not make that explicit? Clarifying it in statute would only strengthen the Bill and provide clearer guidance for local authorities.

Amendment 39 is not necessary as this issue has already been addressed during debates on the Bill in the other place. At the time, my noble Friend the Minister for Rail made a statement on the Floor of the House to the effect that the definition of a socially necessary local service encapsulates access to healthcare and schools as “essential goods and services”. I hope that that reassures the hon. Member for Brighton Pavilion about the Government’s intention. That being said, the Government will produce official guidance for local authorities on the issue of socially necessary local services. That guidance will refer to healthcare services and educational institutions as constituting “essential goods and services”.

Amendment 38 would expand the definition of socially necessary local services to include services that have been abolished in the past 15 years. In addressing it, we should consider the practical issues. A service that has been cancelled in the past 15 years may no longer meet the current needs of the community, which change over time. Furthermore, it is possible that previous services may have been folded into newer and more relevant bus routes. For those reasons, the amendment might not yield the expected beneficial outcomes.

That is by no means a prohibition or limitation on the powers of local transport authorities, however. As local transport authorities continually evaluate the needs of their communities, they still retain the power to consider implementing services along former routes, if they believe that doing so would address the needs of their communities. The amendment is therefore not necessary, so I ask the hon. Member for Brighton Pavilion not to press it.

On a point of clarification, clause 14 adds proposed new subsection (15)(b) to section 138A of the Transport Act. The measure is quite specific that a current service is envisaged—it refers to a service “if cancelled”. Amendment 38 would respond to that by making sure that recently cancelled services were covered. Such services might have been taken away because operators anticipated the risk that they would be defined as “socially necessary”. Can the Minister reassure us on that point?

Does the Minister wish to respond?

I did not give way, but I appreciate the hon. Member’s additional comments.

Oh, apologies.

It is fine. I do not believe that the amendments are necessary.

Does Ms Berry wish to press the amendment to a Division?

I do not. I beg to ask leave to withdraw the amendment.

I beg to move amendment 54, in clause 14, page 10, line 26, at end insert—

“(4A) Where a socially necessary route has been identified in accordance with section 138A(15) of the Transport Act 2000, and no alternative operator has implemented the service within a period of six months, the relevant local authority must take reasonable steps to implement a service on the socially necessary route as far as is reasonably practicable.

(4B) Where a local authority has established a socially necessary service in the absence of alternative operators, the local authority must publish a report on the establishment and operability of the service within six months, which should include, but not be limited to—

(a) the scope and nature of the service;

(b) the estimated operating costs of the service and any identified funding gaps;

(c) the impact of the service on local accessibility and transport needs;

(d) a timeline for the operation of the service;

(e) where the local authority is unable to meet the financial burdens of operating the service within six months of establishing that service, a statement specifying the extent of the financial shortfall.

(4C) Where a local authority makes a statement under subsection (4B)(e), the new burdens doctrine applies to the provisions of this section and the Secretary of State must consider providing appropriate financial support to the local authority to ensure the service can be delivered.

(4D) Within six months of the passing of the Bus Services Act 2025, the Secretary of State must publish guidance on what funds will be available for the purposes of subsection (4C).

(4E) A service established under these provisions is a local service operated by a local government bus company as defined by section 22(5).”

With this it will be convenient to discuss amendment 74, in clause 14, page 10, line 34, at end insert—

“(7) The Secretary of State must, within 12 months of the passing of this Act, lay before both Houses of Parliament proposals for a scheme that would guarantee a service for socially necessary services where—

(a) no operator has implemented the service for a period of six months, and

(b) the local transport authority is unable to run the service.

(8) The Secretary of State must, when publishing their proposals for a scheme under this section, also provide guidance on how the scheme would be funded, including the criteria which would be used for assessing qualification for the scheme.

(9) Within a month of producing the proposals, the Secretary of State must ensure that time is made available in both Houses of Parliament for a substantive debate on the proposals.”

Amendments 54 and 74 would establish a real safety net for socially necessary routes. Amendment 54 would place a duty on local authorities to step in to deliver a service when no commercial operator will do so, while placing a reciprocal duty on the Government to provide financial support to enable it. Amendment 74 would complement that by requiring the Secretary of State to create a formal funding mechanism for such services. The mechanism would include clear eligibility criteria, ensuring that local authorities could not designate routes as socially necessary arbitrarily, but must demonstrate clear social need. Together, the amendments would ensure that essential routes do not disappear due to market failure. They offer a practical, balanced solution to a growing problem, and I urge the Committee to support them. If we believe that these routes are socially necessary, we must find a mechanism to ensure that they are provided.

The Liberal Democrats’ amendment 54 would place a duty on local transport authorities to identify and then satisfy the need for all—and I stress “all”—socially necessary services, irrespective of supply, under an enhanced partnership. The amendment does not explain how the services would be supplied by the local authority—presumably, there would be a tender process—but it would require the authority to produce a report within six months. That report would identify the need, estimate the costs of provision and associated funding gaps, estimate the impact of a new service

“on local accessibility and transport needs”,

provide

“a timeline for the operation of the service”,

and specify local funding shortfalls. That measure, if adopted, would be a truly revolutionary departure for the identification of local need and subsequent funding, because it would hand demand assessment to the local authority, but the cost of provision to the Secretary of State. What could possibly go wrong? I genuinely look forward to the Minister supporting the amendment and explaining how he will fund that.

The Liberal Democrats’ amendment 74 would require the Secretary of State to advance proposals within 12 months to

“guarantee a service for socially necessary services”,

where that service has been absent for six months and

“the local transport authority is unable to run the service.”

That is a second extraordinary proposal, because it would again place identification of need—according to the highly subjective definition of social necessity—in the hands of the local authority, but would give the Secretary of State a legal duty to supply that assessed need. It envisages the Department for Transport directly running individual routes that have escaped the design of the franchise network or the enhanced partnerships. Presumably, since the Department for Transport has to supply for that need, it will be liable for procuring, right across the country, individual routes that are not part of a wider contractual arrangement. There we have it: the Department of Transport directly running individual routes, spread across the country, independent of wider bus provision. It sounds to me like a recipe for disaster.

Amendment 54 is a really important protection for the safe and necessary services that I described. The shadow Minister’s points perhaps highlight the issue of funding more generally in bus franchising and enhanced partnerships.

The amendment would ensure that steps are taken within six months of identifying a route as socially necessary to ensure that the route actually runs. It would also enable the Government to provide them with support and funding to ensure that the route is available, if the financial burden on the local authority is deemed too great. This is another useful protection for the socially necessary services to ensure that they are not another victim of the funding crisis in local government. I have already made clear how important these services are and why we have to ensure that they are protected.

Looking at the perilous financial position of our county council in Norfolk, I fear that there could come a point where that spectacular fiscal mismanagement means that they cannot afford to keep these services going. In that instance, I do not think that my constituents should be the ones who are punished. The Government should step in to protect their access to all the services and opportunities that a socially necessary service provides.

To conclude, I am pleased that the importance of bus services has been truly recognised in law. I am supportive of the sentiment and much of the drafting of the clause. However, if we accept the importance of these routes, we should not make a half-baked attempt to protect them. We should ensure that all important services are considered when deciding on socially necessary routes, and that there are strong protections for both these services and our communities that they serve.

Amendment 54 seeks to establish a process for local transport authorities to implement a socially necessary service where no operator has decided to do so. However, I believe it is unnecessary, because legislation already exists to address that issue. Under section 63(1) of the Transport Act 1985 and section 9A of the Transport Act 1968, local authorities are already under a duty to secure public passenger transport services that they consider appropriate to meet the requirements of the area, and which would not otherwise be met. Clause 14 also sets out that enhanced partnership schemes must include a requirement to investigate alternatives that can be provided if a socially necessary service is cancelled or varied in such a way as to have a materially adverse effect on the ability of passengers to access necessary goods and services.

The amendment also places an obligation on local authorities to fund specific bus services. However, as I set out before, how local authorities choose to spend their funding is a matter for them. I reflect on previous comments from the Liberal Democrats about being all for devolution, but also liking to stipulate exactly how to do it from the national centre. Local authorities are best placed to make decisions on how and where to prioritise their local bus grant. Restricting the range of choices for how an LTA does so would go against the spirit of the Bill, and it is our aim to give more control to local leaders. I have outlined why I believe that the amendment is not needed, and I ask the hon. Member for North Norfolk to withdraw it.

I am a little disappointed that the Minister did not address the shadow Minister’s accusation of passing the financial buck directly to Government in his response. The measure is fundamentally about funding to protect services. If the Minister is relying on sections in previous Acts of Parliament, the interpretation of those sections is not a given without specific reference, which the Bill does not make. I do not share the Minister’s confidence that those obligations will be upheld.

I think it is sad that the hon. Gentleman does not share my confidence in local areas being able to shape their services.

I now turn to amendment 74, which is the final non-Government amendment tabled to clause 14. It seeks to ensure that there is a Government-backed scheme that will guarantee that all socially necessary local services continue to operate. As I am sure I have mentioned before, this Government have reaffirmed our commitment to bus services in the recent spending review by confirming around £900 million each year from 2026-27 to maintain and improve vital bus services. Allocations for that fund will be made through the bus funding formula, which already takes account of local need. The Department is also committed to review the current formula and ensure that it is allocated as fairly as possible. That will take place in due course.

Is the Minister confident that that money is sufficient to protect socially necessary services?

Again, it is local areas that are best placed to use the resources given to them. We do not have a magic money tree. I know that the Liberal Democrats have a supply of those, but unfortunately we do not. The Department is also committed to reviewing the formula and ensuring that the money is allocated as fairly as possible. That will take place in due course. Once the allocations are made, it is then for local transport authorities to prioritise their funding according to the needs of their communities. It is right that they make those decisions and Government should not be asked to intervene. I therefore ask the hon. Members to seek to withdraw this amendment.

Question put, That the amendment be made.

7|0|3|10|The Committee divided:|Question accordingly negatived.||0|0

I beg to move amendment 6, in clause 14, page 10, line 27, leave out subsections (5) and (6).

With this it will be convenient to discuss clause stand part.

Subsections (5) and (6) of clause 14 were inserted by non-Government amendments in the Lords. This amendment seeks to remove those subsections. Clause 14(5) places a statutory duty on the Secretary of State to undertake an assessment of the implications of ending the £2 national fare cap on passengers’ ability to access socially necessary local services, as proposed in the Bill. Assessing the impact of the withdrawal of the previous fare cap on specific routes would be pointless while the current cap is in place. At the spending review, the Government took the decision to extend that cap to March 2027. Moreover, in February 2025, the Department published an evaluation of the first 10 months of the £2 fare cap. That showed that the cap delivered low value for money. Work is already under way to undertake a review of the £3 bus fare cap. Therefore, a legislative requirement for further evaluative work is duplicative and unnecessary. That subsection is also impractical. Socially necessary local services are a new measure introduced by this Bill; they were, therefore, not in place at the time of the £2 bus fare cap and could not, therefore, have any measurable effect on it. It will also take some time for local transport authorities to identify socially necessary local services.

Clause 14(6) places a statutory duty on the Secretary of State to undertake an assessment of how the level of employee’s national insurance contributions may impact on the provision of socially necessary bus services. That includes an assessment of how transport services for children with special educational needs and disabilities are affected. That subsection cuts across existing work of the Department for Education, which has committed to reform the special educational needs and disabilities system. It is also impractical because it is seeking to review three months after Royal Assent. Socially necessary local services are likely to take some time to be identified and agreed, making that assessment premature. I have explained why the Government are seeking to remove both subsections. Having explained why the Government are seeking to remove subsections (5) and (6), I turn to the remainder of clause 14.

I support clause 14 and the Government’s proposed measures. Good decisions depend on good information, and in the East Cleveland part of my constituency we have seen far too many decisions made in a black hole of information, which has seen many routes disappear over many years. I now have many villages left in isolation.

It has fallen to local campaigners to step up and make the case that such routes are socially necessary, including through protests, rallies and so on, to try to save them. That is exactly what happened in the case of the Stagecoach 1 and 2 in my constituency, which was created as a result of a sustained campaign. However, that route is not sufficient, because it misses out certain villages and does not go down the high street in Brotton, for example. It also misses out several residents, of which one example is a lady called Norma Templeman who I promised I would mention in the House. She lives in North Skelton and is 87 years old. She said a few months ago:

“You have no idea how isolated this makes us golden oldies feel.”

I would never use such language to refer to her, because I think she is full of energy, even if she is 87. It should not fall to an 87-year-old lady to campaign to save and extend routes like the Stagecoach 1 and 2, or the demand-responsive transport service that she benefits from, which, again, runs out of money every few months, and there has to be a sustained campaign to try to save it. The entire model is inefficient.

I hope that the mayor in our region will seek to use the powers in the Bill and introduce a franchising model. So far, he is resistant to do that, so I ask for some clarity from the Minister on devolution—which we covered in the previous debate—with reference to clause 14. The principles set out in the various pieces of legislation on combined authorities, particularly the Local Democracy, Economic Development and Construction Act 2009, set out that the role of a combined authority is to act as it says on the tin: to be a combination of the local constituent member councils and their leaders. We have an odd situation in Teesside wherein the councils and their leaders want to have a franchising system but the mayor is resistant to doing so.

With your permission, Sir Desmond, I will deal with this in a slightly different order from that in which the Minister addressed it. I will deal with clause 14 in toto, and then look at Government amendment 6, which removes two subsections from the clause.

Clause 14 amends the Transport Act 2000 by requiring local transport authorities to identify and list services in the enhanced partnership area that are “socially necessary local services”—we have already discussed this at some length this afternoon—and then to specify requirements that must be followed if a bus operator of those services wishes to vary or cancel them. Subsection (2) amends section 138A of the Transport Act 2000, which talks about enhanced partnership plans and schemes, and it requires local transport authorities to identify and list socially necessary local services within their enhanced partnership plans—so far, so sensible.

The term is defined in subsection (2)(c), which inserts proposed new subsection (15) into section 138A and provides a definition of “socially necessary local service” as,

“a local service which—

(a) enables passengers to access—

(i) essential goods and services,

(ii) economic opportunities (including employment), or

(iii) social activities, and

(b) if cancelled, is likely to have a material adverse effect on the ability of passengers to access those goods, services, opportunities or activities.”

That is not necessarily a problem, but it is worth noting that this definition is quite subjective in its application. It is not easily measurable what such a service is, nor is it standardised between local authorities. The Minister will say, “Devolution will allow a thousand blossoms to bloom,” and I conceptually agree. However, I wonder whether, if we have different interpretations of the same term—“essential goods and services”—in different parts of the country, that raises a question about how the provisions will be applied across the board.

Clause 14(3) inserts new subsection (9A) of section 138C of the 2000 Act, which provides that local transport authorities must include requirements in their enhanced partnership scheme

“that apply where the operator of a socially necessary local service…proposes…to cancel a registration under section 6 of the Transport Act 1985 in relation to the service, or…to vary the registration in such a way as is likely to have a material adverse effect on the ability of passengers to access the goods, services, opportunities or activities”

that have already been classified as being socially necessary.

The examples given in the explanatory notes to the Bill include a requirement for an extended notice period before changes are made to these services. Presumably, the thinking behind that is that where more vulnerable passengers, or those with greater social need, need to have access by public transport, particularly buses, to schools, hospitals or medical facilities—where there is an enhanced need for a particular route—a greater notice period for any change to the route gives those passengers an opportunity to find alternative means of transport. It is not entirely clear to me what those alternative means might be, but I at least get the principle behind that example.

The explanatory notes also state:

“Inserted subsection (9A) does not allow LTAs to mandate operators continue providing any socially necessary local service.”

My question to the Minister is quite simple: why not? Why is that in subsection (9A)? Can he explain why it is needed? Is there any conceptual prohibition under the enhanced partnership framework? If not, why have the Government not given additional power to local transport authorities to require provision of socially necessary local services? The operator could be compensated for loss-making adjustments. I accept that that would come at a cost, but if we have already accepted that these are socially necessary services and there is a proposal to vary, cancel or change them in some way, that is a power that the Government could give to local transport authorities, but they have chosen not to do so.

I would be interested to hear the Minister’s response to that. There is currently no power for the local transport authority to insist, only a requirement—that is all that I can find, anyway—under proposed new subsection (9A)(b) that an enhanced partnership scheme must require local transport authorities, where they have been notified of a proposed cancellation or variation,

“to consider whether any alternative arrangements may be made so as to mitigate”

any adverse effects to passengers caused by the variation or cancellation of the service. I am sure that you will have a seraphic neutrality on this, Sir Desmond, but I might impose on you a view that that is a pretty lily-livered response by the Government.

On the drafting more widely, there are a large number of detailed mandatory requirements for inclusion in every single enhanced partnership agreement across the country, the omission of even a single one of which would open up the local transport authorities to legal challenge, and yet there is very little practical benefit for passengers. There are duties to notify and corresponding requirements to consider various actions or inactions, and the net sum of benefit for passengers—the people I am looking after, if I get my way—is zero. It is just process.

It seems a strange way to go about things that we are we are designing in complexity and getting various organisations to jump through procedural hoops, but the net outcome for the consumer, or the passenger—if it makes people feel better that I call them passengers rather than consumers, I am very happy to do so—is zero. Why are we doing this? The answer is, “Well, we can require it—make it mandatory—and then we are going to get a better outcome for passengers.”

Does the Minister consider that the absence of such a clause would strike at the heart of an enhanced partnership? There are quite a lot of things that he has suggested are suitable for guidance notes, rather than for the Bill, yet here we have something that is eminently suitable for a guidance note but has been dragged out of that remit and put on the face of the Bill. Its practical effect is that if a local transport authority fails to comply with this, in my view, rather otiose clause, it opens itself up to judicial review and legal challenge by operators that, after all, have a commercial interest in this area, and quite right too. Surely it would be more suitable in a guidance note.

What would be the consequences for a local transport authority of omitting to include one of these terms within the body of a contract under its enhanced partnership agreement? Would it leave them open to legal challenge by operators or interested pressure groups? Does the clause encourage lawfare? Members on both sides of the political divide know how frustrated our constituents get when they feel that the Government are powerless in some way—when the Government pull the levers of state and nothing seems to happen because of lawfare, endless challenge and the overly complex nature of legal requirements set in seemingly unremarkable legislation such as this, which is held against Governments trying to make firm decisions and change things.

There is a wider problem—it is not just this Bill—of unintended consequences arising where we bind up the system with legal requirements. We think, “We need to legislate on everything,” so we have put this legal requirement on the face of the Bill. It has no apparent practical benefit for passengers, and yet it unlocks future legal challenge and lawfare. I would be interested in the Minister’s explanation of why this is so important that, rather than just being part of the guidance notes, it must be a legal requirement that every LTA in the country must comply with at their peril. While I am on that theme, has an assessment been undertaken of the impact of the measure? If it has, has it been published, and would the Minister be prepared to provide it?

Clause 14(4) provides that local transport authorities with existing enhanced partnership agreements must vary the existing plan and scheme within one year of the clause’s coming into force—fair enough—and that the EP plan and scheme must satisfy the requirements of the clause. That is eminently sensible. It is a transitional subsection to bring the existing partnerships up to date with the new legislation.

Now, Sir Desmond, we come to the good bit —well, one of the two really good bits of the clause. Subsection (5) requires the Secretary of State to conduct an assessment of the impact of ending the £2 bus fare cap on passengers’ ability to access socially necessary local services. Why is that important? I am going to ask you to cast your mind back to 2023, Sir Desmond. Under section 138A of the Transport Act 2000, there is an obligation on authorities to identify and protect access to socially necessary services—those vital links that communities depend on for healthcare, employment, education and welfare. The Government’s decision to withdraw the £2 bus fare cap and replace it with a 50% increase—[Interruption.] Well, that is what it is. If the limit was £2 and it is raised to £3, what percentage increase is that? It is a 50% increase until 2027-28, and then it will be unlimited under the Government’s current plans.

The Conservative Government brought in the £2 bus fare cap right up until the last general election, and it was a costed manifesto commitment of our party—I anticipate the Minister’s chuntering—to maintain it throughout this Parliament. One of the first things Labour did when it came to power was to get rid of it and increase it by 50% to £3. Now, this is more than a transport issue; it is a test of whether we are serious about levelling up, reducing inequality and protecting the most vulnerable in our society. Without exception, it is those groups that most rely on buses, and the evidence supports that.

The Conservative £2 bus fare cap was introduced in January 2023 as part of the Help for Households scheme. Its aim was to protect passengers from rising costs and prevent a collapse in bus ridership. According to the Department for Transport’s own interim evaluation in 2024, the scheme led to an average increase in bus usage of between 5% and 8%, with some operators reporting more than 10% growth in ridership. The £2 cap achieved a 26% average reduction in the price of single fares, saving passengers up to £1.50 per journey. It was enormously popular: over 90% of surveyed passengers said that the cap influenced their decision to travel by bus and nearly half said that they made new or additional trips that they would not have made otherwise, according to the annual bus statistics for the year ending March 2024.

Who does the Government’s increase of the cap from £2 to £3 really hit? According to the data, it is the poor and, increasingly, women. In 2023, people in the lowest quintile for real income made 67 local bus trips on average, more than any other quintile, while those in the highest quintile made 25, fewer than half that and the least of any income quintile. The policy of increasing the cost by 50% focuses its negative impact on the poorest quintile in society. In 2023, on average, females made more local bus trips than males—44 and 34 trips per person per year, respectively—so this approach also targets women.

For frequent users, such as low-income workers and students, the cap delivered weekly savings of £6 to £10. That is over £400 a year. Without a cap, a standard single fare in areas such as Devon, Northumberland and Cumbria, which are particularly reliant on buses because of the lack of alternative public sector transport, could exceed £4.50 to £5, pricing out thousands of rural residents.

According to the Joseph Rowntree Foundation, the poorest fifth of UK households spend nearly 25% of their disposable income on transport. The actions of this Government have increased that cost by 50%. That is not a de minimis increase; it really matters to people. Even a small fare hike, as the Government would have it described, from £2 to £3, has a disproportionate effect on the poorest and most vulnerable in our society. The Joseph Rowntree Foundation report on poverty states that the cost of essentials such as food, heating and transport have increased significantly since 2021, so the increase adds to the cumulative impact of the other cost of living crisis increases with which we are all intimately familiar as local politicians.

What other areas are adversely affected by the Government’s decision? Let us look at employment and economic inclusion. Nearly two thirds of bus journeys are for commuting or education. That is an important consideration. Buses are the most used mode of public transport in England outside London, especially in deprived regions. We are talking primarily about people going to work and to education, particularly in the most deprived parts of our country. In areas with poor rail coverage, such as County Durham, Cornwall and Lincolnshire, many workers rely exclusively on buses to access employment, yet that is where the Government have chosen to increase fares by 50%.

Let us look at young people and education. Some 72% of students travel to college by bus. Young people aged 17 to 20 are more than twice as likely to travel by bus than people aged 40 to 49, yet they have less financial ability than older people to afford alternative forms of transport. The Government’s policy targets the least advantaged parts of our country and the poorest members of our communities.

About 5% of students and young people admit to missing school or work in the last 12 months because they could not afford transport. That rises to almost one in 10 of those from poorer backgrounds—10% unable to access education or work because of the cost of transport. This really matters. Unemployed young people are having to turn down jobs because they cannot afford associated costs such as clothes, but also transport. A Prince’s Trust study found that the rising cost of living for young people was

“threatening the aspirations of an entire generation”.

It seems like a small rise from £2 to £3, but it is deeply regressive in its impact.

A secondary issue is the environmental impact of the change in policy. The Department for Transport’s final evaluation of the £2 bus fare cap scheme found that the initiative contributed to an estimated 5% increase in bus patronage in England outside London. Overall, 10% of respondents to the wave 2 survey reported taking more journeys by bus since the £2 fare cap was introduced. That is in line with findings from the Transport Focus March 2023 survey, which found that 11% reported higher bus use. If people revert from bus to car, as a percentage surely did, the per mile emissions impact would be significant, though the exact total carbon dioxide increase would depend on journey numbers, vehicle occupancy and trip length, inevitably. That reverses gains made through millions of Government investment in zero emission buses and clean air strategies. This is not the direction of travel we want to move in. We should not be increasing the cost of bus journeys.

Let us look at the public support and the Government’s mandate to make this decision. It was certainly not in their manifesto, unless someone wants to correct me. According to wave 10 of the national travel attitudes survey from June last year, of users who were aware of the bus fare cap, 49% said that they had made additional journeys on the bus that they would not have without the £2 bus fare cap. Of those aware of the cap, 51% had taken the bus instead of other public transport modes, because of the £2 bus fare cap. Of users of the bus in areas where the cap is in place, 37% said that if the £2 bus fare cap was extended to tickets other than adult single fares, they would make more bus journeys. All individuals who completed the NTAS wave 10 survey were asked if they were personally aware of the £2 bus fare cap, and it had cut through: 63% of respondents were aware of it, and 18% were aware of the extension.

For the public, particularly the kind of public that Labour traditionally used to fight for, this is not a luxury or a nice-to-have; it is an enabler right at the heart of our society. It enables young people to get to education, and the unemployed to access work and further education. The impact of the removal of the £2 bus cap is profound. It is not just me who thinks that. The majority in the other place agreed, and a sensible cross-party approach led to the insertion of subsection (5) into clause 14. It would be absolutely the wrong decision, and it would send the wrong message, if the Government were to resile from the obligation simply to undertake an assessment of the impact. What are they afraid of? They have taken the decision; they now need to own it. We need to have responsibility in government for the decisions taken. We all have to take tough decisions in government—only the Liberal Democrats do not have to—but we also have to own them, take responsibility and accept negative consequences. That is what clause 14(5) seeks to do.

Subsection (6) requires a review of how the increase in national insurance contributions from 6 April 2025 will affect socially necessary bus services, including transport services for children with special educational needs and disabilities. It sets out that the review must be laid before Parliament within three months of Royal Assent.

The decision by the Chancellor of the Exchequer to increase employer’s national insurance contributions across the board is already having a terrible impact on our economy. According to last month’s figures, it has entered a contraction. It obviously reduces the profitability of businesses and their willingness to employ new people. It will disproportionately reduce their willingness to employ part-time members of staff, because of the double whammy of the national insurance contribution increase.

The main issue is not even primarily the increase from 13.8% to 15% as the headline rate for NICs. Much more damaging—profoundly so—is the widening of the net. Previously, below £9,200 of earnings, no employer’s national insurance contributions were required. That figure has been brought right down to £5,000. In a single move, that has scooped up the vast majority of part-time workers. Those workers are particularly women, who fit work around child-rearing activities. This policy makes them less attractive to employ. It brings into national insurance those who are entering the workforce for the first time, and people transitioning out of long-term unemployment. Employers have to consider whether to give them a chance—what is the cost of that employment? This raises the cost of employment exactly where we do not want it.

One area that has seen a particularly bad financial impact, and has resonance with this Bill and clause 14 in particular, is the provision of taxi and bus services for children with special educational needs. The impact of the October 2024 Budget has been described by providers in the sector as catastrophic, if we do nothing about it. SEND operators who provide transport facilities for children with special educational needs to attend education are in danger of becoming insolvent. That is entirely due to not just the headline rate change, but more importantly, because of the morning and afternoon nature of the work for the drivers rather than full-time employment, the grab at the lowest paid. The two taken together amount to a 15.2% increase in the cost of wages. We are putting up wages by 15.2% in order to send that directly to the Government.

These contracts are fixed. They are not cost-plus contracts, but ones that are agreed with local transport authorities—in the case of Norfolk, that is the county council, which has the responsibility for the provision of transport for SEND children. They are stuck. They are in this cleft fork where one arm of the Government is saying, “We have these fixed contracts. You have agreed to provide a service for a fee,” and then another arm of the Government says, “By the way, we are putting up your costs by 15.2%, and we are not doing anything about it—that’s your problem.”

How fair is that? What message does that send to the providers of SEND transport? All employed drivers now fall above the lower threshold of national insurance contributions. All passenger assistance must be employed and will therefore now fall above the lower threshold for national insurance contributions. Hundreds of SEND operators are in that position. They are screaming about it and deeply concerned; the sector is very worried about this.

Let us consider the case study of a large provider of these services, called 24x7 Group, which is the fourth largest taxi operator in the market according to the Plimsoll UK taxi operators list. It solely operates home-to-school educational contracts, so it is a niche provider in the area, but it is the fourth most profitable and the third most valuable taxi company in the country. However, it will trade insolvently on 6 April if nothing is done about this, because the margin of profitability is more than swallowed up by a 15.2% increase in operator costs.

The Office for National Statistics tells us that there are 8.5 million part-time workers. Every single employer that employs these part-time staff will suffer extraordinary increases due to the national insurance threshold reduction if they pay more than £5,000. It is an extraordinary attack on low-paid and part-time staff.

Is the hon. Gentleman straying from the Bill? I am struggling.

No, I am pleased to say that I am not, Sir Desmond. Clause 14(6) makes specific reference to this. It was a requirement that was inserted into the Bill by the other place. I will read it to you:

“The Secretary of State must undertake an assessment of the impact of the level of employers’ National Insurance contributions on the provision of socially necessary bus services, including transport services for children with special educational needs and disabilities…and lay it before both Houses of Parliament within 3 months of the day on which this Act is passed.”

As such, this is fairly and squarely in the scope of not just the Bill, but this clause. Government new clause 6 would specifically remove that subsection, so I am setting the scene as to why that is a very bad idea.

We understand the effect, which will be a 15.2% increase in employment costs. If an employee works 780 hours on the minimum wage, they earn around £8,923, which is currently below the minimum threshold. In that instance, following the increase, the employer’s national insurance contribution will go from £0 to £678. That is the additional cost of that employment. Who will pay for that in a SEND contract?

We are talking about the impact on the provision of necessary bus services, but you have strayed into taxis.

Thank you for that indication, Sir Desmond, but exactly the same arguments that apply to the providers of bus services for a fee also apply to taxis. You can insert the word “bus” whenever I have said “taxis”; exactly the same argument applies for both providers.

The additional cost of employing a part-time worker, such as a bus driver, in a bus company would be £1,303 per employee per annum, so we have a real problem. Bus providers—and others—are being swept up in the net of increased employer national insurance contributions. It is simply a fact that a large number of the school contracts will become unsustainable under the current format, yet no payments have been offered, either as part of this Bill or elsewhere, to compensate local transport authorities, county councils or whichever authorities are responsible for the provision of bus contracts for education and special education needs, even though the actions of this Government are making these contracts unsustainable.

Thousands of these contracts around the country will need to be handed back to local education authorities. Staff will be made redundant, causing a further shortage of drivers for passengers, and thousands more schoolchildren will be left without transport unless there is movement on this. There needs to be movement of one form or another. In an ideal world, bus SEND provision would be excluded from employer national insurance contributions. However, in the absence of that, an alternative form of funding must be provided, if it is still the Government’s desire that provision be made by local authorities for bus services for SEND children.

For this reason, subsection (6), which mandates a review of how the increase in national insurance contributions from 6 April will affect socially necessary bus services, including SEND transport services for children, is so important. The provision would mandate that the review be laid before Parliament within three months of Royal Assent. This is urgent. The negative impact has already started. We need movement from the Government, or there will be real problems that affect real people. Again, these are the most vulnerable in our society. I therefore oppose Government amendment 6, which inexplicably seeks to remove this necessary assessment from the Bill.

Written evidence to be reported to the House

BSB16 Society of Motor Manufacturers and Traders

BSB17 Guide Dogs

BSB18 Caroline Russell, London Assembly Member (further evidence)

BSB19 Lyn Brayshaw

BSB20 Transmanche Metro (start up)

BSB21 Stagecoach

BSB22 Katherine Barbour (part of a campaign from Southampton Cyclists)

BSB23 Szymon Zwolanski