Transport Act 1985 (Amendment) Regulations 2019

Motion to Regret

Moved by

That this House regrets that the Transport Act 1985 (Amendment) Regulations 2019 were laid before the conclusion of the judicial review of the Department for Transport’s current position in respect of community transport, and, given the potential impact of the changes in these Regulations on community transport operators, that they do not contain sufficient detail (SI 2019/572).

My Lords, these regulations are designed to amend the Transport Act 1985 to bring it into line with EU regulations on community transport. They are the culmination of two years of consultation by the Department for Transport and a lot of toing and froing between the community transport industry, the commercial bus operators and the Government.

The reason for my regret Motion is, I hope, clear in the wording I have used. The Government have been carrying out a consultation which many in the industry feel has been mishandled. They are going ahead with these changes while there is still a judicial review under way, which may or may not clarify at least some of the issues concerned. It is ironic that the Government, who are set on leaving the EU, are rushing ahead to try to align us with EU regulations long before receiving the clarity which the court case will hopefully provide. Once again, we must pay tribute to the Secondary Legislation Scrutiny Committee, which drew attention to the problems with these regulations and has led me to put this regret Motion forward today.

I will start with a bit of background. Most operators of public service vehicles operating for hire or reward require a PSV operators’ licence. Sections 19 and 22 of the Transport Act 1985 provide for exemptions to this. Section 19 permits allow an organisation to provide transport for its own members or people it exists to help. It can charge for this service, but the vehicle cannot be used for profit or to carry the general public. The sort of organisations covered by Section 19 permits within the community transport area include schools, churches, scout groups and so on, which own or use a minibus as part of their overall task, which is certainly not to run a transport system.

Section 22 permits allow a body to run a community transport bus service which can carry members of the public. That bus can be used for other purposes in order to financially support the community bus service. Community transport operators have traditionally used these permits to allow them to provide services in a sector that operates generally on very stretched finances. Historically, the Department for Transport accepted that, if you hold a permit, you automatically meet the EU’s non-commercial criterion. If you operate on a not-for-profit basis, you are non-commercial—that has been the accepted wisdom.

The third, the short-distance exemption, is a new one. It has been put in place to try to provide evidence that an organisation providing a community transport service is having a minor impact on the market. The way that it works is that if you provide services only within a radius of 10 miles of a specified place, you are entitled to a permit. I am sure that many noble Lords can immediately see the problem with that in rural areas. I come from Wales. If you are living in the middle of Wales and need to go to hospital, you will have to go a lot further than 10 miles. Already, in order to hold a permit, you have to be recognised as a non-commercial operator so that the short-distance permit comes in after the fact that you have been recognised as a non-commercial operator.

The Government have obviously recognised that the 10-mile radius has a problem associated with it, and there is now scope for exemptions to the exemption. There is a need for urgent guidance so that we can see how such complex rules can be applied, not least because in the absence of the government guidance so far some permit-issuing organisations have made up their own rules. The offices of the traffic commissioners are applying a rule that means they have been refusing permits to any organisations that have competitively tendered for contracts in the past even if that is a historical factor. So you might no longer hold such a contract or have won that contract, but if you have competitively tendered for it then you are not able to get one of these permits. The OTC interpretation seems to be in direct contradiction to the DfT’s own statements on this issue, so we urgently need government guidance in order for this to be clarified. We also need government guidance on how to operate the short-distance exemption, especially in rural areas—I have hardly scratched the surface of the complexities of applying that—and on what evidence is acceptable in order to prove that you are non-commercial.

Lastly, I want to look at the impact assessment, which I believe is woefully inadequate. Obviously it costs a lot more to get a PSV licence so the impact on operators is considerable anyway. The annual cost for a small operator is estimated to be just under £4,000 but for a large operator it could be £500,000. There is a wide variance between the figures in the impact assessment and the estimated numbers from the Community Transport Association. For example, the DfT estimates that 50% of drivers already hold a PCV D1, but the CTA says that only 6% of drivers currently hold a qualification so 50,000 drivers will need to gain a new qualification.

DfT costings do not include costs for training. The average costs of training are said to be about £1,000 per driver. Its costings are done on the basis of one transport manager shared between 10 operators, but the traffic commissioners’ regulations stipulate that a transport manager cannot be shared among more than four operators. And so on—the costings do not cover, for example, the cost of tachographs—but I have illustrated my point so I will not go on further.

The biggest problem with the impact assessment is that it totally ignores some key areas. There is nothing on the environmental impact; if the community transport service is disrupted, people will be forced to use cars rather than buses and minibuses, with an impact on the environment involving emissions and so on. There is nothing on the impact on family life if there is no longer a school minibus, or if there is no way of getting grandma to the hospital and you have to go with her instead. There is nothing on the wider social costs. Yet we are looking at legislation that could destroy parts of the community transport sector and lead to people with serious health problems being stranded in their homes.

Community transport is used across Britain by vulnerable, elderly, young, sick, poor and disabled people. For them, the trips to the lunch clubs, the youth club outings, the trips to hospital and the school outings are a vital part of their links with the community as a whole. There is nothing in the impact assessment about the danger of raising the costs of community transport, so that some organisations will fold because they cannot raise the charitable donations necessary to continue working; there is also a danger that many part-time volunteer drivers will simply turn around and say, “I don’t want to go for this additional qualification. I don’t want to spend my time training again for something new. I’m going to give my time elsewhere and not work for this community transport organisation”.

I reiterate my regret that these regulations have been brought forward while the judicial review is still under way. It means that there is a yawning gap on the key issue of the definition of “non-commercial organisations”. However, we are where we are. I will not be pushing this to a vote this evening. My purpose is to seek greater clarity for the sector. I ask the Minister to provide us with assurances: first, that the Government will provide full guidance in the very near future, for example on the application of the 10-mile rule; and secondly, that they will ensure that urgent discussions are held with the transport commissioners to ensure that they cease to apply rules that are directly at variance with the specific interpretation issued by the Minister’s colleague at the Department for Transport. I beg to move.

My Lords, the noble Baroness outlined the problem with this piece of legislation extremely well. My first question for the Minister is: why are we doing this at all? As the noble Baroness suggested, we might have left the EU on 29 March without any agreement, so it is a bit odd that the Government should be bringing this regulation through your Lordships’ House two months later, still trying to comply with European Union legislation. Since we still do not know whether we will leave, and if so when, presumably another regulation will be coming shortly that will explain how this particular regulation will be amended or removed if we leave—perhaps the Minister can clarify this. Or do the Government think that this regulation is so wonderful that they will want to keep it?

I see nothing wonderful about this at all. As the noble Baroness said, it is just more bureaucracy in a sector which, by definition, cannot afford it—and sometimes cannot even afford to run the bus. I live in a little village in Cornwall which has a community bus once or twice a week. It takes people to the shops, other villages or the hospital and is run by a dedicated team of two drivers. Occasionally they have to put their hands into other people’s pockets for more money to upgrade the bus and so on. It is run on a shoestring. The people whom it carries on the whole cannot afford very much anyway, and here we are adding more bureaucracy—for no point at all that I can see.

If this is being pushed forward by the Government after pressure from the commercial bus operators, I would ask how many of the routes currently run by community services would ever be run commercially. The answer in most cases is that you either have a community bus service—if you are lucky—or no buses at all. Given the reduction in bus services that this Government and the previous one have “achieved”, it is a pretty depressing story. I cannot understand why the Government want to do this at all. I hope the Minister will be able to explain that to the House, as well as what will happen if we leave without an agreement at the end of October or whenever. Will the Government seek to bring in another regulation to remove this SI and go back to where we were?

My Lords, we support the terms of the regret Motion moved by the noble Baroness, Lady Randerson. These regulations were the subject of a fairly lengthy report from the Secondary Legislation Scrutiny Committee at the beginning of April. The committee drew them to the special attention of the House on the grounds that, given their potential impact on community transport operators, they give rise to issues of public policy likely to be of interest to the House.

As the noble Baroness said, the regulations are being made to align fully, and clarify, the relationship between an EU regulation and the Transport Act 1985. That Act provides for exemptions which allow certain types of organisation to operate passenger transport services on a not-for-profit basis without holding a public service vehicle operator’s licence, following the issue of a permit.

There is also an EU regulation, which I think was implemented in 2011, setting the standards to be applied to public service vehicle licence holders. However, operators are exempt from the EU regulation requirements if they operate exclusively for non-commercial purposes or have a main occupation that is not as a road passenger transport operator, and if they only operate domestically and have a minor impact on the transport market because of short driving distances. The view of the Department for Transport has been that its permit holders automatically meet the “non-commercial” exemption from the EU regulation on the basis that “not-for-profit” equates to “non-commercial”. This has now been challenged on the basis that some organisations operating under the permit system are in fact operating for commercial purposes. At the end of last year, the Bus and Coach Association applied to the High Court for permission to judicially review the Department for Transport’s current position in respect of community transport, and in particular the approach to the non-commercial exemption.

The EU regulation also allows member states to exempt national operations having only a “minor impact” on the transport market, but this exemption has to be given effect in a member state's domestic legislation, which is something we have not done. In addition, as has already been said, there is currently no guidance on the scope of the exemptions from the EU regulations. The Department for Transport has now said that while the judicial review process is ongoing, it will not make any further statements about what “exclusively for non-commercial purposes” means. Consequently, guidance on this point, following a lengthy consultation on community transport, will not be finalised until the outcome of the judicial review is known, after which it will be issued in line with the court’s decision.

These regulations amend the Transport Act 1985 to make it clear that a permit can be applied for and held only by an organisation that is exempt from the directly applicable EU regulation setting out the PSV operator licensing requirements. The regulations also give effect to the “minor impact” on the transport market exemption from the EU regulation available to member states.

If an existing “not for profit” permit holder determines that they do not meet one of the three exemptions from the EU regulations, they will have to obtain a PSV operator's licence in order to continue operating as they currently do. The cost of doing that varies considerably, depending on the number of vehicles operated. As was said by the noble Baroness, Lady Randerson, there is a disagreement over the figures. As I understand it, according to the Department for Transport there are approximately 6,300 Section 19 and 22 permit operators, and it has identified that at least 3,150 educational and religious institutions would be exempt from the requirements of the EU regulations by virtue of operating passenger transport services as ancillary to their main business. Thus the number of Section 19 and 22 permit operators potentially affected by the requirements of the EU regulation and the transition to PSV operator-licensing-related requirements is approximately 3,150 operators, or 50% of the sector.