Local Transport Bill [HL]

My speaking note does not take account of the noble Earl’s contribution, but I shall deal with the issues raised by virtue of the amendment. We agree that there are a good many circumstances in which the interests of bus passengers can best be served by co-operation between bus operators and, in many cases, the local authorities involved. At this point, perhaps I may also pay tribute to the Campaign for Better Transport, which undertook some work earlier in the year on this aspect of the Bill. That work has been very helpful in reinforcing the importance of ensuring that competition law genuinely serves the best interests of passengers. This is why we have made provision in the Bill for a ““tailored”” competition test, which would apply to voluntary partnership agreements and certain other agreements involving a local authority, in place of the test contained in Chapter I of the Competition Act 1998. In taking this rather innovative approach, we have sought to ensure that the interests of bus passengers are well served while also ensuring that our approach does not undermine the Government’s wider policy on competition. I am sure that Members of the Committee will recognise that maintaining healthy competition is an important driver of innovation and growth in our economy. The leading role played by local authorities in developing and negotiating voluntary partnership agreements is critical here. It is this feature of voluntary partnership agreements that, in the Government’s view, justifies the departure from the usual provisions of the Competition Act. We recognise that passengers may benefit from certain types of agreement between two or more bus operators—for example, to ensure that services operate at evenly spaced intervals. Where such provision is in agreements which support voluntary partnership agreements or quality partnership schemes, the provision in Schedule 2 would provide that, in certain circumstances, they would be subject to the new Part 2 test. Those circumstances are where the local authority certifies that the agreement is in the public interest and that any restrictions which would affect competition are necessary in order to meet the objectives of the scheme or agreement. But where a local authority does not make such a certification, the agreement would need to satisfy the appropriate test in the Competition Act 1998. The intention behind the agreement is clear. It is right that such an agreement would not by itself fall within the scope of the new competition test, but, in our view, that provides a useful incentive for operators to work in partnership with local authorities. The scope of the proposed new test is intended to encourage bus operators to explore scope for agreement, not in isolation from the local authority’s efforts to improve services but in close partnership and collaboration with them. We consider that this partnership approach is more likely to deliver the best outcomes for passengers than if local authorities and bus operators pursue their own agendas independently. I hope that Members of the Committee will appreciate that the approach we propose has been given careful thought and that it shows more flexibility on the part of the Office of Fair Trading. We consider that it provides a real improvement on the current situation and preserves the right incentives for bus operators to work not in isolation but in partnership with local authorities. We do not think that we can accept the proposal in the amendment, namely that any agreement between two operators should automatically fall within the scope of that provision, but we are prepared to consider whether anything more can usefully be done in this area. Without absolutely committing myself to bringing anything back at a later stage, I am prepared to say that we will give it some further thought and see what more we can do. I recognise the importance of the issues that the amendment raises.