Transport Committee
Oral evidence: Community Transport, HC 480
Monday 13 November 2017
Ordered by the House of Commons to be published on 13 November 2017.
Members present: Lilian Greenwood (Chair); Steve Double; Paul Girvan; Huw Merriman; Luke Pollard; Laura Smith; Iain Stewart; Martin Vickers; Daniel Zeichner.
Questions 1 - 87
Witnesses
I: Martin Allen, Director, Bus and Coach Association; and Steven Salmon, Director of Policy Development, Confederation of Passenger Transport.
II: Bill Freeman, Chief Executive, Community Transport Association; Frank Phillips, Chairman, Erewash Community Transport Ltd; and Anna Whitty MBE, Member of Steering Group, Mobility Matters.
Written evidence from witnesses:
– Confederation of Passenger Transport
– Community Transport Association
Witnesses: Martin Allen and Steven Salmon.
Q1 Chair: Welcome to the Committee. Thank you for joining us this afternoon. For the record, could you introduce yourselves and say which organisation you represent?
Steven Salmon: I am Steven Salmon. I am director of policy development for the Confederation of Passenger Transport.
Martin Allen: I am Martin Allen, director of the Bus and Coach Association.
Q2 Chair: Thank you very much. We would like to get a lot of information from you and we have limited time available. We are expecting this session to last about 40 minutes. We have lots of questions. I would be grateful if you would try to confine your answers to the specific question asked so we can get the maximum from the session. The first question is to both of you. Recently, the Minister reassured all MPs that in broad terms the community transport permit system was working well and the Government had no plans to change it. Do you accept that most permits are legitimately issued and used?
Steven Salmon: The straightforward answer to that is yes. In our evidence, we said something about some permits that we felt were not legitimate, but they are a tiny minority. In terms of whether the system is working in identifying organisations that need a particular licensing approach, yes, it is. I hope we will come later to where you should draw the line.
Q3 Chair: Martin, what is your view?
Martin Allen: I probably disagree with what Steven is saying. None of us wants to see the permit system go; it is about the abuse and use of them. In our investigations, we found that it is not a handful; it is more widespread and national. For some operators to hold 300, 400 or 500 permits to serve a community cannot be right.
Q4 Chair: Can we talk a little more about the size? Martin, in your evidence you estimate that the number of passenger vehicles operating using community transport permits is about 150,000. Can you tell us how you have come to that figure?
Martin Allen: I supplied a document to the Clerk on Thursday. I do not know whether you have it with you. That document was issued in 2007 and estimated that about 90,000 permits were in use at the time, with an average of 5,000 issued every year. At the time, there were about 100 issuing bodies; we believe that now there are about 400 bodies issuing permits. As Mr Fidler says in his letter, they have no idea how many permits are being issued. They have no evidence at all to suggest how many permits are in use at this moment in time.
Q5 Chair: This question is to both of you. Does anyone have an accurate picture of the size of the community transport sector and the nature of the work being undertaken under section 19 and section 22 permits?
Martin Allen: Section 22 permits are only issued by the traffic commissioners. The last time I looked, there were about 500. There may have been another increase, but it was about 500.
Q6 Chair: Is that a published statistic by the commissioners?
Martin Allen: Yes. It is a published reference to how many permits there are, but there are a lot of totally different guidelines to section 22 from those for section 19. Under section 22, you can do local bus services, but even though the vehicle is running under the permit system, the driver needs to be a PSV driver. The only exemption was the driver’s CPC, but we are talking about two totally different permit systems and guidance.
Q7 Chair: Is your concern more about section 19? You suggested there are 150,000. I am not sure that I understand how you reached that figure.
Martin Allen: We can only go on the figure that was published back in 2007—that it was increasing by 5,000 per annum.
Q8 Chair: You have extrapolated?
Martin Allen: Yes, but the use of the permit is not only in the CT sector. In a telephone conference with the then senior traffic commissioner, Mrs Bell, she said a lot of local authorities were issuing their own permits, which she said was contrary to the permit regulations. We could not find anything that simply stated that, but a lot of local authorities are issuing their own permits and providing transport services under the permit system. They are doing exactly the same and paying drivers without any qualifications.
Q9 Chair: Mr Salmon, do you want to comment?
Steven Salmon: The only thing I would add is that it is actually very difficult to get to the bottom of how many permits there are, because they moved from a system of having indefinite ones to having dated ones, and the records were not very good. We do not know how many of the old ones are about, or what they are used for, so it is quite hard to do.
Q10 Chair: Do you think we need better official data, or would it be excessively onerous to collect it?
Martin Allen: A few years ago, the new permits being issued were for a five-year period, I believe, so there was some control, but we do not know how many permits have been revoked or given up. We just don’t know.
Q11 Chair: Do you have a view about who should be responsible for collating this data and whether it is worth while doing it?
Martin Allen: The issuing bodies must have some kind of reference to how many permits have been issued. If there are 400, it should be easy to get that information, but with regard to issuing permits we feel there should be a recommendation that it comes under the traffic commissioner, so he has full control, as he does with commercial O-licences.
Q12 Chair: Mr Salmon, would you agree with that?
Steven Salmon: I would not disagree. From the point of view of seeing what is happening in both the market and the non‑market sector, it would be a good starting point to know how many vehicles are being operated. At the moment, it is not possible to tell, because there is no central record.
Q13 Daniel Zeichner: I think we would all agree it is quite complicated and difficult to get a handle on this. I want to go into the issue of scale. As someone looking at it from the outside, I think everyone would recognise it is quite hard to run a profitable local bus company, but in terms of scale how big and important is this? I looked at the BSOG figures and saw that the Norse example in Norfolk, which I think you cite in your evidence, got about a quarter of a million in BSOG, whereas the Norfolk Green Bus Company got half a million, which suggests that even a very large-scale operator in the community transport sector is quite small compared with commercial bus operators.
Steven Salmon: If you look at the range of sizes in both the licensed and the permit sectors, there is a very skewed distribution towards smaller organisations, but that does not mean to say there are not large ones. In my evidence, I gave the example of the ECT charity, which operates more than 100 vehicles and turns over £4.8 million a year. It is, to all intents and purposes, a single-purpose community transport organisation. It operates in a number of areas, but it is a single organisation. That is unusual and untypical, but one of the questions that I hope will be addressed through this inquiry and the consultation is whether it is sensible to have a single mechanism that deals with large organisations like that as well as very small local charities.
Q14 Daniel Zeichner: You say it is unusual. Around the country, how many areas do you think are affected in that way?
Steven Salmon: Everything is very local. There are some areas where there is complete harmony between organisations of all sizes on all sides, and there are others. ECT is quite interesting because, as well as its operations away from London, it has a core operation in west London where a medium-sized bus and coach company was very aggrieved because it successfully bid for a very large contract. It is very local. You cannot say it is the same all across the country, because it is not.
Q15 Daniel Zeichner: Are we talking about half a dozen areas where that might be the case, or 10 or 20? What proportion of the country are we talking about?
Martin Allen: From research we have done, our evidence is that it is mainly big towns and cities and pretty large villages. If you look at Birmingham and West Midlands Special Needs Transport, commercial operators in that area of Birmingham have been affected badly. There was an open statement and email about joining the BCA back in 2014 from the then manager. He wanted to join the association because he could see abuse of the permit system. He said that they were the biggest permit user in the country and they employed 800 staff, some full time and some part time. They run 500 vehicles ranging from eight to 48 seats, and I think that at the time they had 11 commercial O-licences. They were also doing bus routes, but all mainly done under a permit.
A freedom of information request to Centro revealed—it also shows it in the accounts—that that company was in receipt of between £10 million and £11 million per annum in grant to carry out a service. It was also doing about 300 to 400 home-to-school contracts, all done under the permit system. It was an open admission from that manager that they did not employ volunteers. The permit system was all about volunteering to provide a service for local areas, not the multimillion-pound businesses we see today that have grown up behind the permit system.
Q16 Chair: Mr Salmon, do you agree that the problems are more widespread in a range of towns, cities and large villages, as Mr Allen said? Is that your members’ experience?
Steven Salmon: It is difficult because we have different memberships in different areas, so I will be aware of different facts from Martin. I am not saying Martin is wrong—absolutely not—but it is not necessarily the case that I will be aware of the same things that he is.
Martin Allen: One of the areas with the lowest level of community transport—it is hard to believe—is Lincolnshire. Lincolnshire is a very rural area, and there are not many at all. You can go as far as Peterborough and back up to Hull and Goole, and there are very few.
Q17 Chair: I would like to focus on the areas where there are conflicts between commercial and community operators. Clearly, you believe that is an issue in your local area—Derbyshire and Nottinghamshire—but are there particular types of contract at issue? Is it home-to-school transport or something different?
Martin Allen: It is mainly home to school. There are non-viable rural bus services that the larger bus companies cannot carry on operating, because of funding cuts, but in our research we found that there are groups in nearly every major town and city. Within the M25, there are lots of groups, the largest being HCT, which operates countrywide. It also provides bus services in Jersey and Guernsey. Some of its operations are done under O-licences; some are done under permits. A lot of these organisations have built up on public money.
You will be aware that I provided evidence regarding the state aid complaint and the investigation. We gathered information from every local authority in England and Wales; we freedom of information-requested every local authority. Some never answered, but nearly every local council, county council and borough council was involved with community transport. Some were granting huge amounts of money—others, not a lot. We found only one council, the borough of Richmond, that funded community transport services but would not allow them to tender. It said that its law department had looked at it and it was high reward and required an O-licence. That is the only borough or county council in the whole country.
Q18 Chair: I do not think it is surprising that local authorities would want to support community organisations that provide community services. In some of the areas you cited, have cases been adjudicated on locally by the traffic commissioner?
Martin Allen: There was a case not long ago in the north-east. The TC was Kevin Rooney. It was about an operator who was operating under an O-licence and a permit as well. He was trying to get round the driver hours regulation. You have to abide by statutory rules under the tachograph rules and the work directives, and he was using the permit as a system to get round the driver hours, which is a serious safety issue.
Q19 Chair: That is one case. Are you aware of lots of cases that traffic commissioners are dealing with, or not?
Martin Allen: No.
Q20 Chair: It is unusual.
Martin Allen: A traffic commissioner can only deal with a case once it is put in front of him. There was a case, maybe a year and a half ago, near Birmingham, where drivers of a community transport group in Swadlincote were stopped by enforcement because they did not hold a driver’s CPC. They were being paid. They held an unrestricted driving licence. After freedom of information requests of different authorities, we discovered that the Department for Transport had intervened and no other action was taken. The drivers were issued with a letter saying they would take no further action, even though it was contrary to the law. It was a failure. The traffic commissioner cannot do anything until a case is put in front of him. If the enforcement body is reluctant to prosecute—
Q21 Chair: Mr Salmon, why do you think problems occur in some places but not in others?
Steven Salmon: Can I first answer the question you asked just now? You asked about segments of the market in which there is competition. If you go back a long way—probably to the 1985 Act and even further—there has been competition in some places in the market of hiring small vehicles with a driver. There has also been competition in the day-trips-out market. Some of our smaller members had quite good businesses taking groups of people from Doncaster to the coast, or whatever, and found that CT organisations were doing it for perfectly legitimate community reasons, but they were doing it cheaper using their assets; indeed, they were doing it at prices that our members could not afford. In terms of hiring small buses and in day trips, there has been competition in, essentially, the same markets. With contracts, it is mostly more recent, because CT organisations in particular have been seeking to spread their overheads or get new sources of income to replace the grants they were getting.
Why it happens in some places and not in others is quite an interesting question. I saw a presentation quite recently about a part of Wales where community transport flourished in areas where there were more people with more time and money. Where the whole community was up against it for some reason or another—for instance, because all the farming was poor hill farming—there was virtually no community transport, because people did not have time and money. That explains a little bit of the uneven distribution of the sector, which I think we could all see if we plotted it out.
Q22 Chair: I understand your point about where community transport does or does not flourish, but why does it come into conflict with commercial operations in some places but not others?
Steven Salmon: The approach to grant funding differs from place to place. If you get a scenario where a council has been relatively generous in grant funding over a long period and, for reasons we all know, no longer is, that will generate tension locally. It is not happening everywhere. In some places, councils have never been generous with grant funding so you have not had this sudden movement of CT organisations. I wouldn’t say they were panicking, because they are generally well-run professional organisations, but CT organisations are saying, “Where are we going to get more money to survive?”
Q23 Chair: You are suggesting that the withdrawal of local authority direct funding for CT organisations is creating pressure for CT organisations to seek contracts.
Steven Salmon: I would say it is one of the things, yes.
Martin Allen: In the state aid case that involved two local authorities, Nottinghamshire and Derbyshire, the decision of the European Commission was that it could see no evidence of cross‑subsidisation to commercial activities. It is about trying to tie up the transport regulations with the state aid regulations. The finding of the Commission was that the funding those groups had received in Derbyshire was sufficient to carry out the service, so our argument is why would they need to chase more and more home-to-school contracts if the funding was sufficient for them to operate? That has been one of the problems. We have no problem whatsoever with community transport doing what its objectives set out to do; it is about the contract work and the multimillion-pound businesses that have grown from it.
Chair: We understand that point.
Q24 Steve Double: In light of the way this discussion has been going, do you think the issue is best addressed locally, rather than by broad regulations?
Steven Salmon: I think it needs a more considered national framework, because small charities and enterprises are not that different in the community at the end of the day. We need another look at the rules, which are ultimately protecting public safety and consumers, around all their activities.
Martin Allen: Some areas are more rural and have less transport than other areas. For services to continue—I know people do not like me to say this—if local authorities had a slight increase in tax and rates, all of that money could be used to fund local services.
Q25 Chair: We are probably straying beyond the remit of our inquiry. It sounds to me that, broadly speaking, you think there should be a new national regulatory approach, rather than it being for individual local authorities to tackle. Would that be right?
Martin Allen: Yes, it has to be a national approach.
Q26 Steve Double: The Community Transport Association insists that conflict between commercial and community operators occurs only in a small handful of local authority areas in England. Do you accept that?
Martin Allen: No, I do not.
Steven Salmon: Much as I dislike disagreeing with somebody essentially from the same background, I do see it as a localised problem, but if the system is not right, the problem could pop up somewhere else.
Chair: That is helpful.
Q27 Luke Pollard: To what extent do you see this problem stemming from misinterpretation of the Transport Act 1985?
Martin Allen: Complaints have been raging for over 10 years to the Department for Transport, the traffic commissioners and the DVSA, but a lot of them have been ignored. There is a document in which the CPT challenged the Department for Transport two years prior to the 1071 regulation coming in. Colleagues with us in this room today have been challenging various Departments over 10 years.
Q28 Luke Pollard: Going back to the 1985 Act, do you think misinterpretation of it is causing these problems, or is it a different reason?
Martin Allen: The 1071 regulation is unique. It was down to the Department for Transport to alter our own transport legislation to allow full adoption of the EU regulation, but it was never done. We have challenged it over a number of years, so it has not come as any surprise. The Department for Transport has had sufficient time to alter our own Act to accommodate the European regulation.
Steven Salmon: This is where I am coming from. It is not a case of misinterpreting UK legislation; it is UK legislation not moving in step with what is happening in EU regulation that has direct effect.
Q29 Luke Pollard: Mr Allen, you described the DFT’s handling of this whole thing, and your complaint in particular, as shambolic. Do you have any brief examples that might help to inform and enlighten the Committee?
Martin Allen: I have been involved in this for nearly six years. After many emails to the Department, I have only ever had one reply. They will not even acknowledge our emails.
Q30 Luke Pollard: For how long has this been a problem?
Martin Allen: For four and a half to five years.
Q31 Luke Pollard: Is that how long you think it has been a problem or how long the DFT has known about the issue?
Martin Allen: It was back in 2009 when CPT confronted them about the issue.
Steven Salmon: We agreed to disagree in 2009. We felt that the wording of the EU regulation meant that the UK ought to change those parts of the 1985 Act, and the DFT disagreed.
Q32 Chair: Have you raised it with them since?
Steven Salmon: Now and again. Yes.
Q33 Chair: Do you feel that they haven’t taken it seriously?
Steven Salmon: They have continued to hold their view. I do not accuse them of not taking it seriously. They simply disagreed with us. It is about the meaning particular words can hold—in particular, the phrase “exclusively for non‑commercial purposes.” To us, the meaning of that is very clear, but DFT did not agree with us. We took informal advice on whether DFT, and therefore the Government, were clearly unreasonable. The advice we had was that they were not so clearly unreasonable that we would obviously win if we took them to court, so we didn’t.
Martin Allen: We first made the complaint to the European Commission on the interpretation of that regulation in the UK back in March 2014. We soon received a reply and we visited the European Commission on 16 June 2014. Shortly after, the Commission started the pilot scheme and issued the infraction notice on 30 April 2015. That was two and a half years ago. It has taken over three years to get to this stage—to Mr Fidler issuing that letter. I was informed on 2 February this year that the European Commission was going to move to the reasoned opinion stage and would issue a reasoned opinion. That did not come. When we were in contact with the policy advisers in Brussels, they informed us that the UK authorities would sooner do it by dialogue than finish up in the European courts, which is a better outcome for us.
Q34 Chair: Mr Salmon, you said there were differing interpretations between CPT and DFT. Would you agree that the Department’s guidance says, essentially, that non-commercial equals not for profit?
Steven Salmon: Yes, it does, whereas in the way the EU has moved, and is continuing to move with the latest text for the road transport package, their view is that non-commercial means not for income.
Martin Allen: That is based on the Lundberg judgment, where the interpretation of non-commercial is that there is no payment made for the carriage. It is quite clear, and I believe they are going to adopt that.
Steven Salmon: It is a text currently under negotiation.
Q35 Chair: There is a suggestion that it does not reflect the circumstances of community transport, which are unique to the UK.
Steven Salmon: That is a criticism for EU lawmakers to answer.
Q36 Martin Vickers: Mr Allen, mention was made earlier of Lincolnshire, my own county, which is extremely rural. Many of the local economies and communities are absolutely reliant on community-operated services. When you started your campaign, was it your intention that the community sector that was not in competition with the commercial sector would also be affected?
Martin Allen: If you read the regulation, because of the interpretation and the previous case law, it affects every community transport group that is receiving payment for transport services. It was never our intention to try to destroy or diminish groups that were doing the job correctly. It will never be our intention to cut out local groups from the essential services they are providing.
Q37 Martin Vickers: Do you agree that there should be a full impact assessment before any new regime is implemented?
Martin Allen: A lot of assessments need to be done in totally different areas of the needs of the people within them. We saw a Westminster debate about a year or so ago that involved Derbyshire MPs and a Scottish MP. The Scottish MP hit on the fact that his community transport groups were totally funded by the authorities. They did not tender for contracts. By that time, the infraction notice had already been issued, in April. He realised that changes were coming and managed to secure funding to train the drivers. We do not want to hit vital core services to the community, but multimillion-pound businesses have grown up from misuse of the permit and what it was intended to do.
Q38 Martin Vickers: Mr Salmon, is it really in your interest to force through change that will bring the larger CTOs into direct competition for all commercial work?
Steven Salmon: We would say that the larger ones are in all the markets we are in already.
Martin Allen: If it is done under an O-licence, the competition or price levels will probably not vary so much. You get a big variation now in prices in tender competitions because there are statutory obligations on the commercial operator and none on the permit sector, so there are big gaps. Once they both enter the market as full-blown commercial operators, they will carry the same costs as we do. It has been said recently that some of those groups still intend to register under a not-for-profit company, with O-licences, and tender for commercial work. We do not accept that it should be possible for them to do that.
Q39 Chair: If community transport operators met the same regulations, and because they would not be required to make a profit, do you think they would still be quite successful in securing contracts? Do you think it will make a difference to your members?
Steven Salmon: It is a strong matter of principle at the moment that organisations running under a permit can compete in the market on the basis of cost advantages that our members cannot replicate. That plays very close to the heart of small members. They can look out of the window and sometimes see a CT operator in premises over the road, probably some council premises they get for nothing. It is using grant-aided vehicles and has cost advantages in relation to licensing, drivers and training. Our members feel they might as well give up, in some circumstances.
Q40 Chair: If we are to believe the evidence presented by the community transport sector, changing the regulations would pose a potential risk to the whole of its operation, including the—
Steven Salmon: We would say that is evidence of the very substantial cost-benefit that it enjoys at the moment. I am not saying that the only way to solve the problem is to move CT’s costs up to the level that my members have to bear. When we are less governed by EU regulation, there may be an opportunity to move things the other way so that the rules are similar and these problems do not arise.
Q41 Chair: Do you think it is in everyone’s interests for a middle ground to be reached through new guidance and legislation?
Steven Salmon: It probably is, following the key requirements, which are essentially public safety.
Q42 Daniel Zeichner: I am slightly concerned by your final suggestion. It sounds like you would be advocating lower standards in the future, which I am not sure anyone would want to see.
I would like to move on to drivers. The evidence we have from hundreds and hundreds of small community transport operators is that many of them have pools of drivers who are very unlikely to want to be trained up to the higher level. What impact do you think it would have if this was seen through and that was required?
Steven Salmon: Not wishing to be difficult, I think the CT organisations have a better handle on that than we have. We know what the costs are, because all our drivers have been through it. I am sure that other people you will have at the table shortly will also have done the exercise, which is why I think there might be mileage in the longer term in finding some middle ground that is safe, does not involve the exploitation of workers, or even the exploitation of volunteers, which is possible, but protects all the things that are important to everybody.
Q43 Daniel Zeichner: Can you tell us about the availability or spare capacity of drivers within the industry at the moment?
Steven Salmon: It is highly variable, rather like the issues we have been talking about today. In some places, the market rate for bus and coach drivers is very high, and there is something of a shortage; in other places, less so. It is possibly an indication of the realities of working in the industry that a lot more people are qualified to drive buses and coaches than actually make a living doing it.
Q44 Chair: Before I thank you, I will give you a last opportunity, if there is anything you feel we may have missed, to say it to us very briefly.
Martin Allen: One of the main questions in the submission was that you were going to assess the short-term impact. Since the issue of Steven’s letter on 31 July, we have seen very little movement towards applying for an O-licence. I am absolutely sure that I put in my submission that the short-term impact would be community transport not applying for commercial O-licences and moving their sector forward. We have to hold local authorities or the Government to account on the interpretation of the regulation, because in a letter to Mobility Matters they simply say: “It is not necessarily helpful to those operators, therefore, to encourage them to delay taking action to ensure that they comply with the law.”
Q45 Chair: Do you think the lack of anything happening in the short term reflects the lack of clarity provided by Government at the moment?
Martin Allen: I think in his letter Steven covers pretty well where it will apply.
Q46 Chair: The Department has already said that it will carry out a consultation in the autumn. It has not started yet, but that suggests that the matter is not settled, doesn’t it?
Martin Allen: No, it is not settled yet. Before the consultation, or even after, all the bodies surrounding this issue need to sit down and work out a forward formula, so that vital services can probably still carry on under the permit.
Q47 Chair: That might be something we ask our next set of witnesses. Mr Salmon, is there something you want to add?
Steven Salmon: I have said all that my members would want me to say. Thank you.
Chair: Thank you both very much for giving us your evidence this afternoon.
Examination of witnesses
Witnesses: Bill Freeman, Frank Phillips and Anna Whitty.
Q48 Chair: Good afternoon, and thank you for being here. For the record, perhaps you could introduce yourselves and tell us the organisation you represent.
Frank Phillips: My name is Frank Phillips. I represent Erewash Community Transport. My organisation is the one that has allegations against it from the DVSA, but it appears that we have already been found guilty by the letter from the DFT that was sent out on the 31st.
Chair: I am sure we will come to those questions in a moment.
Bill Freeman: I am Bill Freeman, chief executive of the Community Transport Association.
Anna Whitty: I am Anna Whitty. I represent Mobility Matters, which is supported by 285 community transport organisations.
Q49 Chair: Frank, what is your understanding of the current legal status of the DVSA’s findings in relation to its investigation of Erewash Community Transport Ltd’s compliance with licensing arrangements?
Frank Phillips: At the moment, they are just allegations and they are being investigated. My organisation received those allegations on, I think, 2 September. We were invited to submit a response and we did that first through the CTO. We were informed by Caroline Hicks of the DVSA that we had to respond to the legal points. Therefore, we engaged the services of Julian Blake of Bates Wells Braithwaite, who responded with a comprehensive legal response. I have circulated that.
Chair: The Committee has it.
Frank Phillips: You have those background papers. Since 25 September, when that legal response was submitted, we have heard nothing at all.
Q50 Chair: How will any remaining disagreements be adjudicated? Is it a matter for a traffic commissioner or for the courts? Do you know what the likely timescale is?
Frank Phillips: We do not know, but we assume that as the traffic commissioners are the permit issuers—the ones responsible for issuing the permits—the matter should be before them, and it may go to a public inquiry.
Q51 Chair: This question is for all members of the panel. Could or should the progress of this individual case in relation to Erewash Community Transport affect the timing of the DFT’s proposed consultation?
Bill Freeman: Yes. As it is a live case and has yet to run its full course, the nature and content of that consultation cannot be fully appreciated. If the consultation is seeking to take the issues further, as the letter says, there is likely to be a read-across between the situation that faces that community transport operator and others, and it is important that that process is fully exhausted and complete prior to any judgment being made of its wider implications.
Anna Whitty: It feels to me as if no decisions have yet been made, and from the letters we have received the DFT appears not to understand the complexity of community transport—that came across very clearly in the first panel—or the impact on users.
Q52 Chair: Mr Phillips, do you agree? Do you think that your case should be concluded before further action is taken?
Frank Phillips: Absolutely. Unfortunately, the effect of the DFT letter is that many county councils are already setting timetables for the withdrawal of section 19 permits. Just last Friday, I saw a Cabinet paper that was going to Derbyshire County Council on Thursday where no section 19 permits would be issued after 1 December, all section 19 permits would be withdrawn on 31 March and only operator-licensed entities would be allowed to compete for contracts.
Q53 Chair: That is a decision being made by a county council before we have had any consultation.
Frank Phillips: Yes. It is not just one county council; it is the common position of Nottinghamshire, Derbyshire and Staffordshire. By that time, I may be out of business.
Q54 Chair: The DFT’s guidance at this stage has not been altered. To what extent do you think the principles set out in the letter of 31 July, which I surmise you all think was hasty, will ultimately require some changes to the way community transport organisations operate?
Anna Whitty: When the letter came out, we were all shocked. It was confusing, and implied that decisions had been made by a decision-making body, which they had not. There was a case going through. It did not account for the complexities of CTs; each area will be very different.
Bill Freeman: I think the DFT had to do something. Whether or not we agree with the nature and content of that letter in its entirety, there was going to be a problem. If the DVSA’s letter had been issued to a CT operator on 31 July, and there had been no other public communication about that issue from the DFT or the DVSA, we would have witnessed what happened numerous times before when similar actions had taken place, which is that the complainants in those cases had a free run at communicating, often inaccurately and in a misleading way, the result and implications. I think that the DFT, as it said in a recent communication to local authorities last week, was seeking to manage the way the result of the letter that had gone to the operator was communicated.
I know, from many times before, that if there is not something from the Department for Transport to challenge some of the implications being presented—in the trade press, as well—it leads to further damage to organisations. I can share with you after this meeting examples where communications have gone to local authorities, when the infraction letter was delivered in the spring of 2015, saying, “Community transport has just been banned; all permits are now illegal; cancel all your contracts.” That communication has gone to local authorities. It is misleading and inaccurate. I think the DFT was trying to avoid that.
Q55 Chair: It appeared to me from reading the letter that went to Erewash Community Transport that it was a preliminary finding rather than a final decision. Is that right?
Bill Freeman: Yes.
Q56 Chair: To the best of my knowledge, that letter would not have been in the public domain.
Bill Freeman: Some of the other cases were not in the public domain. I do not know how information gets protected or how you can stop it being communicated; on those other occasions, there should not have been information in the public domain, but it got out. Once something of this nature has happened, it is very difficult to control exactly who finds out about it. It was important that the DFT tried to control what messages went out. In doing so, there are a number of problems with the content of the letter that have created further uncertainty and alarm rather than reassurance, both for designated bodies and operators.
Chair: That is precisely the area we want to clarify further.
Q57 Iain Stewart: Mr Freeman, do you think the Department should not have sent the letter on 31 July until the various other issues had been clarified or resolved?
Bill Freeman: Yes and no. If the aim was to provide reassurance and clarity, they should not have done it, because it has not done that. If it was to try to manage a piece of news that could lead to misleading and inaccurate reporting of what had happened in this case, they were right to put something out.
Q58 Iain Stewart: Wouldn’t you say it is the Department’s duty to inform permit issuers and holders as soon as possible of issues that may significantly affect their legal compliance?
Bill Freeman: I agree that it is their duty to do that. The extent to which those duties might need to change in the light of this case could not have been fully appreciated at that time, but I still think the DFT and other relevant agencies needed to try to manage the potential fallout from the action that was being taken.
Anna Whitty: Mobility Matters has a big problem with the letter because of the factual misrepresentation and the fact that no decision had been made. Another letter from the DFT was issued on Friday. I am not sure whether the Committee is aware of it. We still have not considered all the implications, but we believe it has muddied the waters some more. It implies—this is happening throughout—that somehow community transport operators are less safe, or do not need to follow regulations, neither of which is true.
Q59 Chair: Mr Freeman said he thought that the Department had a duty to inform permit issuers and holders of things that might affect them. Do you agree with that? Is your concern with the content of the letter rather than the fact of there being a letter?
Anna Whitty: Most of the letter did not make sense, because no decision had been made. I will give you an example. It said that DVSA had made a decision, when clearly it is not a decision-making body. There were other inconsistencies. It talked about commercial activities. For some reason, big and small community transport organisations are subject to different regulations, or should be. We could unpick almost every paragraph. You may already have it, but Mobility Matters answered the DFT in what it was saying almost line by line. It might be helpful to the Committee to consider that.
Q60 Iain Stewart: Mr Freeman, you said that the DFT’s letter has led to local authorities either ceasing or not renewing contracts with community transport organisations. Mr Phillips referenced Derbyshire, Nottinghamshire and Staffordshire, which, if my geography serves me well, are adjacent counties. Is it limited to just that area, or do you have evidence of it being a more widespread problem?
Bill Freeman: In terms of actual contracts being cancelled and the action being used to justify that, we have a small number of examples in Lewes and in the Wirral. The bigger problem is difficulty and scepticism around the further issuing of contracts and, as Frank says, a situation where local authority commissioners are not certain. That is where there is a problem of lack of clarity. If there is lack of clarity, the default position is to act conservatively in trying to avoid any challenges in the future.
We are also hearing that customers for certain types of services in certain areas in London, where other charities might train their drivers using things such as MiDAS, are not doing that now. It is having an impact on CT operators, not just in their contracts, but in the whole environment of all the services they provide, which are not necessarily anything to do with local authority contracts.
Q61 Iain Stewart: We are getting to the point in the financial year when local authorities start to set their budgets for the next financial year. Have you picked up, beyond the three counties that have been referenced, others that are actively putting forward budget proposals that would end or change these contracts?
Frank Phillips: Derbyshire County Council’s report estimates that, if they cease section 19 permits, it will put a 50% increase on their transport budget. Their budget at the moment is £1.6 million, so you can add another £800,000 to that. I think that estimate is on the high side, but they are looking at that.
Q62 Iain Stewart: Have any community transport organisations ceased operating as a result of this?
Frank Phillips: Not directly as a result of the DFT letter. Derbyshire, as you know, was found to be in breach of the state aid rules on grants to community transport organisations, so they fairly swiftly moved to a contract-only situation. One CT operator in Derbyshire has ceased to operate: Clowne Community Transport ceased to operate as of 1 September this year.
Anna Whitty: It might be helpful if we shared the letter that the manager of Clowne sent to us. It is quite heartbreaking. It talks about what the local community is losing.
Iain Stewart: It would be helpful to have that. Thank you.
Q63 Laura Smith: I have a couple of questions for Anna. You sent us some survey data on how CTOs would react in the event of being required to obtain PSV operator and driver CPC licences. What range and types of CTOs were surveyed?
Anna Whitty: As we said earlier, the community transport sector is very different in different places. It would have been a response from a range of operators. We were asked earlier about operators closing. For instance, in rural Wales, where there are a lot of very small CTs, the letter has caused a lot of confusion, and trustees are considering their actions because they have a duty. If we go to the opposite end of the range, in those areas there is likely to be a much bigger issue with shortages of drivers. Again, that will have a similar impact.
Q64 Laura Smith: Do you think it might be too early to speculate, before the DFT’s proposed consultation has been conducted, on what the effects might be on the very diverse range of CTOs and the work that they do?
Anna Whitty: I absolutely agree with you. As a positive, passionate person, that is how I would always look at it, but the way the DFT letter was drafted was, “A decision has been made and you’ve got to do this. It is likely to affect—”. The language that has been used has not been very helpful to community transport organisations. It has created a panic throughout the sector, and some local authorities are very nervous.
Q65 Laura Smith: You have estimated the potential additional cost in relation to core community transport services to be £119 million. How much of that additional cost is it possible for CTOs—particularly large, multimillion-pound turnover organisations such as yours—to absorb without detrimental effects on services or passengers?
Anna Whitty: The whole CT sector is very complex. It is all about funding. Some of that was mentioned in the earlier session. The traditional way is that you get a grant and you do the charitable activities. Most places have lost all funding. Successive Governments have encouraged community transport organisations to find a sustainable model, and we have done that within the law. The permit system absolutely allows that, but let me put it into some sort of perspective. The Committee asked, “How prevalent is this?” Let’s put it into actual perspective.
Community transport operators constitute 10% of operators. Of those, we have 6% of vehicles. If you look at the permit system—this is all in our submission, so you might find it helpful to refer to it—community transport operators are only operating 17.5% of all the permits. It is quite small. If you dig deeper—the SCN contracts for adults who have severe social care needs, and the reason why most of us come to work every day—we are only talking about 5% of the contracts.
Q66 Chair: This is rather a provocative question to ask of you, Anna, if you don’t mind. Mobility Matters has described the potential effects as catastrophic. Do you think that might have inflamed the situation or made CT operators more anxious than they should have been, given that the situation is still unclear?
Anna Whitty: It is genuine. I will give you another example. One or two operators have tried to apply for an O-licence. We know that at least in one case the BCA put in objections to a community transport organisation getting an O-licence. The trade press has been reporting that local authorities have been reacting and CTs are closing. We would be very irresponsible if we took no notice. If we took no notice, we would be accused of putting our heads in the sand. Some CTs are doing that, because it is too big and too complex. It is very difficult to understand. That is one of the reasons why Mobility Matters came together. We were able to seek legal advice and collectively have a voice.
Q67 Chair: Mr Freeman, did you want to come in on the question about absorbing costs and what impact it would have?
Bill Freeman: I was going to try to share some figures that might give an appreciation of the breadth of organisations. Around 30% of our membership would be what you would call primary—people whose main business is transport—and that represents about 500 organisations. From data we drew up in the summer, just over 60% of those had turnover of less than £100k a year. The vast majority of those organisations are quite small. Only 19 organisations within that whole 500 would have turnover of over £1 million.
To some extent, the size of the organisations should not matter in reaching a view about the nature of those organisations. We have some pretty large, multimillion-pound charities out there—household names like Save the Children. You would never argue that they have become commercial because they have grown big. What they have done is find other ways to reapply their values and grow to meet more needs. That is what many of the larger community transport operators have done as well.
That is to give you a sense of the context, but there are also a lot of organisations out there whose main business is not transport. This is being looked at through the very narrow prism of organisations that might fulfil local authority contracts and whose main business is transport, without thinking about the other hundreds of organisations—maybe charities that employ a youth worker or sports coach—that will be affected too. One of the problems with the letter is that, because it is so narrowly focused on what happens in the arena of going for local authority contracts, it has missed out all the other stuff that could have a massive impact beyond what we are talking about in the absolute numbers of easily identifiable charities whose main work is transport.
Frank Phillips: To put that in context, my organisation has 22 buses, 24 drivers and 26 passenger assistants. Most of those are part time; I only have three full-time drivers. However, of those drivers, approximately 15 have indicated that they would not want to go for further training. At the moment, I have sourced that training at a cost of round about £2,300 or £2,600 per driver. That is a great deal, but it is not the total cost. There is then the cost of enhanced MOTs on the buses for a type 6 MOT, at a cost of about £350 per bus. There is the additional purchase of tachographs, and of course the calibration of tachographs. There are other on-costs as well. For my organisation, we estimate costs of about £100,000.
Fortunately, I am in a position where I can meet that. I can deal with that. I have been suffering threats of legal action from Mr Allen for the last six years. Therefore, my trustees have been very prudent and have built up a war chest in case of any litigation. I have a substantial war chest, but I know that most community transport organisations in Derbyshire do not have that at all. They publish their accounts on the web and you can see that; it is there. Most of them will face substantial losses or will have to change their method of operation.
One way of doing that would be to downsize and operate under private hire rules, and use minibuses of eight seats or less. That is a possibility. That is one of the considerations on my plate at the moment, if I tried to continue what we are doing. I passionately believe in what we are doing.
Q68 Chair: Mr Freeman, to clarify, your concern is that it is not just the large operators who are going to be affected; a whole range of your members could be affected?
Bill Freeman: Yes. We should not reach a view, as has come across in some of the other communications, that this is okay because it is large organisations—the implication being that they should be able to shoulder those costs. That is problematic, because a lot of those organisations will not have put aside moneys. They cannot make a profit. Use of a permit means that you cannot make a profit; you can only run the service at cost. Some of those costs could be a contribution to reserves, but it would be minimal.
It is all the other groups. They would not necessarily be affected by some of the operator licensing changes, but certainly around drivers, if they are paid drivers such as a sports coach, youth worker or someone who works for Age UK, they might find themselves within the scope of having to do driver CPC, with the additional costs of that. Also, as we have already heard, we have driver shortages and a driver problem in the whole industry anyway, beyond community transport. All this is doing is adding another group of problems to something the country faces anyway in terms of shortages of drivers.
Q69 Steve Double: On 5 October, the Minister wrote to MPs with the aim of reassuring us that the Department was seeking to work with organisations that were affected to help them become compliant, and that it was going to take a pragmatic approach. Has that message reached the community transport sector. Have you been reassured by it?
Frank Phillips: I can answer that. I have not seen the Minister’s letter, but I have seen selective quotes from various organisations. I have not seen the letter in totality. If I am typical of the community transport sector, the answer would be no.
Anna Whitty: Can I make it absolutely clear that up to 31 July most community transport operators were compliant? There is clear guidance. It may be helpful to refer to the submission, where we actually included a table comparing the differences. You will see that there is very little that is different. Overnight, that appeared to have changed, despite updates and guidance. In 2015, there was guidance issued by the DFT on funding to community transport, in relation to state aid. That had been done with the EU. Within it, there is a presumption that contracts can be operated, just not double-counted or double-funded. The guidance has always been very clear. Overnight, on a decision, or non-decision, it was changed and it just does not make sense to us.
Q70 Steve Double: From your point of view, has the message that was in the Minister’s letter reached your members?
Anna Whitty: The letter has gone out, but, as with the DFT letters, Mobility Matters believes that, instead of making things clearer, it has shown a misunderstanding of the complexity of community transport and the impact of what we do.
Bill Freeman: One thing we have called for all along is for the Government not simply to see this as tidying up a legal matter, but to address some of the broader public policy issues and concerns there will be if you potentially remove from local areas providers of transport that help people who would not have any other means of getting out of the house—the additional costs to them of losing their independence and the costs to local social care and local NHS services. The letter was helpful in that it moved some way towards the Government stating that they saw their job as protecting the community transport sector, and that they were mindful that it was not simply about tidying up a legal matter. Where it was problematic is that, although not directly, there is an implication that there are some concerns around safety; it mentions the continued safety of passengers. We have not seen anything in any of the previous communications that implied, and there is no evidence to suggest, that there are any concerns around the safety of passengers in community transport vehicles. Some of the things said in that letter may have unhelpfully implied that there are.
Q71 Daniel Zeichner: That is quite helpful, because it leads to my question to Mr Freeman. What discussions have you had with the Department about the timing and scope of the proposed consultation? We are in a complicated situation, and now it appears that we are almost going to open the whole question up again.
Bill Freeman: On the consultation that was mentioned in the DFT letter, I said before that there was confusion around whether any action was required to change compliance prior to the completion of and reporting from that consultation. The consultation says it is merely going to consult on guidance and changes to guidance. We think that is not enough. We have been saying to the Department that they have to assess the impact.
Actually, if a Minister is going to sign off some changes that potentially create a lot of instability within communities, with lots of passengers losing services, and lots of small groups that might borrow community transport vehicles for young people, or to help people get out of the house to learn new skills, being at risk, we want the Minister to see that in front of them—who it is going to affect and how. What can we put in place to ameliorate some of the effects of that, or shall we choose another path, because, however much we might want to regulate in the right way and tidy up this matter, the public policy implications of going ahead are too great for us to not find another way of dealing with this? That is what we hope for from the consultation.
There also needs to be some clarity and transparency about how we got here. How have we gone from a situation where the Government were prepared to stand by previous definitions and go back to the European Commission and negotiate dispensations for the UK, because of our culture, conventions and the way in which we work? Why are they not doing that? Can they demonstrate through the consultation that they have reasonably explored every other avenue before taking this action? That would provide better understanding and some reassurance that they are mindful, as Anna says, of all the issues, what the impact might be and what they can do to limit the scope and nature of that impact.
Q72 Daniel Zeichner: The Minister’s letter says that the consultation will be not just on guidance but on potential changes to legislation, too. That makes it potentially wider, given, as I think is very clear from the discussion we have already had, that this is complicated and difficult stuff. What do you think would be a reasonable timescale for the consultation and any future implementation?
Bill Freeman: If it was clear that there would be a positive and sensitive approach to enforcement in the meantime, while the consultation takes place and we arrive at a commonly understood solution, I think it would need to take a number of months, and we would be looking to next year before it is implemented. If we maintain the current situation, where people are uncertain and concerned about what they are meant to be doing now, because they had a letter in July and nothing since, other than seeing some communications to local authorities or MPs, and there has been no consultation and there is still no certainty of when that consultation will take place, there will just be further uncertainty. As we have said before, that leads to organisations, be it local authority commissioners or not, taking a judgment that it is best to avoid taking a risk and just to go along with what is proposed, in case it comes in. That is potentially damaging, the longer it goes on. There is a need to get on with the consultation, but what we want is some clarity and sensitivity around enforcement until that is concluded.
Q73 Daniel Zeichner: I am still not sure that I am particularly clear on that. There is clearly a balance, as you say, between giving certainty in the short term or some reassurance, and actually doing justice to what is quite a complicated set of things.
Bill Freeman: Yes. One of the things we keep hearing is “Why now?” Whatever you think about the UK’s departure from the European Union, and when exactly the departure date will be, it has left a question about whether all this upheaval will be worth it to achieve compliance with what could be a short-lived period before the UK Government have the ability to review and rewrite the regulations independently, outside the European Union, and create something that fits more with our approach to transport in the UK. The longer it goes on, the shorter the period between the consultation ending and our departure from the European Union will be. It further advances the question of why we are doing this now when at some point in the near future we may get to create something that feels a bit more fit for purpose for how we do things here.
Q74 Daniel Zeichner: In my mind, that raises what has been the slight elephant in the room throughout the discussion. There may be other factors driving all this around local authority commissioning practices and the wider economic background that drives those. Do you think the consultation should take those into account as well?
Bill Freeman: I think it should, because seeking to find solutions is not simply about how we get everybody who now has to have an operating licence to get one and how we can help with that. As big a problem, and what is potentially broken, is local authority commissioning of far too many services for which there is not really a market but which have ended up being tendered, because of changing fashions in how local government likes to pay for things.
Local authorities have to work to rules about managing market competition, fairness in the market and all those things. They can also decide if they want a good, local community transport sector for their local residents, and they can invest in that in other ways. What I want to see in the consultation is the ability for examples to come to the fore of ways in which local government might support community transport to carry out services and enable good things to happen in their area that are not necessarily about lumping everything into tendering exercises, especially where there is no obvious market for that to exist.
Anna Whitty: If we are talking about tendering, the regulations already allow for quality. They also allow for the social value act. It is for the local authority to decide what is appropriate to them. It might be helpful to understand that some CTs win work not because they are the cheapest—often they are not—but because the quality is of the standard being looked for.
Secondly, and I am backtracking a little bit, there is the misconception that when tendering for contracts a CT operator can deliver a different quality of service. The local authority sets that, and certainly in my experience it is more likely that a commercial operator, rather than a community transport operator, does not meet them. There is a real history over the decades of the community transport sector bringing up the quality of the provision and the bespoke training that is applicable.
Going back to what you were saying, what might be useful is to understand the scale at the moment. Nobody actually knows how many permits there are. Nobody knows how many people are affected or what those community transports might be using the vehicles for. That might be a useful starting point.
Q75 Luke Pollard: It seems to me that at the moment this affects a very small geographical area, but has an impact that could affect everyone in the entire country. What do you feel the impact is for your members who might not be in the affected counties where we have heard examples, but might be in areas we have not yet spoken about? I am thinking about not only the impact on where they are going with their business model but what effect that could have on other tendering opportunities, investment decisions and additional training they are putting in place.
Anna Whitty: Any board of trustees or any manager will have to assess those risks. When there is insecurity, things tend to stand still; Mr Phillips was saying that they have not bought vehicles for a while, because they did not know what was going to happen. Yes, that will happen, but I would disagree with Bill. Whilst MiDAS may not be offered on a wider scale, any competent CT will continue providing full training to any of their drivers who may be delivering any of their passenger services.
Bill Freeman: We have plenty of good examples of county councils and other local authorities that understand and value their community transport operators and work with them, such as East Riding of Yorkshire and Hampshire. Both those local authorities say, “Actually we are going to take steps to support our local community transport operators to make sure that this doesn’t have a damaging impact because we and local residents rely on the services that they operate.”
It is up to local authorities to decide what kind of attitude they have to their local sector and whether they want to work with it. As I said before, we have seen other examples, such as in the Wirral, where the local authority has been bullied because of threats of legal action—“Cancel all your CT contracts or we will take you to court”—and they have gone along with it for an easy life. As you know, if a local authority has a sense that there is a risk, it will be overcautious. That has had a massive impact on charity in the Wirral, which has had contracts withdrawn because of the threats and bullying that has taken place around this issue. We see it in other areas. It comes down to the extent to which the local authority is prepared to push back against that bullying and say, “We are not going to stand for that. We have a different view of community transport and we want to work with them.”
Q76 Chair: I want to clarify the issue about geographic impact. Mr Phillips gave some specific examples about Derbyshire, Nottinghamshire and Staffordshire, with the local authorities taking a different approach to the issuing of permits. It seemed to me that the question from Mr Pollard was maybe suggesting that it was not having a widespread impact. Would you suggest it is already having a widespread impact?
Bill Freeman: If you go back to when the infraction letter was received in 2015, what I would have expected was a period of deliberation and consultation and that all of these challenges would stop until that had concluded. But they did not stop; they carried on, with individual threats to CT operators and local authorities. There was that grouping around the east Midlands. You might question why they were singled out. It may be to do with the originators of the complaints being based there, so contracts they wanted to win had community transport operators locally, and that is why those councils had threats issued to them about being taken to court unless they took action. It is the same in the Wirral.
The BCA website says it has 28 members. It would be interesting to see whether there is a correlation between the areas where there have been the most challenges and threats to local authorities and whether that has led to local authorities withdrawing or changing their practices to avoid being taken to court. It appears to be in small pockets that there is a local and aggressive campaign against community transport, which you have experienced as well in Ealing, that leads to local authorities running scared of threats and challenges. In some instances, it has led to them saying, “We are just going to step away from contracting in case we get taken to court.” That is unfair on the CT operators in those instances.
Q77 Chair: That is an impact in different, specific parts of the country as a result of the actions of the BCA, as you would see it.
Bill Freeman: Yes, but what has happened since the letter is that the world view that was adopted and led to those actions is now being taken across the whole of Great Britain. There is parallel action in Northern Ireland as well. The lived experience of most CT operators, their passengers and the commissioners would be that they have not witnessed any of this kind of conflict. I go to Scotland, and CT operators there do not know what we are on about when we talk about aggressive campaigns against local CT operators. They do not see it in Wales. They do not see it in lots of parts of England. It has been pockets—a small number of places—but the impact will be much wider than those places. It has taken its language from the playbook of those challenges, and that is where the disagreements from a lot of the CT sector have come from.
Q78 Chair: Would it be fair to say, in terms of the 31 July letter, that it is not at the moment having a widespread impact, albeit that its implications could?
Bill Freeman: Yes. Data is not available on what the actual impact to date has been on organisations closing, contracts closing and people ceasing not just local authority work but actually a whole range of other activities as well. That is why we said that the Government have to try to collect that through the consultation.
Q79 Chair: I want to pick up on some of the questions you were answering from Daniel around the timescale and scope of the proposed consultation. Can I clarify whether you have had helpful discussions with the Department for Transport around that or whether it is still a bit of a mystery?
Bill Freeman: One of the things said in the letter was that it would be in the autumn. That gives a three-month window for it to come out, which has nearly gone. All our discussions have been based on an assumption that it would come out in the period between September and the end of November. I have not had any conversations with them that would imply that their intention is to do something other than that. They have two or three weeks left in which they could do it. I do not know. If it came out in November, we would expect a good period—maybe 12 weeks, which is standard for consultations—for that consultation to take place.
Q80 Chair: But, at the moment, you do not know what the time is going to be, and there is nothing beyond what we have already seen.
Bill Freeman: No. That is the benefit of being able to pick a season. You get a three-month window, but we are getting towards the end of it now.
Q81 Chair: We know that autumn means the end of the year, probably. To clarify the issue around the timing in relation to our withdrawal from the European Union, do you have a view about whether the Government should repeal EC 1071 as part of the process of withdrawing from the EU, or might that have wider unintended consequences?
Bill Freeman: At this moment, I do not have a view. If you had a blank piece of paper and could redesign how this might all look, you probably would not create what we have. As you say, there could be unintended consequences and a pro-community transport voice would not be the only voice in a debate about what our regulations ought to look like. There would need to be some changes and compromises on all sides to create a better set of arrangements that enable the Department for Transport and the Government to feel they are regulating in the right way. It needs to be very clear for the enforcement officer on the street that they are doing the right thing, and for operators, both commercial and community, to feel that they can go about their business without constant threats and challenges hanging over them.
Q82 Chair: Anna, I can see that you want to come in on that.
Anna Whitty: Mobility Matters fully supports a review of the licensing regime in the future. There is a lot of talk about commercial or not for profit. Ultimately, a court may need to decide that. There is quite a lot of talk about a fait accompli. Nobody knows, and if you take 10 lawyers they will have different views. Nobody can agree what that means and in what circumstances. A case has been used that has no relevance to passenger transport and the uniqueness of the UK. There are a lot of questions to be answered before we even go to a consultation, let alone changing the system, and having a holistic review of the licensing system.
Q83 Paul Girvan: I would like a little bit of clarification. I represent an area that has benefited greatly from a very good community transport network. It works very effectively. The difficulty they are having is in relation to the grandfather rights of the driving licence and the requirements in that area.
This is what I would like some clarification on. You mentioned earlier an ignorance or lack of understanding in the DFT in relation to community transport and how it is developed and working. What mechanism do you have for feeding in exactly what community transport is to the Department for Transport in relation to that? You said earlier, when answering some of the questions, that there was ignorance about the nuances of what was involved in community transport and how it was working. I am sitting on another side of the fence, and I appreciate that I very much see this as commercial operators wanting the whole cake as opposed to a 17% share of the cake. I might ruffle some feathers by saying that, but that is very much the way it reads to me.
As far as the EU and the infraction charges and suchlike are concerned, there is a debate as to what we accept from the EU and what we do not. In some areas, I am concerned that we accepted it all. I would like some clarification about your engagement with the Department in relation to this. I know we are further down the road than that now.
Bill Freeman: Yes. I think the experience of operators within Northern Ireland will be very similar to GB. They will face many of these challenges because of the actions there.
I would not wish it to be thought that I had said that people within the Department for Transport were ignorant of the full range of issues. I ought to clarify. In trying to solve this matter, they have been forced to look at the issue through a very narrow prism, which is around how we settle the legal challenges and stop the threat of court action against the Government. That is to the exclusion of everything else.
I regularly meet people from the Department for Transport. I think they do understand community transport. Certainly, when people are new to the community transport team, my organisation will help those new staff to go out and meet some community transport operators and spend time on the bus with passengers to get a feel for how it works, so that they are not just hearing it from me. I do not think they are ignorant of the issues, but in trying to solve this matter perhaps they are focusing too narrowly and are not giving their full attention to the broader public policy concern.
Anna Whitty: I would not use the word ignorant.
Q84 Paul Girvan: I have never used it, but it was my understanding—
Anna Whitty: Sorry; could you move your hand from your mouth when you speak?
It is more of a misunderstanding. I have mentioned this before, but a letter dated 9 November still talks about “CT groups that may have less stringent MOT tests” and “the driver needed fewer road safety qualifications.” It is not true. To me, that is an example that I feel misrepresents how I, and potentially 285 other CTs, operate. I still do not believe that they actually understand how we operate.
Q85 Iain Stewart: I have listened carefully to all your evidence, and to that from the previous panel. In your opinion, is part of the solution to this looking at a difference in the regulations that would apply to small operators with, say, £100,000 turnover or less—I think you said that would represent 60% of your members—and a separate set for organisations that are multimillion-pound operations? Do you think that would help square the circle?
Bill Freeman: It would be difficult to enforce. There are the tests I mentioned earlier in terms of how the enforcement officer on the roadside knows what they are meant to be doing, and how they treat someone they may have stopped. Given the fluctuating nature of the income of charities and community groups, which may differ from year to year, at what point would you make a judgment about what size it was and—
Q86 Iain Stewart: Forgive me for interrupting, but there is a clear difference between an operator that has maybe one or two vehicles and another that has 20, 30 or even into three figures.
Bill Freeman: Yes. The fact that the good financial standing requirements are based on the number of vehicles would place some higher costs on some of the larger organisations, although it is on a scale.
In terms of trying to find a workable solution, one of the things we have talked about in our submission is the hybrid model—the term we used: can you take operator licensing and see if there are any requirements on which you could take a slightly different approach, because of the nature of an organisation’s size or because they are a registered charity, so their finances are in the public domain and their audited accounts are published by the Charity Commission? Could that be taken as some way of demonstrating good financial standing that would remove that requirement for them? In terms of trying to find a workable solution, we could see the advantages of that, but I do not think it would be as simple as managing it based on size.
Anna Whitty: Mobility Matters does not see any objective reasons that have been put forward as to why smaller operators should be treated any differently from larger operators. Sitting here, it feels like a criticism that a larger operator has been successful. It seems perverse, unless they should not be operating under section 19, and we fully accept that there will be some who do not. Bill mentioned the important issue that we should consider what else they are doing in their community.
In ECT’s submission, we talk about measuring social value. As an example—given that our turnover has been mentioned here—for a £5 million turnover, we are able to create £1 million social value back to the community. This saves costs to society. Loneliness and isolation issues are growing. We are a population that is getting older, so the problems will get worse. If a CT has become successful, maybe it is because there is a bigger need where they are operating; or maybe the local authorities have been particularly let down by the lack of a local market. I go back again to the point that you have to understand the whole picture before any decisions are made.
Frank Phillips: I can speak from personal experience. The areas in which my organisation operates are largely areas where commercial contractors do not go anyway. They are contracts that need tail lifts. They need specialised vehicles and specialised help with the passengers. Commercial contractors do not go down that route. I cannot see that we are putting a lot of pressure on commercial contractors, when it is clearly not the case.
The area that my particular community transport deals with is designated under permit. It is for persons over 60 years of age. That has to be done under section 19. It is for disabled people; people in receipt of income support; persons in receipt of JSA; persons suffering from social exclusion by virtue of unemployment, poverty, economic factors, homelessness, geographical remoteness, ill health and religious or cultural mores; persons who believe that it would be unsafe for them to use public transport, or carers or persons under 16 years of age.
Q87 Chair: It is not the general population; it is people with particular needs.
Frank Phillips: It is not the general population. It is a very small specialised area. The trouble is that we do it so well.
Chair: We do not want to discourage organisations that do things well. Do any other members of the Committee have any questions?
Thank you very much for your contributions today. You are free to go.