Section 19 overhauled?

DfT says permit system to be reviewed as it announces new guidance

The DfT has announced a review of the Section 19/22 permit system this year, while launching its new guidance on using permits.

Announcing the guidance – which has taken since the consultation closed on 4 May last year to emerge – the DfT has introduced the exemption of ‘minor impact’ on the commercial market, and has set an operation range of ten miles for S19/22 operators to achieve exemption from O licensing.

The guidance says the distance is not a rigid rule, and that S19 permit holders can apply to extend this range to account for, for example, a rural location. It also allows S19 operators to run ‘occasional’ day trips outside of the radius.

Transport Minister for Buses, Nusrat Ghani MP, says the DfT will not rule on ‘not-for-profit’ exemption for local authority contracts at the moment, due to the Bus and Coach Association’s Judicial Review challenge, currently going through the courts. However, the guidance itself refers to this exemption category.

Other exemptions the DfT highlights in its latest guidance, dated 15 March 2019, include that of road transport for a not-for-profit operator being the ‘main occupation’ and says supporting evidence such as financial accounts must support this derogation.

The guidance has conflicts. It says: ‘Commercial organisations, including privately owned schools, nursing homes, activity centres are not eligible to be granted a permit.’ In the ‘main occupation’ section of guidance, however, it cites as an example of a private school meeting the exemption, seemingly by virtue of being a registered charity. Many private schools are now registered charities, including Eton College.

The DfT also offers councils 16-seater exemption under the ‘main occupation’ exemption, giving as an example: ‘Applicant D is a district council who intends to run bus services using permits. The council is able to show that their main occupation is not transport, because most of their time and resources are consumed by the provision of local services other than transport.’

The guidance also deals with ‘Community Interest Companies’ which, it says, will be considered for exemption on a case-by-case basis. The DfT says any CIC which has share capital is unlikely to qualify, especially if profits can be distributed to shareholders. It suggests a CIC may only be eligible if it has an ‘asset lock’ and does not pay its directors ‘excessive fees’ to absorb profit.

Dealing with contract awards, the guidance says S19 operators cannot bid for ‘local services’ for the general public, but says permit holders can tender for home-to-school contracts and Dial-a-Ride on which the general public isn’t carried: ‘However, the holder of a section 19 permit may only provide services under a contract where the contract is limited to the carriage of passengers within the class or classes specified on the section 19 permit.’

Responding in a personal capacity, Steven Salmon, the CPT’s Director of Policy Development, said: “I am pleased with the line that the government has taken on ‘main occupation,’ particularly the decision not to accept constitutional documents if the reality is different.

“I am less delighted with the adoption of a short distance exemption, and the way that the government proposes to do it. I am concerned that it will be difficult for anybody to challenge a CT operator unless the limit that applies to them is set out somewhere that it can be seen in public.

“The government’s position on the not-for-profit issue is understandable but regrettable. I can see why they are reluctant to make a pronouncement while they are subject to Judicial Review, but it will take more than five minutes to make new legislation once we have left the EU, and we will have to run the arguments all over again. The DfT has, in any case, committed itself to a review [of the permit system] in the last paragraph of the consultation response.”

New Section 19 regime?

The guidance announcement includes hints that the DfT may revise the S19/22 permit issuing system, and may change the number and type of issuing bodies, and restrict fleet size for S19/22 operators.

It was admitted in the Transport Select Committee hearings last year that the DfT does not have a central register of Section 19 permit holders, did not know how many permits are issued and current, and could not identify all of the issuing authorities. Some Section 19 permits issued before 2009 were perpetual, and the DfT’s guidance says these will remain valid.

Read the full text of the guidance

Announcement and summary

Section 19 and 22 permits and obligations: not for profit passenger transport

‘Main occupation’ exemption: worked examples


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