Main conclusions:

• Re-examination of local authority grant aid for CT sector
• DfT to publish details of S19 permits issued, and those used for public contracts
• Need for ‘care and sensitivity’ in handling changes
• No reliable evidence for scale of unfair competition with O licensees
• DfT to collect and publish road safety data for S19 sector
• DfT to ‘learn lessons’ from handling of legal challenge
• DfT to re-open dialogue with Martin Allen
• Consultation must aim to protect vital S19 services
• Consultation must proceed with urgency
• DfT to seek ‘hybrid’ licence for CT sector
• DfT to allow a transition period for CT operators

The Transport Select Committee has urged the Department for Transport to begin a safety assessment of the Section 19/22 community bus sector for comparison with O licensed operators.

Although the committee accepted evidence that the sector operates safely, it rued ‘a lack of data by which to assess the relative safety records’ and urged the DfT to collect and publish this data.

Among core recommendations, the TSC said that withdrawal of grant funding had forced Section 19 operators to bid for contracts, such as home-to-school transport, to cross-subsidise their costs. The TSC urged re-examination of this policy, particularly with regard to home-to-school contracts.

In its wide-ranging analysis of the use of Section 19 permits and Sections 22 Community Bus Permits – prompted by ongoing changes in guidelines from the DfT – the TSC heard evidence that, of 152 unitary authorities and county councils, just 24 responded to a survey of tendered contracts placed with community transport organisations (CTOs) and in-house S19 fleets, but revealed that even in this small sample, 547 contracts were being run on S19/22 permits.

The latest guidance from DfT says that Section 19 operators may only retain contestable contracts if they are not contested by O-licensed operators. The Association of Transport Coordinating Officers’ survey found that only 17% of those contracts were not contested by commercial operators.

“Some commercial operators appear to have suffered substantial detrimental effects from potentially unfair competition from community transport organisations in contestable markets. There is, however, a notable lack of reliable evidence against which to assess whether the practices of community transport organisations create widespread unfairness or the geographical extent of the problem,” says the report.

“Proposals to address instances of unfairness should be considered in the forthcoming consultation but, given the acknowledged wider social benefits of community transport, the Department should proceed with caution. It must not take a sledgehammer to crack a nut.”

The TSC heard that the Confederation of Passenger Transport had pursued concerns about the Section 19/22 sector since 2009 without success, and that the Bus and Coach Association, dissatisfied with progress, had attempted to engage the DfT in the issue for six years but was ‘totally dismissed,’ receiving just one emailed reply in this time.

“UK legislation and guidance have not kept pace with developments in community transport practice and European Regulations and, under intense legal pressure, some changes have now become necessary,” the TSC’s report concludes. “TheDepartment did not respond appropriately to address valid concerns over many years, and it acted too slowly.” The TSC also urged the DfT to open constructive dialogue with the BCA’s Martin Allen.

The TSC also criticized the way in which DfT issued guidance letters which caused panic in the CT sector, and said subsequent clarification heightened tension: “In trying to clarify and calm the situation, it achieved the opposite, creating confusion and a level of panic in the community  transport sector. The uncertainty led to some local authorities halting commissioning processes and, in some cases, unnecessarily beginning the process of withdrawing contracts from community transport organisations.”

The TSC urged the DfT to move its consultation forward quickly to end confusion in the sector, to include an impact assessment and mitigation of damage to the CT sector taking into account the Public Services (Social Value) Act 2012, to consider a ‘hybrid’ licensing system, offer a transition period and propose a ‘clearer division of responsibility for regulation.’

The TSC heard that nobody knows how many Section 19 permits are in issue, nor how many vehicles are run with them, and that there is no central register for any aspect of the Section 19 licensing system. It says the DfT must instigate ‘proportionate measures to collect and publish relevant data, including on the number of permits issued and the type of work undertaken using those permits, including under public sector contracts.