Is there a difficult road ahead for Community Transport?

On 8 February 2018 the UK Government Department for Transport (DfT) published a consultation on changes to guidance on section 19 and 22 permits used by community transport (CT) operators in Scotland, England and Wales. While on the face of it this might seem to be a technical or obscure topic, both CT operators and the Welsh Government are concerned that changes may seriously affect the sector’s ability to deliver services. They fear this could have serious implications for vulnerable and isolated service users.

10 April 2018

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

On 8 February 2018 the UK Government Department for Transport (DfT) published a consultation on changes to guidance on section 19 and 22 permits used by community transport (CT) operators in Scotland, England and Wales.  While on the face of it this might seem to be a technical or obscure topic, both CT operators and the Welsh Government are concerned that changes may seriously affect the sector’s ability to deliver services. They fear this could have serious implications for vulnerable and isolated service users.

What is community transport and what services does it provide?

CT services are accessible and flexible not-for-profit services usually run by the community for the community. The sector provides a variety of services such as community car schemes, door-to-door dial-a-ride services, community bus services and group transport, which address needs not met by public transport.

Whilst commercial bus and coach operators are required to have a Public Service Vehicle (PSV) operator licence, sections 18 to 23 of the Transport Act 1985 exempt CT operators from this requirement. CT operators are able to operate using two permits instead of PSV operator licences; section 19 permits cannot be used to carry members of the general public, while holders of section 22 permits can operate “community bus” services and carry members of the general public.

The Community Transport Association in Wales (CTA) published its most recent State of the Sector report (PDF 3.43MB) in 2014.  This showed that 140,000 individuals in Wales, and 3,500 groups, were registered to use CT services provided by about 100 organisations. It shows that demand for CT services is increasing, as passenger miles increased from 4.3 to 6m between 2010 and 2013, and passenger journeys from 1.2m to 2m in the same period.

The report also highlights the role CT plays in providing access to services, particularly for people with disabilities, the elderly and those living in rural areas. It also suggests CT plays an important and increasing role in supporting access to health services with non-emergency patient transport described as “the most significant area of growth” since 2010.

So what’s changing?

EU Regulation EC1071/2009 establishes common rules for all road transport operators whether profit-making or otherwise. The regulation requires operators carrying fare-paying passengers to employ professionally qualified drivers, engage a professional transport manager and obtain professional operator licences.  However, it also establishes three exemptions from these requirements, including where operators are “engaged in road passenger transport services exclusively for non-commercial purposes”.

Until now the DfT, which is responsible for CT policy development and guidance, interpreted “not-for-profit” and “non-commercial” in the same way. However, following legal challenges by commercial bus operators and an investigation by the Driver and Vehicle Standards Agency (DVSA) into a CT operator delivering local authority contracts, the DfT wrote to all permit issuing bodies in July 2017 (PDF 235KB) to say the non-commercial derogation could not be considered to apply “simply because the operator was a registered charity and was therefore prohibited from distributing its profits”.

While the letter highlighted that the operator under investigation hadn’t complied with the EU Regulation, it appears that this was largely because DfT guidance on section 19 and 22 permits did not reflect EU law (or as the DfT put it, “has not kept pace with these developments”). The letter concluded:

I appreciate that there has historically been guidance that may have provided an inaccurate indication of the conditions and criteria for operating services under Section 19 and 22 permits, and that, as a result, there may be some organisations that are relying on such permits inappropriately. Such operators will now need to take action to bring their services into compliance with legal requirements.

How might the proposed changes affect the sector?

The DfT letter said it intended to consult on changes to guidance and amendments to the Transport Act 1985 in autumn 2017. This was delayed until spring 2018 in order to take account of a House of Commons Transport Select Committee inquiry, which reported in December 2017.

While the consultation makes clear that the CT sector should continue to have a separate permit regime, which will no doubt provide some reassurance, it looks like significant changes are on the way. The consultation proposes two changes:

  • That the Transport Act 1985 would be amended so that permits may only be issued to organisations that meet at least one of the exemptions set out in the EU Regulation. This would mean they must use smaller vehicles (a “laden” weight of 3.5 tonnes or less); have a maximum speed of 40 km per hour; or be exclusively “non-commercial”; and
  • The DfT’s guidance would be updated to reflect “current market practice and better illustrate and explain the cases where exemptions may apply”.

The consultation document outlines a proposed approach to establishing when CT operators might rely on the “non-commercial” exemption currently used by most permit holders. Briefly, these are:

  • That the service is free of charge;
  • That any charge is “substantially” less than cost;
  • Any charge equals or exceeds cost but there is no competition for the service from “commercial operators”, including where no commercial operator bids for a local authority contract or provides an “equivalent service”. The CT operator must provide “appropriate evidence” that this is the case; or
  • That the services are “occasional” or “incidental”.

The CTA in Wales produced a summary of the evidence submitted to the House of Commons Transport Select Committee by Welsh CT operators. Operators suggested the changes could lead to a “winding down” of services given the cost of securing a PSV operator licence and the fact that the additional requirements of this regime might deter volunteers.  There is also uncertainty and confusion among operators about how changes would apply in the short-term. The summary also highlights how local authorities have encouraged CT operators to bid for local authority contracts at a time when wider grant support has “receded dramatically”.  Finally, the evidence emphasised the potential impact on vulnerable and isolated people if CT services are reduced.

Has the Welsh Government acted?

In evidence to the Transport Select Committee inquiry Jesse Norman MP, the UK Government Parliamentary Under-Secretary of State for Transport, announced £250,000 to fund advice for operators who need to switch to a PSV operator licence.  However, it was unclear whether this extended to Wales.

The Welsh Government’s Cabinet Secretary for Economy and Transport was questioned by the Assembly’s Economy, Infrastructure and Skills Committee on 17 January 2018 on his plans to support the sector through the transition.  The Cabinet Secretary agreed “that the proposals could have a very, very damaging impact on community transport providers across Wales”.  He highlighted the significant role CT plays, and that “in contrast to commercial services” CT passenger numbers are increasing.  Noting uncertainty as to whether the UK Government funding would apply to Wales, he described this as “a drop in the ocean across the whole of England and Wales if it does apply to both”.  He concluded:

This is something that must be addressed by the UK Government, given that it’s a reserved matter and it should be addressed with adequate resource for Wales as well. As it emanates largely from vehicle standards, it’s a reserved matter. It’s something that I would wish to see devolved if at all possible, but we already support bus services with the bus services support grant to the tune of £25 million a year. Changes of this type that emanate from the UK Government should be resourced and should be delivered in such a way as to not disadvantage communities in Wales, or the community transport providers. So, I’d expect adequate financial resource to be made available.

Writing to the Committee following the session he said the Government had “taken steps” to ensure that the potential impact on the sector in Wales is “fully considered” by the DfT.

The Assembly debated the issue on 21 March. During the debate the Cabinet Secretary said clarity is still needed on “how much Wales can expect to receive” from the UK Government to mitigate the impact of changes.  He said there is a need to “consider [the potential impact] very carefully”:

The public service operator regime is more rigorous than the permit regime, and it’s right that this should be the case. But simply forcing operators to incur these potential additional costs when the benefits to passengers are negligible is not a viable solution.  Operators must be permitted to operate services to passengers under the most appropriate licensing regime.

He stressed that he is working with the CTA “to develop contingency plans to mitigate any potentially negative impact on services provided under the community transport permit regime”.

Once again, he stressed that £25m is provided annually to the bus and community transport sector through the Welsh Government’s Bus Services Support Grant – 5% of which is ring fenced for CT – and that this level of funding has been confirmed for the next two years to 2019-20. However, it’s worth noting that this funding stream has been maintained at £25m since 2013-14 representing a real terms reduction at a time when costs are increasing and local authority revenue funding for services is also under significant pressure.

Article by Andrew Minnis, National Assembly for Wales Research Service

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