Bus Services (No 2) Bill

03 January 2025

The Bus Services (No.2) Bill was laid before Parliament on 17 December 2024, which means it is well on the way towards being enacted as legislation. The Bill will apply in full in England, with specific clauses applicable in Wales and Scotland (detailed below).

The Confederation of Passenger Transport (CPT) has recently circulated a useful outline of what the Bill contains and we set the text of that note out below, courtesy of the CPT. Their Policy Team will be working with DfT officials throughout the passage of the Bill, and have already engaged on the various strands of Guidance that will follow and support the Bill.

Wales, Scotland and Northern Ireland

• Clause 11 (Direct award of contracts to incumbent operators) – this will extend to England, Scotland and Wales, but only apply in England.
• Clause 20 (Powers of inspectors) – this will extend to England, Wales and Scotland
• Clause 23 (Safeguarding duty: drivers of school services) – this will extend to and apply in England and Wales.
• Clause 24 (Training about crime and anti-social behaviour) – this will extend to and apply in England and Wales.
• Clauses 24 and 25 (Training about disability) – this will extend to and apply in England, Scotland and Wales
• None of the Bill provisions extend to or apply in Northern Ireland.

Overview

The Bus Services (No. 2) Bill brings forward primary legislative measures intended to support the Government’s commitment to deliver better buses. The Government’s intention is to empower local leaders in England to choose the bus operating model that works for their local area and provide powers to effectively underpin these models.

The Bill contains measures to simplify the process for local transport authorities (LTAs) who wish to pursue bus franchising; strengthen legislation governing Enhanced Partnership (EP) agreements between LTAs and bus operators; and enable LTAs to establish new local authority bus companies (LABCos – previously referred to as municipals).

In addition, the Bill includes provisions that (1) devolve grant making powers to LTAs; (2) provide greater protection against service cancellation by placing a duty on LTAs to consider the provision of socially necessary local services; (3) reduce the use of new non-zero emission buses; (4) deliver a more accessible and inclusive bus network, including measures aimed at protection from anti-social behaviour and violence against women and girls; and (5) contains measures aimed at improving the transparency and availability of data relating to bus services.

 Franchising

The Bill enables all LTAs to franchise their bus services without requiring the consent of the Secretary of State. It aims to reduce the amount of time it takes for LTAs to franchise their bus services and introduce further flexibilities. The Government had stated that it will support authorities by further updating the franchising guidance.

Franchising Assessments

The Bill removes the term “audit”, to widen the pool of those available to undertake the assessments (these will no longer be known as “audits”). The professional qualifications (or potentially, other experience) that will qualify a person to prepare a report will be listed in secondary legislation. The Bill also gives a franchising authority more flexibility to decide when to appoint an independent assessor, allowing the assessor to provide independent advice to the franchising authority much earlier in the assessment process.

Direct Award to incumbent operators

Direct award involves the award of a contract without a competitive tendering procedure and directly to the supplier of the awarding authority’s choosing. The Government believes that allowing franchising authorities to direct award initial franchising contracts to the operators already running the same, or “substantially similar”, bus services in the local area could reduce transitional risks of moving to a franchising model. These bus operators will already have existing vehicles, infrastructure and staff to provide the continuity of services to passengers. The transfer of assets and staff can then be managed over a longer period.

A franchising authority will only be able to rely on the direct award exception for the first round of franchising contracts. If a franchising scheme is varied to add a new area, the exception will be available in respect of the first franchising contracts in that area. It cannot be applied to new local services in an existing franchise area.

This is to support LTAs and operators in the transition to franchising, without restricting competition for franchising contracts in the long term. This direct award exception can also only be used for contracts awarded to incumbent operators who have been providing services in the area to which the franchising scheme relates, for at least three months leading up to the date the contract starts. Contracts awarded under this exception can only relate to services that are the same as or substantially similar to local services already provided by the relevant operator.

Service Permits

The Bill makes two key changes on service permits. First, it exempts heavy and light rail replacement services from the requirement to hold a service permit. Second, the Bill reformulates the tests for granting a service permit, setting out new and broader grounds for granting a permit and clarifying that benefits for passengers on cross boundary services can be considered. These changes will provide flexibility for the franchising authority to grant permits if, in their opinion, the service would benefit either passengers travelling from neighbouring areas (where bus services remain deregulated) or the cross boundary service would benefit the economy in those deregulated areas.

Socially necessary local services

This measure will require LTAs to identify which services in the EP area they consider as being socially necessary local services and to include a list of these services in their EP plan. This measure will place a duty on LTAs to specify requirements which must be followed if a bus operator wishes to vary or cancel a bus service that has been identified as a socially necessary local service. This must include a requirement to consider whether alternative arrangements can be made to mitigate any adverse effects of the cancellation or variation. LTAs or operators will not be required to continue a service if an alternative cannot be found.

Objections by Operators

The Transport Act 2000 provides for notice and consultation requirements when LTAs are creating, varying or revoking an EP plan or scheme. An operator of a qualifying local service can object to any proposal to create, vary or revoke an EP plan or scheme at several key stages in the process. Rather than being required to wait up to a month for the objection period to lapse in these circumstances, the Bill amends the Transport Act 2000 to allow LTAs to move to the next stage of creating, varying or revoking EP plans before the 28 day objection period lapses, where qualifying local services have indicated in writing they have no objection to the notice.

Local Authority Owned Bus Companies (previously referred to as Municipal Bus Companies)

The Bill will repeal the ban on establishing new local authority bus companies (LABCos). The measure also introduces new requirements mirroring the existing Transport Act 1985, which disqualify directors of existing public transport companies from being members of the LA that owns the company. Directors of new LABCos formed after the repeal of section 22 of the Bus Services Act 2017 will therefore be subject to the same governance requirement. This will maintain the mechanism for keeping LABCos as arm’s length bodies, separate from the local authority’s central financial, operational and accountability processes.

Grants

The Bill will provide LTAs with a power to make grants to operators of bus services in their areas. This gives LTAs similar bus grant making powers to the powers that the Secretary of State has under section 154 of the Transport Act 2000. This will enable LTAs to make funding decisions tailored to their own local needs.

LTAs will not be required to seek approval from the Treasury to design or pay these grants and will be able to set criteria for which bus services in their area are eligible without being constrained by the Bus Service Operators Grant (England) Regulations 2002. These changes will allow LTAs to set the criteria for what bus services are eligible for grant support.

Information about local services

This measure makes various changes to require LTAs in Enhanced Partnership areas with a delegated registration function to provide registration information, and to require franchising authorities to provide information akin to registration information, to a central source and to a set data (this will include BODS data). The measure also enables the Secretary of State to publish all registration information, and information akin to it, into the public domain.

Enforcement and staff training

The Bill includes measures to improve safety on buses by giving greater powers for LTAs to bring forward byelaws to tackle anti-social behaviour and help to improve safety on buses. The Bill also amends section 24 of the Public Passengers Vehicles Act 1981 to give LTAs additional powers to enforce fare requirements.

Powers to mandate training of bus drivers and others on tackling crime are also included, which the government intends will include offences against women and girls and anti-social behaviour and in relation to disability awareness and disability assistance.

Safeguarding for school services

The Bill will close a loophole through the inclusion of a measure to require the operator of a public service vehicle to check an enhanced criminal record certificate, including information as to whether the driver is on the children’s barred list, for drivers who carry out “closed” school transport services frequently or more than 3 times in any 30 day period.

Safety and accessibility of stopping places

The Bill includes the measure to develop statutory guidance on the inclusivity of bus stops and stations and facilities.

Zero Emission Buses (ZEBs)

This measure will accelerate the rollout of ZEBs by introducing a restriction on the use of new non zero emission buses on registered local bus services (franchised areas will be able to set locally). The restriction will not be able to take effect before 1 January 2030.

For more information please contact your CPT contact or the Backhouse Jones regulatory team here.