Source: Bus and Coach Professional
The community transport sector has become something of a political hot potato in recent months. A complaint to the European Commission about possible illegal state aid to CT operators from a group of independent bus and coach operators has led to the start of potential infraction proceedings against the UK government.
Tension between commercial operators and the voluntary sector has been simmering for some time and the issue is at last being debated more openly, although the search for a resolution continues.
The recent announcement by transport secretary Patrick McLoughlin of a new £25million fund to support the purchase of new minibuses by community transport groups included an explicit recognition of the current row. In launching the fund, McLoughlin said: “Smaller operators and those who help out in rural areas will be favoured in the scheme. Each bidder will need to undertake that the vehicle will be used only for voluntary services and will not be used to compete for bus service contracts.”
The Community Transport Association has broken its period of relative silence on the challenge made to the sector concerning European state aid in its State of the Sector report published last month. The CTA document refers to “unfair and unwarranted attacks on community transport”, from a “small, but very aggressive and vocal, anti-CT lobby”. The protagonists in question are those behind the Bus and Coach Association which was launched in February 2014.
The Bus and Coach Association has responded to the CTA report in kind, dismissing it in a response co-authored by safety organisation BUSK which has a long history of campaigning on the issue of training and regulatory oversight of the voluntary sector, including the use of school teachers to drive minibuses. “A large number of community transport operations are as commercial as the commercial sector,” says the BCA/BUSK response, “bidding for paid contracts and winning them. This is not legal, neither is it safe as they do not have to comply with a high enough standard that the commercial operator is required to.
“Small operators are right to object to the voluntary sector bidding and winning contracts for work that should legally be only for the commercial operator. So yes, they are concerned about community transport taking their work.”
The nub of the issue is the operation under Section 19 and Section 22 permits by community transport groups. The CTA report claims that there are around 500 Section 22 permits for local bus service registrations operated by about 200 different organisations. It points out however that Section 19 permits, which involve carrying members of a local organisation or those it specifically caters for, rather than the general public, account for 83.6 per cent of permit operations by CT groups, while 2.2 per cent operate under a full PCV O licence.
The distinction between ‘voluntary sector’ and commercial is important, since operating under permit rules enables the CT groups to avoid the need to comply with regulations including drivers’ hours, Driver CPC and vehicle checks. BUSK reports that the department for transport was unable to supply it with evidence of the records of monitoring or checks on the voluntary sector.
The Bus and Coach Association was set up by a small group of operators who appear to have been driven partly by frustration that the issue was not being addressed by the industry’s main trade body CPT. The BCA has adopted a very robust approach to the CT sector which may not win it many friends, but its persistence has undoubtedly awakened interest at the European level in the state aid issue.
The government’s guidance document on its new £25million CT fund includes the warning: “We expect bidders to ensure that they are compliant with European rules on State Aid funding.”
European intervention is also possible on the application of Driver CPC requirements and the rules on financial standing and drivers’ hours. In its State of the Sector report, the CTA depicts this as an existential threat: “Put simply, this would mean having to accept an EU definition of ‘commercial’ which means that community transport organisations delivering public sector contracts are engaged in commercial activity and will have to do so under an ‘O’ licence.
“If enacted, this could be a massive blow for all types of operators, not just those delivering public sector contracts using section 19 permits. Some would say a line can be drawn between those operators who would need to comply (those wishing to deliver public sector contracts) and those who could continue to work under the current derogations (everyone else). It is doubtful whether such a line can be drawn.”
The CTA claims that funders might be frightened off providing any further grants to the sector for fear of falling foul of state aid rules, even if such awards might not be in contravention of the rules.
The government appears to be in no mood to see the community transport sector’s work diminished however. The DVSA has issued guidance which states that: “Drivers who hold a category D1 (101) on their licence are exempt from driver CPC when driving a vehicle being used under a section 19 or 22 permit. There is an exemption from driver CPC requirements where the vehicle is being used for the non-commercial carriage of passengers.”
The DVSA points out that while it is the view of DVSA and the Department for Transport that a vehicle used under a section 19 or section 22 permit is being used for the non-commercial carriage of passengers, “the interpretation of the law remains the sole prerogative of the courts”.
In its guidance for bidders for the new minibus fund, the DfT states: “Commercial operators often struggle to run passenger transport services in communities where demand is thin or diffuse. Community transport can play an important role in providing services in these circumstances.”
The question of whether community transport services are restricted to such gap-filling is of course the main bone of contention.
The relationship between the BCA and CPT could at best be described as distant. A BCA member resorted to a Freedom of Information request to get confirmation of a meeting attended by CPT amongst others at the DfT in September 2014. The formal response to the FOI request confirmed that a meeting was attended by CPT, Community Transport Association, Office of the Traffic Commissioner, Driver and Vehicle Standards Agency, Transport for London, DOE Northern Ireland, Association of Transport Coordinating Officers and DfT officials. An “oral overview of various domestic and European legislation” was given to the attendees by barrister Alan Bates. Conspiracy theorists will be energised by the fact that the DfT claims that no formal minutes were made of the meeting, although it is inconceivable that some form of written record is not buried somewhere within the department.
For its part, CPT prefers to project a more statesmanlike approach to the subject. It is certainly not unaware of the concerns among commercial operators about losing contracts to voluntary groups who may be backed by public funding, and issued a request earlier this year asking its members to advise it of cases where they are “losing business to a community transport operator”. CPT claimed credit for pressuring the DfT to update its tendering advice to local authorities, which now states: “It is potentially distorting competition for the authority to grant aid to a community transport scheme and then to allow, or indeed to expect, the scheme to bid competitively to undertake contract work for the authority using grant-aided resources.”
In a letter to CPT members, president Chris Owens spelt out the trade body’s approach: “As I am sure you appreciate, this is a very difficult policy area to address. No politician wishes to be seen to do something which could be portrayed as having a damaging effect on the community sector no matter what the issue. This therefore is one of those cases where a loud ‘tub thumping’ campaign would not be appropriate and could well make things worse rather than better.”
Owens acknowledged that the problems surrounding Section 19 permits have not gone away and “continue to cause problems to many of our operators – in some cases threatening their very existence”.
CPT says its appeal for information from members follows a case it is pursuing on behalf of a member whose business has been affected by the award of a lottery grant to a community operator. The organisation in question used a “lack of local bus services” to justify a grant for a luxury 16-seater that it uses to compete with genuine PSV operators.
Owens is right to highlight the protected status of the voluntary sector, always something of a sacred cow to politicians, and with good reason. It is not sensible for commercial operators to be seen as attacking the voluntary sector which is often working with some of the most vulnerable members of the community. But it is entirely legitimate for a professional operator to cry foul if they suffer unfair competition for contracts from organisations that receive grant aid which is designed to assist them to carry out their core purpose rather than help them get involved in work that is already covered by commercial businesses. It is also not something which is restricted to transport; many small retailers make similar complaints about charity shops mushrooming in high streets, assisted by exemption from business rates and other taxes.
In addressing the state aid issue so publicly, CTA has acknowledged how seriously it is taking the matter and leads one to conclude that it believes that the sector has been benefiting from state aid in a way that may not satisfy an in-depth investigation by European authorities.
CTA is calling for what it terms a “new settlement” for community transport and is seeking support across the political spectrum for its approach. “We must continue to defend the use of section 19 permits in delivering public sector contracts and build a wider coalition of support for defending community transport in the UK.”
From the commercial operator’s standpoint however the issue is simple. There are two types of organisation providing similar services, yet one has to abide by a raft of rules and regulations designed ultimately to protect the safety of passengers, and the other doesn’t, even though both are carrying fare-paying passengers.
It might be seen as a circle that can’t be squared, but it is also an issue that can no longer be ignored; putting our collective heads in the sand is no longer an option.