Climate Change, Environment, and Infrastructure Committee

Diolch yn fawr iawn, Chair. It's great to be with you this morning. To that very point, I would agree that the Bill doesn't explicitly require the use of contracts, but I'd argue that the Bill actually does imply that franchised services have a higher status in the legislation, and that's because a permit could only be granted if Ministers were satisfied that there wouldn't be a significant adverse impact on contracted services. And similarly, for a service to be directly provided by Welsh Ministers they'd have to be satisfied that it's a more effective way of fulfilling the duty in the legislation. What I would say is that the model for delivering a national network has to be dynamic, and if bids are received for a contract package and one of the services within it is significantly more expensive to deliver, we may decide that it'd be better value for money to remove that service from the package and deliver it via a permit, or indeed directly. So, it's about giving flexibility to Ministers over how this will operate and ensuring that in all eventualities we're able to deliver the best possible bus services across the whole of Wales.

We'll delve into some of those particular aspects as we go along this morning. Can I just, as another sort of general question, then, ask you—? You may be aware we visited Transport for Greater Manchester recently as a committee. It was really, really informative and they were very good with us, in fairness, in giving a lot of time and information. But the big takeaway for many of us, I think, from that visit was how expensive the franchise contracting process has been for them, indeed how challenging it has been in terms of resources and effort as well. So, can you reassure us that sufficient funding is available both for the whole procurement and contracting process but also as well to fund the franchise network? And are you confident that the Government and Transport for Wales have the necessary skills, the necessary capacity, the resource and the governance structures as well to implement and manage franchising effectively?

Yes, a really good set of questions. I was pleased to see that you visited greater Manchester, because I think they're doing a magnificent job of operating and managing bus services across that part of the UK. It would obviously be very difficult for me to comment on spending plans for future Governments. It's for future Governments to determine priorities. But what I would point to is the enormous amount of money that we are already investing in bus services across Wales. This year alone we've uplifted revenue funding from £123 million to £140 million, and by the end of this Senedd term we'll have invested over £600 million in the bus network. So, we're already investing vast sums of money in the bus network, but the challenge that we've got is we don't really have any control over the network itself, so we can't introduce a timetable and a route network that is fully integrated.

I think the other point that I'd make in regards to finance is that we can achieve savings with the model that we are proposing. And perhaps the best way of viewing the potential of what we are proposing is to look at what's happening right now in south-west Wales, where franchising is at the most advanced stage in Wales, and currently about 56 per cent of people in south-west Wales have access to the public transport network. Now, we define that as living within 400m of an hourly service. Under the base network plans that means, where funding remains static, that 56 per cent increases to 60 per cent. So, even if there isn't an increase in funding, we still get an increase in the proportion of people who are able to access public transport. But we've also set an aspirational network based on financial uplift, and that then raises that figure of 56 per cent to 72 per cent. So, it's a huge leap.

And likewise, the amount of miles that the bus network covers increases very significantly under our aspirational network. It increases by 33 per cent in that particular region. And this won't be exclusive to south-west Wales. We're aiming to do this across Wales, but obviously spending plans are for future Governments to determine. I can't dictate at this moment in time what the priorities of future Governments will be, but I think the amount of investment that we’ve put into the bus network gives an indication of where certainly this current Government feels we need to prioritise funding, and it's with bus services.

The question that you raise about Transport for Wales and governance I think is also really important as well. I have confidence in Transport for Wales to deliver on this hugely ambitious programme of work, not least because they've got a proven track record on rail. They went through a pretty exhaustive process of identifying an operator for rail services. That was back in the last decade and, of course, COVID impacted greatly and we took control ourselves. But, during the course of the past 10 years, Transport for Wales have broadened and deepened the work that they do on public transport, whilst at the same time delivering in the last year alone a 14 per cent increase in passenger numbers. They're delivering the £800 million of new trains. They're delivering the south-east Wales metro. So, they've got a track record that gives me confidence.

And also, I think it's really important to point to the development of corporate joint committees; they give us regional bodies that are able to assist Welsh Government and Transport for Wales in completing regional networks and, indeed, then stitching together the national network. So, we're in a similar but I would suggest a different position to greater Manchester. But we have learned many, many lessons from greater Manchester and, indeed, other parts of the UK and from experts from around the world. So, I do have confidence that we have the skills, we have the expertise, and I would hope that future Governments would provide the funding that will prioritise buses, as this Government has.

The takeaway from greater Manchester was that it's working—it's the right course of action that they've taken. But I think they were not expecting the pains and the travails that they experienced as part of that journey. And when it comes to skills, you can have train experts in the room, but you really need contracting and franchising experts as well, et cetera. It isn't sort of, you know—. Yes, okay. So, on additional funding then, you quoted some aspirational aims in terms of where you want to go. So, in an ideal world, you would wish—. In order to achieve those for additional money—. For the Bill to achieve its full potential, then you'd envisage that more money would be needed, but, obviously, that's not within your gift for future years.

That's right, Chair. And also, I think it's probably valuable to point to the value of increasing passenger numbers in terms of increasing the farebox overall. And with an increase in the farebox, then you can reinvest and make sure that all parts of Wales benefit from an integrated public transport network, not just those areas where the greatest revenue raise can be generated.

[Inaudible.]—I'm sure. Yes. Diolch yn fawr. Delyth.

Thank you, Chair. Good morning to you all.

I wanted to—[Interruption.] Bore da. I wanted to ask you about the interaction of the Bill with learner travel, please. How have you set out to make sure that the Bill will interact effectively with that? Because I appreciate that it isn't something that you've decided to put into the crux of the Bill, then. Can I ask specifically about how you're going to be gaining—well, going further than just gaining—the views of local authorities on this? Because I think section 6, subsections (2) and (4), require consultation with local authorities. Do you think that that is going to be sufficient to make sure that learner travel is utterly integrated into this system?

Thanks for your question, Delyth. The challenge of dealing with learner travel is pretty immense. It's a very significant cost. This year, I think we're going to be spending around about £200 million on learner travel, and it's still a major issue across the whole of Wales. It's an intense issue in certain parts of Wales, but it's a challenge right across the country. Now, learner travel is out of the scope of this piece of legislation. The current statutory responsibility rests with local authorities, whereas responsibilities under the bus Bill will rest with Welsh Ministers. But there are opportunities, I think, to influence positively the services that are available to learners through the Bill, and to encourage more children and young people to use public transport, not just to access education but also to access employment opportunities, whilst retaining local authorities' powers and responsibilities to provide dedicated home-to-school transport for pupils who need it.

Now, I think what the most beneficial element of the Bill is in terms of learner travel is the integration of learner transport with public transport. It will take us time; I'm not going to promise that we will see improvements overnight. It will take time, but it's important that we work closely with local authority partners in implementing bus reform, in making sure that those network maps and timetables reflect opportunities for contracted services to provide transport for learners. I'll bring in, if I may, officials just to talk through a little more about learner travel. But this is also a subject that we're going to be discussing with local authorities and other key delivery partners on Friday, when we have the learner travel summit. Alex.

I think the Cabinet Secretary has set out the position around the current statutory responsibility of local authorities remaining as is and learner travel being outside of the scope of this Bill. Catrin, I wonder if you're able to say a little bit more about the difference between the fee-paying and non-fee-paying, and some of those interactions.

Yes. It's outside the scope of the Bill, but the Bill doesn't try to avoid being able to support learner travel, because the nature of the market in Wales, the small and medium-sized enterprises—they are very much the backbone of providing learner travel. So, I'd say what we're trying to do with the implementation of the Bill is to make the position of SMEs sound so that they continue to provide the social benefit, including learner travel. So, in the Bill, there are various provisions that enable us to work with learner travel by providing local bus services that will support children to get to school, but there are also services under section 46(1) of the transport Act that we will also be able to use as part of the provision of local services. Those services are closed school services that allow for fee-paying passengers. Those fee-paying passengers are pupils, but they are the ones that don't fall within the free-school-transport provision. So, we can use that as part of the network.

We can use the contracts. When we implement the contracts, we're looking to include an ability to bring learner travel into those. So, you might find that the contracts cover things like providing school bus services between 7 o'clock and 9 o'clock in the morning, and then that same service is a local bus service for the rest of the day, until the end of the school day, when, again, they revert to school services, and then, after that, they go back to being local bus services. The flexibility, the nature of the flexibility, around the provisions in the Bill allow us to do that sort of thing to support services. But the key one, I think, is, as you say, to work with local authorities to ensure that we support children getting to school, sixth form college and technical institutions later on in their school career, to enable them to get there using local bus services so that they hopefully then get into a habit, and, as adults, they'll continue to use local bus services. I've strayed a little bit from the question there, but it's all linked.

Thank you all so much for that. I was going to ask a follow-up question; I wonder if you could write to us with this answer, though, because I don't want to take up too much time on this. But if you could write to us, please, about how the views of children and young people and families could be consulted and could be taken under section 6(4). If you could write to us, that would be really helpful, please.

And just finally from me, for now, the Bill, as it's drafted, doesn't make any provision for statutory guidance. Could you talk us through, please, why that is and how potential service providers will then understand the processes, particularly about contract permits, direct award provisions, related to information data? Without that statutory guidance, how confident are you that they will be able to be fully up to speed with it?

Sure. Thank you. We will certainly write to you in response to the further question you raised on learner travel. We did consider including a power to issue statutory guidance, but we basically concluded that it was unnecessary because the functions primarily sit with Welsh Ministers. If we decide to issue guidance to any relevant parties involved in delivering bus services, then non-statutory guidance would be issued under general powers in the Government of Wales Act 2006. Now, we've had extensive engagement with the sector and with local authorities, and so I have confidence that the processes that are going to be applied will be understood, are understood, and we will continue to engage thoroughly with bus operators and local authorities in regard to ensuring that they are aware of the process that we will be pursuing.

Bore da. I wanted to ask you about the definition of local bus services. The explanatory memorandum says the Bill sets out a definition of local bus services, which is similar to the existing definition under section 2 of the Transport Act 1985. So, could you summarise the similarities and the differences, and explain why you have taken the particular approach you have?

Yes, absolutely. So, under the Bill, a local bus service is a service with one or more stopping points in Wales, and a service that's using one or more public service vehicles, and a service that's for the carriage of passengers by road, at separate fares, where passengers are picked up and set down within 15 miles, as measured in a straight line. Now, the definition in section 1 is similar to the definition under section 2 of the 1985 Act. It aligns with the existing definition for all practical purposes, but you are right, there are some key differences. The first is that services must have one or more stopping places in Wales. Given that the Bill obviously seeks to establish a Welsh national bus network, a definition capturing services operating in Wales was deemed necessary. And then the second difference concerns excursions or tours and also rail replacement services. They are excluded from the definition. It's not the intention of the Bill for these types of services to be secured by Welsh Ministers, because they're not local bus services. Rail replacement obviously is to replace rail services that are not operating, and excursions or tours are not local bus services either, so they've been excluded from the definition.

We've included the word 'bus' in the definition within the Bill, because I think it gives important information to the reader about the nature of the services the Bill is dealing with, and that doesn't appear—I don't know why, but it doesn't appear—in section 2 in the 1985 Act.

Thank you for that. Section 1(5) says that, where part of a non-qualifying services meets the distance condition in subsection 3, that part will be treated as a local bus service. So, what are the implications and the practical effects of that, and could you give us some examples?

Yes, sure. I'll provide, perhaps, an example first of all. So, long-distance bus services may contain parts that meet the 15-mile limit requirement, and under subsection 5, these parts to the services will be treated as a service in their own right, and they'll be capable of being franchised or permitted or directly provided. But Welsh Ministers won't be required to consider whether a long-distance service, in its capacity alone as a long-distance service, needs to be included, needs to include short-distance stops under section 5(1). In practice, the intention is to permit these parts of the service with the long-distance element continuing to run free of the restriction. I hope that makes sense to Members. I'm not sure whether we could provide some more examples, actual tangible examples, based on long-distance services that currently operate but which contain stops within 15 miles, just to aid understanding.

More examples for the committee—that would be great, I think, don't you?

Yes. Happy to do that.

Yes, because it is quite complicated to grasp.

Yes.

And then finally from me: on what basis did you identify the objective set out in section 4, and were any other objectives considered and not put in the Bill, and why?

Yes, a really good question. Well, the wording is consistent with transport policy objectives and the intention to fulfil the aims that we set out in the White Paper three years ago to deliver that one network, one timetable, one ticket, but there were a few, just a few, variations to the objectives that we considered during the development of the Bill. Originally, we considered, for example, including the continuous development of the bus services so far as is economically practicable. Now, the reason that we didn't include that was because effectively we'd be containing two, or presenting two, conflicting economic tests within the legislation.

The third objective originally read that we would work towards increasing the frequency and geographical reach of local bus services. Now, I think that's a really valid and sensible approach, however there are unforeseen consequences of explicitly stating that. For example, if you had a bus service that ran to an out-of-town business park and then that business park closed and nobody wanted or needed to make the journey anymore, it would seem odd to need to have regard to the geographical reach of a service that actually wasn't meeting anyone's needs. So, instead, we used the definition of 'availability' of local bus services that would then take into account people's travelling needs. That enables us to be dynamic, to respond to changes in circumstances and, indeed, changes in infrastructure. When road infrastructure, when social infrastructure changes, then travel habits change as well, and travel needs change. So, that's why we decided to amend that particular objective. And I don't know if any officials would like to speak to this as well?

Yes. Do you want me to answer—?

Yes, please.

We went through it and, as you can imagine, for the drafting, there was quite a lot of sort of chopping and changing for the objectives to ensure, as you say, that the network can remain dynamic and fulfil public need, because what we don't want is sort of surplus routes that sort of take funding or take buses away from other areas.

But the sixth objective was another one that we sought to amend, because originally we'd had that we would focus on sort of cleaning up bus, as it were, and bus transport, but actually, that doesn't always work out as the best and most environmentally friendly way of approaching it. So, we've gone with reducing the impact of road transport on environment and public health. So, we considered something specifically about bus emissions and waste, as I say, but the reality is that operators may still need to buy and run diesel buses on the roads to satisfy the demand for services, and in order to increase patronage and encourage people out of their cars. So, there are these things that we've tried to futureproof, for those objectives to do what we need them to do, but in a sensible way that sort of considers all the options.

[Inaudible.]—Carolyn.

Thank you. My question to you—you might have covered it already—is: how, in practice, will Welsh Ministers determine the local bus services they consider are required for the purposes of section 5(1)(a)? But what I want to ask myself, right, is: will you look at implementing the existing network first? Because we've got to manage expectation. Okay? And when we went to Transport for Greater Manchester, it's taken many years to get to the stage where they can look at expanding the network. Okay? So, they had to make sure they got the existing network in place first. And in the past, when I was part of a local authority, we looked at rationalising services where the subsidies were the highest, but then it got to the stage where you were looking at cutting rural routes, routes that are needed because of vulnerable people. So, you know, I just want to know how you are going to determine your network first. But we know that if it's an existing network, because it's being worked on on a commercial basis as well, that is where the need is. It doesn't always work, 'If you build it, they will come.' So, you've got to start off where the need is, so we've already got a core network based on need, based on affordability. So, that's my question.

A really good question, and you're absolutely right. The first objective is to secure the existing network, and then to grow the network. I've already mentioned that we've got an aspirational network planned as well as a model for the base network in south-west Wales, and that work will be replicated across all of the regions.

There are a few further points in regard to the questions that you've raised. First of all, the Bill requires Ministers to determine services that are required on the basis of whether they are for the purpose of providing safe, integrated, sustainable, efficient and economic transport in Wales. So, that's the test in determining the routes. The existing network is the starting point, and Transport for Wales are working with corporate joint committees and the 22 local authorities to develop the network.

They're also utilising very complex data sets. This is a really complicated process, but they're using as much data as they possibly can, looking at people's movements across Wales and movements between communities, between places of work and home, education points and home, other journey purposes. They're able, with this data and through consultation with passenger groups and local authorities, to map a very extensive network. Ultimately, the scope of the network is going to be determined by the money that's going to be available under future Governments.

But what we're also looking at doing, to the point that you raised about heavily subsidised routes, we're able to package routes in each of the regions in a way that allows different types of operators to secure contracts. We want to make sure that we support what is a hugely important sector, particularly in rural Wales, by packaging routes that will enable SMEs as well as larger companies to bid for work.

But we're also, alongside that, going to be able to cross-subsidise. This is a key component and objective of the Bill. We'll be able to cross-subsidise the most commercially beneficial services and those services that require the heaviest subsidy, so that we're able to make sure that all communities, regardless of whether they're intensely urban or very rural, benefit from this legislation and benefit from improved connectivity.

Thank you. Earlier, you mentioned that local authorities and CJCs will be involved. Can you confirm also that operators, the drivers and the unions will also be involved? Because they're the ones that know the routes; they know where the people are. At the cross-party group, they were concerned that things have been done by local authorities as well, such as putting bus stops in wrong places. Just different things that they could be involved with—the roll-out of the £1 bus fare. So, at your learner travel summit, can you make sure that the people that actually deliver the service are involved as well?

Yes.

Is there flexibility in the Bill, if you get funding from section 106 or the investment zone, to add extra services as well, as the funding becomes available?

Yes, absolutely. We were determined to make sure that we protected the investment that local authorities themselves put into bus services as well. So, essentially, under the Bill, we recognise the need to identify as many additional funding streams as possible to purchase additional services. So, the network can be a dynamic one. There can be revisions to it based on the availability of other sources of funding, not just from local authorities, but as you say, through initiatives such as the investment zone in Flintshire and Wrexham.

On the point that you raise about engagement, we're working with the unions in social partnership on the Bill. We are consulting extensively with local authorities and also with the public. We want to get drivers fully involved in the process of developing the network. You're absolutely right, those people who know routes and services the best are the people who are most familiar with them, and they are essentially the drivers and the existing passengers. So, we want to harness their intelligence, their ideas, their observations and their knowledge to make sure that the network that is rolled out across Wales reflects what people who have lived experience of bus services expect and indeed need in the future.

Thank you. We say how important local authorities are, but why have you not given local authorities a more central role in delivery of the duties in Part 2? And are you concerned that this expertise may diminish over time once they lose responsibility for bus services? Those officers in local authorities have built up relationships with operators. I know, in the past, when operators have struggled to be compliant with policies for the transport commissioner, they have actually stepped in to help to make sure that they are viable. I am concerned, going forward, if we are to maintain the small providers, which we must do, because we need them for school transport, that they do have that expertise and we have got somebody in place who can hold their hands and make sure they're compliant and that they can bid for these contracts. Sorry, I've put a lot in there.

You're absolutely right, Carolyn, I think, on all fronts there. First of all, on the question about the involvement of local authorities, I've said repeatedly, when we've been developing this legislation, that local authorities really have to be with us in the driving seat. Yes, Welsh Ministers are going to sign off the network plan, and that's because we need to avoid the situation where there is difference of opinions over the finances of the network, and that could lead to a veto of the whole network by just one local authority. So, it is important that sign-off is with the Ministers.

But, equally, it's important that sign-off comes once local authorities are content with the network. And, for that reason, we're going to be setting up a bus board in TfW, which will comprise corporate joint committee representatives on transport. They will then propose the network to Welsh Ministers. So, in effect, local authorities will have a far greater role than I think many people thus far have appreciated, and they're going to have a huge role as well in preparing the plan—not just in proposing the plan to Ministers, but also in preparing the plan.

For these reasons, I don't think we will see a loss of expertise at a local level. For the reasons you outlined, we have to maintain that expertise at local level. There has to be, between councils and Transport for Wales, a family of experts who are able to guide and support businesses large and small, and microbusinesses, as they seek to capture the contracts and as they seek to deliver services. So, we're absolutely determined to maintain the expertise that we currently have. It has to be said, I think, Carolyn, across Wales, the expertise has dwindled over time and it's very precious now, so we need to protect it all we can.

Okay, thank you very much. We'll invite Julie to ask a few more questions.

Diolch. In relation to the Welsh bus network plan, the Bill identifies consultees, but doesn't say what form the consultation should take or give any direction about the approach. So, can you tell us how the consultation will be undertaken and how the public and other stakeholders will understand what is happening?

I think consultation is absolutely vital, for reasons I've already outlined. We need to make sure that people who currently use services and people who would like to access services but aren't—for a variety of reasons, whether it's availability or cost of fares—are able to shape the network. It's really important, through consultation, that the network is shaped by people who use and deliver services.

We've developed an approach on engagement and consultation that reflects the regions of Wales. So, regional network design has been developed and that's going to be considering activities not just leading up to network development, but also activities that will go on beyond network development, because the plan will be a live plan. There will be revisions in the future. And so it's going to be very important that stakeholders, including the public, are engaged in designing the plan and improving the plan as we move forward.

We did republish the road map to bus franchising just this year, and that specifically sets out Transport for Wales’s engagement framework. It’s in the section that’s titled ‘Taking people on the journey with us’. So, there’s far more detail in that document than perhaps I can rehearse today. But if the committee wishes, we can certainly provide a briefing note based on the road map of the document, if Members wish.

Will that be details of how the consultation will take place?

Pardon me, I didn't quite catch that.

Would that be details of how the consultation would take place?

Yes, and we can provide further details about specific consultations that are taking place within the first region to go live with franchising—that’s south-west Wales. So, we can provide details on the 12-week consultation that’s going to happen, which will involve communities in the region, and involve key stakeholders and delivery partners. So, perhaps, as an action, I can outline in writing the specific form of engagement within south-west Wales as an example of what’s going to happen across Wales, and then the general engagement framework for Transport for Wales.

Would that include all types of engagement—opportunities for face-to-face discussion, as well as online stuff?

Yes, absolutely. And also the role of the access and inclusion panel in Transport for Wales, because they’re going to be vitally important in kicking the tyres on the network for people who face the most severe disabling challenges day in, day out.

Chair, I am very happy, as an action point, to provide comprehensive detail of the consultation and engagement work that’s going to happen—as I say, specific to south-west Wales, as the first region that’s going to be going live with the franchising, but also that framework that will be utilised by Transport for Wales across all of the regions.

I do think it’s very important that disabled people are involved in those discussions.

Absolutely, yes.

Thank you. You’ve mentioned already that the plan will be open to revision. Section 7(2) says that the Welsh Ministers may make any planned revision they consider is required to ensure that it continues to set out the key particulars, and may make any other revision appropriate. Can you outline in practice how the plan will be kept under review, and what specific processes and steps will be undertaken to meet this duty?

I think this is a really important area of concern. We have to make sure that the plan is live and dynamic, because change will be ongoing on the ground right across Wales. There’ll be changes to infrastructure. There’ll be changes to travel patterns and behaviours. So, the requirement to make revisions to the network plan is vitally important.

Towards the end of a contract term, Transport for Wales will review the services as part of the ongoing administration of the network. They’ll look at progressive changes with each generation of contracts. All of this will be done, obviously, in collaboration with local authorities, and also with expert input from a national supervisory panel. Data sharing is going to be really important as well, and data sharing provisions will enable Transport for Wales to constantly monitor the network, and amend the plan where it’s deemed that an altered plan would offer safe, integrated, sustainable, efficient and economic transport better than the existing one.

So, it will be a live process. The plan will be dynamic. Provision will be available for receiving feedback from the public on proposed changes to existing services. So, revisions that are going to be conducted will be on the basis of those tests laid out in legislation, and in conjunction with operators, and, crucially, the public.

Thank you. The explanatory memorandum notes that, taking section 7 and 8 together, it’s not necessary to consult on draft revisions that have effect for 14 days or less, and are minor, where it’s not reasonably practical to consult. Can you explain the rationale behind that? Does it mean that, in these circumstances, changes will be made without consultation?

I just don't think it would be reasonable to trigger consultation requirements where changes are on a temporary basis. We'd be bogged down in administration and bureaucracy if we were to do that. So, for example, if there is a road closure for one week while potholes are being filled, I don't think it would be necessary and reasonable to trigger a consultation over a slight change to the plan for that particular route.

We've got data that we can certainly share with you from the traffic commissioner, which demonstrates how many consultations we'd have to undertake if we included very short and temporary changes to the network. I think, off the top of my head, there were 75 changes in just 13 weeks to the current network that would have triggered amendments to the network plan under the new system. They included things like new services, cancelled services, stopping places that had changed, and there are a huge number of temporary measures that would have triggered the consultation. So, I think it's important that we don't introduce an unnecessary amount of bureaucracy and administration for what are temporary and short periods of time when changes to the network are deemed necessary for those reasons that I've outlined—road resurfacing or other infrastructure works.

So, it's just practical considerations really.

Yes.

Thank you. And then, finally, I think the Chair said in his introduction about our visit to Manchester and how we had such an enormous amount of information and I think we were all struck by the magnitude of having to achieve this, and, you know, it's very exciting, but certainly a big undertaking. And one of the challenges involved negotiating changes to services under franchise contracts, even with review provisions included in the contracts, so how will revisions to the plan be implemented on the ground via changes to local bus service contracts?

Well, as I've said, we've learnt so much from greater Manchester. They've been incredibly constructive and helpful as we've developed this legislation and you're absolutely right that the network is constantly changing. Changes in travel patterns, new land developments, operational experience, business closures—especially if they're large businesses employing lots of people—they all impact on bus provision.

What we're going to be doing is introducing change control arrangements in the franchise contracts. They'll enable changes to be made effectively, working in partnership with operators running the franchises, and it's likely that the cost of incremental changes to operating hours, to miles, to vehicle requirements will be included within contract terms, so that any proposed changes to contracted services can be implemented smoothly and sensibly, and that's actually an approach I think is commonplace for local authority tenders at the moment. It means that you can minimise the amount of bureaucracy and administration and you can introduce changes that are incremental in a far more sensible way.

Joyce.

Good morning. I'm going to focus on local bus service contracts. So, how will the local bus service contracting operate in practice? In particular, given franchising is just one approach to contracting for bus services, are you content that the Bill leaves all contracting options open to future Governments?

Yes, absolutely. The Bill, I think, offers an approach that is not prescriptive. It certainly leaves options open for future Governments and flexibility is built into what we're proposing. I think it's absolutely vital that operators remain motivated to deliver for their customers. So, Transport for Wales are investigating potential incentive mechanisms to ensure that operators benefit from driving up passenger growth. And I'm pleased to say that operators have already shared their views and ideas on incentives, and engagement on this is a key part of developing the contracts.

I think there's also a piece of work that's being undertaken by the Wales Centre for Public Policy, and they're looking at where franchising operates best, where franchising operates in a way that drives up patronage and incentivises bus operators to drive passenger growth. So, we'll be learning from that work as well. And officials, I think, can give a bit more detail about how we will be engaging on this very important point with operators.

Yes, I'll come in there. Thank you, Cabinet Secretary. So, operators will not be responsible for setting fares. As a result, they'll lack one of the key levers in driving revenue. So, the contracts will be awarded on a gross-cost basis, which means that we can reinvest ticket revenue in providing more services and offering simpler multiple-service tickets. Bus reform in this way gives us the option to distribute revenue from local bus services across Wales and not just focus on commercial routes, ensuring more equitable provisions for local bus services across the country, as I think the Cabinet Secretary mentioned earlier. So, market engagement is a critical part of the transition into the new system, and Transport for Wales is working with operators to test and refine procurement strategies and encourage effective competition for contracts.

As we mentioned earlier, I think, the package is to ensure that there are attractive options across the market of operators in Wales, and to encourage new operators, we hope. So, franchising will provide the Welsh Government with more control over the financial risk and power to control significant funding to invest in bus services, making sure that it's spent where it can have the greatest impact, and reducing inefficiency and improving the integration of services to make that funding go as far as possible. I think that's probably the—.

Yes, so it enables Welsh Ministers to enter into agreements with private, public and third sector operators, and that's really important. This is why it doesn't include provisions around procurement and contracting processes.

In terms of contracting local bus services, and I heard what the Minister said about not providing things for coach tours, et cetera, that those are not being included, but nonetheless, in high tourist hotspots, there will be additional passengers, as we know, from the trains on regulated routes, enjoying travel by bus where train isn't a possibility. So, in terms of what I've just said, will there be some flexibility there for those operators, perhaps, maybe, to add additional routes in at times of heavy use?

Yes, absolutely. So, this relates, really, to how the contracts are going to be designed, and how the contracts are going to be designed is being informed by a piece of work that I've mentioned that the WCPP are undertaking. That's the Wales Centre for Public Policy—apologies. They're developing work entitled 'success factors for contracting and awarding bus franchises in Wales'. Now, there are two overarching questions that they're seeking to answer with this research. The first is: what practices or what features of contracting and awarding show promise in achieving the desired quality improvements and policy outcomes, whilst also delivering value for money? And then the second is: how can contracting, including incentives, help to enable modal shift by increasing bus patronage, and also how will it contribute to transport integration and alleviating transport poverty? So, those two big questions will be answered through the research being undertaken by the WCPP.

They're working with Transport for Wales, who are putting together early drafts of contracts to scrutinise them, to test them with operators. And integral to that will be the question of how operators are provided with the flexibility within contracts to be able to scale up or to scale down bus services that reflect different seasonal patterns. So, that might relate, not just to the tourism sector—hugely important in rural Wales—but it might also reflect major events that occur in cities and indeed in rural areas as well. So, we want to make sure that the contracts that are developed, where there is a known movement and significant change in patronage, are flexible enough to be able to provide for that change, whether it be on a seasonal basis or on an event-by-event basis.

Thank you. Could you give us more detail on the likely content of regulations made under section 10(3), setting out the standard terms that 'must' be included in a local bus services contract, and prescribing the circumstances in which that standard form 'may or must' be used in a contract?

Yes, sure. Again, this all relates to that work that's taking place at the moment with WCPP and Transport for Wales. So, the terms that are going to be included in regulations are going to be informed by that work.

Now, I believe that the research paper is going to be available early summer for sharing. So, perhaps we could provide, if it's helpful, Chair, a technical briefing on it for Members, because this will be an important and informative piece of work that will assist in designing the contracts across Wales. Would that be helpful if we, as an action point, could arrange that?

Yes, timing allowing, I'm sure that's the kind of thing that would be very helpful. Thank you for that, yes.

I'm happy to do that.

Thank you. We note that, as highlighted above, the statement of policy intent for subordinate legislation to be made under the Bill highlights that an early draft model local bus contract will be produced before the summer recess to aid engagement with key stakeholders, but we don't have any copies of that and we can't scrutinise it.

Okay. I will check whether it would be possible for you to have sight of that and scrutinise that. This is a legal issue, I'm afraid, and I'm not a lawyer myself. We will check. I'm not sure whether Catrin can give an indication whether it would be possible to share that with committee members today. If not, we'll have to come back to you and provide a clearer answer based on legal advice, if that's okay. But, Catrin, are you able to give an answer to this?

Yes, Cabinet Secretary. Just to say that they are in the process of developing it. We could share it, not now, because they're still working on it. I think they have made great strides with it. We can check with TfW and see how far they are, but we can certainly share a very draft version. What we don't want to do is pre-empt the regulations because, obviously, we value industry, union and other representations on what should be in the contracts. Because, obviously, the regulations only cover what must be included. I mean, there'll be other provisions in contracts based on, I don't know, geography, population and the needs of specific services. I think we can share it, but just to bear that in mind, really, that the regulations will need to be developed with key stakeholders and then publicly consulted on.

Sure, and we understand that it's a draft; it's a working document and that's something that we'd obviously respect as well. If that is possible, we would appreciate a copy; that would be great, diolch.

I know that you've partly answered the next one, but for the record, if you could elaborate on the comment in the explanatory notes with regard to section 10 that says,

'Whilst some terms will be included in all contracts, there will be some differences between different types of contracts. This is to recognise the complex geography and varied operator market in Wales.'

Yes, very good question. What's right for Barry might not necessarily be right for Bettws or for Broughton. We completely appreciate that Wales is very diverse, and so we have to make sure that when we frame the contracts, we acknowledge the geographical changes across Wales, the fact that Wales is largely rural, but there are many towns. There are some intensely urban areas as well, and there is also an incredible and diverse bus market in Wales and a family of bus businesses, some of which are multinational, some are municipals, a huge number of SMEs, and there are also third sector operators. So, the contractual terms will endeavour to be framed within the different requirements to ensure the best possible services are delivered to customers, whether they live in rural parts, whether they live in urban parts, whether they're served by an SME, or whether they're served by a larger bus operator.

Geography, though, is ultimately a hugely important factor in the use of different types of vehicles, and that will inform whether electric or diesel are required. So, for example, delivering services in some urban settings, we may choose to specify the use of electric or hydrogen vehicles, but in more rural areas, where you have more severe terrains, where you have much longer routes, we may choose not to specify the use of electric, or indeed hydrogen, at this moment in time, whilst battery technology is still in development, and instead actually leave it more flexible, because it might well be that operators would need to utilise hybrid or advanced diesel buses. So, I think we have to have a flexible approach when it comes to the terms that are included in the contracts.

Thank you.

Thank you for that, Cabinet Secretary. We've got about half an hour left. We'll come on to Carolyn.

Regarding what you just said, in Manchester, they said, 'Don't try and do everything at once.' So, don't say you want to go for net zero straight away, because it was just too much for them to do. I know a lot of operators don't have enough downtime for electric vehicles. So, they said, 'Don't include that in your plan straight away.' It's really difficult. Euro 6 diesel vehicles are probably just as good, aren't they, at the moment?

That's right, yes.

What will you do if there aren't enough operators wanting to bid for your services? Would Transport for Wales look at providing their own buses and operator licences? Because in the Bill, local authorities can run their own public transport if they haven't got enough operators coming in. So, I just want to talk about that, really, going forward. If the Welsh Government have capital funding, and not revenue, to provide buses, they can train drivers up. That could be a way forward. And I'm not saying in competition with existing operators. But you might have huge gaps that you need to have filled. Local authorities have trouble getting operator licences, and having that expertise. So, how would you overcome that, and how would you fill the gaps if there aren't enough operators going forward who can bid for this?

There are lots of really good questions there. First of all, in terms of what would happen if no business bid for a contract, there's the option to go for direct delivery, and TfW are looking at establishing a subsidiary for that purpose. There are also provisions for local authorities to create municipals, as you've identified, and there are also provisions for permits to be provided. Ultimately, in the circumstances that you've outlined, if nobody came forward to bid for a contract, then direct delivery would likely be the most appropriate outcome.

But we're designing the network in such a way as to ensure that packages of routes are attractive to all operators, whether they're large or small. We should not exclude opportunities for any business based on their size or business model. We want to make sure that we utilise what we have at the moment in Wales, because we have some fantastic bus operators, and that we support them in delivering passenger services across Wales and in growing passenger numbers. So, it's our hope that, through the packaging of routes, that direct delivery based on nobody bidding will be very unusual indeed.

So, regarding permits, that might happen in that instance. When else do you anticipate the arrangements for local bus service permits will operate, so both where the application is initiated by an operator proactively seeking to provide a service not identified in the plan, and where they are used by the Welsh Ministers to meet the section 5(1)(c) duty? We're going to have contracted services, so when will you issue permits? When will they be used to fill that gap, and how?

They might be used in circumstances where a route has not been identified or where a route emerges that actually would be beneficial for us to support. A permit would also be used in regard to cross-border services. Where you've got a service that passes in and out of Wales, the English part of the service would be overseen by authorities in England, but when it comes into Wales, we would ensure that it's subject to a permit. That's important so that we can integrate all bus services, not just those that start and finish in Wales, but also those that are of a cross-border form. We want to make sure that all bus services are fully integrated. I think it might be best for Catrin just to talk through the specifics of the duty in respect to cross-border services, if that's okay.

We're coming on to cross-border in a minute, if that's okay. I'm just conscious of time. So, instead of doing it now, we'll just come back to it in a moment, if that's okay. Thank you.

How in practice will the requirements in section 11(3) be assessed and met for those permits?

Can I bring in Catrin, if that's okay?

Diolch. The permitting application will require the applicants to detail the route, frequencies and timetable that they're applying to run under the permit. Transport for Wales will compare these details with what are currently under a contract, and they'll assess the impact that that proposed service will have on contracted services and ensure that it doesn't have a material adverse impact. But that has to balance with the social benefits as well and the purposes of having local bus services. And for us to do this whole bus reform is to ensure that customers are served and that we encourage more patronage. So, it's important that permits are not granted that will have the potential to take away business from contracted services. But, of course, that is a balance with all the other conditions that we might put on a permit.

Transport for Wales will assess the impact of granting the permit on the infrastructure to ensure the smooth running of contracted services so that they aren't compromised and it doesn't compromise other services. We need to avoid, where possible, circumstances where permitted services and contracted services would be using the same stops or the same bus lanes at the same time. We've been told by industry that congestion with regard to bus lanes, et cetera, is an issue that we could seek to improve with this. So, these are all the sorts of things we have to consider when we'd be looking to set up the permitting regime, and this is something that TfW are starting to work on with stakeholders.

Would permits be issued for short-term transport during seasonal services to help with tourism? Is that when you would issue a permit as opposed to a contracted route? Just to try and get my head around that.

Initially, operators were looking at a five-year contract to ensure sustainability going forward. Is that something that you're looking at as part of this plan, that this is long term for them, a long-term contract? Thank you, that's my last question.

Yes. And on the point that you've raised about a short-term event, for example, or a significant increase for whatever reason it might be, the network plan would benefit from a permit. I’ll give an example, actually: the Eisteddfod. We might wish to utilise a permit in the case where the Eisteddfod is coming to Isycoed near Wrexham, where park and ride is required and so we need to get bus services operational for that purpose. So, a permit would then be utilised in those circumstances. So yes, in short, to the question that you asked, yes, we would use permits in those cases.

And long-term contracts.

And longer term contracts, then? The potential for five-year contracts.

That's what the operators were asking for. They thought that might be the case with franchise services and that would help them.

I'll bring in Catrin on that point, if I may.

Diolch. I think this is all part of the discussion around the incentives as well, whether you can have—don't hold me to this—seven-year contracts if things are going well and that extra two years can be the incentive for operators to do well, to perform well under, yes, a five-year contract, but with a two-year incentive.

Diolch yn fawr. Thank you for that. I'm looking at section 17, which is provision of local bus services by the Welsh Ministers. The explanatory memorandum makes it clear that that is intended to enable Ministers to make sure that there's full coverage, for example if a service failed or a bid for a contract wasn't forthcoming. But, of course, it isn't limited explicitly to those circumstances, so maybe you could explain to us why that is the case. How do you respond to the suggestion that's been made that section 17, as it's drafted, could in future be used to nationalise bus services, if you took the view that you're satisfied that that's a more effective way of proceeding than franchising?

It's certainly not a back door to nationalisation—I can assure committee members that. Again, we've got three forms of provision—one through contract, one through permit and then direct provision. Direct provision would clearly come into being if there was service failure, a bus operator went out of business and Transport for Wales had to step in immediately to keep the wheels turning, or where there is no interest in a contract. But as I've already said, I would hope that that would be very unusual indeed.

But the Bill doesn't say that, does it?

It doesn't say that, because we can't foresee all eventualities. What we wouldn't want to do is be very clear and prescriptive in a way that in the future would then lead to services not being provided because an event has taken place that isn't reflected in the legislation explicitly. So, I think it is important that Ministers have flexibility in order to ensure that bus services, regardless of what eventuality there might be, can be provided. But in terms of direct provision, that would be on the basis of something very unusual happening, and something that would be undesirable as well.

Okay, thank you. Given the time pressure we're under, we'll come straight to you, Joyce, if that's okay, for the next questions.

We are coming back to cross-border services. We're looking particularly at section 19 regarding cross-border services and wanting to understand how, in practice, the Welsh Ministers would conclude that they consider that the relevant transport need will not be met without securing a service.

In terms of cross-border services, we've got the data now, and we should probably share that with committee if we haven't already done so, relating to how many cross-border services there are. There's extensive engagement that's been taking place with local authorities both in Wales and across the border, to make sure that the network reflects the travelling needs of the public. There are various bus services in place across Wales that provide vital access to leisure, education, employment, and that includes community transport services and closed school services. We want to make sure that these can continue, and where possible, be included as part of the bus network. So, this is a huge area of concern, but we are working with local authorities on both sides of the border. We are working with community transport groups. We are working with local authorities, in terms of making sure that we can develop regional plans that truly reflect the travel patterns of the people of Wales. I'll bring in Alex and Catrin, if I may.

Who wants to go first? Catrin, do you want to kick off?

Yes. The Cabinet Secretary has covered it, I think, for the most part, with regard to what we're doing for cross-border. We're in a complicated place with regard to cross-border routes, because not only will we be introducing on a zonal basis—so, we'll have, effectively two different systems working in Wales—we've also got to consider what's happening on the other side of the border. They've got their 2017 Act, and it's been implemented in certain parts. But because it's a matter of choice, if you like, in England, we're not entirely sure yet which parts of the border local authorities will choose to establish under the increased provisions that are being made under this current No. 2 Bill that the UK Government is doing. So we're working with them to understand that better, and how Wales fits into that Bill. But also, we're pretty confident. We know that the provisions that we have in this Bill will satisfy working with the deregulated areas, and we're satisfied that they'll work with the new provisions in England. But there are certain choices that can be made by local authorities in England, under their Bill, as to the extent to which they franchise and the extent that they allow for competition as well. And so we're making sure that our legislation is foolproof, if you like, when it comes to working alongside that legislation. And the key thing is working with English local authorities. They're not mentioned specifically in the Bill, but there is provision in there to allow us to work with them. And this is vital. We wouldn't dream of doing it without that, really.

No. Okay. Thank you. Sorry, I am conscious of time, so we will come back to Joyce, if that's okay.

We're looking at, of course, an explanation of the need for section 19(5). That means that Welsh Ministers cannot take account of English services secured by tender under section 63 of the Transport Act 1985. In particular, could you explain the reference to the risk of circularity in the explanatory notes?

Yes. Can I come to Catrin, first of all, on the issue of circularity?

Yes, the circularity. Sorry, I think I'm going to revert to Hannah on this, because I think it's more of a legal question.

Yes. It would be good to understand circularity in this context.

Yes, that's absolutely fine. So, under section 19, the Welsh Ministers don't have to secure the English section of the service if the relevant transport needs in Wales will be met without it being secured. The duty on local authorities in England to provide a service under section 63 applies if that service would not otherwise be provided. On this basis, if both the Welsh and English duties could be considered in relation to the same English part of a cross-border service, there is a risk that an impasse could result, with both the local authority in England and the Welsh Ministers concluding that, if they did not provide the service, the transport need would otherwise be met.

So, simply, the English local authority may conclude that the section 63 duty does not apply if it doesn't provide the service, because the Welsh Ministers will be required to provide it. And the Welsh Ministers may conclude that the duty to secure under section 5 of the Bill doesn't apply if it doesn't provide it, because the English local authority will be required to provide it. And the exclusion of section 63 services in section 19(5) is needed to avoid that particular circularity.

Okay, yes, I think I get that. It's like a never-ending bounce-back, in a sense, isn't it?

Yes.

Yes, okay. Shall we go on to the last question, if we could, then, if that's okay, Joyce?

Right. Just the final one. Having said what you've just said, section 3 services are ignored, but not services franchised under either the Bus Service Act 2017 or the expected provision of the Bus Services (No. 2) Bill, once enacted.

Can I refer to Catrin on this, please?

Yes. The services provided under the new system brought about by the 2017 Act are currently being amended, as I mentioned, by the new No. 2 Bill, and would not be subject to the same tests and will be co-ordinated in a different way. So, we intend to work closely with local authorities in England during the development of the network plan and any revisions, to ensure that cross-border services continue to support and maintain and grow connectivity. They're slightly different circumstances, so you don't get the circularity.

Okay, so—. I'm struggling a bit with this, because—

I'm struggling as well.

Yes. So, the effect of section 19(5) appears to be that such section 63 services must be ignored by the Welsh Ministers in deciding whether they consider the relevant transport needs are met. But if that's the case, how does the Bill avoid the risk that the Welsh Ministers duplicate service already provided under section 63 in England?

Hannah?

I think the first point with this is that Welsh Government officials and Transport for Wales will continue to work with stakeholders, and also with local authorities, on regional plans to consider and plan for the cross-border connectivity of community needs.

Just on the point of avoiding duplication, where a local authority in England is securing a service under section 63, and that service is a cross-border service that is within the duty to secure, the result of the approach is that responsibility for securing those services will fall on the Welsh Ministers. So, in terms of the section 63 duty, an English local authority will not be able to say that the requirements for the service in their area will not be met unless they take action under section 63. As a consequence of that, they will no longer be required to provide the service under section 63. So, there won't be a duplication there.

Okay, fine. We can we can mull over that and we can listen back, I think, just to make sure that I get my head around it.

Can I move on to information and data, if I may—provisions in in Part 4? Can you set out how the Bill and associated regulations will make sure that commercial sensitivity is respected and avoid distorting competition, both in terms of information provided to the Welsh Ministers and, of course, the information that subsequently might be made available to the public?

Yes, absolutely. I think it's just worth highlighting how much information bus operators have provided to Transport for Wales over recent years, and that's as a consequence of what happened with COVID. A lot of data, some of it commercially sensitive data, has been shared with TfW. So, there is experience already of bus operators sharing data that needs to be protected with Transport for Wales, and I think that's going to give them confidence that information, sensitive commercial information, will be protected moving forward.

TfW will only publish information, such as trends and total passenger numbers and data, that's in line with the duty to make arrangements to secure certain information is made available to the public. Any franchise agreements or other documents published by TfW will have financial and other sensitive data redacted. Operators will have commercially sensitive financial information to share during the process of bidding, and indeed beyond that when a contract is actually in operation. So, again, any franchise agreements or any other documents that are published will have financial and sensitive data redacted before publication.

Okay. Thank you. And finally, I think, Delyth.

Diolch, Gadeirydd. Just thinking through the fact that we've been talking about how different bits of legislation will interact, different powers will interact, looking specifically at local authority powers and duties, could you assure us, please, that all necessary amendments and repeals have been made to existing powers? We're thinking specifically of one example where several local authority powers are held under the Transport Act 2000, and they remain on the statute book.

So, the existing requirement for councils in Wales to secure public transport, passenger transport services that would not otherwise be provided, and also the power to subsidise services under sections 63(1) and 63(5) of the 1985 Act are going to be amended so they no longer apply or they're no longer exercisable in respect of local bus services as a result of amendments made by the Bill. So, on this basis, the provisions will not overlap with the provision to secure services in the Bill, and where local authorities wish to give financial assistance in connection with the provision of bus services, they can then rely on the new power that's being provided under section 34. And in respect of local authority powers in Part 2 of the Transport Act 2000, which include, of course, powers relating to quality partnership schemes, quality contract schemes and ticketing schemes, we're planning to table consequential amendments to these provisions at Stage 2.

Diolch. And for my final question, it's quite thrillingly technical, I'm afraid. In terms of section 32, could you outline what the practical effect will be of disapplying section 66 of the Transport Act 1985? So, we're thinking particularly about the implications of moving to a reliance on the general power of competence, as well as the Local Government and Housing Act 1989 and Local Authorities (Companies) Order 1995.

This is wonderfully technical, and I think it's probably—

I know, we were saving the best till last for you.

In that case, can I invite a lawyer to answer, because it's very, very legally technical, this?

Yes, sure. So, once the section 66 restriction has been lifted, local authorities rely on the general power of competence. And where services are run commercially, they will be required to establish a company to provide those services under section 27 of the Local Government and Elections (Wales) Act 2021. So, the implications of this are that local authorities will be able to compete for local bus service contracts, and, if successful in securing those contracts, run local bus services under the Bill. Local authorities will also be able to apply for local bus service permits and run services under that permit by providing them directly.

In terms of section 67 to 73 of the Local Government and Housing Act 1989 and the Local Authorities (Companies) Order 1995, they impose general controls on local authority companies, but not existing local authority bus companies, such as Cardiff and Newport bus. The application of those controls to local authority bus companies formed under the general power of competence will mean that those companies will be subject to the same regime as any other local authority company.

Thank you so much.

Okay. Dyna ni. Thank you very much. Can I thank you, Cabinet Secretary, for being with us this morning, and your officials as well? This is the beginning of our Stage 1 scrutiny, and we're very grateful to you for the evidence that you've shared with us. And as you've suggested, as we went through the session, we look forward to receiving some of the follow-up information that's been mentioned in passing. So with that, you will, of course, receive a copy of the draft transcript to check for accuracy. We will be seeing you again at the end of Stage 1, of course, once we've heard from a large number of stakeholders, who obviously have a keen interest in this Bill. Diolch yn fawr iawn. Thank you so much for joining us. Diolch.

Diolch yn fawr iawn.

Thank you.