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Transport of delight
Law Society Gazette – 30 April 2009

Reforms to the Local Transport Act 2008 will create more work for lawyers, says Mark Smulian

The humble bus is about to drive through a number of new avenues for litigation, following enactment of the Local Transport Act 2008.

Traffic commissioners, most of whom were originally solicitors, will gain wider powers to fine operators who run unsafe vehicles, to impound the offending buses and to penalise operators who persistently fail to run to time. They will also gain a new role as a sort of ringmaster between local authorities and bus operators, when councils seek to use new powers to regulate local bus services.

Commissioners will hold hearings on the robustness of councils' service plans set out in 'quality contracts'. If there are subsequent breaches, commissioners can penalise an operator and report a council to the secretary of state for transport.

It is a situation that almost seems designed to provoke judicial reviews - operators have historically resented the idea that councils might be able to tell them which routes to run and what fares to levy, and councils resent the commissioners being involved in this process, seeing this as an interference in local autonomy. In-house and external solicitors acting for bus operators can expect to be busier as the new powers to regulate buses become established. These changes have come about because, in short, one government policy clashed with another. The Conservatives deregulated buses outside London in 1985 and Labour did little to change this, seeing the sector as something appropriately left to the market.

But then the government became interested in environmentalism and in trying to reduce the growth of car traffic. Achieving the latter is a difficult task by itself, and more or less impossible unless the public can be offered a guaranteed high-quality bus service as an alternative. Leaving bus services outside the capital to the market looked less and less attractive. Eventually local authorities outside the capital, which had long looked enviously at London's high-frequency network of cheap and regulated buses, found that government concerns about the environment meant they were listened to in Whitehall. Last year's act was the result.

Post-1985 deregulation has meant that, outside London, bus operators can run any route, at whatever frequency, fares and vehicle types they choose, merely by registering their intention with the traffic commissioners 42 days in advance. A similar notice period is required to end or alter a route. Local authorities were given powers to subsidise socially necessary but uneconomic routes.

Depending on one's viewpoint, this produced either a flowering of private sector initiatives that responded to the market or a near-disappearance of buses outside peak times and main routes.

The Conservatives left buses regulated in London, perhaps fearing the effects of unrestrained competition on the capital's roads, and here a quite different system evolved. London Buses decides on routes, fares, frequencies and vehicles, and invites operators to bid by tender to run each route.

What the Local Transport Act does is to make it possible for local authorities - most likely those in the main conurbations, but in theory anywhere - to use a new mechanism, the 'quality contract', to impose something similar to the London system on their local bus networks. This would prevent the operators from running their businesses as conventional commercial propositions, and instead make them contractors to a local authority.

The likelihood of litigation by aggrieved operators is obvious. John Major, director of communications at bus operators' trade association the Confederation of Passenger Transport, says: 'A quality contact is effectively a regulated system and we are private companies who do not believe that that is the best way to secure good services for our passengers. It takes away our expertise.

'There is a raft of guidance to deal with what will probably cause some legal complications. Quality contracts ought to be the last tool used in the box, and it's possible there will be increased litigation because of them.'

The transport act also provides for partnerships between local authorities and operators to be given legal force. This is less contentious, but could still cause complications. Some partnerships already exist - for example, where a council undertakes to install bus-priority measures on main roads and in return the operator improves its services - but these have been voluntary agreements, not legal contracts.

Major says: 'Statutory partnerships are not such a problem, but making them statutory implies a lack of trust between partners.'

Were a quality contract imposed, it is possible that one operator could be awarded an entire local network, thus forcing others that operated in that area to cease doing so.

Major chooses his words with care when considering whether there are any human rights issues arising from this: 'The government has said it does not see any human rights implications, but who knows?'

Senior traffic commissioner

The man at the centre of these changes is Philip Brown, the senior traffic commissioner. He began his career as a solicitor and worked mainly in the magistrates' service before joining a Cambridge firm, then called Carruthers.

'One day in 1990 I had a phone call - this was long before any appointments commission - asking me to serve as a part-time traffic commissioner,' Brown recalls. 'Since I knew a lot about road traffic from my time in the magistrates' courts, I applied. We have two main powers: to ensure that public and goods transport is safe, and that public transport operators run the service they have registered with us.'

The commissioners form regional one-person tribunals, but are not an investigative body. Evidence is collected by the government's Vehicle and Operator Services Agency. Most cases before them will see operators represented by barristers who have been instructed by a solicitor who specialises in transport cases.

Brown says: 'Our powers have increased under the new act, but essentially we hold an inquiry and can order firms to reduce the number of vehicles they operate, or put them out of business temporarily or even permanently.

'I can say, for example, that firms clearly cannot properly maintain their buses and so they must run fewer of them.'

Commissioners also deal with the competence of bus drivers and can remove their public service licences.

'When you are a bus driver it is not just a question of whether you can drive, there is also an element of public protection in the job,' Brown says. 'I had a man apply for a licence and when he declared his previous convictions, one was for murder, so I refused it. I doubt it would have come out if he had not had to apply through us.'

Brown concedes that local authorities do not like the idea of a commissioner deciding whether their proposed quality contract is acceptable. Commissioners cannot veto these contracts, but were they to find extensive flaws it would provide powerful ammunition.

'Local authorities may think we are straying into their processes, but I think it is our job to test their contracts' robustness and whether they work in bus terms,' Brown says. 'It's an interesting scenario that we might start to be taken to judicial review as the local authorities resent our role and the operators resent quality contracts.'

Stephen Kirkbright, senior partner at Leeds firm Ford & Warren, has handled cases involving the commissioners for decades and acts for a number of the major public transport operators. He says: 'The UK is unique in Europe in having such a system of regulating goods and public transport vehicle safety, and I think it has helped to keep our roads among the safest in Europe.'

Fines levied by the commissioners can be fearsome, he points out, at 550 per vehicle where an operator fails to run registered services - in the case of a major urban bus operator, that could add up to more than 500,000. But, he says, this expertise in safety does not in itself qualify the commissioners to decide on the validity of quality contracts or council-operator partnerships - a new body might be needed for these.

'Quality contracts are similar to the London system, and one would expect legal challenges to be mounted by operators where these are proposed,' he says. 'I have always been concerned that the traffic commissioners' powers in relation to control of local bus services were wholly divorced from their prime function as regulators of the bus and haulage industry. That function has safety as its basis. Control of local bus services should be regulated by a different body.'

Rob Elvin, a partner at Hammonds, says commissioners are 'an odd thing to deal with and unpredictable, because an argument that succeeds before one commissioner may not succeed before a different one in a different region, and the result is that you don't get consistent decisions. They are not always joined-up, so you don't know which way different commissioners will go.'

Elvin says bus regulation has grown in importance since 1985, because 'when buses were a nationalised industry, there was more emphasis on safety and less on profit. Now it is the other way round, so where things are left to the market you do need a good regulatory system to ensure safety'.

He believes the London system works well, and thinks that the government appears keen to expand it. 'But,' he adds, 'I do think there is a chance of more litigation, because if I were a bus operator in a recession and someone wanted to impose a new regime on me, I might try to fight it off by challenging it legally.'

Mike Oliver, a consultant to Chester law firm Aaron & Partners, dismisses the idea that operators who lose business as a result of quality contracts might invoke human rights legislation. 'When it first came in there was a whole industry devoted to telling everyone how it would change the face of litigation forever, but it didn't, and in these cases I suppose it might just be a bargaining point,' he says.

But Oliver also expects the 2008 act to make him busier. 'I feel it's quite likely that there will be increased litigation over quality contracts, but the difficulty is the cost and the chance of success for smaller operators,' he says. 'You might find they will set up collective litigation, possibly through their trade associations.

'Larger operators are likely to fight because the funding is less of an issue. Councils might be very confident, or faced with legal action might seek a compromise. It is difficult to predict.'

Could it be that, having waited for more cases, transport lawyers will find that they all arrive together in the next year or so?

Crosstown traffic

In February, the London Central Bus Company was ordered to reduce its fleet from 638 to 618 buses after a maintenance investigation led to a conviction for using a vehicle in a dangerous condition.

The London commissioner heard evidence from the police that a wheel had fallen off one of the company's buses while in service. Evidence was also given that the company's inspection systems did not meet the requirements of the Passenger and Public Vehicle Act 1981. London Central said training on this had improved since July 2008, when the wheel loss occurred, and that it had introduced additional and refresher training.

Also in February this year, East Thames Buses was ordered to reduce its fleet from 170 vehicles to 150 by a commissioner after a wheel fell off one of its buses while in service.

In January, Highland Country Buses was fined 17,500 by the Scottish commissioner over failures to stick to timetables in Skye and Fort William. Highland is now part of Stagecoach. The incidents occurred when it was under its previous ownership. Monitors found 41 of 104 monitored journeys failed to observe their timetables.

Highland cited in mitigation traffic congestion in Fort William, unannounced road works and its use of different stops to those monitored.

The commissioner concluded there was a non-compliance rate of 10-15% of journeys and imposed a penalty of 100 per vehicle, totalling 17,500 for the 175-strong fleet.

(Source: Central Office of Information)