The use of Section 19 and 22 permits and the DfT advice

HCT Group is proud to be part of the Community Transport sector and, as such, we believe that the recent DfT advice on Section 19 and 22 Permits has some profound implications for our movement – even though the way we operate means that HCT Group is barely affected.

Over the past 20 years, the DfT has advised and successive governments have encouraged the Community Transport movement to earn their keep through trade, to become more self-sufficient and robust as operators. Community Transport operators have done exactly what has been asked of them. The advice, as it stands, marks an abrupt reversal of policy that will have far-reaching implications; it is the very model of a wrenching regulatory change.

For all of my concerns about the impact of the advice on Community Transport operators, these pale into insignificance when set against my concerns for the beneficiaries and service users of Community Transport. Community Transport exists to support the most vulnerable in society. It exists to ensure access to those things that so many people in society take for granted - getting to the shops, or the doctors, or to see family and friends – providing an essential component of the struggle to combat loneliness and isolation. 

In study after study, research on social isolation and loneliness amongst older people shows its impact on mortality – those who suffer from social isolation are 29% more likely to die than those who do not1. Yet 975,000 older people in the UK say that they are often or always lonely2. Supporting people to get out and about saves lives.

In a difficult and unequal society, so many Community Transport operators are trying to tackle these issues, doing what is best and good about our nation. To any CT reading this, we salute you!

The heart of my contention is that the DfT advice touches not solely upon a narrow point of transport regulation, but also on the independence of hundreds of thousands, if not millions of vulnerable people. These are the shoals of unintended consequence writ large.

To navigate these issues, the DfT’s consultation must embrace the debate about what sort of society we want to live in, what sort of society we want to try and create. Do we want to bow to the few at the expense of the many? How do we want to support older and disabled people to fulfil productive and happy lives?

As things stand – The sector is resilient and, as Bill Freeman, Chief Executive of the Community Transport Association so eloquently put it, we now know what we need to do! So where next for Community Transport?

We need to support CTs to get O licences, if that is what they want. HCT group will be working on a programme where we can support CTs to do this over the next few months and hopefully we can announce something in the autumn.

We also have the Bus Services Act, which we need to ensure is taken up by more and more areas of the UK. This at least puts the passenger at front and centre of the debate. But this alone will not be a solution. We need to urgently take forward the idea of Mobility-as-a-Service and ensure that technology enables people, and all people, to have control over their mobility. We need to reduce the numbers of children on SEN transport by providing alternative solutions that open up life chances as well as reducing Local Authority budgets!

But most of all we must concentrate and double our efforts on the things that make us unique. We must not let this decision reduce our commitment one iota to our service users - to those people who rely on our services and we must keep fighting to reduce loneliness and isolation every day.

Update 17 August

The Community Transport Association has started a petition calling for concerns about this change to be addressed.  If you’d like to support this, you can sign the petition here

1Holt-Lunstad J et al (2015) ‘Loneliness and social isolation as risk factors for mortality’ Perspectives on Psychological Science, vol 10, issue 2
2‘TNS survey for Age UK, June 2016’ cited in Later life in the United Kingdom (2017), Age UK

Comments

  • Jon Walden Thursday August 2017 08:43

    Whilst I applaud most of your comments here Dia, there is significant and growing unease at accepting, without question, that Community Transport operators will have to acquire PSV O Licences.

    The current "not for profit" guidance has stood for many years and its previous interpretation has been widely accepted by successive governments. Now the mandarins in the corridors of Whitehall have decided to reverse this policy, based on one test case and without any realisation of the impact of the sector and its vulnerable and socially isolated customers.

    As a PSV CPC holder, I fully understand the technicalities and costs of obtaining the O Licence, which are not massively onerous for many of us.

    What will have a profound impact on the sector, should we be forced to go down this route, is an acute driver shortage. Many of our current drivers will leave rather than undertake a 4 part driving test, obtain tachograph cards and participate in 35 hours CPC every five years. The HGV industry is facing major labour shortage for the same reason. Why would anyone want to take a D1 minibus test when, for the same investment, they could take a full D bus driver test and earn a lot more money?

    The other unintended consequence, will be a sharp increase in drivers' wages which ultimately will be passed on to local authorities and the third sector at a time when austerity is still very prevalent. This factor alone could also put many community transport organisations out of business very quickly.

    I think the realisation of this decision is only just starting to sink in amongst the smaller operators, many of whom carry out contract work to actually subsidise travel for those in greatest need.

    In the first instance, we intend to challenge the ruling itself, rather than lay down, roll over and let DfT tickle our tummies.

  • Dai Powell Thursday August 2017 11:57

    Jon

    Thanks for your response. I fully agree with your first point, that we should oppose any change to the accepted interpretation that everyone has understood and work with for many years. And the system is not broken, just because some people want to put money before people is no reason to change. We would support any challenge. We should also bust the myth that O licence operations are all good and proper, you only have to read the trade press to understand there are significant numbers of O licence operators who are well dodgy.

    However we also need to ensure CT’s understand the ease which an O licence can be obtained, it is not that difficult or that expensive, and most of the procedures that CT’s currently undertake will not need to be tweaked too much to comply. I agree with the potential driver shortage issue, and again this will affect all operators and it is something the DfT need to take into account. However where I do disagree is on driver wages. If as a society we are to seriously address the needs of the most vulnerable in society then that will come at a cost, the benefits far outweighing the cost but it will still need to be paid for. Public transport, and community transport are no different in that they require a supply side subsidy to meet the needs of all.

    What we, as a sector, must not do is ask our people to trade value for values, we need to ensure we pay, as far as possible, proper wages. We are after all values driven organisations and our people are part of this and deserve to be recognised.

    As I mentioned before, we will do all we can to help organisations down the O licence route if that is what they wish to do, along with supporting any challenge to DfT that needs to be undertaken.

  • Jon Friday August 2017 10:03

    Thanks for your support Dai, which is much appreciated. It would be interesting to know how many D1 PCV drivers there are in the UK at present. I wouldn't be surprised if demand outstrips supply somewhat if we're forced to go down this route.

  • Vee Friday August 2017 13:55

    I agree with Jon that this one test case seems to be having a "knee jerk" reaction regarding an O licence. As a very rural CT we have 27 vehicles and 30 staff. We are now one of the largest employers in our area as a result of tendering and wining contracts, as already stated, CT's were encouraged to become self sustaining through trade. It now feels like a " kick in the stomach" after CT's have taken that route and kept within the rules of Sections 19 and 22. We cannot go back to relying on grants as they are few and far between especially for transport. However, if we are forced to take the O licence route then the cost implication is huge with having to have financial standing of £7,000 for the first vehicle then £3,900 for each additional vehicle. Driving staff would then have to be trained to PCV Cat D1 then Driver CPC at a cost of approximately £2,249 per driver we would have to train 22 drivers, would there be financial help for CT's to do this?It's like being between a rock and a hard place and seems that now CT's are being punished for being successful at wining and maintaining contracts.
    The DFT need to look at the impact that enforced O licences could have particularly on rural CT's like ours,the potential loss of so many jobs would have a huge impact on the local economy. Due to our fleet we also support 15 businesses in the local area who would also be affected leading to a ripple effect throughout the local area.Then ultimately the people we provide transport for, those most vulnerable in society, those who fall through the gaps are most isolated, will cruelly become isolated again. Surely as a society
    this is something we should be striving against. It has been well documented that those most isolated from society are more likely to have mental health issues.

  • Dai Powell Friday August 2017 14:59

    @Vee - Couldn't agree more - encouraged to be self sufficient then punished for it. And if CT goes, who will provide the service to the most vulnerable people in the community? Pure bonkers. The DfT say they are going to consult, we need to make sure that they hear the full facts and not just one side. The voice of the lonely, the voice of the isolated, who speaks for them?? We need to get local MP's involved and ensure story does not go away...... much too important.

  • Jon Walden Tuesday August 2017 12:49

    The one thing I'm not clear about is the CTA's position? The sector seems to be fairly united in challenging the 'not for profit' decision. Maybe I'm wrong but it seems to me that the CTA seems to have accepted the DfT ruling and is looking to lobby for an implementation timescale. These are two very different positions and we can only influence the powers that be if we take a unified and united stance? Yes the DfT have offered to consult with us but what is the basis of this consultation? Can the decision be challenged or have we reached a fait accompli and are negotiating how we move towards O licencing?

  • Mark Arnold, Halton CT Wednesday August 2017 11:04

    This issue is by no means over, consultation should mean exactly that, however it is often the case that Government consultations are little more than a steered information exercise with a predetermined conclusion.
    As a moderate sized CT with a fleet of 24 vehicles a garage which operates as a wholly owned commercial trading arm, 6 unused ‘O Licence permits’ in a drawer just in case, 18 staff and around 50 volunteers this still worries us!
    We stopped using our ‘O’ licence officially a couple of years ago when we moved away from Accessible Coach operation. As more and more commercial operators rolled out accessible fleet we felt we no longer wished to remain in that market as we did not want to ‘compete’ because that’s not what we are about. We fulfilled a need while it existed and when market forces led commercial operators to do the right thing we moved back to a more traditional role.
    We felt we had the perfect setup, a mix of around 10 paid drivers and 30 volunteers working side by side with no animosity even covering the same duties, and our overriding aim was always to offer reasonable paid employment to as many people as we possibly could.
    However, we do need to recognise that there is a cost difference to employing drivers with ‘vocational licences’ and in this part of the country that’s about £1.40 per hour.
    Even us, as a CT who is well places to potentially transition would find it difficult, 7 of our 10 paid drivers would need an investment of at least £2.5k, then a pay uplift by £1.40 per hour. We would also need to recruit and employ at least another 4 paid drivers.
    Then there are fleet issues such as at least the £100 more per PSV Test (as opposed to class 5), about 1/3 uplift in our insurance costs for operating commercially, and because we are still a charity there are all the extra levels of insurance and accounts we need so we could potentially become a very expensive commercial operation (because we would have to do everything properly).
    So where is the £50k I need to transition safely coming from and then the extra £90k a year I need for my wages bill? Will the Government be paying this extra burden for us?
    Let’s all start working together now to show Mr Fidler, who in his letter said;
    “By contrast, I expect that many (perhaps the overwhelming majority of) smaller and more traditional Section 19 and 22 permit holders are unlikely to have any compliance difficulties.”
    that this is not the case, it will fundamentally change CT no matter what the size or shape of your organisation.
    Let us hope that some Transport Select Committee in the not too distant future agrees and does something to prevent the potential decimation of the CT Sector…

  • Dai Powell Wednesday August 2017 13:35

    @Mark: I know some rural authorities are very worried about these proposed changes as they have build their response to bus cuts and lack of transport on the assumption that S19 operators can play a significant role..... This could cause them huge issues and this will effect some very small CT's.

    Whilst mid size CT's will survive it will have a huge impact, as you say financial, but also on the ability to maximise the impact you could create in your communities. And it is the impact in communities that DfT need to consider if consultation is going to be meaningful, or as you say just an exercise..

  • Dai Powell Wednesday August 2017 14:37

    @Jon: I feel CT's need, and will come together on this issue as it is fundamental to what we stand for, the provision of mobility to the most vulnerable. I know the CTA have started a petition which can be found here https://you.38degrees.org.uk/petitions/save-community-transport which we should all sign and distribute as wide as we can to get support. I suspect there will be an ongoing campaign. I know that some Local Authorities are getting together to do something as this affects them as well. We need to ensure we have a coordinated response to this threat.

  • Jon Walden Wednesday August 2017 15:51

    Thanks Dai. I look forward to receiving clarity of the CTA's position on this matter and echo everything that Mark has said. This affects the smaller urban operators just as much.

  • Colin c Wednesday August 2017 19:56

    If they are seeking a 'level playing field', shouldn't this also include ensuring taxi and other commercial transport firms employment terms and conditions for their drivers are legally and morally correct, in a similar vein to the likes of recent challenges to Uber and Deliveroo employees. If full employment costs (instead of using 'self employed drivers' had to be included when these private companies bid for contracts, our Community Transport sector might stand a chance of competing with them on price

  • Jenny Thursday August 2017 11:44

    I'd be very interested to know what the private operators think will happen if we do all have to go to PSV? I for one will have no choice but to obtain more work in order to pay for the PSV training. Some of this work will come from private operators such as taxi and private hire companies!

  • Dai Powell Wednesday August 2017 08:46

    @Colin, could not agree more, a level playing field made just that. @Jenny, this is the approach we will have to take if the government in the consultation does not see sense. So many CT operators I know and have known for the last 20 odd years will do what ever it takes to make CT work, and not for themselves but for the communities they serve, for the isolated and vulnerable people for whom CT is vital. If it means we have to be more aggressive in how we approach things then so be it....... The CT sector will deliver.

  • Alan Voda Friday September 2017 07:56

    Thank you for your blog Dai, I agree that if implemented, the recently published opinion of the DfT toward S.19 permits could be very detrimental to those CTs seeking to help those in need. I also agree that careful consideration should be given to the kind of society that we wish to live in.

    In some respects, the UK has done this, and voted to leave the EU, ostensibly to avoid restrictions such as the one covered by the derogation. Once the UK has left, it is entirely possible that this would render the basis on which the DfT has issued its recent view, obsolete.

    I feel that the guidance the DfT has issued is too narrow, and is discriminatory toward CT’s. It does not take into account the unique position CT holds both within the UK society, and its specific socio-economic and cultural characteristics that set it apart from activities by private, for-profit companies that European directive 1071/2009 seeks to administer.

    I also feel very strongly that the guidance issued by the DfT regarding the work carried out by CT’s under S.19/22 permits, does not fully encompass the raison d'être of Community Transport. Nor does it recognise in its guidance the perspective of Community Transport in relation to types of work such as SEN / Adult (elderly / Disabled) transport.

    I would also strongly challenge the idea that providing transport for SEN / adults (elderly/disabled) constitutes ‘commercial work’. In most cases this work is dealing with statutory transport for clients who would qualify for transport on other CT services. The private companies who claim to be disadvantaged in some way, have no interest in otherwise helping these groups as they do not represent a source of profit for them.

    To base the existence of community transport organisations on a technicality within a dictate, designed to deal with an entirely different sector is at best misleading. At worst, it is a bureaucratic mistake that could potentially destroy an entire charitable sector supporting UK communities and leave 100,000’s of vulnerable people in need.
    1. In Europe (including UK) an operator licence is required if minibus passenger transport is carried out for hire or reward. However, in the UK we have a DEROGATION from this requirement (Our S.19 permits) because we are not-for-profit organisations only carrying out transport for not-for-profit, non-incidental to profit, non-commercial purposes. Therefore we are exempted from needing to comply with PCV operator requirements. This should be where any argument ends.
    The DfT seem to have ignored this derogation altogether.
    2. EU directive 1071/2009 appears to have been applied by the DfT as it relates to ‘Commercial’ tenders issued in Europe. This directive should not apply due to our S.19 derogation as outlined in 1 above.
    ‘Commercial ’ is defined as:.
    1.Concerned with or engaged in commerce
    S.19 Community Transport operators can only provide not-for-profit transport services to not for profit organisations/individuals.
    b2. Making or intended to make a profit.
    S.19 Community Transport operators do not intend to make a profit
    2.1. Having profit rather than artistic or other value as a primary aim.
    Community Transport has: 'other value as a primary aim'.

    Just because a commercial operator might now be carrying out previously operated S.19 route, it does not therefore make it ‘Commercial’.

    3. S.19 operators are permitted by law to apply for tenders issued by councils.

    5 . In summary; the DfT’s interpretation of the regulations and subsequent statement, suggests that S.19 operators have no right to tender for essential transport issued by other s.19 operators (councils).; This conclusion is illogical.

    The impact for the CT sector of having to suddenly convert to PSV operator licences would be a major blow for all, and I don’t think your suggestion that CT’s should do this is practical for the majority of smaller CT’s who need to operate on the most efficient possible model .

    The effects of having to comply with the DfT proposal would be:
    1. Most importantly; those that we in the CT sector seek to help; the most marginalised and vulnerable people in society. The DfT’s decision could be devastating to our members.
    2. CTs themselves may well be severely financially affected and will be at serious risk of vital community bonds being hacked away, diminishing their ability to serve their local community. Communities everywhere could be very badly affected with the quality of life of hundreds of thousands of vulnerable people diminished.
    3. If the CT sector is set adrift by the government / DfT, at the behest of a lobby group of few private operators, social isolation amongst the groups we seek to serve will only continue to rise. In this respect, it could set our country back decades.
    4. Can the administrative apparatus associated with the PSV operator regime accommodate a huge influx of new operators? Where will the drivers come from?
    5. The private, for-profit sector, will also be affected. If there are 7800 S.19 operations in the UK and 10% are forced to operate under PCV rules, then that means 780 new PCV operators in the UK. Private operators then won’t be able to complain about them tendering if this proposal comes to fruition. They will also not be able to complain when these new operators begin looking for other work in the for-profit sector.
    S.19 operators are used to working in very specific areas of operation as prescribed by their S.19 permit regulations. If ‘Allen’s Law’ means they are freed from these constraints by the PSV operator licence which allows them to work at anything they wish, I can envisage they will seek to exploit this new found freedom.

    The talk from those at the heart of complaints against S.19 operators claim to call for a ‘level playing field’. I don’t believe there is such a thing in this case.
    Two worlds have collided; the not-for-profit and for-profit sectors. Ironically, the arena in which they have been thrown face to face is within the S.19 regime of not-for-profit transport.
    Certain operators in the private sector want S.19 operators out of ‘their’ market so they can improve their profitability by restricting the community sector. If the private sector truly wants a level playing field then should they be forced to start providing transport for their local community? Not as an occasional thing, but as an everyday priority. Will they be asked to do this? Of course not.

    Beyond their own benefit the for-profit sector are uninterested in CT, what we do, how or why we do it. They have convinced themselves they are right, and have lobbied hard to bring us to this point.

    The CT sector is NOT the private PSV operator sector and comparisons made between the two need to stop. It is important to oppose outright the proposals outlined in the Fidler letter and not force CT’s to become PSV operators in order to remain viable, as you and the CTA seem to be suggesting.


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