If a new service provider starts to operate a service causing the existing service provider who operated that service on behalf of the client to cease to do so, is there a service provision change?
CT operated a park and ride service in Hull under a contract with the Council. The Council subsidised the service and had control over the timetable, the age and type of buses, the branding and logo used. Public sector transport legislation provides that a subsidised service cannot compete with one that is not subsidised. If a new provider wishes to operate a non subsidised, commercial, service, and it serves the requisite 56 days’ notice to do so, then the existing subsidised service must cease to operate. Stagecoach served such notice and commenced operation of a commercial park and ride service servicing the same route as that operated by CT. The Council therefore had no choice but to bring its contract with CT to an end, although it expressed concern about Stagecoach’s proposed service. Unlike CT, Stagecoach had no contract with the Council, it received no subsidy and offered a reduced service in off-peak hours. Stagecoach did pay the Council to use the car park from where he service operated and also liaised generally with the Council about the service. It declined to take on CT’s drivers on the grounds that there was no transfer.
The ET held that the activity was the running of the park and ride service from the car park to the city centre. Prior to the 29 September 2014 this service had been operated by CT on behalf of the Council and the Council was the client within Reg 3(1)(b)(ii). Stagecoach after that undertook the same activities. However, when Stagecoach took over the service it did not do so on behalf of the client and therefore the requirements for a service provision change were not met. The Council was not the client, it was merely an interested bystander.
CT appealed on the basis that the ET had focussed too much on the absence of subsidy and overlooked the fact the Council still retained some degree of control. For example, it could withdraw the licence from Stagecoach and it had engaged in discussions with Stagecoach prior to the commencement of the service by Stagecoach concerning the quality and age of buses, frequency of service, standards and qualifications of drivers. There was also publicity which gave the impression that service was being operated on behalf of the Council. In essence it was argued that in reality the service was being operated, for all practical purposes, on behalf of the Council.
The EAT held:
- SPC issues should be approached in a commonsense and pragmatic way (see Metropolitan Resources and Hunter).
- The ‘client’ must remain the same throughout.
- Client means means the organisation that is in a position to carry out the services either itself or by commissioning them from others.
- The ET had not erred in law by being unduly legalistic. It had not required the client to be in a contractual relationship with Stagecoach, it did not hold that there had to be a subsidy from the Council. The ET took into account that Stagecoach had disregarded he Council’s reservations about the frequency of the service