Process for making a franchising framework
Overview of process to make franchising frameworks – inserted section 13C
186.Section 13C pulls together the key steps that a local transport authority must complete before it is able to make a franchising framework for its area. It must:
prepare a proposed framework;
prepare an assessment of the proposed framework;
obtain a report from an independent auditor on the financial implications of the proposed framework;
consult on the proposed framework;
if necessary, modify the proposed framework and, where the modifications materially affect an aspect of the assessment, go through the process of assessment, audit and consultation again; and
obtain approval to make the proposed framework from a panel convened by the traffic commissioner for that purpose.
187.Paragraph (g) of subsection (1) confirms that a local transport authority must also comply with any additional procedural requirements that may be imposed by the Scottish Ministers under section 13T.
188.Once that approval is obtained, the local transport authority may make the framework and give the requisite notices under section 13K.
Proposed franchising framework – section inserted 13D
189.This section sets out the required content of a proposed franchising framework. Once prepared by a local transport authority, the proposed framework forms the basis of what the assessment that must be prepared under section 13E will consider and the subsequent independent audit and consultation.
190.It is possible for the franchising framework to specify certain local services (or descriptions of local services) within the area of the framework that are not to be subject to the franchising arrangements. Where it does so, section 13B(5) provides that the conditions for the exemption act as the prescribed particulars for registration under section 6 of the 1985 Act. This gives flexibility to cater for the various circumstances that may arise locally. For example, operators who are primarily providing longer distance services may be exempted so that they can continue to use stopping places within the area of a franchise agreement made under the framework.
191.Also of note is that subsection (4) requires that the franchising framework must provide for the revocation or variation of any existing partnership plan or any scheme made under such a partnership plan to the extent that there is an overlap between the framework and the scheme. This reflects that a partnership scheme under Chapter 1 of the 2001 Act (inserted by section 35 of the Act) cannot operate in respect of the same local services at the same time as a franchising framework (due to the exclusivity elements of the franchising model). It is possible, however, for a partnership plan and a franchising framework to co-exist in so far as the plan may cover a broad geographical area, within which franchising may operate in some areas. The ability to vary the partnership plan in subsection (4)(b) is to enable appropriate dovetailing of the two models.
192.The making of a franchising framework will have the effect of varying or revoking the existing partnership plan or scheme without any requirement to follow the processes which would otherwise apply in order to make such a variation or revocation (such as obtaining the consent of a proportion of operators providing services in the area). However, the processes for preparing, assessing and making a franchising framework involve extensive consultation and independent approval which provides procedural safeguards.
Assessment of proposed franchising framework – inserted section 13E
193.Section 13E requires local transport authorities to prepare a detailed assessment of the proposed franchising framework. As noted in the introduction to this chapter, this assessment is adopted in place of the tests that exist for Quality Contract schemes in section 13(1) of the 2001 Act.
194.The assessment provides a basis for an independent audit of the financial implications of the framework and the overall approval of the framework (after consultation) by a panel convened by the traffic commissioner. A report on the assessment is also to be made available as part of the consultation on the proposed framework that the local transport authority is required to carry out.
195.In preparing the assessment, the local transport authority must have regard to the guidance issued by the Scottish Ministers in relation to such assessments (subsection (5)). It is anticipated that the guidance will be similar in many respects to existing best practice guidance around producing business cases in the public sector.
196.The local transport authority must also engage with operators in their area to obtain their views on the proposal. While this is short of formal consultation, it provides an opportunity to engage at an early stage in the process and test the viability of the proposed framework.
197.There are several mandatory elements to the assessment. To deal with each in turn:
The local transport authority must believe that, at least to some extent, the proposed framework will contribute to the implementation of their relevant general policies. The exact way and extent to which it contributes to these policies then has to be set out in the assessment;
The local transport authority will have to consider the other available options and set out in the assessment why they consider franchising to be suitable;
There must be consideration of the impact of the framework on areas adjacent to the proposed framework. This sits with the duty of the local transport authority under section 47 of the 2001 Act (as amended by paragraph 3(4) of the schedule) to have regard to the desirability of making the framework jointly with the local transport authority of another area;
The assessment requires the local transport authority to set out their proposals for operating the framework and to seek to identify if there are concerns around finding operators for all of the local services to be provided under the framework. This practical element is of importance to the determination of whether, in practice, the framework is likely to be viable;
The financial implications have to be considered and set out. This key element is the primary basis of the independent audit and it is expected that the guidance from the Scottish Ministers will have a particular emphasis on this aspect;
The final mandatory element of the assessment is the local transport authority’s proposal in relation to how they will review the effectiveness of the framework. As each framework will be tailored to local circumstances, it is expected that the local transport authority will need to identify relevant data in order to enable them to benchmark progress.
198.Additionally, subsection (3) confirms that a local transport authority may include such other elements in their assessment as they think fit. For example, this could relate to particular local circumstances which have a bearing on why the local transport authority consider it desirable to pursue a franchising framework.
Audit of proposed franchising framework – inserted section 13F
199.Section 13F sets out the requirements for an independent audit of the financial implications in the assessment. A local transport authority must obtain a report from such an auditor before they are able to proceed with the consultation on the proposed framework.
200.To be an auditor for these purposes, a person (which may be an individual or a firm) must be eligible for appointment as a statutory auditor under section 1211 of the Companies Act 2006. This includes, for example, appropriately qualified members of the Institute of Chartered Accountants of Scotland.
Consultation on proposed framework and any modifications – inserted sections 13G and 13H
201.Section 13G sets out the process for consultation in relation to the proposed franchising framework. This involves giving notice of the intention to make a franchising framework and then conducting a consultation with the persons listed in subsection (4).
202.Section 13H anticipates that the consultation may lead to the local transport authority making adjustments to the proposed framework. Subsections (3) and (4) provide that, where necessary, the local transport authority should repeat the assessment, audit and consultation steps of the process in respect of the framework.
Approval – inserted sections 13I and 13J
203.Sections 13I and 13J provide for a mechanism for a local transport authority to obtain approval for them to make their proposed franchising framework.
204.To do this, they must request that the traffic commissioner convene a panel for the purpose of approving the making of the proposed framework and provide the commissioner with a range of relevant information for passing to the panel.
205.On receipt of such a request, the traffic commissioner must give notice in such manner as the commissioner considers appropriate (for example, perhaps by publishing it in a local paper or putting it on its website) that the local transport authority are seeking approval and inform interested persons that they may make representation to the commissioner (who will them pass them on to the panel (see section 13J(2)).
206.Under section 13J, the traffic commissioner must appoint a panel to consider the application. The criteria and process for appointment to a panel will be set out in regulations made under section 13S.
207.It is open to the panel to approve the framework subject to the local transport authority making modifications to the approved framework before it is made (i.e. giving a conditional approval).
Making of franchising framework – inserted section 13K
208.Once the local transport authority have the approval of the panel, they may proceed with making the framework. They have 6 months from the date of approval to do so (and thereafter a year to put in place the necessary franchise agreements to implement it – see section 13Q). It is open to the local transport authority to postpone the coming into force of the framework under section 13M.
209.Within 14 days of the framework being made, the local transport authority must publish notice of having made the framework and send a copy of the framework as made to the traffic commissioner. The notice must set out where the framework can be viewed (for example, it may be in local libraries or online).
210.Subsection (5) sets out that a franchising framework comes into operation by reference to the local services contained in the framework and that there are two possibilities for commencement. Either, the framework comes into force at a date specified in the framework or (if no date is specified in the framework) it comes into operation at such date as is provided for in a franchise agreement which has been entered into under the framework in respect of the local service in question.
