Last reviewed 8 November 2013
Tim Ridyard gives an overview of the Senior Traffic Commissioner’s newly revised Statutory Guidance and Directions.
Introduction and background
The 3 October 2013 saw the publication of the anticipated revised Statutory Guidance and Statutory Directions (SGSD) documents. They were first issued in December 2011 to coincide with the coming into force of EC Regulation No. 1071/2009 — the “O-Licence Regulation”, as it is sometimes termed.
The SGSD derive authority from the Local Transport Act 2008 and under s.4C the Senior Traffic Commissioner is permitted to give Traffic Commissioners guidance or general directions as to the exercise of their functions. This can include guidance as to:
the meaning and operation of any enactment or instrument relevant to the function of the Traffic Commissioners
the circumstances and manner in which a Traffic Commissioner should exercise any power to impose any sanction or penalty
matters which a Traffic Commissioner should or should not take into account.
The Senior Traffic Commissioner can include directions to Traffic Commissioners on the:
circumstances and manner in which officers or servants of the Traffic Commissioner may exercise any function for or on behalf of the Traffic Commissioner and any conditions that such officers or servants must meet before they do so
information which a Traffic Commissioner must ask to be supplied with in connection with the exercise of any particular function, and the steps which must be taken to verify the accuracy of any information so supplied
procedure to be adopted in Inquiries under s.54 of the Local Transport Act 2008, s.35 of the Goods Vehicles (Licensing of Operators) Act 1995 or any other enactment
manner in which a Traffic Commissioner must or may publish his or her decisions
circumstances in which a Traffic Commissioner must consult some, or all, of the other Traffic Commissioners before exercising any particular function.
The SGSD are to be regarded as documents which will vary from time to time, as the law changes, whether by statute or case law and where other circumstances dictate.
The SGSD have not changed in the sense that the various categories of documents first published in December 2011 remain and much of the original content remains unaltered — they have all been revised to some extent with the exception of Document 6, which relates to vocational driver conduct. That document is to be reviewed and revised separately but its content is nonetheless outlined below.
There is an additional document that relates to limousines and novelty vehicles. This has been an area of concern for Traffic Commissioners for some time.
What do these documents set out to offer?
These documents serve a number of purposes, they:
contain guidance and directions to Traffic Commissioners
provide guidance and directions to staff in the Office of the Traffic Commissioner for the carrying out of case work
provide advice in detail as to how the operating licensing system works (on both the goods and passenger side) and to that extent they are of invaluable assistance to all those who work in the road transport sector, whether operators, transport managers, solicitors, consultants or others with an interest in this sector
provide a highly useful reference for those whose work touches on operating licensing issues.
Those making applications for new or varied licences and who wish to ensure their applications are processed swiftly and smoothly would do well to consult the SGSD.
The areas covered by the SGSD guidance and directions include:
good repute and fitness
operating centres, stable establishments and addresses for service
vocational driver conduct
delegation of authority
the principles of decision making and the concept of proportionality
written reasons, decisions and publications
limousines and novelty vehicles (new area).
Most of the above may never be needed but other documents may be a source of constant reference, for instance, the material on good repute and fitness, transport managers and, of course, the document on finance.
Financial standing is a particularly troublesome area — numerous applications flounder due to misunderstanding of the financial standing requirements, just as operators frequently find themselves in difficulties with the Traffic Commissioner during the lifetime of a licence because of an ignorance of how the rules work. Operators could do worse than read Statutory Document Number 2: Finance to avoid problems of this nature.
While not exactly “bedtime reading”, the documentation is a mine of invaluable information and reference material. The material is commended to those who operate fleets, whether on the goods or passenger side, as a practical reference source.
Good Repute and Fitness — SDSG 1
This part deals with principles of repute and fitness, convictions and infringements, criminal charges and Most Serious Infringements (MSIs). As with the other documents, relevant legislative reference material is also provided.
Main changes in the revised Good Repute document relate to the treatment of criminal offences, the issue of good repute and further case law in this field.
This document now further emphasises the seriousness attached to the loan of vehicle discs to the extent that: “it is incumbent on an Operator who discloses a disc from another Operator to provide a paper trail to show that the use is legitimate; simply relying on an assertion is not sufficient.”
This is part of the overall topic of “fronting” which is said to occur when:
“appearances suggest a vehicle, (or fleet), is being operated by a whole different Operator’s Licence when the reality is that it is being operated by an entity (i.e. an individual, partnership or company) which does not hold an Operator’s Licence and the manner in which the vehicle is operated requires, if the operation is to be lawful, that the real Operator holds an Operator’s Licence in which circumstances, the Traffic Commissioner is entitled to take a serious view of such conduct.”
(2011/357 Utopia Traction Ltd and 2012/071 Silver Tree Transport Ltd.)
This document sets out the circumstances in which Traffic Commissioners can conclude there has been a loss of repute and fitness, for a variety of different reasons. This includes dishonest acts and illegal operations, as well as conduct concerning liabilities in previous businesses which can be said to amount to unacceptable business practice.
The document has been updated to include amendments on rehabilitation periods imposed by the Legal Aid, Sentencing and Punishment of Offenders Act 2012.
Of interest is a provision concerning Driver’s Certificate of Professional Competence (DCPC). The commercial press has for some time quoted the views of Traffic Commissioners concerning their intended approach to non-compliance in this area and in this document the approach is starkly set out.
“Where a driver is found to be driving and does not comply with the regulations then the Traffic Commissioner would require an explanation from the Operator as well as the driver and, as appropriate, the Transport Manager about the steps taken to ensure that drivers of authorised vehicles have the necessary qualification [...] If not it can result in regulatory action [...] against the Operator.”
The message is clear. Non-compliance in this area may well lead to Traffic Commissioner intervention.
The document also deals with the issue of transport manager declarations which were requested in the early autumn of 2011 prior to the introduction of EC Regulation 1071/2009 — it will be recalled that transport managers had to provide details for a questionnaire to assist in the creation of a National Register. Abuse of the licensing system occurred during this process and this is addressed in stark terms in the document as follows.
“ In October 2011 transport managers were requested to complete and return a questionnaire in order to populate the national register. Some operators used this opportunity to change the transport manager details without making an application as they were required to do. The questionnaire specifically required the individual transport manager to only list those licences for which they had been authorised. […] If there has been a false declaration this will need to be referred to the Traffic Commissioner to consider whether or not to take regulatory action in respect of the named CPC holder and/or the operator. A similar approach should be taken where the self-service facility has been used and there is no subsequent application lodged.”
While this document has made some revisions to the original, a large part of the original remains and is a very helpful research tool — particularly in relation to the labyrinthine minefield of “notifiable convictions”.
This document includes guidelines on passenger vehicles travelling to and from sporting events in England and Wales including issues surrounding the carriage of alcohol.
Finance — SDSG 2
Finance is traditionally a problematic area for operators and many misunderstand and misinterpret their obligations. More often than not operators are bewildered by the fact that they must have ready access to particular sums of money, notwithstanding substantial investment in maintenance – a paradox of operator licensing is that large capital investment can take place to create a highly modern fleet, which reduces available capital to satisfy the financial standing criteria. Nevertheless operators still have to demonstrate ready access to the necessary funds for the size of the fleet in question.
Amended wording in this document reminds operators of the continuing requirement for there to be sufficient finance throughout the duration of an operator’s licence.
Also operators are reminded that there must not only be monies for maintenance purposes but there has to be other money available to ensure the remaining aspects of the “establishment” and “proper administration of the business”.
As before, the document confirms that operators are not required to have the full amount available “365 days per year, throughout every year that the licence is in existence” but rather the key test is whether the applicant operator has “available capital and reserves of an amount equal to the sums specified”. Operators are reminded that “available” is defined “capable of being used, at one’s disposal, within one’s reach, obtainable or easy to get”.
This document reminds operators that every January there is a revaluation of the amount required for financial standing purposes (for standard licences) for non-euro countries. The rate, which comes into force on 1 January each year, is the value of the pound against the euro for the previous October.
Annual audited accounts
Of note is the provision that the latest annual accounts can be submitted as an alternative to bank statements where the entity is a limited company or PLC with a turnover of, now, £6.6 million. This was previously £5.6 million, which remains for accounting periods prior to the 1 October 2012. This change emanates from the Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012.
SGSD: Finance reminds operators that where standard licence holders cannot demonstrate financial standing, Traffic Commissioners can provide a period of “grace” time of a maximum of six months to demonstrate that the requirement can be met on a permanent basis.
The value of this document remains in providing detailed information as to how the Office of the Traffic Commissioner staff process applications and how different types of financial resource (bank statements, overdrafts, credit cards, annual accounts, etc) are treated.
When making applications for O-Licences or seeking variations to existing licences, operators can benefit enormously by using this SGSD for reference. The Office of the Traffic Commissioner staff spend a considerable amount of their working lives engaged in financial standing related problems, many of which are avoidable and which cause significant delays and unnecessary public inquiry hearings.
This set of SGSGs is of a particular practical importance to operators in this context.
Transport Managers — SGSD 3
Statutory Document No 3 is the third in the series of the “holy trinity” of repute/finance/transport managers upon which standard national and international licences are built.
The revised guidance confirms how transport managers have to be more than “just a transport manager in name”.
It adds that persons who control an entity which operates heavy goods or public service vehicles must have “sufficient knowledge to exercise proper oversight”. The guidance sets out that operators must supervise and monitor the actions of the transport manager and cites examples of how this can be achieved, eg by checking maintenance inspections, annual test pass rates, number of prohibitions issued, OCRSs, and the arrangements for compliance with drivers’ hours rules and tachograph regulations.
The document confirms that a finding of serious misconduct can be reached where operators fail to appoint replacement transport managers after periods of grace or where there has been a failure to communicate with Traffic Commissioners about transport manager issues.
The revised SGSD 3: Transport Manager includes the table setting out the number of vehicles authorised and proposed hours of work for transport managers each week which was included in the original SGSDs but remains unfamiliar to many operators.
The table sets out starting points for vehicle/hours ratios. It is deployed as follows.
When an application is made for the appointment of a transport manager he or she must fill out the necessary form (TM1).
On that form hours of working have to be set out and if the proposed hours of working meet the ratios set out below then these are regarded as acceptable without further reference by the case worker to a higher level.
If the proposed work hours do not meet the ratios then it does not necessarily mean that the transport manager will not be able to be appointed, eg he or she may have a team of well qualified and able transport staff contributing significant numbers of hours to the transport management.
That individual may be able to be the nominated transport manager while working fewer hours than set out in the table, because of the transport support network within the business.
Proposed hours per week
2 or less
3 to 5
6 to 10
11 to 14
15 to 29
30 and above
Full time (additional assistance required)
Additional hours may be required for trailers.
This document also includes a reminder that road transport working time legislation limits the average working week to 48 hours in relation to the Road Transport (Working Time) Regulations 2005, as amended. There is also a reminder that non-EU regulated mobile workers who are subject to the horizontal working time legislation require adequate rest each week.
The reality of the situation is that when applications are made by transport managers who may also be owners/directors of the business, Traffic Commissioners will have regard to both transport and non-transport manager duties in assessing whether they can be appointed as nominated transport manager.
For instance, in a recent case in which the writer acted, two linked businesses operating from the same premises with the same common nominated transport manager and director were required to provide the Traffic Commissioner with a written contractual confirmation of the minimum hours to be worked in the capacity of director in each respected company as well as the hours to be devoted in the capacity of nominated transport managers. This may appear very invasive but is indicative of the approach currently being taken in this area.
This document is a useful reference work and reminds transport managers of the wide ambit of their responsibilities.
Operating Centres, Stable Establishments and Addresses for Service — SGSD 4
This SGSD clarifies the procedure in relation to Operating Centres, particularly the process concerning applications relating to goods vehicle operating centres and the issue of representations made by local “representors” when they assert that they will be adversely affected by the use or increased use of Operating Centres in their area. This can be a real issue for operators.
The guidance now affirms that where objections are made the matters complained of must “amount to a real interference with the convenience of representors and the matters complained of must be related to the effect which the use of the land which an Operating Centre has or would be likely to have on the environment of that vicinity”.
It is frustrating for operators that a sole representor can create significant delay in the application process, with potentially huge commercial and financial ramifications. The normal process is to try to resolve the issues prior to any public inquiry, often by the agreement of a condition or an undertaking.
The document points out that, while there may be correspondence between the parties prior to any hearing, there is no expectation of commencing a process of negotiations around possible conditions once a public inquiry has been called.
This document could justify a detailed feature article in its own right — the advice is that applicants of a new licence or variation should read this document carefully, not least the “stable establishment” and “address it for service” sections which deal with the importance of the address to which documentation from the Traffic Commissioner is sent. Operators should ensure that at all times the address for correspondence is accurate to ensure any communication from the Office of the Traffic Commissioner is received. The document confirms that a PO Box address is not adequate as a suitable address for an O-licensed business. Countless issues arise, leading ultimately to licence revocations in some cases, by a failure to address this issue.
Operators should generally work on the basis that any significant business event is likely to involve a notification to the Office of the Traffic Commissioner.
Legal Entities — SGSD 5
This section deals with the various types of trading entity, from sole trader to PLCs, stressing the fundamental difference. The failure to understand that a sole tradership/partnership is different to a limited company (and hence the O-Licence must vest in the correct legal entity) is a source of continuing problems. It is often the case that the former (eg a sole tradership) continues to hold an O-Licence while trading as the latter (a limited company), rendering the transport operations unlicensed and hence unlawful, albeit often unwittingly.
The document provides additional assistances as to the nature of a company:
“which in many ways can be likened to a human body. It has a brain and nerve centre which controls what it does. It also has hands, which holds the tools and acts in accordance with the Directions from the Centre. Some of the people […] are mere servants [...] Others are Directors and Managers who represent the directing mind and will of the company”.
This document also deals with the difficult area of administrations, bankruptcy, insolvency and voluntary arrangements. Readers of the commercial press will be acutely aware of the strong feelings that are aroused in relation to failing businesses that reincarnate themselves while at the same time their controlling minds distance themselves from debt, often to HMRC and other significant creditors. This has been an area of real concern to Traffic Commissioners for some time. This document, read in conjunction with other documents such as that on repute, deals with this area, including the expectation of notification of relevant financial events to the Traffic Commissioner, on applications and pursuant to the requirements of existing licences.
The document also reminds operators of with the scope of Regulation 31 Applications: a provision whereby authorisation is sought from the Traffic Commissioner regarding the licence on a short term basis where there has been a change, eg a death, bankruptcy, etc as provided for under regulation 31 of the Goods Vehicles (Licensing of Operators) Regulations 1995. (This enables a licence to continue when otherwise it could not otherwise do so in law and is a practical solution to such issues facing a business. Many businesses find themselves operating in inadvertent illegality in ignorance of these provisions.)
Vocational Driver Conduct — SGSD 6
SGSD 6 explains the process by which Traffic Commissioners deal with law concerning vocational driver conduct and the explanation of how drivers are called to hearings before Traffic Commissioners. As mentioned in the introduction above, the Traffic Commissioners have not yet revised this document, but are expected do so in 2014.
This document is not exhaustive but, helpfully, sets out in detail the sort of sanctions which can be imposed on vocational drivers by Traffic Commissioners for specific offences, eg in the case of mobile phone misuse the suggested potential suspension of the vocational entitlement is for 14 days (or 21 days if driving commercial vehicles) — the guidance suggests that in such cases a driver conduct hearing before the Traffic Commissioner will be ordered.
There is further guidance for road traffic offences, drivers’ hours matters and falsification of tachograph charts. By way of example, the use of an interference device on a tachograph could result in revocation of a vocational licence and disqualification of 12 months; deliberate charts/records falsification could result in 1 month per offence for up to 3 false records; while for up to 5 offences there is revocation for up to 6 months. These penalties are not set in stone and each case will turn on its own facts.
Operators and transport managers would be well advised to consider circulating or summarising the sections of this document to driving staff to reinforce the ramifications of offences and the threat to their own vocational driving entitlements.
Impounding — SDSG 7
The option for unlicensed vehicles to be impounded by VOSA extends not only to goods vehicles but also to passenger vehicles, of course. While the majority of operators are unlikely to fall foul of the impounding provisions, the document now contains detailed guidance to the law in this area. Of particular note is what, in law, amounts to owners of vehicles knowingly permitting or facilitating the unlawful use of vehicles.
The document confirms how impounding occurs where the vehicles are unlicensed and applications for their return can only be made in restricted circumstances. These would include the fact that use of the vehicle did not require a licence, that there was in fact a valid licence or that the owner did know it was being used without a licence.
Delegation of Authority — SDSG 8
This part of the guidance relates to how the Office of the Traffic Commissioner works. It describes:
how decision making is delegated or has to be referred upwards
the arrangements for multiple licence holders (where operators have an O-Licence in more than one traffic area and hence there is a “lead” traffic area and Traffic Commissioner for such operators)
expectations and conduct of staff.
While this document is not an obvious priority for operators it is nevertheless worth referring to, perhaps when licensing applications or procedures appear to be stalling and an operator may wish to make representations about this. It is useful to understand how the administration process is supposed to operate.
Case Management — SDSG 9
SDSG 9: Case Management contains general information on case management and includes representations relating to the granting of interim licences, case listing and periods of grace, as well as late fee payment problems. Most issues arising during the course of a case are likely to be found here.
The case management document now includes a section on the position of transport consultants who are regarded as different from barristers or solicitors, whose conduct is regulated by professional bodies. Transport consultants need leave to appear at public inquiries, as has always been the case and the document stresses that there must be written confirmation that transport consultants are authorised to act. The standards of advocacy at hearings conducted by transport consultants has been of some concern for some time — in a recent case the written decision of a Traffic Commissioner set out how, had the transport consultant been a solicitor or a barrister, his conduct during the hearing was so poor that there may well have been grounds to refer him to the Law Society or Bar Council for professional misconduct.
There is a short section about preliminary hearings — these are less well known and are hearings which are not public inquiries and hence are not published. At such a hearing the Traffic Commissioner determines or not whether the matter should proceed to a full public inquiry hearing. It is used as a type of filtering procedure and means operators appear before Traffic Commissioners for less serious shortcomings where no formal sanction may be necessary, but potentially could be.
Service of Documents
This document covers a multitude of various aspects of case management. One area of interest is the inclusion of a section about service of documentation prior to public inquiry hearings and in particular late service of documentation which is an area of real concern for Traffic Commissioners.
The document refers how to properly prepare cases to avoid a potential breach of professional standards by legal practitioners. Documentation should be presented in the correct format, eg paginated, indexed, etc.
While the above is a laudable aspiration, in practice there are problems here because there is often very little lead time between the calling of a public inquiry and its hearing date, within which time a significant amount of work may have to be carried out and documentation marshalled. Further, the requirement that there is a particular burden on legal representatives to comply with early service of documents is curious in the sense that an unrepresented operator will often produce documentation on the day of the hearing and they are not prevented from deploying such previously unserved material as there is no requirement set out in any regulations to do so within any fixed time limits such as those in civil or criminal proceedings.
The Principles of Decision Making and Concept of Proportionality — SDSG 10
In SDSG 10 the Traffic Commissioners have set out how they should interpret the law in relation to:
the making of decisions
the holding of public inquiries
fairness of the proceedings.
The decision-making process is set out here, notably in the area of loss of good repute (“is the conduct such that the Operator ought to be put out of business?”) and how there has to be a fair balance between the rights of the operator and the interests of the licensing regime.
This document sets out how the Traffic Commissioners should conduct the entire decision-making process, eg at public inquiry. In the annexes there is categorisation of severe, serious, moderate and low types of conduct, setting out a range of sanctions from revocation (to include disqualification) all the way down the scale to formal warnings.
The annexes include very helpful tables setting out the features of adverse conduct but also including balancing features. These are portrayed in similar format to the Magistrates Sentencing Guidelines, deployed by Justices in sentencing cases in that court. These constitute a useful guide to preparing for public inquiry hearings and they are useful checklists of aggravating and mitigating features.
Written Reasons, Decisions and Publication — SDSG 11
This section simply deals with the way in which the Traffic Commissioners written decisions have to be formulated, set out and published. It sets out how the content, case law and details of the facts considered in the decision making process should be formulated.
Appeals — SDSG 12
This deals with the right of licence holders, transport managers, applicants or statutory objectors to appeal against a Traffic Commissioner’s decision to the Administrative Appeals Chamber of the Upper Tribunal, formerly the Transport Tribunal. Vocational driver licence appeals do not go to that jurisdiction but instead are still made to the driver’s local Magistrates’ Court (or the Sheriff’s Court in Scotland).
The document sets out the limited provisions whereby Traffic Commissioners can themselves conduct reviews of cases in limited circumstances.
There is also set out the procedure by which applicants can seek a stay in the execution of any decision made at a public inquiry pending the hearing of the appeal. Given the limited number of cases that go to appeal, this document may be of less immediate practical application to most operators.
Interestingly, the document sets out the approach to be adopted by the Magistrates’ or Sheriff’s Court in the case of vocational driving licensing appeals and the significance of a driver’s personal circumstances that can be taken into account. It is affirmed that a driver’s personal circumstances can be regarded as mitigating the adverse conduct (if it is illness, emergency, momentary lapse of carelessness) but other personal circumstances (eg loss of work, impact of hardship through loss of vocational licence, etc) of the type often put forward in are not relevant to the determination of a driver’s fitness to retain a vocational licence. This is because the question of fitness to drive is being determined, not a criminal sanction against the driver.
Limousines and Novelty Vehicles — SDSG 13
This is the new SGSD 13 which sets out provisions for dealing with “the significant increase in the amount of limousines and novelty vehicles on Great Britain’s roads”.
This is less important to the freight sector, but, briefly, the document sets out the licence requirements in a passenger licensing regime which is arguably more complex than the goods sector in terms of when O-licences are required or not. There have been significant problems in recent years bought about by the hiring out of limousines and stretch-vehicles without a driver which may involve the hire of the vehicle from one source and procuring a driver from another source. This is known as “dry hire” and this has been the subject of a significant number of VOSA prosecutions and debate about its legality, such arrangements often lacking transparency.
This document specifically looks at the area of “dry hire” and when an O-Licence may be required.
This article has tried to draw attention to some important aspects of the SDSGs and some of the changes introduced. The documentation is lengthy and detailed and no brief summary can ever aspire to cover all points. It does not seek to pick out every change in these documents — a lot of detail has been expanded or amplified rather than new material added in. However, the SDGSs remain an invaluable reference work for an understanding of the operator’s licensing regime and a practical aid for those whose work touches on the licensing process, in all its facets.