Earlier this year, the Department for Transport (DfT) published the Government response to a consultation on the use of section 19 and section 22 permits for road passenger transport in Great Britain.

The then Parliamentary Under Secretary of State for Transport, Nusrat Ghani, said: “I understand the importance of resolving the issues on the use of section 19 and section 22 permits in Great Britain. Today, I am providing greater clarity to the community transport sector so that operators can continue to play a valuable role in improving the lives of the passengers that they serve.”

The legality of the domestic permit regime under which most “not-for-profit” community transport operators are permitted to run services had been challenged, the DfT noted.

This move to the courts has come from some commercial operators who raised objections that organisations operating under the permit system are competing unfairly because they are not subject to the same regulatory requirements as commercial operators and so benefit from the lower costs of the “not-for profit” system.

The challenge has focused on whether domestic legislation is in line with EU Regulation 1071/2009 on operator licensing.

DfT has issued guidance on this point, available at GOV.UK, but Ms Ghani said that it would not rule on the “not-for-profit” exemption for local authority contracts because of the pending legal action.

This took the form of a request for a Judicial Review launched by the Bus and Coach Association (BCA).

A spokesman for the Association, Martin Allen, said that its members felt they faced unfair competition from social enterprises that were able to operate at lower costs than commercial operators because the DfT had misinterpreted sections 19 and 22 of the Permit Regulations 2009.

The argument centres on the exemption granted by the DfT provided permit holders operate “exclusively for non-commercial purposes” (see a letter from Ms Ghani to the Transport Select Committee available at www.parliament.uk).

The judgment in the case has now been published and can be found at www.bailii.org.

Lord Justice Leggatt and Mr Justice Lewis have rejected the claim that the DfT was operating an unlawful non-prosecution policy and they refused to grant a legal declaration setting out circumstances in which a community transport organisation (CTO) would be compelled to obtain an O-licence.

According to solicitors appointed by the Community Transport Association and Mobility Matters (Russell-Cooke LLP): “A lot of progress has been made in heading off what could have developed into an existential threat for many CTOs. There is now a good opportunity for a clear and practical approach to community transport licensing reflected in appropriate guidance from the DfT.”

Last reviewed 12 December 2019