Explanatory note

These regulations amend the Service Subsidy Agreements (Tendering) (England) Regulations 2002 (“Principal Regulations”) in so far as they exclude from the tendering requirements of section 89(1) of the Transport Act 1985 various agreements that provide for the payment of service subsidies.

Regulation 3 of the Principal Regulations is amended so that it applies to authorities with a forecast expenditure on service subsidies for the current financial year that does not exceed £600,000. An agreement is excluded if it will remain in force for less than 12 months and the service subsidies payable do not exceed £29,999. If an agreement will remain in force for more than 12 months, it is excluded if the service subsidies payable during the first twelve month period it is in force, and each subsequent twelve month period, do not exceed £29,999. The requirement in regulation 3(2) of the Principal Regulations, that an agreement may not be entered into if the effect would be that a person operating the service would receive an aggregate amount of more than £150,000 of service subsidies, under agreements entered into other than by tender, is removed.

Regulation 3A is inserted into the Principal Regulations, and applies to authorities with a forecast expenditure on service subsidies for the current financial year that exceeds £600,000. An agreement is excluded if the service subsidies payable under it in that financial year, as well as service subsidies payable in the same financial year under all other agreements excluded from section 89(1), do not exceed one quarter of the authority’s forecast expenditure on service subsidies. If the agreement will remain in force after the financial year in which it is entered into, it is excluded if the service subsidies payable under the agreement in subsequent financial years do not exceed one quarter of the authority’s forecast expenditure on service subsidies for the year when the agreement was entered into.

In order to be excluded, an agreement must have a term of not more than 5 years. This applies whether the agreement is subject to regulation 3 or 3A of the amended Principal Regulations.