On 11 January 2024, the Public Service Obligations in Transport Regulations 2023 (the Regulations) were published, together with an explanatory memorandum. Drafts were published on 16 October 2023 .
The Regulations revoke and replace Regulation 1370/2007 on public passenger transport services by rail and by road, which sets out the conditions under which “competent authorities” may award Public Service Obligation (PSO) contracts for rail passenger services to train operating companies, as well as bus and tram concession services. Regulation 1370/2007 was retained as direct EU legislation by section 3 of the EU Withdrawal Act, subject to amendments made by the Regulation (EC) No 1370/2007 (Public Service Obligations in Transport) (Amendment) (EU Exit) Regulations 2020.
Regulation 1370/2007, in particular, allows the making of direct awards of PSO contracts outside the general procurement and state aid rules, but this provision ceased to apply on 25 December 2023.
The Regulations, which came into force on 25 December 2023, replace Regulation 1370/2007 with largely equivalent provisions, while making certain improvements to support its more effective operation in Great Britain. They will continue to allow the making of direct awards of PSO contracts for passenger transport by rail (the government considers that it is important to retain the direct award flexibilities to ensure the effective continued operation of passenger rail services). They also contain new provisions to ensure the government is able to meet obligations under the UK-EU Trade and Co-operation Agreement (TCA).
The Regulations set out the objectives that a competent authority must pursue in exercising functions under them (including delivering value for money and maximising public benefit). They also set out the required content of the public service contracts (PSCs) that must be used when granting an operator an exclusive right or compensation in return for the discharge of a PSO (including defining the scope of the PSO, ensuring no over-compensation and the duration of the contracts). The Regulations also set out rules for the award of PSCs. This should be by competitive tender unless the PSC falls under one of the situations where direct award is permitted (including direct award to an internal operator of a local authority, direct award of de minimis contracts, emergency measures and the direct award for rail PSCs). In addition, the Regulations set out the situations in which PSCs can be modified, details of pre and post-award publication requirements, and enforcement provisions (including a new remedy of recovery of unlawful subsidy).
The Public Service Obligations in Transport Regulations 2023 (legislation.gov.uk)
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