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Mr. Clifton-Brown: Has my hon. Friend concluded that there is a particular irony about the problem, in that the further that one gets away from London and the other major metropolitan areas, the worse the bus service tends to be? If the amendment is rejected, the effect will be that local authorities are likely to cut back on discretionary

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spending on bus services. That will further reduce the number of services, especially in areas such as that represented by my hon. Friend the Member for North-West Norfolk (Mr. Bellingham), and in my area of the Cotswolds?

Chris Grayling: My hon. Friend is right. Many services depend absolutely on local authority support to keep going. Such services are nowhere near the principle routes. They deliver more a social service than a commercial one, and they benefit from the support of local authorities. If local authorities get less money, there will be fewer of those services. That has to be a matter of great concern for hon. Members considering the Bill.

2.15 pm

Quite rightly, the Government have an aspiration to see concessionary fare schemes grow. Many parts of the country have nothing like the level of such schemes that are available in London. Many of the authorities in those areas would like to do more. My authority's aspiration is, at the very least, to charge pensioners a 50p flat fare for buses.

However, if the additional costs of concessionary schemes are placed, in whole or in part, on local authorities, it will be more difficult for those authorities to introduce improved schemes. Moreover, although no one could argue with the aims of the Bill, the irony is that it will make it more expensive for local authorities to introduce expanded schemes in the future. By definition, they will have to find budgets to cover people aged between 60 and 65, as well as those aged over 65. As a result, it is less likely that local authorities will be able to afford new schemes in the future.

I hope that the Minister will give the matter careful thought, and that she will consider the consequences of failing to fund local authorities in full. I hope that she will give us this afternoon a commitment to providing full funding, and that she will think about those areas in the country that do not have the sort of schemes that would be desirable. The Minister must look at the potential extra costs that will arise, as a result of the Bill, if local authorities try to improve their schemes. Moreover, I hope that the Minister, when she looks at her Department's financial planning for the future, will encourage local authorities to go ahead with fare schemes and, where appropriate, give them the financial support that they need.

In conclusion, I welcome the Bill very much, and I also commend my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) on the amendment. I hope that the Minister will accept it. If she does not, I hope that she will at least accept the principle behind it, and give our local authorities the support that they undoubtedly need to implement the Bill.

The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Ms Sally Keeble): I appreciate the way in which the hon. Member for Cotswold (Mr. Clifton-Brown) introduced the amendment. He clearly acknowledged that the form of words used is something of a device and that the intention behind the amendment is better expressed in new clause 1. I shall not talk about the new clause, but I will deal

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with some of the different ways to tackle the financial arrangements, as I think that that is the subject that most worries Opposition Members.

The question of funding has been a recurring theme in debates on this Bill in this House, in the other place and in Committee. I am afraid that I must disappoint the hon. Member for Christchurch (Mr. Chope) by telling him that I do not agree with his interpretation of what my right hon. Friend the Minister for Transport said. If I do not use the same words as my right hon. Friend, it is only because I cannot be as eloquent.

I appreciate the concerns about funding, and about the need to get the formula right. I shall therefore go through some of the arguments explaining why the Government chose the approach contained in the Bill.

The amendment would add another stage to the system of funds distribution. Given that the hon. Member for Cotswold admitted that it would also require an additional round of consultation, it would be inconceivable for us to get the scheme up and running even in time for the next financial year. I urge Opposition Members to think hard about that, especially as amendment No. 3 deals with commencement. In addition, the amendment could undermine the method of distribution of Government support for the expenditure of local authorities.

Before I move on to some of the other issues, I shall deal with the concerns raised by hon. Members, and make some general comments. The hon. Member for Christchurch talked about the new burdens principle and the discussions that took place in Committee. In adopting the new burdens and revenue support grant approach, the Government are utilising the usual channels for local authority financial arrangements. As a result, the scheme will be introduced in a manner that, if not super fast, is speedy and orderly. The Government's approach also allows for proper discussion of the distributive mechanism through the local government channels. That is important because of the two big issues in local government funding—the size of the cake and how it is shared out. There must be discussions with the local government associations about both issues, particularly the latter.

Mr. Chope: What system could be fairer than one which reimburses local authorities, on an individual basis, for the costs that they have incurred as a result of the legislation?

Ms Keeble: I was going to come to that point later. That would mean a ring-fenced grant, which one of the amendments suggests, but it would lead to delay. In contrast, the Bill provides for an orderly and fair distribution of the total costs between local authorities.

It is true that some time ago concerns were raised by local authorities about the fairness of the distribution. I understand that the discussions between officials and the local government associations have been successful and that the margins that were talked about, which were in multiples of a million, have been whittled down to a small amount.

The hon. Member for Christchurch, along with other Conservative Members, argues that his local authorities are losing out. All Members think that their local authority is losing out. In fact, the way in which the mechanism

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works means that local authorities that already have more generous concessionary fare schemes in place, such as Merseyside, Reading and the West Midlands, are more likely to be under pressure than the local authorities that started from scratch or from a lower base in introducing concessionary fare schemes. I do not accept that the hon. Gentleman's authorities have necessarily lost out, nor those of his hon. Friends. In checking with officials, they do not seem to have raised that concern with my Department. Therefore, I do not think that this system, which is the normal one, discriminates against the hon. Gentleman's local authorities.

Mr. Chope: Does the Minister accept that the two local authorities in my constituency have incurred additional costs as a result of her legislation of £250,000 a year and have got back, between them, £20,000 a year? Which local authorities have been getting the extra £230,000 that should be going to Christchurch and East Dorset? Why is that money going to the West Midlands and Merseyside which are already over-resourced?

Ms Keeble: I am sorry, but the hon. Gentleman has misunderstood me. Local authorities which are the most likely to find that they have unmet costs as a result of this mechanism have, in the past, had more generous concessionary fare schemes in place. The total cost of the new burdens are put into a general kitty and then carved up. Councils which have in the past had more generous schemes will have higher new burdens under the Bill. Authorities such as the West Midlands and Reading, rather than getting more money out of the scheme, are most likely to be under pressure.

Chris Grayling rose

Ms Keeble: I should like to continue, because I will come on to the concerns of the hon. Member for Epsom and Ewell (Chris Grayling). I should also like to deal with the concerns of the hon. Member for North-West Norfolk (Mr. Bellingham) about bus transport in rural areas, particularly for pensioners. He said that pensioners moving out of London would lose the valuable benefit of the free bus pass which London local authorities have had in place for many years. They kept the scheme going even when they were under acute financial pressure under the last Conservative Government. The decision to keep the free bus pass was made by Conservative and Labour councils in the teeth of considerable opposition. It was a recognition of local needs, and that is how local government should work.

We have recognised the problems of people in rural areas who need bus transport and have provided front-end support for them in the form of the rural bus challenge and a big increase in the subsidy for rural buses. We had the last round of the rural bus challenge last Friday. I believe that the hon. Gentleman's local authority, although it might not have been his constituency, benefited from that challenge.

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