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11.18 pm

Mr. Nicholas Brown (Newcastle upon Tyne, East and Wallsend) (Lab): Truly it is said that no good deed goes unpunished. A year ago, my right hon. Friend the Chancellor of the Exchequer announced in the Budget statement that there would be free bus travel for pensioners. The announcement was widely welcomed and the Treasury allocated some £350 million—a sum of money that covers the cost of the policy. The Office of the Deputy Prime Minister chose to distribute that money in such a way that some authorities got more than they needed to implement the policy and 32 authorities were short-changed. In cash terms, by far the greatest losers are the five district councils in Tyne and Wear, with a shortfall of £5.4 million. The problem arises because Ministers chose to use a general formula to distribute a grant that was designed for a specific purpose. There are two related issues that I would like to raise—pensioner travel on the Tyne and Wear metro and pensioner bus travel between Tyne and Wear and the neighbouring counties of Durham and Northumberland.

As soon as the problem became clear, strenuous efforts were made to achieve a solution. There have been discussions between officials from Nexus, the Office of the Deputy Prime Minister and the Department for Transport. There have been two meetings between the Minister for Local Government and local Members of Parliament, and there has been some progress. A small adjustment has already been made to the distribution formula in Tyne and Wear's favour. Separately, the Secretary of State for Transport has given Nexus £1.7 million to deal with the potential loss of income for the metro, which Nexus owns, if pensioner bus travel is free but metro travel is not. I wish to place on record my gratitude for the part that the Secretary of State for Transport has played in trying to resolve that issue. [Hon. Members: "Hear, hear."] My hon. Friends are obviously grateful as well.

Two problems remain. Despite the free pensioner bus travel within counties it is now more expensive for pensioners to travel from Durham to Sunderland or Newcastle. The half-fare scheme covered the cost of the whole journey, but free travel only takes them to the county boundary. After that, they must pay the full fare for travel. Far worse—and this is at the heart of the issues that I wish to raise tonight—Nexus faces a £5.4 million shortfall. The authority must set a budget, and it must tell the five district councils what that budget is. There is little room for further delay.

Mr. Fraser Kemp (Houghton and Washington, East) (Lab): On the shortfall and the way in which Nexus has handled it, does my right hon. Friend agree that while we must try to find a solution in the final few days, it is imperative that we find a fair funding formula so that Tyne and Wear does not face this problem every year? Those reserves cannot be spent again. They have been spent this time, but they will not be available in future. We need to resolve the problem this year, but we must make sure that we do not face it again in future.

Mr. Brown: My hon. Friend is quite right. The Nexus budget for the financial year must cover the shortfall;
 
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the authority has no choice. Nexus has set a provisional budget, which is a combination of fare increases and cuts in secure services. As my hon. Friend has suggested, it is drawing down its reserves to cover half the shortfall. It can only do so once, as those reserves will not be available for drawing down again. We need a solution to this year's problem, and a permanent solution for future years.

Students who will be hit by the fare rise think that it is unfair. They are right to hold that view, as Nexus did not intend to introduce a fare rise until the budget shortfall became clear. Pensioners and organisations that represent them are upset too, as pensioners do not want their free travel to be paid for by service cuts and fare rises for others. That point has been made clear to me, and I am quite certain that it has been made to my right hon. and hon. Friends who represent the county. I am grateful to my hon. Friend the Minister for the part that he has played in trying to find a solution. Talks are continuing, but I fear that they are doing so in the same way that a fairground roundabout continues in motion—it goes round and round, but it does not go anywhere.

My hon. Friend the Member for Tyne Bridge (Mr. Clelland) secured on the Floor of the House a promise of a meeting with the Prime Minister. If there is not some real progress, my hon. Friends and I will very soon insist on that meeting. We want our money, and I for one will not give up until we have secured justice for our constituents.

11.24pm

Mr. David Clelland (Tyne Bridge) (Lab): I congratulate my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) on securing an Adjournment debate on such an important subject. As he intimated, I have taken a great deal of interest in the matter from the beginning. Like him, I have received representations from pensioners in Tyne and Wear who, for the first time in my 20 years' experience as a Member of Parliament, have said to me that they reject something that the Government have offered: free transport. They do not want free transport at the expense of transport for young people and others who currently receive concessions. Additionally, they do not want free transport at the expense of services, which will also be on the cards unless the problem is resolved.

My right hon. Friend referred to a possible long-term solution and reminded the House that the matter was initially raised by the Chancellor in last year's Budget. When the Chancellor announced the scheme, it was widely welcomed, not least by those of us in Tyne and Wear who had concessionary fares, but welcomed the idea of free fares for pensioners. However, we did not anticipate such an unintended outcome.

The long-term solution might well lie in next week's Budget. Even at this late stage, I urge the Minister to talk to the Chancellor and the Treasury about what that Budget might contain. It might well be that the Chancellor can resolve the problem by introducing a national scheme for free transport, rather than a local one. As I understand it, such a scheme would not cost a massive amount. It would be much easier to administer and would certainly resolve our problems in Tyne and
 
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Wear. It might also resolve the problems that are anticipated in other parts of the country. The existing scheme is restricted to local government boundaries. A national scheme could be introduced at low cost, so I ask my hon. Friend the Minister to raise the matter with the Treasury in the anticipation that next week's Budget might bring a resolution to the problem.

Mr. David Anderson (Blaydon) (Lab) rose—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I sense that there is a co-operative at work. The normal courtesy is that the right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) and the Minister have given permission for the additional contributions to be made to the debate. I think that that was perhaps implied by the concise speech made by the right hon. Gentleman, but I need to get things in order.

11.27 pm

Mr. David Anderson (Blaydon) (Lab): I will try to be even more concise. My right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) and my hon. Friend the Member for Tyne Bridge (Mr. Clelland) did not talk about the way in which the scheme applies to disabled people. It is perverse that the impact of free travel for disabled people, which was announced in the Budget, might well be that we find that the care bus service will be withdrawn from Tyne and Wear.

Let me read from an e-mail that I received from a man living in my constituency who has severe problems due to muscular sclerosis. He wrote:

"No-one I speak to on the bus can actually believe that it will be stopped . . . as threatened—they cannot contemplate their lives without it. It is a mental torture for them to be worrying about losing their independence, when many already have enough to worry about with illness and disabilities . . . As our MP I hope you can let those with the power to solve this realise that they are not playing with pound signs, they are playing with the independence of already vulnerable people who deserve to be treated with respect & dignity—not left hanging on a thread of threats!"

That is what we are talking about with this cock-up. We are talking about bus services that should be a real bonus for our people actually becoming a detriment.

11.28 pm

The Minister for Local Government (Mr. Phil Woolas): I should start by paying the usual tribute to my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) for securing the debate and raising a matter that is extremely important to his constituents and those of other hon. Members in the Chamber. I have a useful opportunity to explain how we support services via the formula grant. My right hon. Friend is obviously especially concerned about the distribution of funding for free bus travel for pensioners in Tyne and Wear.

Before looking in detail at the process, it is worth reminding ourselves of the substantial social benefits that will be delivered by the Government initiative on concessionary travel. The need to meet the transport requirements of a growing population of older people is
 
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vital to the success of the Government's commitment to sustainable mobility and to people's ability to retain a high quality of life as their income, health and mobility levels change. Despite the rising number of older driving licence holders, declining driving ability and financial constraints mean that many motorists will have to adjust their driving practices, and probably ultimately give up their car. A high proportion of the older population will be dependent on public transport. However, evidence suggests that many will experience difficulties in using bus and rail services.

For the first time, in 2006–07, we have announced two-year grant allocations for every local authority in England. We have put a premium on the stability and predictability of funding, so that councils can plan ahead for better service delivery. The first three-year settlement will be introduced alongside the next spending review round commencing in 2008–09. In the interests of further stability, we have made grant floors a permanent part of the grant distribution system. Floors guarantee a minimum year-on-year grant increase for all authorities and increase local authority confidence in planning for the medium to long term.

Tyne and Wear, to which my right hon. Friend referred, has benefited from the extra money that we have provided in recent years to the local authorities, which have invested in improving local services—for example, reducing antisocial behaviour and providing more support for vulnerable people in Newcastle, developing healthy communities in Gateshead, and supporting carers in Sunderland.

For the 10-year period to 2007–08, we have been able to provide Tyne and Wear metropolitan district councils with an average annual increase in general grant of 4 per cent. in cash terms. For 2006–07 and 2007–08, the grant increases going to Tyne and Wear district councils are £14.7 million and £14.8 million respectively, or 2.8 per cent. in each year, running ahead of current inflation. Additional transport funding for Tyne and Wear has also come through the local transport plan and Challenge funding routes. We have provided £12.9 million for concessionary fares above last year's grant, and £1.7 million for the Metro transport system.

Capital funding to enable implementation of the local transport plan is allocated by my right hon. Friend the Secretary of State for Transport to the Tyne and Wear authorities, mostly in the form of supported capital expenditure revenue—SCER—as my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend knows. The allocations are determined primarily by formulas reflecting transport need and adjusted to reflect the quality of the local transport plan and the progress made in implementing the plan. A single allocation is made for Tyne and Wear, which is distributed among the authorities in accordance with their wishes.

The allocation for 2005–06 is 68 per cent. higher than that for 1999–2000. As this is capital funding, it cannot be used directly to support the cost of concessionary fares. However, this high level of central Government capital support releases local authorities' own funding to support other initiatives in accordance with local priorities.
 
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Since 1998 the Government have provided Nexus, the Tyne and Wear transport executive, with more than £7.7 million funding specifically to support the operation of a number of bus services through the urban and rural bus Challenge and Kickstart programmes. Funding for concessionary fares is supported through formula grant.

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