Travel Concessions (Extension of Entitlement) (England) Order 2005

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Second Standing Committee on Delegated Legislation

The Committee consisted of the following Members:

Chairman:

Mr. Peter Atkinson

†Beith, Mr. Alan (Berwick-upon-Tweed) (LD)
†Bellingham, Mr. Henry (North-West Norfolk) (Con)
†Buck, Ms Karen (The Parliamentary Under-Secretary of State for Transport)
†Campbell, Mr. Alan (Tynemouth) (Lab)
†Cousins, Jim (Newcastle upon Tyne, Central) (Lab)
†Ennis, Jeff (Barnsley, East and Mexborough) (Lab)
Hamilton, Mr. Fabian (Leeds, North-East) (Lab)
†Hodgson, Mrs. Sharon (Gateshead, East and Washington, West) (Lab)
†Kemp, Mr. Fraser (Houghton and Washington, East) (Lab)
McDonnell, John (Hayes and Harlington) (Lab)
Mates, Mr. Michael (East Hampshire) (Con)
†Paterson, Mr. Owen (North Shropshire) (Con)
†Rowen, Paul (Rochdale) (LD)
†Slaughter, Mr. Andrew (Ealing, Acton and Shepherd’s Bush) (Lab)
†Spink, Bob (Castle Point) (Con)
Tapsell, Sir Peter (Louth and Horncastle) (Con)
†Wright, Mr. Iain (Hartlepool) (Lab)
Glenn McKee, Committee Clerk

† attended the Committee

 
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Tuesday 24 January 2006

[Mr. Peter Atkinson in the Chair]

Travel Concessions (Extension of Entitlement) (England) Order 2005

10.30 am

Paul Rowen (Rochdale) (LD): I beg to move,

That the Committee has considered the Travel Concessions (Extension of Entitlement) (England) Order 2005 (S.I. 2005, No 3224).

The Government’s announcement a couple of years ago that there would be free concessionary off-peak travel on buses from next April was welcome. My party does not object to that proposal—indeed, it was part of our election manifesto as well—but we are concerned about what has become apparent during the passage of the order. I know that the Minister is aware of the extensive consultation with affected authorities, especially the passenger transport executive group. Our particular concern is about the formula that is used, and the effects that it appears to have on at least one passenger transport authority—Tyne and Wear.

Despite being pressed on several occasions, the Minister has failed to give an assurance that the proposal will be cost neutral to local authorities. At thed ¤time of the initial consultation, four passenger transport authorities were going to be losers, but the formula has been rejigged so that only one local authority—Tyne and Wear—will now suffer. The effects on that authority are dramatic, however. On 10d ¤January 2006, the Evening Chronicle clearly stated that the crisis was a direct result of the introduction of the free travel scheme, and that the area faced cuts in local services of £7.3 million to fund the concessionary travel. The cuts impinge on school bus travel and on many of the subsidised bus routes in areas where buses are desperately needed.

Jim Cousins (Newcastle upon Tyne, Central) (Lab): As a Member from the Tyne and Wear area, I should be grateful if the hon. Gentleman would explain how the £7.3 million shortfall can be accounted for. What are the figures that make it up?

Paul Rowen: My understanding is that Tyne and Wear has been allocated £12.7 million, but that the actual cost is more than £20 million.

Jim Cousins: I am aware of that very general figure, which is in wide circulation. I have asked the passenger transport executive on several occasions to explain it. So far it has not explained in detail what the difference between the £20 million and the £12.7 million actually is. How does that gap come about and what are its component parts? We must assure ourselves that it is not plucked out of the air.

 
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Paul Rowen: No, the figure is not plucked out of the air. I am not a member of the PTE, but I can say that the figure derives from the formula allocated by the Government. That formula has been adjusted to take account of the large population in Tyne and Wear without access to private motor vehicles and the extensive public transport network. Nevertheless, what the Minister guaranteed was that there would be no increases as a result of the scheme. Some £2 million is allocated for the metro. She could argue that the Government did not propose to subsidise or continue to subsidise the metro, but even without that consideration the authority is left with a shortfall of £5.3 million, which will be met by cuts in the subsidised bus network. The authority is considering several options, but the cuts will mean a diminution in service. During the consultation conducted by the Office of the Deputy Prime Minister, the passenger transport executive group requested that, rather than have all the money allocated at the start of a formula-driven process, a proportion should be held back so that authorities affected by the inequality of the system could bid into that pot. I am disappointed that the Minister has not seen fit to follow that sensible policy.

Tyne and Wear is the only passenger transport authority in which we know that there will be an overall shortfall. Because the formula allocates money to district authorities, the different circumstances of those authorities means that the amount that each receives will not necessarily cover the total cost. For example, I am told that the additional cost to Stockport metropolitan borough council this year will be £1 million. That has to be met either through cuts in other services or council tax increases. If the Tyne and Wear increase were taken out of council tax it would mean a 2 per cent. council tax increase. Those are typical examples of what happens when the Government put forward a welcome measure without working through all its consequences.

Mr. Alan Beith (Berwick-upon-Tweed) (LD): My hon. Friend has described the situation in passenger transport authority areas, but he will recognise that in two-tier areas, small district councils that are faced with a shortfall have almost no other areas of the transport budget from which they can find the money to meet that shortfall.

Paul Rowen: I am grateful to my right hon. Friend for that intervention. No detailed information is yet available as to how the measure will impinge on districts, which, as he rightly says, have much smaller budgets and therefore less room for manoeuvre. Although my party welcomes the policy, as it stands it is a blunt instrument that is likely to have unacceptable consequences.

Will the Minister tell us the basis of the calculations through which the proposed changes will be made? The explanatory note states that the Government expect a 25 per cent. increase in bus patronage. When a similar policy was introduced in Strathclyde, bus usage increased by more than 30 per cent. For most district councils, this year’s budget settlement is very tight, so they will not have the manoeuvrability to
 
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accommodate such changes. Will she give some assurance that she will deal with the problems in Tyne and Wear, which I think she has so far refused to consider, and that as local authorities report the effects of the changes throughout the year, there will be recompense for them and reconsideration of the order?

The benefit of off-peak concessionary bus passes varies from area to area. In the constituency of my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), a bus pass covers a district, not a county. Yet in Greater Manchester, West Yorkshire or Merseyside, the bus pass may be used in a much larger area and is therefore more beneficial. It is not fair to our pensioners that some will be able to go from Bolton to Wigan, for example, whereas others will be able only to travel across my right hon. Friend’s constituency.

As it stands, the order is a blunt instrument. It will have dire consequences for at least one passenger transport authority, and a lot of imponderables for many others. Will the Minister reassure us on the use of the order and tell us whether there will be flexibility in its interpretation?

10.40 am

Jim Cousins: We should first celebrate the existence of the order. It is wonderful for the Government to endorse the idea of free bus travel throughout the country for over-60s and people with disabilities. That is a wonderful thing, and I celebrate it.

One of the advantages of having been in politics for what I sometimes think is rather too long is that I remember introducing free concessionary travel into Tyne and Wear as a young councillor in 1973–74, in one of the first such schemes to exist. Not everything went well in 1973. The first car that I ever had broke down while I was campaigning in Shilbottle to prevent the election of the right hon. Member for Berwick-upon-Tweed in that year’s by-election. Although 1973 was a mixed year, at least one part of it was very good: the introduction of free concessionary travel on buses and local rail in the then county of Tyne and Wear.

It gives me a huge sense of pride to see the Government reintroducing free concessionary fares in Tyne and Wear all these years later. Part of me regrets that the Government had to do it, because no Government told us to do it in 1973. We believed that it was right, we campaigned for it, we introduced it and we defended it at election after election until 1986, and the people of Tyne and Wear supported us. I am ashamed that Tyne and Wear went back on that commitment to free travel, and that the Government have had to move in and reintroduce it there, but I thank my hon. Friend the Minister and her colleagues for doing it. She will understand my feelings about the fact that the Government had to do it and not local councils and the local passenger transport executive, but she will also understand my sense of pride that they have.

I am grateful to the hon. Member for Rochdale (Paul Rowen), as I know that he meets the Liberal Democrat executive in the city of Newcastle regularly; minutes explaining his visits are leaked to me. As the
 
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Liberal Democrats show a great reluctance to speak to me, perhaps we could open up a channel of communication through him. That would be helpful to me, to him and probably to the people of Newcastle.

There is a problem in Tyne and Wear, and I ask my hon. Friend the Minister to think carefully about it. I appreciate the difficult position that she is in this morning, because any announcement of funding must wait for the announcement on the local government settlement. That will probably come next week, although we do not know for sure. The Committee should understand the difficult position that she is in and that it would not be proper to seek to extract from her promises of undertakings that cannot be given properly in this Committee; we must wait until next week.

Paul Rowen: Is the hon. Gentleman aware that the actual revenue support grant settlement was issued in December, so local authorities know what they have got and what they are likely to get in the future?

Jim Cousins: Dear me, I do not know what life is like in Rochdale. The local government settlement, which was issued in December, was for consultation, and there is a period in which representations can be made. Indeed, some have already been made; I was present at the representation meeting between the Minister for Local Government and the city of Newcastle, and the one between him and the passenger transport authority for Tyne and Wear. So the settlement is an interim one; the final one will be next week.

I am modestly hopeful that there will be recognition of the particular problems in Tyne and Wear, but I do not propose to put my hon. Friend the Minister on the rack because she is not in a position to give a direct response. It is important that the hon. Member for Rochdale recognises that the settlement was for consultation. Furthermore, I am happy to regard the Committee as an extension of that consultation process, and I hope that he regards that as an appropriate use of the occasion.

Paul Rowen: Obviously.

Jim Cousins: I thank the hon. Gentleman; we are at one on the issue.

On the situation in Tyne and Wear, there is a real opportunity for the extension of free travel for the over-60s to create a new bus ridership. That is set out clearly in the documents in front of the Committee. The Government’s proposals for free bus fares for over-60s will reverse the decline in bus ridership that is happening everywhere in the country outside London and a few parts of the south-west and south-east.

Bob Spink (Castle Point) (Con): Does the hon. Gentleman accept that that will require a partnership between the bus-operating companies and the councils to ensure that councils are recompensed fairly for the free travel and that bus-operators invest in new routes? That could be done, for instance, on the Pitsea to Tarpots route in Castle Point, which has recently been cut, causing pensioners in my constituency distress.

 
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Jim Cousins: This morning’s sitting will be good news for the over-60s of Pitsea, as I hope the hon. Gentleman will recognise. None the less, he raised an important point that I intended to address, and which I will come to directly.

In December, a useful report was published by the Audit Commission that looked at the delivery mechanism for improving bus services throughout the country. The report dealt with the financing of concessionary fares, which is an important point in Tyne and Wear as well. Of course, there is a big difference in the way that concessionary fares are financed in London and elsewhere. In London, all the fare box revenue goes to Transport for London. With that money, Transport for London commissions the bus services. Everywhere outside London—the Minister may correct me; one or two other places might operate in the same way—the cost of concessionary fares is met differently, in the way that the hon. Gentleman set out. It is a deficit financing arrangement or revenue loss compensation arrangement between the bus operator and the provider of concessionary services.

I have no doubt that the arrangement used outside London has room for lots of error and that in many parts of the country, local authorities are overpaying and over-compensating bus operators, not through any fault of their own but because of the design of the system. Equally, I have no doubt that some bus operators will be underpaid and under-compensated because of the myriad local arrangements for working out the compensation formula for the notional revenue lost due to free bus fares for over-60s.

That issue is difficult for every local authority outside London. It is particularly difficult in Tyne and Wear because of the considerable number of different bus operators and because the bus network is extremely dense, the loadings are extremely high and the number of people using the services creates the greatest density of travellers of any bus network outside London. The problem of how to compensate operators—negotiating, calculating what revenue has been lost and deciding how to meet the cost—is particularly difficult in Tyne and Wear. That is certainly one of the contributing factors to the situation there. I am grateful to the hon. Member for Castle Point (Bob Spink) for raising that important point.

Paul Rowen: Is the hon. Gentleman aware that in a written answer to me last week, the Minister stated that the Government had no plans to change the commissioning—or recommissioning, as the hon. Gentleman calls it—of buses outside London?

Jim Cousins: I must disappoint the hon. Member for Rochdale: I do not follow all his parliamentary questions and answers. It is a failure that I must own up to. But whenever “no plans” appears in a parliamentary answer, it is always sensible to stick in the invisible word “present”. The Government might have no present plans to address it, but I am hopeful.

 
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The issue was clearly addressed in the Audit Commission report. I am not going to attempt to put my hon. Friend the Minister on the spot unfairly on a second occasion; the Government have had no opportunity to consider the Audit Commission’s findings. But the report clearly states in its recommendations that the method of financing bus services used in London is more accountable and fairer to both operators and local authorities than anywhere else. I hope that the Government will address that point in due course.

Mr. Fraser Kemp (Houghton and Washington, East) (Lab): Does my hon. Friend agree that it would be strange and bizarre for anyone who supports the principle and policy of concessionary fares to vote against the order? The best hope for pensioners and the disabled in Tyne and Wear is to remain optimistic and positive about the response—all Tyne and Wear MPs have been involved in representations—that we might receive from the Government in the near future. Would that not be the best way forward, rather than opposing the order?

Jim Cousins: I am speaking to a former Whip, with whom I have spoken on a number of occasions about voting. The relationship was very amicable. I see my present Whip looking at me; I am not suggesting for one moment that I have favourites among Whips. I would not do that. However, when it comes to voting, every Member is accountable for themselves, and of course, the hon. Member for Rochdale will be looking at me closely as I will be at him, and we shall see what we shall see.

I remind the Committee of a wise remark that was made in the 1929 hung Parliament, which was the last time that the party of the hon. Member for Rochdale controlled a Parliament. It was said of the Liberals then that they were two or three hearts that beat as one though they voted as four or five. We will see how they vote today.

Bob Spink: Like the hon. Gentleman, I welcome the principle behind the order and want to support it, but he will of course acknowledge that it is our duty to seek to improve it.

Will he add cross-boundary travel to his shortlist of some of the financial difficulties of running and organising the scheme? Does he believe that the Government should have a plan to address cross-boundary travel? For instance, many of my constituents need to travel to one of the hospitals in Southend or Basildon, which can be difficult. Does he think that we can encourage the Government to find a way to improve the order so that it facilitates cross-boundary travel?

Jim Cousins: I can well see that the hon. Gentleman would not want to put up a barrier between Pitsea and Southend, and I have no doubt that when we have bedded down this scheme, which should happen this year, cross-county or cross-authority travel will be a live issue to which we will return. Indeed, my hon.
 
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Friend the Member for Easington (John Cummings) tabled an early-day motion to address those issues in the north-east. I urge the hon. Gentleman to sign it.

Bob Spink: I already have.

Jim Cousins: We are all at one on that issue then. We all recognise that cross-authority travel will have to be addressed in the near future. I have no doubt about that, and I look forward to it.

I dealt with how travel is funded in London and outside, which is an important point that relates to the issue in Tyne and Wear. If my hon. Friend the Minister cannot assure us on that specific point, I hope that she will at least acknowledge the force of the Audit Commission’s recommendations and assure us that she will consider them carefully.

On the situation in Tyne and Wear—I realise that I must be brief, Mr. Atkinson—there will be generated travel effects. The reason for the Government’s proposal to give free bus travel to the over-60s is to ensure that there will be generated travel effects and that the decline in bus ridership across the country, outside a few specific areas, will be reversed.

The source of the difficulty in Tyne and Wear is that although we know that there will be generated travel effects, we do not know the costs that they will involve. The figure of £7.3 million has become a holy writ for our local passenger transport executive and passenger transport authority. I urge them to be cautious. First, we do not yet have whatever additional help the Government may announce in the local government settlement. Secondly, we are talking about generated travel effects that will become clear only as time goes by. It would be wrong to run into a wave of cuts, particularly in the school transport service and the teen travel card that gets teenagers to school and to recreational facilities, before knowing the true generated travel effects.

The hon. Member for Rochdale mentioned £7.3d ¤million. I questioned him, as I have the passenger transport executive, on how he has arrived at such a curiously exact figure. He could not tell me, other than to say that £2 million of that amount is intended to introduce free travel for over-60s on the Tyne and Wear metro system, which is outwith the terms of the Government’s proposal. Even on his account, the gap therefore comes down from £7.3 million to £5.3d ¤million. That is a soft figure produced through alarmist calculations.

There will clearly be generated travel effects, partly because the introduction of travel charges for over-60s in Tyne and Wear is a relatively recent phenomenon. The passenger transport authority recently doubled the cost of travel in the area for over-60s, to pay for the Sunderland metro extension. I have grave doubts about whether that was the proper thing to do, and whether the over-60s of Tyne and Wear should have paid for the difficulties in financing that extension. There is an hon. Member from the Sunderland area present—my hon. Friend the Member for Houghton and Washington, East (Mr. Kemp). All of us would support the idea of extending the metro to Sunderland, but I think that he would agree that it would be wrong
 
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to ask the over-60s of Sunderland and everywhere else in Tyne and Wear to meet the costs of that extension, which is what has happened. Concessionary fare revenues have paid for the shortfall in income from the Sunderland metro extensions.

When I hear my colleagues in the passenger transport executive and the passenger transport authority, I sometimes say quietly to myself, “They protest too much. They have something to hide.” The over-60s of Tyne and Wear—I happen to be one of them myself—are alarmed by the idea that they are getting a handout that will cause trouble for school transport. That is entirely wrong.

There is a difficulty in Tyne and Wear, and there will be generated travel effects and additional costs. I hope that next week or the week after, the Government will go some way towards meeting those costs. I doubt whether the figure is £7.3 million or even £5.3 million, but there will be a figure and at some point we must work out how to deal with it.

It will give great assurance to hon. Members from Tyne and Wear, who are trying to prevent an unnecessary and premature crisis that would devastate school transport services across the county, if the Minister gives an undertaking to keep an eye on the issue of generated travel effects. Will she also work with her colleagues from the county of Tyne and Wear, in discussion with our colleagues from the passenger transport authority and the passenger transport executive, so that we can measure such effects and deal with them properly as and when they arrive? That would be preferable to sacrificing so much of our local public transport system for premature cuts brought about by the false, mythologised figure of a £7.3d ¤million gap.

11.4 am

Mr. Owen Paterson (North Shropshire) (Con): It is a pleasure to serve under your chairmanship this morning, Mr Atkinson, and to follow the hon. Member for Newcastle upon Tyne, Central (Jim Cousins).

I apologise for not being my hon. Friend the. Member for Wimbledon (Stephen Hammond), who should be speaking on the issue, but who I think—he has just come off the screen—is speaking on rail transport in the south-east. I wonder, Mr. Atkinson, whether you could pass it back to the powers that be in the Speaker’s Office that it would be appreciated if they could look at the timing of statutory instrument debates on transport that clash with important Westminster Hall debates on transport.

It is a pleasure to speak on the issue because it concerns many of my constituents. In the penultimate paragraph of his Budget speech, the Chancellor boldly said:

“It is now time with the resources available to legislate so that in every community of the United Kingdom there is, from next year, free local bus travel for every pensioner and every disabled person too.”—[Official Report, 16 March 2005; Vol. 432, c. 269.]

This morning, however, that fine journal of record, The Daily Telegraph, had a headline from its highly respected transport correspondent, David Millward,
 
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saying “Muddle over Brown’s free bus passes for over-60s”. One wonders what has gone wrong, because the Government have had long enough to get their act together.

Way back in June, my hon. Friend the. Member for Meriden (Mrs. Spelman) asked the Minister various questions on the issue, and on 20 June the Minister reassured her:

“The Government will provide an extra £350 million in 2006–07 and an extra £367.5 million in 2007–08 which will be sufficient to fund the cost to local authorities.”—[Official Report, 20 June 2005; Vol. 435, c. 678.]

There was then a further reassurance on 22 June:

“Free off-peak concessionary travel will be introduced in England for those 60 and over and disabled people on their local bus services from April 2006.”

Then we have the same figure as before:

“The Government will provide an extra £350 million in 2006–07 which will be sufficient to fund the cost. Final decisions on the distribution of the extra funding—which will be done through the Revenue Support Grant process—have not been made.” .”—[Official Report, 22 June 2005; Vol. 435, c. 1038.]

The Minister and the Government have had plenty of time since then to get their act together and come up with a formula that will deliver the Chancellor’s promise, but I am not sure that they have succeeded.

There has been an interesting north-east, Geordie tendency in the debate. A quick ring round has produced some interesting examples in the cases of other councils. To swing it back down south I shall look at Brighton and Hove city council. It has said that the central Government grant it is due to receive is considerably less than the forecast made by its consultants of the cost for the new concession. Brighton currently offers half-fare travel from 9 am, rather than from the statutory minimum of 9.30 am, and it is concerned that a large number of 60 to 65-year-olds will use the new concession for commuting, thereby generating a huge extra bill. Brighton may have to trim the current concession back to 9.30 am.

If we swing up to the north-west, we come to Cheshire county council, which has said that it currently offers half-fare travel at any time across the county and also on cross-border travel, provided that the journey starts or ends within Cheshire county council’s borders. It is worried that the obligation to provide free fares will mean trimming to off-peak only and ending cross-border travel. That is thoroughly bad news for those who go to hospital across the border in Ellesmere Port.

Cambridgeshire county council currently offers free bus travel for the partially sighted. Again, that may have to be ended to cover the new obligation. A point that cuts across many other counties is that there are three capped district councils in the Cambridgeshire county-wide scheme that may wish to use the grant money for other projects. Is it correct that the money is not ring-fenced? If not, the county-wide scheme could be at risk.

In the south-west, Wiltshire county council and North Wiltshire district council are not sure whether funding from central Government will cover the
 
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scheme. To take a big city, Bristol city council has said that if the grant is not sufficient, local taxes will have to increase to cover the shortfall, so the picture is not quite as rosy as the one that was painted in the previous speech.

My first question to the Minister is therefore: how does the formula work? Are there going to be winners and losers? Have they got the numbers badly wrong in the north-east where, as the hon. Member for Newcastle upon Tyne, Central said, there will be problems? Will the formula work so that some councils will gain? It appears that is it patchy and that it has not been very cleverly worked out.

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Prepared 25 January 2006