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25 Apr 2007 : Column 302WH—continued

That was followed by a statement from the Israeli Foreign Minister saying that Israel would prefer issues with Iran to be resolved through diplomatic channels. It is not helpful to continue this story. It is a red herring. It does not help our multilateral or unilateral relationships. Neither we nor the international community are preparing for war with Iran.

During the past few years, international concerns have arisen about Iran’s nuclear programme. Iran’s uranium enrichment and reprocessing activities were secretly developed for 20 years, and questions put for the past four years by the International Atomic Energy Agency remain unanswered. Why is Iran’s military involved in a civilian programme? Why will it not explain its dealings with A.Q. Khan’s network, which helped North Korea and Libya with their secret nuclear weapons programmes? Why did it experiment with polonium-210, which has no use in electricity generation but can set off nuclear explosions?

As I said, we remain committed to taking the diplomatic route in relation to Iran’s nuclear ambitions. Last summer’s generous proposals would give Iran everything that it needs to develop a modern civil nuclear power industry. This is where I take issue with my hon. Friend. The proposals were among a range of measures in which Britain has played its part multilaterally to promote engagement between Iran and the international community. We presented proposals that Iran could accept to resolve the issue effectively and sustain its own independent civil nuclear power industry, but it has chosen to reject that multilateral approach. We still need to work with Iran to gain active support for building, for example, new light-water power reactors, which would benefit Iran, not only technologically, but by moving it away from using nuclear power for military purposes.

On regional issues, many countries in the middle east feel threatened by Iran’s increasingly malign role in Iraq, Lebanon and Palestine. They wonder how much worse it would be if the President had a nuclear arsenal. If we sit by while Iran acquires a nuclear bomb, how many other countries will try to follow suit?

It is important to recognise that the Iranian Government, uniquely, opposes a two-state solution to the Israel-Palestine conflict—a two-state solution that this Government have worked in the heart of international diplomacy to promote, develop and secure, despite difficult circumstances. Iran’s President still queries the existence of the holocaust, in which 6 million lives were lost during the second world war.

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Iran remains a key source of funds and arms for Lebanese Hezbollah and Palestinian Islamic Jihad, using Iranian taxpayers’ money that would be better spent on providing housing, education and jobs closer to home. It is an ignominious regime that, while needing to provide 800,000 jobs each year to the talented young population from which it must secure support, spends and diverts that money to the promotion of terrorist activities. Iran is arming and funding extremists who are undermining security and stability not only in Iraq but throughout the region as a whole, and that should be ended.

I turn to human rights, which was raised by my hon. Friend in relation to the MEK or PMOI. My hon. Friend suggested that I had been meeting that organisation. I have no recollection of doing so, either as a Minister or as an individual member of the Labour party; I want to put that on the record. That does not mean that I never met somebody who belonged to it—people come up to me in their hundreds at party conferences, so I may well have done so. But I want to put on record the fact that I have never had discussions with that organisation about its activities.

Andrew Mackinlay: I am certainly not suggesting that the Minister has had meetings with PMOI members as a Minister—I do not want to cause him any unfair embarrassment. However, I think that he has met them informally, as many people have. We will look to see whether there is advice on the matter for him, but I do not want to cause him embarrassment now.

Mr. McCartney: It does not cause me embarrassment. Why should it? I just wanted to place on the record that I have not met that organisation in my professional capacity. As for whether, like many people, its members have come up to me at a party conference, that may well be the case. I do not know, but my point is that even that situation would not be meeting with them, nor have I had discussions with them.

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Patrick Mercer: I am grateful to the Minister. Briefly, in the time that he has left, could he address the curious decision to suspend boarding operations and then reimpose them?

Mr. McCartney: The statement made yesterday by my right hon. Friend the Secretary of State for Defence was quite clear. It was the second occasion of setting out the processes and procedures. My hon. Friend the Member for Thurrock asked me about the operations. That was extremely unfair, although not to me.

Patrick Mercer: Why?

Mr. McCartney: First, because the Secretary of State gave an absolute commitment that an inquiry would take place and the findings would come before the House; and secondly, because he has instigated a second inquiry—the Hall inquiry—into other matters relating to the incident. We should wait for those reports, which will be available in May. Apart from that, it is critical, whether in the Gulf or any other theatre of operation, that we should be allowed the maximum ability not inadvertently to provide information to people who might want to trespass on our military operations. The military operation in the Gulf is under the direction of the United Nations as a multinational force, as hon. Members know, and nothing happening in relation to the inquiry has prevented, stopped or undermined that operation. It continues and will continue, today and beyond.

As for the lessons to be learned, my hon. Friend the Secretary of State’s report will be submitted some time in May, and will be debated in the House. The Select Committees on Foreign Affairs and on Defence might want to discuss it further, and that will be a matter of their choice, but let us be absolutely clear—

11.30 am

Sitting suspended until half-past Two o’clock.

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Concessionary Bus Fares

2.30 pm

Graham Stringer (Manchester, Blackley) (Lab): I am pleased to bring the issue of concessionary bus fares before hon. Members today. I believe that the proposals for free bus fares for elderly and disabled people have almost universal support. The Government are to be commended for introducing local free fares in 2006 and for extending the scheme nationwide from 2008. Someone given a pass in Newcastle will be able to use it on holiday in St. Ives. A pass that is given out anywhere in England will be valid anywhere in England, and I hope that at some future time the scheme will be extended to anywhere in the United Kingdom.

Mr. Alan Beith (Berwick-upon-Tweed) (LD): I thank the hon. Gentleman for giving way at this early point. Is there any good reason why other parts of the United Kingdom, particularly border areas, should have to wait until after 2008 for this valuable scheme?

Graham Stringer: I can think of no good reason in principle. I suspect that as I go through the details of my speech, practical problems that any Government would face in introducing such a scheme will be raised. What I really wanted to say is that the scheme is a good idea that everybody supports.

I want to use the debate to ask the Government some questions and to air some issues, so that we do not have another example of the law of unintended consequences whereby good ideas result in bad and poorly thought through outcomes. I shall not go through all the examples, but I think of the money that has gone into GP services, which has resulted in a huge increase in the number of people attending accident and emergency units at weekends. The Government did not intend that, but the initiative has resulted in extra costs at both ends and a poorer service for many of my constituents. We want to avoid another situation like that.

I hope that my hon. Friend the Minister will provide answers to some of my questions, either in her summation at the end of the debate or in writing. Her responses will help when we consider the Concessionary Bus Travel Bill on Second Reading on 14 May.

I have three areas of concern. The first is about how the Government intend to disburse the money to the 291 local authorities that will administer the scheme, because that will be difficult to do fairly under the current rules. Secondly, I have concerns about the appeals system and some of the perverse incentives in the scheme for bus companies to put up fares and increase the public subsidy. Thirdly, I have concerns about the implementation of the scheme and how it will work in detail, and I would like to ask some practical questions about whether pensioners will have the passes in their hands by 1 April 2008.

Under the 2006 scheme, which is now in operation, the Government used the normal local authority grant system to hand out support. I am sure that my hon. Friend the Member for Tyne Bridge (Mr. Clelland) will refer to the consequences in his constituency of using that formula—there were £3.5 million of cuts because the Government underestimated the number of people
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in the north-east who had concessionary passes. It is not very important, but there are also anomalies such as the Scilly Isles getting part of the grant even though they do not have a bus service. Furthermore, of very pound spent on the scheme a percentage goes to Scotland and Wales, so that when the Government properly say that £250 million will go into the scheme in 2008, in fact England will probably get some £212 million after the disbursements to Scotland and Wales. However, that is part of the wider debate on the Barnett formula.

What does all that mean? As I said, when the national scheme comes into effect in 2008, someone from Newcastle will be able to use their pass in St. Ives. If at that time the money is paid out under the grant scheme, things may work very well in areas where few tourists go. However, there will be much larger consequences for councils such as Blackpool, which has millions of visitors every year, as visitors from England will be able to use their passes on the local buses. The problem will affect virtually all passenger transport authority areas that have cities with shopping and tourist centres. Quite simply, the way in which the local government grant is disbursed is not subtle enough to cope with such variations. There will be winners and losers.

I have three questions on this aspect for my hon. Friend the Minister. Can she give an assurance that the subsidy for the scheme will follow the passengers and that no local authority or passenger transport executive will be underfunded? A much better principle is for the money to follow the passengers rather than be distributed to local authorities on an historical basis. Secondly, can she provide an assurance that concessionary fare schemes for children and young people will not have to be cut because of Government underfunding to local authorities or passenger transport executives for the national concessionary fares scheme for pensioners? Thirdly, can she give assurances that the introduction of the new national free scheme will not lead to withdrawal of local authority-supported bus services, thereby undermining the value of the scheme to its users? People want reassurance on those three important questions.

The second area of difficulty is appeals by operators. I know more about PTA areas than I do about other areas. When the 2006 scheme came in, there was a huge number of appeals by bus companies saying, in effect, that they were not getting the right level of subsidy, even though local concessionary fare schemes had been accepted by both sides for many years. If I understand it properly, the point of difference was that the bus companies wanted 100 per cent. repayment for every fare, whereas the PTAs and local authorities quite reasonably said that some elderly people would pay anyway, so that the bus companies’ claims did not represent their real loss or the real subsidy that was required. The adjudicators seem to have taken a purist view of the matter. They awarded the bus companies in Greater Manchester £3.4 million more than was expected, and the consequence was a 70p increase in the fare for schoolchildren. I am sure that that is not what the Government wanted, but it was inevitable once the scheme had started.

That brings me to perverse incentives. If the Government are giving 100 per cent. subsidy in respect of pensioners and disabled people, there is an incentive
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for a bus company to put up fares and to attract more and more pensioners on to the buses at the expense of the fare-paying public, who would be much more likely to find another way to get to their leisure activity or work if the fares went up. They might buy a car or go with a friend; however, they could also lose their job if they could not afford the fare

The easiest way in which I can illustrate that point is to ask hon. Members to imagine a virtual bus that is travelling down a radial route with 100 passengers on it—buses do not normally have that many passengers on them, but this is only an illustration. Let us imagine that half of those passengers receive concessionary fares paid by the local authority and half pay a £2 fare. If the bus company doubles the fare, it is likely to have more pensioners and fewer fare-paying passengers on the bus, which makes it easier for the bus company to make a profit.

We have monitored the decline in bus patronage since the second world war. Patronage increased when buses were deregulated, but since then it has declined. There has been an improvement in patronage in London, and in other parts of the country there has recently been improvement, but that has been caused mainly by elderly passengers and other concessionary fare users. In future, to compare like with like, how will the Government compare statistics on fare-paying passengers with the statistics that we have from the second world war? It would indeed be perverse of the Government to claim an increase of 2 or 3 per cent. a year in passengers if that was masking a real decline in fare-paying passengers and it was only pensioners and disabled people who were using public transport. We all want them to use public transport, but not at the expense of people going to work or to the shops.

The real solution is quality contracts, which I will not discuss in detail because we have had a number of debates on the subject and the Government are to introduce another Bill on it later in the year. If we had quality contracts, we could specify the concessionary fare and all fares at a particular time. That would remove the problem of perverse incentives and of appeals being decided outside the system.

I will start the next part of my speech with a series of questions because they illustrate how difficult it will be in practice to make the system work. Will the Minister guarantee that the national scheme will be secure? What measures will the Department for Transport take to minimise the dangers of fraudulent passes and applications? Will the Minister provide an assurance that pensioners will have a new nationally valid pass in their hands by 1 April 2008? That will involve the administration of more than 9 million passes by 291 authorities—a tall task. Will the Minister provide an assurance that the scheme will continue to be locally administered, so that local authorities and passenger transport executives can offer a more generous scheme if they wish? For example, they might wish to extend the hours to before half-past 9 or to extend the scheme to other categories of people.

I would like assurances on those questions because the Government have been late in providing guidance on the scheme to passenger transport authorities and local authorities. I understand that it has been issued
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only in the last week. I also understand that it is too late to move straight to a smartcard scheme. However, it is important that we have a consistent and coherent scheme that can be administered locally, and that local authorities understand the scheme so that they can distribute the passes to those who have been awarded one.

I will conclude with a number of questions and points. Some £250 million—less the amount that will go to Scotland—is being put aside for the scheme in 2008. I shall be grateful if the Minister explains where that figure has come from and assures us that the amount will be adequate. Judging by what I have seen in Manchester and heard from colleagues, there has been a terrific take-up of passes and a real increase in bus usage following the start of the local free pass scheme. I can only see take-up increasing by large amounts.

I know that the Minister has heard me say this on a number of occasions, but the scheme is open to abuse by bus companies. I have made the case that there are perverse incentives in the scheme, but what action can she take to stop bus companies exploiting the scheme? Their business plans relate not to obtaining extra passengers and improving public transport, but to maximising the public grant. I have previously given examples of that to the House. First Group is the main operator in my constituency—it runs a virtual monopoly. When First Group drives a bus out of the depot, half the basic costs of that bus have already been paid for by the taxpayer, which is extraordinary. First Group is withdrawing from less profitable routes and putting more pressure on the public purse for subsidised routes. Now, it is putting more pressure on fares and on the public purse. The result is higher fares and fewer passengers. Evidence to support that scenario can be found in Wales, where a national scheme is in operation. In Wales bus companies’ profits and fares have gone up by more than in England, where there is not a national scheme. They have increased by 12 per cent.

How will my hon. Friend stop avaricious multinational bus companies from effectively ripping off the public sector? The profits of bus companies are increasing and so are subsidies from the public sector. In addition, deep in the statistics there is a decline in the networks of bus routes and in the number of fare-paying passengers.

Mark Hunter (Cheadle) (LD): The hon. Gentleman makes a good point about perverse incentives. Does he share my concern that one consequence of perverse incentives is that the bus companies are no longer doing enough to promote their services, timetables and concessionary fares and to provide the other aspects of a good service? In the conurbation that he and I share as Members of Parliament, there certainly seems to be a marked lack of such promotional activities.

Graham Stringer: The hon. Gentleman raises the point that I am making in a different way. The main target for bus companies in their business plans is how to increase their grant. That is the most effective way for them to get money to their bottom line. They are not looking to provide a good public service and that worries me. I am concerned that we will end up in the
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same situation as we had with the railway companies six or seven years ago, when public expenditure on the railways was completely out of control. To deal with that situation, the Government introduced the Railways Act 2005, which got rid of the Strategic Rail Authority and provided some control over public expenditure.

I am asking for a fair grant distribution system that allows the money to go where it will be used. That is best done by having a safety net and money held back that can be paid to Blackpool, Manchester, York or wherever there are extra traveller journeys. We also need to guard public sector interests. I look forward to my hon. Friend’s response to the points that I have made, whether it is given in this debate, in writing or on Second Reading of the Concessionary Bus Travel Bill. The drive behind the Bill is good and it has good ideas, so I do not want to see it ruined by a bus industry that wants to make huge profits at the expense of the public purse.

Several hon. Members rose

Frank Cook (in the Chair): Order. There are 41 minutes left—40 by the time I have finished this announcement—before I call the first of the three Front Benchers. Will hon. Members please bear that in mind when making their contribution and when accepting and responding to interventions?

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