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Mr. Alan Beith (Berwick-upon-Tweed) (LD): I am glad that the hon. Member for Manchester, Blackley (Graham Stringer) has raised this subject today. He is right in commending the Government for what will be a much appreciated scheme. He is also right, however, to mention that there are some important questions about it. He has raised some of them previously and they are significant, so I hope that the Minister will give attention to them.
I want to concentrate on a particular aspect of the scheme. Virtually all my constituents have to travel out of the local authority area to get to a major shopping centre or a district hospital. Many of them also have to travel out of their area to visit their nearest local shopping centre or supermarket. Some of them even have to travel out of the local authority area to visit their GP. They will benefit greatly from the introduction of the scheme.
Many of my constituents have to change buses, which means that they immediately forfeit even discretionary help on the rest of their journey, because they have completed the journey that started in their local authority area of origin, and they board a bus in a different such area. It is a nightmare for pensioners to get help under the current system, which relies heavily on discretionary arrangements whereby one local authority agrees to provide free travel for pensioners who travel in another local authoritys area. Such arrangements are limited and complicated.
For many of my pensioners, therefore, 2008 will be a delight, because all that will be swept away and they will have a national bus pass. However, that applies to
only half of them. Unless the Minister acts, the other half will find April or May of next year an extremely disappointing time, because they will not benefit at all. The reason is that, when they visit their nearest city, district hospital, supermarket or in some cases their GP, they have to travel into Scotland. They will not get help unless there is interchangeability between the Scottish and English schemes. To the limited extent that they receive help at the moment it is because Berwick-upon-Tweed borough council gives some discretionary assistance for a limited number of journeys to Scotland, but not those on which one has to change buses.
If some of the financial problems described by the hon. Member for Manchester, Blackley come to pass, local authorities might find that they are unable in any way to supplement the provision of the national bus pass with discretionary arrangements. The financing of the scheme does not assume that local authorities will have to make further discretionary arrangements, but those in border areas would have to do so merely to keep the support that people have now, and they might not have the money to do that. What is needed is interchangeability between the English and Scottish bus passesthat stands out a mile.
The comments that I have made about my own constituents apply also in reverse: all those in Scotland whose nearest GP, supermarket or indeed shop is in Berwick need to be able to travel the opposite way and need to be able to benefit from the scheme. If their national card runs out, they will not be able to do so.
Tourism is a relevant issue as well. The hon. Member for Manchester, Blackley mentioned that, although in a negative sense, saying that the bus pass situation could be a problem for tourist areas. My own area is a tourist area, although not on the scale of Blackpool, where there are all those people wanting to use the trams for free. Nevertheless, there will be a problem. If tourists can travel around on the bus, in particular those who want to use the bus to go on walks, it is an attraction to our area. Many pensioners walklet us not assume that they are all restricted in their movements. Many are keen walkers and ramblers, and would be delighted to use the scheme to arrive at one place and walk to anotherdown the coast, for example. A similar situation must exist in the Welsh borders as well.
Unusually among Ministers, but commendably, those dealing with the scheme have foreseen the problemthey have included powers in the legislation to enable interchangeability. However, all the replies that I have received from them have lacked any sense of urgency on the negotiation of interchangeability, and no commitment to achieve it by the time of the introduction of the national bus pass. It is vital that the national bus pass is interchangeable from the day on which it is introducedotherwise half my constituents will say, What use is this to us? It is not getting us to the GP, the hospital, the shopping centre, or the city. They will be extremely angry and there will be a pensioners backlash in border areasnot just in my constituency but in the Carlisle area and in all the areas along the Welsh border. The local authorities in those areas, which provide for a certain amount of cross-border travel, will not have spare money to continue
provision if the scheme financing presents the sort of difficulties that have been referred to in the debate.
I have one simple request of the Minister, therefore, which is that I hope that she will respond today by saying, Yes, as soon as the Bill is on the statute book and the Scottish elections are over I shall be negotiating with my Scottish and Welsh colleagues to ensure that there are interchangeable national bus passes from the date of introduction of the national bus pass scheme.
Mr. Clive Betts (Sheffield, Attercliffe) (Lab): I congratulate my hon. Friend the Member for Manchester, Blackley (Graham Stringer) on securing the debate. It is timely that we recognise a successful and important Government policy initiative, although we should highlight certain potential and existing problems. I shall reinforce some of the comments made by hon. Friend, and perhaps elaborate on one or two.
I welcome the Government initiative of having local free fares for pensioners and the proposal to extend that to a national scheme next yearthey are among the benefits of a Labour Government with a policy of tackling disadvantage and social exclusion. Furthermore, the scheme can be paid for because we have a Labour Government who have created a successful economy. That has produced the financial wherewithal to ensure resourcing of the scheme.
On the subject of the existing scheme, not only are there local arrangements of the type that the Government have funded in South Yorkshire, but a Labour-controlled passenger transport authority means that there is also an extended scheme operating over a greater time. Pensioners can use their free passes from 9 amthe same situation as that which applied under the old concessionary reduced fare scheme. The free fares apply to the trams as well as to the busesthat has also been agreed at local level. Furthermore, cross-border agreements with West Yorkshire mean that pensioners can travel between South Yorkshire and West Yorkshire on the free fare scheme, and on the same basis certain routes into Derbyshire can also be accessed, which is important for my constituents as my constituency abuts the border, so there is a certain amount of cross-travel.
Those are all welcome and important local extensions of the existing scheme, and I seek reassurance from the Minister that, on the move to the national scheme, the ability to have local scheme additions will remain available to local PTAsparticularly the earlier start and the extension to the tram. When the Government initially proposed the new scheme and indicated that it would apply only to buses, rather than to trams as well, I received enormous numbers of letters from constituents saying, What are you going to do about us? We like the tram and we use it, and we want to make sure that we are not disadvantaged. That has certainly been achievable at local level in Sheffield and South Yorkshire.
I have certain worries about the scheme funding, particularly the subsidy element, and I want to emphasise the points made on that by my hon. Friend the Member for Manchester, Blackley. It cannot be a coincidence that, around the time that the Chancellor made his announcement of funded free fares for
pensioners at local level a couple of years ago, First Group, the major bus company that provides services in my constituency and throughout Sheffield, managed to have three fare increases in a 12-month period.
The basis for funding and subsidising operators for the concessionary scheme is that they should be neither better nor worse off commercially as a result of the scheme. However, it just so happens that whether they are better or worse off depends on the comparison with off-peak fares, and who sets off-peak fares but the bus companies themselves? In certain circumstances, we have almost given operators the ability to write their own numbers on a cheque.
Again, it cannot be a surprise that when First comes to look at its fare increases this year, some of my constituents face double-digit increasesincreases far in excess of inflation or any reasonable increases in costs that operators have. Some people have to pay those fares: they have no choice but to ride on a bus and will pay the fare anyway. Pensioners riding on the bus at times when free fares are available will not really be concerned about what the level of off-peak fare is and how much money that will cost the passenger transport executive to pay over to the operators. They will simply get on the bus because it is free, and the operators will get extra money for them, having put fares up that people do not have to pay anyway. There is something slightly wrong about that system.
Let me explain my real concern. The PTEs budget was, understandably, £18.3 million in the last financial year to pay for concessionary fares for pensioners. There was a more than 100 per cent. increase on the previous year, and we understand whybecause the fares were free, rather than 40p, as they previously were. This year, however, there is a further increase of 5.66 per cent., which, given that the overall PTE budget is not expanding by the same amount, means that to fund the increase in fares that the operators are putting on at off-peak periods, which gives them an increased subsidy for the concessions for pensioners, other aspects of the PTE budget are starting to be squeezed and the ability to deliver other concessions to other groups that are in need of concessions will be affected, or the ability to fund tendered services will be squeezed out. The price of tendered services is already rising because there really is not competition for those, either.
I have supported in the past, and my hon. Friend the Minister will not be surprised to hear me again extol the benefits of, a move to quality contracts and to a franchise system for local bus services, because that is the right thing to do in order to be able to regulate the service and to deliver a real public service. It is not that I want to go back to where we were before the free-for-all was brought in by the Conservative Government. Rather, I would like to bring an element of real competition into the delivery of concessionary services.
At present, the bus operators, by being able to determine fare levels themselves, while recognising that many people who have to pay for them will have no choice but to use the buses and that no one will be put off getting on a bus if they have to pay nothing for that anyway, can almost name the increase in subsidy that they want each year, by putting off-peak fares up.
It is no surprise, either, that the price of single off-peak fares in my constituency has on average gone up more than that of weekly tickets, which are often
bought by people who make a decision to pay for a local bus service and to get on it. That is because the local weekly ticket and the cost of it do not relate back to the subsidy for the concessions that the bus operators get. They put up those fares that will directly ensure that they have an increased subsidy at the end of the process, to compensate them for the concessionary passengers they carry.
However, as my hon. Friend the Member for Manchester, Blackley mentioned, if we moved on to a franchising basis and there were a competition for the franchises between different operators, that would cover the delivery of service not only to fare-paying passengerspeople who hand money over weekly, monthly or on the bus as they undertake individual journeys. It would also be a tender and a competition to deliver the concessionary travel at the same time.
Under the arrangements in London, we do not have all this business of operators and PTEs having to sit down and argue with one another about what the real value of the concessionary travel iswhat is the point at which the operator does not make a gain and does not make a loss from concessions? We do not have the issue of appeals going through and the decision being taken out of the hands of locally elected councillors or their appointed officials in the PTEs. The matter is determined by the tender that is put in for the franchise by the operators. They tender for a package of services.
I am arguing strongly that we must retain the concessionary scheme and bring in the national scheme and we must have the ability to retain, even when the national scheme is introduced, additions at local level such as we have in South Yorkshire, but we must also consider the business of how operators can be properly compensated, not overcompensated, as I believe many are at present.
When we move to transport authorities and transport executives being able at local level to decide what the best way is to run bus services in their locality, if they choose to go to quality contracts, that will mean that we have a proper element of competition in the entirety of local bus serviceswe do not have much now, because in most parts of Sheffield, one operator runs the services full stop. There will also be competition for the concessionary element of those services. It will stop the nonsense of operators simply putting up fares to get an increased subsidy for the concessions. It will stop all the nonsense of trying to arbitrate between the views of PTEs and of operators about what the actual and proper subsidy is. That will be a much better arrangement for the future.
I welcome what the Government have done so far. I welcome the extensions. Clearly, I would like to hear the Ministers answer to some of the problems with the national scheme in relation to the introduction of smart cards and cross-border travel that my hon. Friend the Member for Manchester, Blackley has already put to her. I also hope that we move as quickly as possible to allowing a choice in favour of quality contracts and franchising at local level, because that will mean that there is a much fairer way of reimbursing operators for the cost of the subsidy, and ensure that we get proper value for public money, which I am not sure that we are totally getting under the current arrangements.
Mr. David Clelland (Tyne Bridge) (Lab): I, too, congratulate my hon. Friend the Member for Manchester, Blackley (Graham Stringer) on securing this important debate. I join my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) in praising the Labour Government for introducing the free transport scheme for elderly and disabled people and for rolling it out nationally next year. That is not something new for many metropolitan areas and certainly not for Tyne and Wear, where we introduced a free travel scheme in the late 1970s for pensioners and disabled people. Charges had to be introduced in 1979, when the Tory Government came in, and I certainly objected to that at the time. I felt that the free scheme ought to have been protected at all costs, but unfortunately that was not done, and fares have increased ever since, so I welcome the new scheme; indeed, it has been widely welcomed in Tyne and Wear.
As has been pointed out, however, there have been unintended consequences because of the way in which the funding for the scheme has been distributed. There must be a rethink on the distribution of funds when the new national scheme comes in. It is crazy that the Isles of Scilly received a share of the money when they have no bus services at all, that Scotland and Wales received a share of the money through the Barnett formula when they have their own funded schemes anyway, and that some local authorities received more than they needed to run the scheme in their areas and others received less.
As my hon. Friend the Member for Manchester, Blackley pointed out, that cost Tyne and Wear dearly. I am referring not to the £3.5 million to which he referred, although we did have to make £3.4 million-worth of cuts. Some £2 million also had to be taken from balances, so the total cost to Tyne and Wear of introducing the scheme in the last financial year was £5.4 million. As I have said, £3.4 million of that related to cuts. There was a 25 per cent. rise in child concessionary fares to 40p, a 50 per cent. rise in the cost of teen travel tickets for 16 to 18-year-olds in further education, and the scrapping of 11 subsidised bus routes providing services where no other public transport could be provided. Those were the consequences of introducing the scheme under the formula that applied.
If the national concessionary travel scheme will be funded in the same way as it has been up to nowon the basis of population, not journeysNexus, which is the Tyne and Wear passenger transport executive, faces the certainty of further cuts in years ahead. It is also certain that urban Tyne and Wear will be a hotspot area in attracting greater numbers of journeys than the net journeys made by its own citizens. That is because the Metro shopping centre and the Newcastle and Gateshead cultural and other leisure attractions, which bring people into the area. In 2008, local authorities and PTEs will have to cover the costs of all concessionary journeys that start in their areas, including those of non-residents, so we will be severely disadvantaged. We would therefore like the Government to reserve funds from the national concessionary travel budget to compensate hotspot areas as they emerge.
If possiblethis is a serious request to the Ministerwe would also like Tyne and Wear to receive
some compensation, if not 100 per cent. compensation, for the £5.4 million that it lost last year. If we do not get it, we will start next year not on a level playing field with other PTE areas, but with a severe disadvantage, as we try to get back, if we ever can, to where we started from.
Will the Minister therefore give an assurance that the subsidy for the scheme will follow the passengers and that no local authority or PTE will be left underfunded? Will she provide an assurance that concessionary fares schemes for children and young people will not have to be cut because local authorities or PTEs have received insufficient funds for the Governments national concessionary fares scheme for pensioners? And will she reassure me that the introduction of the new national free scheme will not lead to the withdrawal of local authority-supported bus services, which would undermine the schemes value to its users?
There is also the question of appeals by operators. PTEs and local authorities currently reimburse operators for the cost of providing free travel by means of local formulas, which are broadly based on a proportion of the off-peak fare. Operators have appealed against such reimbursement arrangements, and appeals in PTE areas alone gained operators additional revenue of about £12 million in 2006. That resulted in some PTEs having to raise fares for other groups, and fares for children in Greater Manchester had to be increased from 50p to 70p to cover the cost of appeals. A further 40 appeals are already in the pipeline for 2007.
There is a further problem. As the number of fare-paying bus passengers continues to decline, while the number of state-subsidised non-fare payers increases, there is a perverse incentive for operators to raise off-peak fares. As my hon. Friends the Members for Manchester, Blackley and for Sheffield, Attercliffe have said, the answer is the introduction of quality contracts or a franchising system, under which local authorities can have some control over fares and bus services in their areas. That would simplify the arrangements for concessionary fares and eliminate the perverse incentive to increase off-peak fares. The provision of a concessionary fares scheme would be part of the quality contract, and operators would have to build that into their overall tender price. Fare levels could also be regulated as part of the contract.
Finally, there is the question of attempting to prevent fraud when the national scheme is introduced. The Department for Transport has been slow to produce a strategy setting out how the national scheme will work, and it is already too late to have a working national smart card scheme in place for April 2008. Will the Minister guarantee that the national scheme will be secure? What measures will the Department take to minimise the dangers of fraudulent passes and applications? Will she provide an assurance that pensioners will have a new nationally valid pass in their hands by April 2008? Finally, will she provide an assurance that the scheme will continue to be locally administered so that local authorities and PTEs can offer a more generous scheme if they wish to?
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