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25 Apr 2007 : Column 315WH—continued

Mark Hunter (Cheadle) (LD): I shall be brief, Mr. Cook. I congratulate the hon. Member for Manchester, Blackley
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(Graham Stringer) on securing the debate, and he contributed thoughtfully on a subject that has caused considerable concern on all sides. I speak as a former member of the Greater Manchester passenger transport authority and a keen supporter of public transport, whether bus, light rail or the railway system.

As the hon. Gentleman has said, there is all-party support for free travel for pensioners after 9.30 am, and it has been a considerable success. However, he will be aware, as will the Minister, that many of us remain gravely concerned about the unintended consequences of the proposed move. I refer, of course, to the decision by bus operators in Greater Manchester, which has been mentioned, to rack up concessionary fares for children by 40 per cent., from 50p to 70p. I shall not go as far as one member of the Greater Manchester PTA, who referred to the operators as “robber barons”, but I certainly understand where that comment came from. Whether or not the problem is down to the Government seriously underestimating the take-up of free fares among older people, we are certainly all aware that the situation is serious, and I look forward to the Minister perhaps giving us some idea of what the Government intend to do, or might be able to do, about it.

When the Minister responds, I encourage her to touch on the way in which the money is distributed to transport authorities. I am referring, of course, to the fact that it goes via local authorities, and we have heard of the problems that that has caused—it was certainly clear who the winners and losers were in Greater Manchester. I have no problem with Manchester, as the regional capital of the north-west, benefiting most from the proposals, but I certainly do have a problem with the fact that my borough of Stockport, as well as those of Trafford and Bolton, received nothing very much as a result of the funding formula. With those few comments, I would be grateful to hear the Minister’s response to the debate.

Frank Cook (in the Chair): There are 44 minutes remaining, and I appeal to both Opposition Front-Bench speakers to take no more than a third of that time.

3.16 pm

Mr. John Leech (Manchester, Withington) (LD): I assure you that I shall take up no more than my allocated time, Mr. Cook. I, too, congratulate the hon. Member for Manchester, Blackley (Graham Stringer) on securing a debate on this important subject. As he rightly said, the measures have almost universal support across political parties and the general public.

The hon. Members for Sheffield, Attercliffe (Mr. Betts) and for Tyne Bridge (Mr. Clelland) and my hon. Friend the Member for Cheadle (Mark Hunter) all mentioned the serious issue of the potential shortfall in funding, and I shall concentrate my remarks on that. However, I also urge the Minister to respond to the concerns of my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) about cross-border arrangements, which are clearly important for Members with constituencies near the borders with Scotland and Wales.

In his 2006 Budget speech, the Chancellor announced that, from 1 April 2008, 11 million over-60s
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and disabled people in England would be entitled to free off-peak local bus travel in every area of the country, and the Concessionary Bus Travel Bill will legislate for those changes. Free bus travel will be available to those who are eligible from 9.30 in the morning until 11 at night on week days and all day at weekends and bank holidays across the whole of England. Local authorities will still be able to offer residents additional benefits, such as travel before 9.30 am, concessions on other modes of transport such as trams and tokens for use on taxis and community transport.

The Liberal Democrats welcome the proposed extension of the national fares concession, but we are concerned that the Bill as it stands simply contains enabling provisions, rather than details of how the funding mechanism will work. Questions remain over whether councils and passenger transport authorities will face any financial risk in administering the programme.

The issue is as much about how funding is distributed as it is about the total amount of funding. For example, under the earlier scheme for local free travel, which came into force on 1 April, a number of councils, including in Tyne and Wear, experienced severe financial impacts as a result of the administration of the funding distribution regime, and those problems have still not been fully resolved. The hon. Member for Tyne Bridge noted that his local PTA is about £5 million down, and any PTA or local authority would have serious problems with the cuts to services to which that might lead. The worry is that problems remain unresolved from the first time round, and the more complicated national scheme may bring even more. Council tax payers should not have to pick up the tab for a poorly managed and administered national scheme.

The present scheme is funded through the local authority block grant system, which is very crude and bears no relation to the numbers of concessionary fare bus travellers. That is why the Liberal Democrats support the inclusion in the Bill of the opportunity to introduce a smart card system, along the lines of what has been introduced in Scotland. That system would provide not only a method of buying tickets, but, more importantly, a measure of bus use. It would therefore facilitate a much better method of distributing money to operators by ensuring an accurate link to the number of passengers carried. Some local authority areas are already introducing smart cards, so it is vital that all adhere to a national standard that will make integrated ticketing and funding possible.

Unfortunately, there are potential problems with the current proposals. In areas with large numbers of visitors aged over 60, there will be additional pressures, as current funding arrangements do not take into account journeys made by visitors—only those taken by residents. Where there are high numbers of visitors, the level of bus use by the over-60s will be higher than average. If the funding formula does not reflect that, local taxpayers may pay for holidaymakers aged over 60 to use buses free. The problem is that no one really knows how many additional journeys will be created, or where.

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There is a notable lack of research or data held by the Government on visitor numbers and, consequently, on the likely impact on bus use in areas more likely to be visited by the elderly. Figures on the age of visitors and on the likelihood that elderly visitors will use local bus services are not readily available. However, the raw figures on visitor numbers are a useful pointer to the areas that might experience significant increases in bus travel. For instance, London is clearly at the top of the table, but interestingly Blackpool is second and my own authority, Manchester, is in third place. It is not only seaside resorts that will feel the impact. Research needs to be done to find out the number of visitors, by age, in each local authority, their current bus use and the likelihood that those people will use bus services once they are free.

There should also be provision in the Bill for an eligible journey to be extended on to another mode of transport, where that is considered appropriate. My Liberal Democrat colleagues in the House of Lords have raised the matter of Croydon Tramlink, which for part of its journey from New Addington to Croydon is a substitute for a bus service that was withdrawn. That substitution will prove to have been very unfair, if the journeys are not included in the free scheme. Similarly, on Merseyside a number of journeys from Birkenhead to Liverpool will include a ferry journey, but at the moment such journeys will not be included in the scheme.

The original 2006 scheme received £350 million of funding, but the distribution system to councils, through the revenue support grants, has not covered costs, and some councils have lost out. Those councils have had to cut subsidised bus services, increase children’s bus fares, use reserves or increase council tax to fill the funding gap between the Government grant and the actual cost of free bus travel. Serious annual shortfalls have affected, for example, Tyne and Wear, Devon county council and Bath and North East Somerset council. The extended scheme for 2008 will receive an additional £250 million in Government funding, but the Government again propose to distribute that by a revenue support grant formula.

Recently, in January, the Local Government Association regeneration and transport board discussed that serious issue of funding. It has argued for a more transparent system of distributing funds, preferably by way of a direct ring-fenced grant to local authorities that are transport authorities. It has also suggested a safety net of money top-sliced from the Government’s £250 million to prevent local authorities from incurring unintended deficits and extending the fares-free concession to tram and light rail, local heavy rail, local ferry services and community transport. Unfortunately, the Government rejected all those proposals in the House of Lords Grand Committee debate.

There is a danger that unless a system is devised to ensure that each journey is paid for, some local authorities and passenger transport authorities will be short-changed. No one really knows what impact the national extension of the concessionary scheme will have on the take-up of free journeys. We do not really know how many people will decide to go on a day trip
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from Manchester to Blackpool by bus, which is why it is vital that resources are directed to the areas where journeys are created. The sensible solution is a smart card system that will log every journey and allow direct payment to be made to the bus operators, ensuring that no local authority will be left out of pocket and have to make up a shortfall.

Frank Cook (in the Chair): There are 34 minutes remaining.

3.26 pm

Stephen Hammond (Wimbledon) (Con): I shall try to take well under half of that time, Mr. Cook, to give the Minister time to reply to some of the issues that have been raised today.

I confess to some surprise at this debate today, given that in less than three weeks, on 14 May, the Concessionary Bus Travel Bill will have its Second Reading. The Bill was introduced in the Lords last November and had its Third Reading there on 5 February. Everyone knows that it will guarantee concessionary off-peak travel for people aged 60 and over and disabled people on all local buses in England from 2008. It will also allow future mutual recognition of national concessionary bus passes. Like other hon. Members, I would like the Minister to tell us when that mutual recognition of passes across border areas is likely to happen. The Bill will also effectively give the Secretary of State reserve powers to alter the scheme.

All hon. Members who have spoken in the debate have pointed out that the concept of concessionary travel is supported by all parties. The key intention of the Bill, the introduction of national concessionary bus travel, certainly enjoys our support. Clearly the clauses will require fairly detailed scrutiny. As I have said, Second Reading is on 14 May, so one might wonder why this debate should be happening today. I initially thought that it might be an appeal to humour: you wait for a while and then several come along at once.

Mr. Leech: I am sorry to ruin the hon. Gentleman’s joke—

Stephen Hammond: So am I—it is the only one I have got.

Mr. Leech: Nevertheless, the debate is timely, because it may give the Minister the opportunity to change her mind.

Stephen Hammond: I thank the hon. Gentleman for his contribution, but the Minister has been extremely generous in preparing for the Bill by inviting Opposition spokesmen to help to iron out several issues before it comes to the House. She has been able to answer several of the questions on which the Liberal Democrat spokesman and I sought reassurance—although that does not, as I am sure she can imagine, mean that we shall not give the Bill extensive scrutiny in Committee.

We have heard the usual comments today about bus companies. Some such comments are undoubtedly true, but there is no balance. One of the problems with
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the deregulated markets at the moment is that bus companies are becoming increasingly frustrated by what they see as local authorities’ failings, and local authorities are increasingly frustrated by what they see as bus companies’ failure to invest or to be responsive. The operators have freedom to decide where and when to run buses, but they are banned from co-ordinating with other operators. Local authorities can offer subsidised and non-commercial schemes, but there are restrictions on deals and on what they can negotiate on service levels. Of course, local authorities can invest in quality bus corridors and bus improvement schemes—I have been to see several of those. The private sector benefits from them, but several local authorities feel that they do not make a greater contribution to the public purse. However, those are not necessarily good arguments for the reintroduction of older schemes or for making the tests on quality contracts easier.

There is a lot of talk about the schemes that quality contracts might enact if the test were made easier. The schemes would be similar to those on the London bus network, but that is not the paragon of virtue that many people who live outside London’s precincts believe it to be. The Government believe that the current test for quality contracts is far too exacting and that the public interest clause should be redefined to state exact circumstances. Although it is clear that voluntary partnerships continue to work and can be made to work, it is not clear, even with the revision to the test that the Minister proposes in “Putting Passengers First”, whether quality contracts can ever work. They seem to take us back to the pre-1985 solution. The Minister talks about the Bill and “Putting Passengers First”, but rather than trying to make quality contracts work, we want her to make voluntary and quality partnerships work.

Mr. Betts: The essence of the Government’s proposals is that it should be up to transport authorities to decide locally the best way to run bus services in their areas. Surely the hon. Gentleman would not want to rule out the possibility of quality contracts being the right way in which to run services in certain areas and the passenger transport authorities in those areas having that choice.

Stephen Hammond: I merely remind the hon. Gentleman that the proposed change to quality contracts will re-enact the status quo ante. It was a former Secretary of State for Transport who said that there should be no going back to that era.

Graham Stringer: Will the hon. Gentleman give way?

Stephen Hammond: No, I have given way twice and I am mindful of your strictures, Mr. Cook. We could rehearse our Second Reading speeches and raise questions of cost, definition and reimbursement, but I intend to save much of that for Second Reading and Committee stage of the Concessionary Bus Travel Bill.

It is clear that concessionary schemes are not simply a subsidy to bus operators. As the Government have said, and as the evidence from a number of passenger
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transport executives and bus companies shows, reimbursement is made to work on a no better-off, no worse-off basis, which inevitably means that the scheme is revenue neutral in most areas. The level of reimbursement that is offered can be imposed by local authorities, so the ultimate power in terms of reimbursement resides with local authorities.

The funding of local government and of free local concessionary bus travel, which will soon be a national scheme, has caused considerable problems. The Liberal Democrat spokesman said that how funding is distributed is more important than how much is spent, but both questions are relevant. Several operators have written to me about the Bill to say that local concessionary and reimbursement schemes have resulted in many of them not receiving the appropriate level of reimbursement for carrying passengers who travel free, or for the investment required to introduce new vehicles or increased frequencies as a direct result of that concessionary travel being offered.

Equally, many local authorities have complained that the mechanism for allocating Government resources to cover the cost of local concessionary and free bus travel has resulted in a fairly major shortfall. When local concessionary fares were first offered, my office phoned 15 local councils to inquire whether the proposed extra Government funding would cover the schemes that they would have to introduce in their areas. Only one said that it would. I understand that there were 60 initial appeals, of which 44 are still outstanding, against the level of funding given to local concessionary schemes.

It is instructive to look at an example of how some local authorities have been hit. I shall use Christchurch as an example because it has one of the highest percentages of citizens aged over 60—36 per cent. Before the mandatory free scheme, it ran a half-fare scheme that allowed some cross-border travel and travel outside the district, which cost £138,000 in 2005-06. The new scheme cost substantially more, and the Government adjusted the grant to Christchurch by £237,000 from 1 April 2006, but the amount that was needed to enact the new local scheme to meet Government stipulations was £395,000, leaving a deficit of £20,000 for the local authority to pick up. The following year, take-up and usage exceeded expectations by 69 per cent., partly because of local usage and partly because of other people coming in. As a result of the scheme, Christchurch faced a £345,000 hole in its account. Therefore, the issue of how the money is being distributed is of concern.

The hon. Member for Manchester, Blackley (Graham Stringer) told us that Greater Manchester has pointed out that although the national allocation was £250 million, only £212 million actually reached local authorities. The history of the scheme is that the Government are clearly putting money in, but not all of that money is covering the full cost of implementing schemes in local areas.

The Minister has already claimed that, with the additional moneys that the Government are providing to make the local concessionary schemes and now the national concessionary scheme work, they will provide
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an extra £1 billion of funding. The £350 million that was made available last year and the £250 million for the national scheme add up to £600 million. I am told that the £1 billion is made up by extra movements in grant funding to local transport authorities. I hope that the Minister will clarify how that money will be delivered and how local authorities will recognise that.

Today, we have briefly discussed the hotspot scheme. A number of local authorities are clearly concerned that if the funding for the concessionary scheme does not follow the passenger, there will be a fairly dramatic impact on local council tax payers. It would be worth the Government giving us a clear statement, perhaps before Second Reading, about their thinking on one or two matters associated with the Bill.

The hon. Member for Sheffield, Attercliffe (Mr. Betts) talked about his local residents’ desire for trams to be included, but in several rural areas, although community transport or dial-a-ride is the only form of public service transport available, they appear to be excluded from the national scheme. For many disabled people, the ability to travel or to use the scheme will be real only if it applies to their carers as well. I am sure that, like me, the Minister will have had representations from various charities on that point. Does she intend to amend the Bill to allow that to happen?

The Government’s policy is relatively rare internationally, in that most countries do not offer 100 per cent. concessionary travel. We should be pleased that we do. We are almost unique in that regard. One reason why other countries do not offer 100 per cent. concessionary fares is because they contain a dead weight loss initially unless the funding is sensitive to journeys. I hope that the Minister will give us further guidance as to whether the pass that will be issued to citizens aged over 60 or to disabled people will have smart card technology. If such passes will not be available at the start of the scheme, when will they be? In future years, will the subsidy be entirely allied to usage and entirely follow the passenger?

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