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The Under-Secretary has informed us on a number of occasions that from April 2008 the Government will be providing around £1 billion a year in total to fund concessionary travel. When she replies, may we have a little more explanation of how that is made up? The £350 million that was made available for local concessionary travel in 2006 has been topped up by £250 million as
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part of this package, making a total of £600 million today, but where does the extra £400 million come from and how will it be delivered? If the detailed work is being done now on the way in which the funding will be allocated, how can Ministers be sure that £250 million is sufficient to meet all the needs? Can they provide assurances that it will be enough to cover the costs of the scheme? The experience under the fares scheme introduced in April last year is that they did not get it right the first time round.

We have already heard from some hon. Members how the 2006 scheme has affected their areas, but I will pick up on a couple of examples. During the recent Government consultation on the 2007-08 local government finance settlement, the Government received representations from 23 local authorities and local authority groups that the funding for concessionary fares was insufficient to meet the costs of the scheme. We heard about the major issue in the north-east from the hon. Member for Tyne Bridge (Mr. Clelland). The introduction of the scheme cost Tyne and Wear £5.4 million in the last financial year. It had to make £3.4 million-worth of cuts because the Government had underestimated the take-up of the scheme. There was a 24 per cent. rise in child concessionary fares, 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 to areas that benefited from no other forms of public transport.

There is a similar situation at the other end of the country. In Christchurch, roughly 6 per cent. of the population is over the age of 60—the highest percentage of any local authority area in England or Wales. With the introduction of the 2006 local concessionary scheme, the Government increased the council’s grant by £237,000, while its total budget for concessionary fares was £395,000, including £20,000 of its own money. However, the take-up was even greater than anticipated, and 69 per cent. of those eligible have been issued with a pass. The £395,000 budget has been overspent by almost 100 per cent.—equivalent to an 11 per cent. increase in the borough’s 2006-07 council tax. There is no point in giving our pensioners free bus travel if they just have to pay the bills through their council tax instead. It is not just local authorities that have had problems with the funding of the local concessionary scheme. Sixty appeals have been lodged with the Department for Transport by bus companies since the start of the local concessionary scheme, 45 of which remain unresolved.

It is essential that the Government not only clarify exactly how much is being spent, how it will be broken down and how and where it will be allocated, but confirm and prove that they have sufficiently allowed for take-up in excess of expectation.

How the money is allocated will be just as important as how much there will be. The Government have used the normal local authority grant to support the 2006 scheme of local concessionary bus fares. The local authority in which a concessionary journey begins will have to compensate the bus operator. However, if the Government reimburse local authorities according to their resident over-60 population, areas with large numbers of elderly visitors will end up with a large financial burden for which they will not be adequately compensated. Again, I hope that the Under-Secretary will address that when she replies, because it is a particular problem
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for holiday resorts that attract a large number of elderly visitors. If towns such as Brighton, Cleethorpes or Poole have a disproportionate number of elderly visitors, inevitably they will end up footing the bill for a much higher level of bus usage than will have been provided for under the grant that they receive. How do Ministers plan to address that issue?

Let me touch on a number of issues related to the scope of the scheme. The Secretary of State will be aware of the pressure coming from a variety of sources to provide concessionary fares on other transport systems as well, such as trains and ferries. I am particularly aware of the representations being made by my hon. Friend the Member for Isle of Wight (Mr. Turner) about his constituents. I understand the problems that the Government would face in funding such an extended scheme, but when the Under-Secretary replies will she brief the House about the work that was done on the scope of the scheme and what assessments were carried out on the viability and costs of extending it to cover other local transport systems, such as trams and ferry links?

In particular, can the Minister tell the House what assessment the Government have carried out of the cost of extending the scheme to cover community transport? Ministers will be aware of the valuable work done by our community transport sector. An underlying principle behind the Bill must be to help tackle social exclusion, but the reality is that some of the most socially excluded in the country are those who, for whatever reason, are unable to use public transport and for whom innovative community transport schemes are their only lifeline to the wider world. The truth is that the Government have decided to exclude community transport from the scheme. Will the Minister explain her approach to that issue?

Mr. Atkinson: I want to reinforce my hon. Friend’s remarks about community transport. In my constituency I have one community, Kielder village—the most remote village in England—that depends entirely on a post bus to go south and a community bus to go shopping in Scotland. Without subsidy, that service is extremely vulnerable.

Chris Grayling: My hon. Friend is absolutely right to highlight the fact that in some areas of the country, particularly in our rural areas, community transport schemes—we have some tremendous community transport operations and great work is done by the social enterprise sector—are the only transport service. The Government must support them.

The Secretary of State addressed the cross-border issues to some degree, but I am not entirely certain that he is confident that he will deliver a solution. Wales and Scotland have concessionary bus schemes, and England will have one from 2008. I hope that the Minister can assure us that between now and then as much as possible will be done to ensure mutual recognition of the schemes across borders. For those who live in the border areas, whose local bus service can begin on the other side of the border from where they live, that mutual recognition is vital, as we heard from the hon. Member for Ellesmere Port and Neston (Andrew Miller) in relation to his
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constituency. There is a risk that the new scheme will not help. If we get things wrong and if Ministers do not take the right decisions and cannot reach the right agreements with the devolved Administrations, there is a danger that people in those areas could be losers. Many local authorities have arrangements to help to fund concessionary cross-border travel, but if their contributions are squeezed by a national scheme that is not funded to work most effectively with those authorities, they might impose cutbacks on that help. Certain services have already been cut as a result of the previous scheme, and I would not want cross-border services to be cut because the funding package was not right.

May I also press the Minister on the subject of start times? At present, the scheme applies only to travel after 9.30 am. Obviously, I appreciate that it could not possibly be extended across peak times, but the start times for other services are an issue. For example, the first appointment at most hospitals is 9 o’clock. The pensioners’ parliament has alerted my hon. Friend the Member for Eastbourne (Mr. Waterson) to the problems that the start time for the scheme will cause some pensioners who have early medical appointments. Will the Minister consider such people? What work have the Government done to assess that dimension and the relationship between pensioners’ entitlement to free travel and start times in the health service?

On the issue of technology, the Welsh and Scottish schemes already use smartcard technology. The Minister is clearly working on the issue, but there are still big doubts about whether smartcards will be available at the start of the scheme in England. Clearly, that poses a number of problems. I have already explained why there are question marks over how funding will be handled and whether it will be possible to get it right through the grants system. Smartcard technology would help to create a smoother funding mechanism by making it possible to fund directly the number of journeys made in the areas where they were made rather than having to use block grants made on an assessment of population. That is a more attractive way of distributing future funding. However, even if it is not immediately possible to do that, it is logical to do as much as we can to provide for the use of smartcard technology in future. I listened with interest to my right hon. Friend the Member for Bracknell (Mr. Mackay) and his account of the work of his local authority.

Given the time frame, would not it make sense for the passes that are handed out to be enabled with ITSO technology so that, even if it is not possible to introduce a smartcard scheme up front, when the technology is ready to come on stream six, 12 or 18 months later, the Government will not ask local authorities to withdraw all the passes and replace them with a new generation of smartcards? Will the Secretary of State and the Under-Secretary consider that approach?

Let us consider technology and the prevention of fraud. Little can be done immediately if a lost or stolen photo card is used fraudulently. However, under a smartcard system, such as the oyster card system in London, a lost or stolen card can be cancelled to prevent fraudulent use and any credit on the card can be reissued to a replacement card so that the rightful owner does not lose out. Given that electronic ticketing systems may not be available in the first months or years of the scheme’s operation, what plans do the
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Government have to help prevent fraudulent abuse? Fraud is especially relevant, given the funding pressures on some local authorities. There simply does not seem to be the room for manoeuvre for local authorities to bear the cost of significant fraud.

It is worth briefly referring to the impact of the proposals on London. The Secretary of State referred to the freedom pass, which has existed for 23 years and is funded and run by the London boroughs. It is the most generous concessionary fares scheme in the country, giving older and disabled Londoners free use of the capital’s trains, tubes, trams and buses.

The introduction of a national scheme could cause problems for London. The extension of concessionary fares nationwide means that London will be in danger of losing out because of tourism. It is a major tourist centre, which attracts many retired visitors from all parts of the country, who will be entitled to free bus travel in London. Under a national scheme, journeys taken by those visitors will have to be underwritten by London councils as part of the overall cost of concessionary fares in London. I hope that the Department will consider that.

I sensed from the Secretary of State’s remarks that he recognised the potential problem of technology. London already has an established electronic ticketing system—the oyster card. It would be daft to have systems around the country that are not technologically interoperable. It would be valuable if the Under-Secretary could give some idea of the steps that are being taken to ensure genuine interoperability between the smartcards that are in use throughout the country, and especially between the scheme in London and those that will be introduced outside London.

The debate today essentially comes down to dealing with unintended consequences of a well-meaning Bill, of which all parties generally approve. That is a task especially for the Committee. We must ensure that the measure does not cause problems, which no one has previously envisaged, for local authorities.

Bob Spink: I am delighted by my hon. Friend’s constructive approach to the Bill. Does he agree that we need to go further to increase the attractiveness of buses to elderly people? We need to tackle some of the barriers that prevent them from travelling on buses: drivers driving off before elderly passengers have taken their seats; the accessibility and readability of timetables; co-ordinating bus and train times, and tackling antisocial behaviour on buses. We need a comprehensive and holistic approach to increasing travel on buses.

Chris Grayling: My hon. Friend is right. If we are to have any chance of providing genuine alternatives to the car or achieving a balanced system, we must ensure that public transport offers as much as possible. It must provide a genuine alternative to people who may choose to leave their cars at home, or might not otherwise travel at all, because they have no means of doing so.

Getting public transport right must be a priority for any Government, whatever their political persuasion, now and in future. My colleagues and I fully support the principle of national concessionary fares, but we shall have to examine the details carefully in Committee to ensure that, when put into practice, the scheme does what it is supposed to do. We need to be sure that it does
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not have a negative effect on the most excluded from society, who cannot or do not have access to public transport.

It is a good Bill with a good set of intentions and will provide a well-deserved additional pillar of support for pensioners who have contributed so much to Britain during their working lives. All too often, however, the Government have started with good intentions and then failed to deliver, so the Committee needs to ensure that that does not happen this time.

4.30 pm

Mr. David Clelland (Tyne Bridge) (Lab): When the scheme was introduced in 2006—indeed, when it was announced by the Chancellor in 2005, too—it was widely welcomed, not least in Tyne and Wear, because it returned us to a position that we were in 30 years ago. The Labour Tyne and Wear authority introduced a free travel scheme around the county 30 years ago, which had to be abandoned because of the Conservative party policy of introducing charges. I have to say that I resisted it at the time, because I felt that if charges were introduced, they would inevitably be increased, which is precisely what happened.

The return to free fares was widely welcomed—until the sting in the tail was discovered. The funding allocated to the scheme used the standard local authority funding formula, which meant that it was tied to population, not to bus usage. In Tyne and Wear, of course, there is a high take-up of public transport, so we ended up with a shortfall of funding. In 2006-07, £5.4 million of cuts in bus services had to be made—cuts to vulnerable people and to young people, as the teen travel scheme of subsidised travel for students had to be severely cut back. Furthermore, £2 million had to be taken from the reserves, adding up in total to an actual cut of £7.4 million last year for one of the poorest regions in the country.

This year, of course, the scheme continues under the same formula and has to be subsidised yet again by Tyne and Wear council tax payers. Further subsidies will have to be found, so by the time we get to the national scheme next year, it will have cost Tyne and Wear £10 million to run the free travel scheme over the two-year period.

Mr. Paul Truswell (Pudsey) (Lab): My hon. Friend is detailing one problem with the current use of the revenue support grant, but are there not two further ones? It also depends on the money being passported from districts through to passenger transport authorities in areas such as my hon. Friend’s and mine, and it does nothing to help when some authorities—including the Isles of Scilly, I understand—get some cash under the system even though they do not have any buses.

Mr. Clelland: My hon. Friend raises a couple of points that I shall come back to later. There are several anomalies in the distribution of this money, and nowhere else in the country has suffered to the same extent as Tyne and Wear. Meanwhile, because of the method of distribution, some authorities with lower public transport usage than Tyne and Wear will once more gain from the funding formula as my hon. Friend has just pointed out. Indeed, funding for Scotland, Wales and Northern Ireland will be found from this cache of money despite
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the fact that they already have fully funded schemes. My hon. Friend is right to point out that the Scilly Isles will receive a share, even though they do not have any bus services at all. The distribution of this money is therefore nonsense, and I hope that Ministers will accept that it has to be corrected.

Ministers could correct the problem if they devised a system whereby funding went directly to the concessionary travel authorities through a specific grant. We could have a ring-fenced grant to transport authorities, with 75 per cent. allocated for the running of the scheme and 25 per cent. held back as a contingency to provide additional resources where the formula does not fully reflect the cost of concessionary journeys in any particular area. That would iron out many of the anomalies that we face today.

The opportunity must also be taken to correct through the Bill the funding anomalies relating to Tyne and Wear, which I cannot stress too strongly. It is grossly unfair that Tyne and Wear should be put in the position in which it finds itself, so I ask the Minister to give an assurance in her wind-up speech that the acknowledged underfunding of Tyne and Wear will be addressed and that revised arrangements will be made for the distribution of funding in future. If she cannot give that assurance, will she then acknowledge that the introduction of the national scheme will leave Tyne and Wear at a severe disadvantage; that cuts in services and concessions to young people will have to continue; that the area will be denied the level playing field it needs when the scheme begins in 2008; and that we shall also be denied what the Secretary of State implied earlier when he said that this should be looked at as a floor rather than a ceiling? That will mean little to Tyne and Wear unless the funding formula is corrected.

Mr. Mullin: My hon. Friend is absolutely right to underline the dire underfunding of the scheme in Tyne and Wear. Has he had elderly constituents come to him, as I have, who say that they do not want the concessions if they can be obtained only at the cost of cutting, for example, the student concession?

Mr. Clelland: Indeed I have. In fact, among the early complaints that we received from elderly people about the scheme was that, although they welcomed the idea of returning to free fares, they did not want them at the cost of student concessions and other bus services, which is how the increase was paid for. We still receive those complaints, which is why the issue needs to be ironed out. Some elderly people were upset that that was the outcome of this otherwise welcome scheme.

What measures do Ministers propose to deal with the problem of bus companies exploiting concessionary fares to their advantage?

Mr. Doug Henderson (Newcastle upon Tyne, North) (Lab): Does my hon. Friend agree that there is a particular problem in the areas in the city that are most heavily dependent on buses, such as the outer west area of Newcastle?

Mr. Clelland: Yes, indeed. In fact, some of the services that were cut were to outlying areas, to which it
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is not profitable enough for bus companies to run services. Certain subsidised services that were run by the passenger transport authority have therefore been cut back in order to pay for the concessionary fares scheme. People in areas such as those to which my hon. Friend referred have suffered as a result.

Chris Grayling: I would be curious to know whether the hon. Gentleman thinks that the problems that he is describing are a direct consequence of the funding mechanism for buses or part of a broader pattern that has left the north-east receiving the second-lowest transport funding per head from the Government of any region in the country?

Mr. Clelland: The hon. Gentleman refers to a point that will come up in other debates and in other Bills, although I acknowledge that the north-east of England is unfunded so far as transport provision generally is concerned. That is something that some of us will be taking up tomorrow with the Minister responsible for roads.

The exploitation of the system by bus companies also needs to be addressed, if the scheme and the Government’s ambition to increase public transport usage are to be successful. With the introduction of the scheme, surely it is even more important that we move to a system of local franchising of bus services and bus routes. Unless public transport is accessible, affordable, comfortable and convenient, we will never get motorists to abandon their cars, and buses will increasingly become transport for concessionaires and no one else, with taxpayers providing the profits of the bus companies.

There is a further problem that will arise from the Bill as currently drafted and which needs to be addressed—the proposal that transport authorities cover the cost of all concessionary journeys that start in their areas, including those of non-residents. That will impose an additional burden on areas such as Tyne and Wear, to which huge numbers of people come to visit the Metro centre, Newcastle city centre, and the cultural and leisure attractions of Tyneside. All those people coming into the area and beginning a bus journey there will create a burden that will fall upon the Tyne and Wear passenger transport authority, on top of the problems from which it already suffers. It is essential that we should have a more flexible funding system that can take care of all those extra burdens.

Mr. Kevan Jones: As my hon. Friend knows, many of my constituents travel over the border from Chester-le-Street into Gateshead and the Tyne and Wear conurbation not only to work, but to visit the large number of well-managed attractions on Tyneside. Does he agree that one proposal that we perhaps need to consider in the north-east is a passenger transport authority that covers not only Tyne and Wear, but the region as a whole, and which could address some of the broader issues to which he has referred?

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