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28 Jun 2007 : Column 522

Jim Cousins: I am grateful for that intervention. It draws attention to two significant things. First, the national scheme will compound the difficulties of financing. Secondly, the hon. Gentleman is right to say that a formula basis of distribution of support cannot inherently deal with the difficulties that we are talking about.

There is a difficulty with formula grant support. By its very nature, it cannot pick up the striking local variations that we are likely to see and which will increase as the scheme goes national. The formula approach produces winners and losers. It is in the nature of winners and losers from formula funding support that the losers become clear immediately. The winners, very wisely, tend to keep quiet about it. That there are winners and losers, however, cannot be doubted. It is a direct result of the formula funding.

I have studied the Public Bill Committee debates carefully, and that problem exercised hon. Members. In the course of those debates, my hon. Friend the Member for Tyne Bridge (Mr. Clelland) offered a solution, which was to withhold a certain amount of formula grant support in a special pot so that it could be paid out later to mitigate the effect of the variations in take-up. I have thought carefully about that, and new clause 1, tabled by the Conservatives, in a sense reflects that. However, I do not favour that solution for two reasons. First, if we withhold a proportion of grant, it will generate all sorts of knock-on problems. Secondly, the increasing use by local councils of judicial review against the Government will become a significant problem in the distribution of the retained money because the factual basis for that will be challenged.

That was the Government’s difficulty in dealing with the problems of Tyne and Wear at the outset in 2006. Had they gone down the path of introducing a special scheme to deal with the special problems of Tyne and Wear—I know that they considered that—there is no doubt in my mind that that special scheme would have triggered a range of judicial reviews by authorities that felt that their position had been worsened by it. Given the particular place of London in this context, London boroughs would undoubtedly have taken the Government to court had a special scheme for Tyne and Wear been introduced.

I have recognised the Government’s difficulty throughout the controversy about these matters in the county of Tyne and Wear. Had they attempted to deal with the specific problems facing Tyne and Wear—and similar problems affect other authorities, such as Brighton—legal challenges would have followed immediately, and the whole scheme might well have been unpicked. A rich crop of judicial reviews should not be the object of any proposals made in the House.

My amendment would take advantage of the very important clause 9. Clearly, the Government have prepared against some of the difficulties that have been set out becoming serious problems. The clause provides that the Secretary of State can take over responsibility for the financial support of the statutory national scheme to be introduced in April 2008, and the consequential responsibility for reimbursement.

I also understand the Government’s concern about negotiations over reimbursement for the purposes of the statutory concessions, local or national. Authorities
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around the country will deal with different operators, with the result that different methods of reimbursement may be adopted. The Department for Transport is worried that that pattern of variable negotiations over reimbursement may in turn create perverse incentives. The talks may also be influenced by incompetent negotiating skills, or informal collusion between authorities and the major operators in their areas.

Those are the difficulties inherent in the reimbursement negotiations, but it is very important to ensure that the standards of reimbursement have common characteristics that apply nationwide. Apart from the very small local operators, the bus industry is now a big national operation made up of three or four main providers. It is extremely important that local authorities work to common standards in their reimbursement negotiations, and that they do not allow themselves to be picked off. They must not accept fare increases for the non-statutory schemes that are being introduced, as they would then trigger consequential increases in the costs of the concession—a difficulty that is built into the present architecture of the way that reimbursement is conducted.

David T.C. Davies: Does the hon. Gentleman accept that the privatisation of the bus companies might prevent the problem that he has described? Through competition, the various operators are able to offer lower fares, but it would be difficult for one to hike up costs to get greater reimbursement from central Government, via the local authority, because a rival could respond by submitting a cheaper tender the following year. Is that not one of the advantages of privatisation and competition? That approach has been robustly supported by the Opposition—and, more recently, even by Labour Members.

Jim Cousins: I remind the hon. Gentleman of the very wise words of Adam Smith. He was an honest Scotsman, and this, of course, is a time to be singing the praises of such men. His profile is now to be found on our banknotes, and in one remark he observed that, when three or four business men gather together, a conspiracy against the public was waiting to happen. So it has proved with bus privatisation.

We now have a small number of big operators. In my region, we have recently seen the sale of a body of operations in the town of Darlington, which Stagecoach had managed to capture after years of competition. The whole operation has now been sold en bloc to another national-level operator. We are not now dealing with a variety of bus companies that are all small and locally based. I know that such things exist, but the bulk of bus operations are now run by a small number of big national operators with some of the characteristics of a cartel. The block sale of all the operations in Darlington from Stagecoach to another operator in the past fortnight indicates the kind of things that happen.

Similarly, if the Government were to accept the responsibility for running the national statutory concession, the issues of reimbursement could be resolved. The Government could then negotiate
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forcefully with the limited number of big operators that is the reality of modern bus networks. The debate about the unfairness of the grant regime could itself be resolved and the Government could be reassured that grant given for the purposes of supporting the statutory concession would not be recycled inside local authority finances to pay for other activities. Again, if the Government met the costs of the national statutory concession, all this churning of grant through council and passenger transport authority budgets, with all the knock-on effects for council tax, could be resolved.

There would be an additional attraction for the Government if they took on the responsibility for operating the national statutory concession. They could produce a nationally branded scheme. Such a scheme could be supported by smartcard operations in the way that some Opposition Members have sensibly suggested, but even if it was not, a nationally branded scheme would be a much better incentive for the recovery of bus networks, which must be one of the objectives of the Bill, apart from simply operating the concession itself.

A nationally branded scheme would bring some benefit to the Government of the day and some clarity about how schemes were funded and supported. Of course, outside the national statutory scheme there could still be proper debate locally about extensions to the national scheme. For example, in London the freedom pass kicks in at 9 am. In the county of Tyne and Wear, it kicks in at 9.30 am. There is a debate to be had about how the national scheme, which functions from 9.30 in the morning, could be brought forward to 9 am. Those debates could be had locally without being confused by the wider arguments about the fairness of the grant support.

The rights conferred in the Bill will create new demand for bus services up and down the country. The Bill will lead to an expansion of bus services up and down the country. If the national statutory concession is nationally funded, the extra demand that will be created can then be supported by the Government. It would not be a problem for local council tax payers or local authorities. The rising level of bus use and the improvement in the quality of bus services that we hope will result from this Bill would then be seen as it properly should, as a collateral benefit, not, as it would be if we kept the present obsolete structure of formula funding, as a problem rather than a benefit.

It will be impossibly difficult to achieve through annual grant awards by formula proper support for the rising use of buses and the extension of bus networks unless the national statutory scheme is operated, funded and negotiated by the Department for Transport. That is the purpose of my amendments, and I commend them to the House. Indeed, the Government must have contemplated that course of action anyway because otherwise they would not have provided for that possibility in clause 9. I very much hope that the clause will not prove to be a residual, fallback position, but that the Government can build on it to introduce a nationally branded scheme, which is nationally funded and nationally negotiated, so that all the local difficulties that have been the by-product of doing something that in itself is commendable and good can be avoided.


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2.45 pm

Paul Rowen: The Liberal Democrats welcome the Bill. We believe it will go a long way towards dealing with social exclusion; its introduction has the support of the whole House. Notwithstanding that fact, however, in Committee we raised a number of concerns and issues that we wanted resolved, some of which were fully discussed but some of which are still of concern. The new clause proposed by the hon. Member for Wimbledon (Stephen Hammond) addresses one of those points.

In response to the hon. Member for Newcastle upon Tyne, Central (Jim Cousins), although as a general principle we welcome the introduction of a national scheme, we believe that the right and proper place for its administration and operation is with local authorities and passenger transport authorities. We certainly would not support the Government’s taking over that responsibility.

Many Members in Committee and today talked about previous experience of the introduction of local concessionary bus schemes. That gives us sensible pointers to some of the issues and concerns with regard to the extension to a national scheme, and I do not intend to rehearse or repeat the arguments that have already been so eloquently put. However, earlier this year, I tabled a question to the Department for Culture, Media and Sport about the number of visitors to various places and the most popular visitor destinations in Britain. Although the DCMS was able to give fairly accurate figures for the number of visitors, it had no information about the number who might qualify under the Bill for a concessionary bus pass. That brings us to the crux of the problem with the scheme. The Minister has assured us that, with £250 million, the Bill is adequately funded, but the reality is that none of us knows whether that is the case. We do not and cannot know until the Bill is in operation what the effect of concessionary bus travel on individual authorities will be.

It is clear that certain authorities, whether we call them honeypots or tourist destinations, will be disproportionately affected by the Bill. For example, throughout the year the majority of visitors to Blackpool—a Lancashire town I know well—are retired people and they will qualify to use the bus services in the town while they are there. It is clearly wrong that Blackpool borough should therefore have to pay the cost of those visitors coming and using the service while they are on holiday in Blackpool. As the hon. Member for Newcastle upon Tyne, Central said, Blackpool will not receive from the formula grant any recognition of that use of the service. As has been repeated, the formula grant is a blunt instrument. My borough is very much likes those in the north-east, in that 32 per cent. of the people in Rochdale do not own a car. They rely wholly upon the use of public transport. Their needs will be reflected to some extent in the formula grant, but not totally. The problem with any formula grant system is that it produces winners and losers.

In Committee, we moved several amendments. One was designed to ensure that the national scheme was ITSO compliant, so that there could be an accurate measure of the number of people using buses. Although we might hope to achieve that in the next two
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or three years, we are certainly will not achieve it by next April. In another amendment, we wanted to make sure that local authorities were properly funded and we sought a commitment from the Minister that she would deliver on that. That amendment was not accepted. Then we supported the amendment tabled by the hon. Member for Tyne Bridge (Mr. Clelland) and similar to one moved by my noble Friends in the other place. It would have provided for some money to be moved back.

The Minister accepted none of those proposals. Although new clause 3 is not necessarily as strong as I would like it to be, I believe that we need a commitment from the Government that they will take the issue seriously. Once the Bill is up and running, the problems are likely to get greater. We have seen this year for the first time, outside London, that the number of people using buses has risen. However, we need a proper analysis of who those people are. More than a cursory glance will demonstrate that they are predominantly those who have a concessionary bus pass. I welcome that. One of the Bill’s laudable aims is to promote social inclusion. But if the Bill is not properly funded, the burden will fall on local authorities and that will cause disproportionate cuts that will probably affect just the people who benefit from travelling on buses. Whether those cuts are to social care or to the provision of leisure services, or whether groups such as young people end up, as happened in the north-east, facing increasing fares, that will not be right and proper.

I therefore hope that the Minister will consider the new clause. It would not alter one jot or iota of what the Government want to do, but it would commit the Department and future Ministers to carrying out a proper review, to ensure that the operation of scheme can be reviewed once it is fully in place and that we can have a proper discussion of what the funding needs are, where the money should come from and how it is to be delivered.

Mr. Charles Walker (Broxbourne) (Con): I have followed the debate with great interest. My postbag, like that of many Members of the House, contains many letters each week from people concerned about bus services both across the constituency of Broxbourne that I represent and the county of Hertfordshire, in which Broxbourne is located.

We have a sort of monster on our doorstep; it is called London. London absorbs a huge amount of resources, and I am interested in how we shall manage the issues of reimbursement and the allocation of resources for funding. Over the past decade, many of our bus services have been sucked into London. If someone wants to get from one part of my constituency to another part or to another part of Hertfordshire, often they have to travel through London. Sometimes they have to travel for an hour and half through London to reach somewhere in Hertfordshire that is no more than 4 or 5 miles away as the crow flies. That poses some questions. If the bulk of the journey takes place in London—although it originates in Hertfordshire—will Hertfordshire taxpayers fund that journey and will the reimbursement be allocated to Hertfordshire or to authorities in London, where the bulk of the journey takes place? I hope that the Minister will respond to that.


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We need to look seriously at new clause 3 because it would enable us to have a periodic review of how funding is allocated to pay for services. It would be devastating for local council tax payers in Hertfordshire if we ended up funding additional bus services that are routed through London—services that are primarily for the benefit of Londoners, but whose cost would fall on my constituents.

I hope that the funding formula does not act as a perverse distortion on the market, drawing even more of our services away from the county and into London. That would be disastrous at a time when local hospitals are being reorganised and are going to be moved even further away from my constituency. We face the closure of Chase Farm hospital in north London and the transfer of services to hospitals further north in the county. If more of our bus providers run services through London, it will be even harder for my constituents, many of whom are elderly, to access services to take them to other hospitals. I have a lot of sympathy with the new clause and I hope that the Government will give it serious consideration.

Mr. Beith: When the Prime Minister, in his then capacity as Chancellor, announced that there was to be a national bus pass scheme, he created an expectation and a hope among many people that they would be able to get to their relatives, friends, hospital and doctor using their bus pass. At the moment, many people in many constituencies find that they are not able to do so because of the cross-border problems. They depend on enhancement at the expense of the local authority.

The importance of the new clause is that it calls for a review of funding on the basis of whether local authorities have had enough money to carry out the scheme. I want to draw particular attention to the relevance of that to border areas, where the Bill as the Government propose to implement it will not solve the problem and where local authority enhancement will still be required. The Government have made it pretty clear up to now that they are in no hurry to negotiate a reciprocal scheme with the Scottish Executive or the Welsh Assembly Government. In the words of the Secretary of State in an earlier debate, that is regarded as a matter for “another time.”

That means that local authorities such as the borough of Berwick-upon-Tweed, which has a population of 26,000—it is a very small authority—would still have to put in extra money to give access across the border so that people could get to their nearest shops or hospital, or to friends and relatives. At the same time, the funding arrangements that the new clause seeks to expose would put the authority under great pressure anyway, because the area also has one of the highest proportions of old age pensioners in the country—the highest of all being in Christchurch, which my wife used to represent and which was mentioned earlier. She well knows that that is top of the league, but the little borough of Berwick-upon-Tweed is also very high up. Where the bus journeys are long and the reimbursement element accordingly large, the financial pressures of the scheme will be great.

At the same time, whereas other local authorities will no longer have to put in extra schemes to enable people
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to get across local authority boundaries—as they do now in many areas—Berwick will still have to put in some kind of extra scheme to enable people to travel on local journeys to Eyemouth, to the doctor’s in Coldstream, and to Kelso.

Clearly, I want the Government to use the powers that they are rightly giving themselves in clause 10 to go ahead with negotiating a scheme, which they still have time to do. New clause 3 offers the second-best solution: a review after two years that would demonstrate conclusively that the scheme had not worked satisfactorily in border areas. I support new clause 3 on the basis that if all else fails, there must be a mechanism of showing that border areas need help.

3 pm

A better solution would be for the Government to use the time between now and next spring to get into negotiations with the new Government in Scotland, difficult though that might be. They might find negotiations easier with the part-Labour, part-nationalist Government in Wales. If they do not carry out such negotiations, the new clause, if accepted, will reveal that there is a serious problem in border areas. Such a problem should not arise, so I ask the Minister to think again.

David T.C. Davies: I have a slight sense of déj vu because some years ago, perhaps even before Ministers had thought about a concessionary scheme for England, I, like all my Conservative colleagues in the Welsh Assembly, defended and supported wholeheartedly the initiation of such a scheme in Wales. We supported it then and we support it now because the Conservative party has always believed that the public have the right to choose to use safe, efficient and reliable forms of public transport. While large amounts of tax are raised from car fuel, the public are unfortunately not given the proper choice of catching buses instead. They deserve such a choice and the situation needs to be reversed.

This scheme is good for everyone, not just the over-60s who will be entitled to a bus pass. If demand for bus services increases, especially in rural areas, it is likely that more services will be laid on. The scheme is thus good for anyone who wishes to use public transport. It is good for car users, too, because if more people use buses, roads will be less congested. If the scheme is properly managed, we will have a win-win-win situation for all those who use transport to get from A to B, which is virtually all of us.


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