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The key factor is whether the scheme is properly managed. Several unexpected problems arose after the scheme was introduced in Wales. Many people will be aware of the market town of Chepstow, which is on the border of my constituency. Chepstow itself is in Wales, in the county of Monmouthshire. However, part of Chepstow is on the English side of the border. Pensioners who live in the Welsh part of Chepstow in the constituency of Monmouth receive a free bus pass that they may use to travel as far as Hereford, which, of course, is in EnglandOwain Glyndwr did not get quite that far. However, people who live in Tidenham, which is just across the river and somewhat on the outskirts of Chepstow, cannot get hold of a free bus pass to travel into the towns in Wales in which many of
them do their shopping. They will not be able to do so after the introduction of the scheme under the Bill because the cross-border problems have not been sorted out.
When the Minister considers funding, I hope that one of her first actions will be to try to ensure that a scheme is introduced whereby people can use their passes throughout the whole of the United Kingdom. As an unashamed Unionist, I am disappointed that people will be restricted to their constituent nations, rather than be able to exercise their right to travel the length and breadth of the United Kingdom. They have paid their taxes over the years for such a right.
The scheme in Wales gave rise not just to cross-border issues, but to enormous problems involving the allocation of funding, many of which have been mentioned today. Some local authorities have received more funding than they might have been expected to get, whereas other received less. My hon. Friend the Member for Wimbledon (Stephen Hammond) eloquently set out the way in which such funding inequalities can arise.
I am a bit of a cynic, and I have suggested before that formulas have sometimes been used in a particular way, quite deliberately, to benefit certain local authorities at the expense of others for political reasons. I have certainly seen that happen in Wales and I want to ensure that people in England are protected from that. What can possibly be unfair about suggesting that Ministers look at the formula in two years time to ensure that everything is being done in an equitable manner? If nothing else, that will protect existing bus services, and protect people from inordinate rises in council tax, such as those that have taken place over the past 10 years. As I have said beforeI will repeat it quite a few times in the years aheadcouncil tax has risen by 184 per cent. over the past 10 years in Monmouthshire. Earlier, my hon. Friend the Member for Wimbledon talked about a doubling of council tax, but my constituents would have been absolutely delighted if their council tax had merely doubled. Many of them are struggling to pay their mortgages.
Many other problems have arisen in Wales as unexpected consequences of the Act. In some areas, a sort of impromptu park-and-ride scheme has developed; people drive into townsoften, I am told, in their Mercedes-Benzand park on outlying streets, and then use the local bus service to ride into town. There is nothing wrong with that. It is a free country, and everyone would support peoples right to do that. However, it means that the local authority to which those people apply for their concessionary pass ends up getting lots of funding, while the local authority that pays for them to use the buses does not. That is one example of the sort of inequity that could arise in the funding formula. We need to make sure that the Government are aware of all those problems, and the many others that are likely to arise, and we need to ensure that they have the means with which to deal with them. If they fail to deal with the problems, there will be a reduction in services, which is what all of us are fighting against.
There is also the issue of rural areas. Many rural areas have to subsidise all or most of the bus routes that are in place. I believe that all rural areas are grossly
disadvantaged by virtually every funding formula used by the Government. I am sorry to have to say it, and perhaps the Minister will like to argue the point, but I see that as very much a political decision. For example, in the county of Monmouthshire, the funding formula that is used to fund local government generally used to take proper account of sparsity, and that is absolutely right, because of course it always costs more to deliver services in a rural area, where there are much greater distances for buses, or any other services, to travel. The last funding formula change reduced much of the weighting that was given to take account of sparsity. It also resulted in sparsity being calculated with reference to how long it takes to get from A to B, not by road, but as the crow flies. That meant that many isolated rural communities were counted almost as part of urban conurbations under the formula, and the local authority lost out as a result.
That sort of subtle change, which most people could not be expected to pick up on, has been deliberately used to disadvantage rural areas. We do not want the same thing to happen with the formula used for allocating money for transport. My hon. Friend the Member for Wimbledonthe Front-Bench spokesman for transporthas not suggested that there is anything wrong with the scheme; he merely suggested that it would be wise of the Government to consult the Local Government Association in two years time to make sure that the money is being allocated in a fair and reasonable fashion. It puzzles me that anyone would argue that that is not the wise and sensible thing to do. I say again that it could prevent bus services from being cut, prevent council taxes from rising, and ensure that local authorities are listened to, in a system in which there is accountability. That is why all those in the House who care about supporting bus services should support new clause 3 this afternoon.
Gillian Merron: We return once more to this important Bill, and in particular to the issue of funding for local authorities, which we discussed at great length in Committee, including the arrangements for the reimbursement of bus operators.
May I begin by thanking my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins) and his near neighbour, my hon. Friend the Member for Houghton and Washington, East (Mr. Kemp), for recognising the importance of the Bill to passengers, to the improvement of bus servicesand the figures are coming throughto efforts to tackle social exclusion, and to the improvement of the public transport network. That is why I am great supporter and advocate of this Labour Government Bill. I appreciate, too, the comments of my hon. Friend the Member for Newcastle upon Tyne about saving the Government from judicial review, and I am happy to take his advice.
I shall make some general points before coming to the specific matters raised by the amendments. I have previously statedand I am happy to restate itthat I agree absolutely with the sentiment that local authorities should indeed be adequately funded by central Government for the costs of administering that mandatory concession. After all, it is the Governments policy to fund fully new statutory burdens. Let us be honest: it is in everyones interest in the House that we
get it right, and that is what I am keen to do. As hon. Members knowand I will restate it for the recordthe Government will provide up to an extra £250 million of funding a year for the proposed new national bus concession. That is in addition to the significant extra funding that we have already provided to local authorities for the implementation last year of free off-peak local bus travel within local authorities. We provided £350 million in 2006-07, and £367.5 million in 2007-08. We remain confident that there is sufficient overall to fund the extra costs to local authorities to provide that welcome improvement, which has benefited millions of people. I shall come to our calculations in a few moments and explain them.
Mr. Walker: On reflection, I was rather inarticulate in expressing my concerns. Many bus routes start at Waltham Cross, which is in Hertfordshire and on the border with London, but 90 to 95 per cent. of the benefits go to London. Owing to the fact that the routes originate in Hertfordshire, we will fund the full cost of the scheme, although 95 per cent. of the distance covered falls within London to the benefit of Londoners.
Gillian Merron: I can assure the hon. Gentleman that he made his point perfectly clear. Travel concession authorities will pay for all concessionaires boarding in their area, irrespective of who issued the pass and where the journey ends. What matters is the funding to the travel concession areas, and that is what we will discuss today.
David T.C. Davies: The main point that we were making was not so much about the amount of money, although that is clearly important, but about the way in which that money is divided up. If the Minister is about to give us an explanation, I shall await it with interest.
For the benefit of hon. Members who did not participate in Committee, I should say that it is true that there is no mention of the funding for concessionary travel in the Bill, but I can assure the House that that is for very good reasons. As we know, circumstances change and flexibility needs to be built into the legislation to enable future improvements to concessionary travel to be made as efficiently and effectively as possible. It would not be appropriate or wise to lock ourselves into a particular approach now, as the important issue of funding is currently being considered and discussed across Government and beyond. The existing arrangements contain appropriate checks and balances to ensure that public funds are spent wisely, which is something with which we would all concur; an incentive for local authorities to reimburse cost-effectively by a fair amount; and the right of appeal for any operator who believes they have been disadvantaged. Importantly, the system is fair to the taxpayer and the operator alike.
The extra funding that the Government have announced for the new concession already includes a generous allowance, both for uncertainty over future
travel patterns and the difficulties of allocating money on a formula basis. The sum of up to £250 million extra per year is based on a number of key assumptions. Hon. Members may be interested to know that those include an extra 100 million journeys generated and a pass take-up rate of 85 per cent. Once distributed, it will result in double-digit percentage increases for most travel concession authorities against budgets that already include discretionary spend. The extra costs will not be as much as many people may think, because many of the new trips will be generated travel, which will not require full reimbursement. I hope that that gives some indication about the sums involved. The House should be concerned about the full amount, as well as the distribution, which I am on record as saying is extremely important. The assumptions are generous. As I said, we have allowed for a pass take-up rate of 85 per cent. In some areas of England, pass take-up is below 40 per cent. at present, so we are confident that the extra funding is sufficient to cover the total extra costs to local authorities.
It is important to recognise that the freedom and flexibilities provided by unhypothecated formula grant, which was discussed earlier, are generally supported by local authorities. They have long argued against having their hands tied by hypothecated funding streams. Concessionary fares reimbursement is only one of the many obligations that authorities must meet from their council tax receipts and from the funding provided by central Government through the formula grant process.
The Local Government Association strongly supports a specific grant for the extra funding for the national bus concession, at least on a temporary basis. However, we need to be clear that such a move would be a break from the policy of greater freedom and flexibilities in funding which is generally welcomed by the local government community. It would also be inconsistent with the basis for allocating existing funding, and we would need good reasons for making such a change. However, the Department for Transport, the Department for Communities and Local Government and the Treasury are looking carefully at the merits of different funding mechanisms for statutory concessions.
Mr. Beith: One thing that the formula cannot do is recognise that there are some authorities that will still have to enhance their schemes if some of their citizens are to be able to get to relatively nearby facilities on the other side of a national boundary. That will persist until a reciprocal scheme is introduced. Therefore those authorities have to meet more out of their council tax and out of the formula than most authorities, which will no longer have the problem of making special arrangements for cross-border travel.
Gillian Merron: Perhaps this is an appropriate point at which to remind ourselves that the Bill covers off-peak concessionary national travel within England. Any enhancement beyond that is a matter for local discretion and the Bill allows for that. I shall shortly deal with devolved Administrations, who I know are a matter of interest.
Jim Cousins: My hon. Friend is about to move on to a topic that has engaged several hon. Members in the debate, but before she does so, will she set out how her Department is considering variations of funding from the funding formula and, in particular, how it might use the powers that it is taking in clause 9?
Gillian Merron: A number of hon. Members asked about how we will deal with hot spots, as they are called, where there is particular pressure on areas such as my constituency, Lincoln, which people are happy to visit, and we look forward to welcoming them. I understand the concerns expressed about the distribution of funding, especially in respect of those visitor hot spots. The overriding principle is that extra money should be directed to where extra costs fall. We should recognise hot spots, so far as it is possible to do so. Various options are being discussed in the concessionary fares working group, which involves representatives from all tiers of local governmentdistricts, counties, unitaries and PTEs as well as operators. We are, of course, also working with the Department for Communities and Local Government and the Treasury on various options.
In looking at the wide variety of data sources that might help to develop the best possible formula distribution, we are examining issues such as visitor figures, tourist beds, retail floor space and bus patronage. We hope to have reached a decision on the preferred route by the summer, when we will consult widely on the formula basis for distribution. I hope that that helps my hon. Friend.
New clause 3 includes the exact text of an amendment that was defeated on a vote in Committee. I see very little benefit in introducing a requirement on the Secretary of State to review the arrangements for the allocation of funding to local authorities two years after the legislation is commenced. We debated the proposal in Committee, as well as the idea of another review of the reimbursement of bus operators by local authorities. The amendment has not changed, and nor has my position. There is very little to be gained from new clause 3. We have already embarked on a great deal of informal consultation with local authorities and other interested parties about the issues surrounding the implementation of the national bus concession.
I have explained the matter and the role of the concessionary fares working group on a number of occasions. Again, I emphasise that the Department for Communities and Local Government has already implemented a well-established annual process for consulting local authorities informally and formally about the formula grant distribution. I am a little disappointed this afternoon, because in Committee I invited the hon. Member for Wimbledon (Stephen Hammond) to suggest how we might improve things now rather than in two years time, but all we have before us is exactly the same amendment.
I gently remind the hon. Member for Monmouth (David T.C. Davies) that concessionary travel is a devolved issue. Local authorities in Wales can pass the
full costs of the scheme to the National Assembly, and it is therefore unlikely that the situation that he described with regard to increases in council tax relates to concessionary fares.
The hon. Member for Upminster (Angela Watkinson) is not currently in her place. She referred to a charge for passes claimed but not used. That is a misunderstanding, because reimbursement is made in respect of actual concessionary travel and not on the number of passes issued.
The suggestion that there should be a review in two years time contains another contradiction. Local government funding involves a three-year settlement. If we were to accept the new clauseI ask the House not to do sowe would create uncertainty at a time when local authorities are asking for more certainty.
On funding in the Tyne and Wear area, I recently met my hon. Friend the Member for Tyne Bridge (Mr. Clelland) and Nexus. We had a constructive discussion on how we can go forward, which is what I intend to do.
On mutual recognition, the nature of a devolved Administration is, again as I have said before, that it will take devolved decisions. Our priority is to get a workable national concession in England, perhaps in the first instance in April 2008. Local authorities can make their own arrangements across borders, if they fund them, which is an option that will be available under the Bill. We will continue to hold discussions with devolved Administrations.
Mr. Beith: What is delaying the Minister? Assuming that she stays in her job, she has got until next spring to negotiate in time for the arrival of the new national bus pass. What is to stop her reaching an agreement with the Scottish Executive in that time? If they were to refuse to do it, it would not be her fault, but if she does not attempt to reach an agreement in that time scale, it will be her fault.
Gillian Merron: I thank the right hon. Gentleman for offering me a way out should success not be mine. Our priority is a workable scheme for England that everyone understands. We will continue to work with the devolved Administrations, and in the interim it is possible for local authorities to manage the current situation.
Amendments Nos. 14 and 15 would have major implications for the general funding of local authorities. It would not be possible to introduce those changes for April next year. In any case, the amendments do not set a time frame for commencement; I am not sure whether that is intentional. It would be only right and proper to consult on any changes to the fundamentals of the administration of the mandatory concessions. In fact, it is not clear from our discussions that local authorities would favour such a centralised approach as suggested by my hon. Friend the Member for Newcastle upon Tyne, Central. I assure him that we fully considered a range of options. Having said that, we are not ruling out changes to the administration in future. This is an enabling and a flexible Bill.
Bearing in mind everything that I have said today and on several previous occasions, I hope that Opposition Members and my hon. Friend the Member
for Newcastle upon Tyne, Central will agree that new clause 3 and amendments Nos. 14 and 15 are unnecessary and duly withdraw the motion.
Stephen Hammond: As the Minister said, in Committee we discussed funding for the Bill at great length, because it is absolutely central to the Bill. I said in Committee that this was an excellent amendment that would enhance the Bill, and I still think so. Nothing that I have heard from the Minister this afternoon suggests that there is any reason not to put the new clause into the Bill, and I therefore wish to test the will of the House.
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