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Mr. Mark Todd (South Derbyshire) (Lab):
I thank my right hon. Friend for giving way, and repeat the congratulations of my hon. Friend the Member for High Peak (Tom Levitt) on the flexibility she has shown about the issues raised in Derbyshire. In
weighing up the increase given to Derbyshire, did she take into account the arbitration dispute with the bus companies based on the previous scheme, which is still in place this year? I believe that the arbitrator has found in favour of the companies and therefore substantially increased the cost that local authorities will have to pay. Has she taken that into account in the awards that have been given?
Ms Winterton: My hon. Friend is absolutely right. There have been instances where the bus operators have challenged the amount that they receive through the reimbursement system. Overall, in terms of the appeals that have been heard, some £6 million has been granted through the appeals system although some £28 million had been asked for by operators. Overall, £6.5 million is a fairly small amount, compared with the £1 billion that is spent on concessionary fares.
If my hon. Friend is asking whether we took into account appeals that are taking place, the answer is no. We had a formula that was based, as I have said, on bus patronage, eligible population and visitor numbers. It is then up to local authorities to handle matters through the reimbursement scheme, under which the bus operator should be no better or no worse off—that is the point of the scheme. That is how the appeal system works. It is important that we have an appeal system, but we consulted with local authorities on what we thought and gave them a number of options based on a host of different ways of calculating the formula. We then based the award on that. In my hon. Friend’s area, the increase is about 21 per cent., but overall in the Derbyshire scheme there is agreement that we can move forward on the terms that we had before.
Ms Winterton: I shall now wind up, but I shall take one more intervention if my hon. Friend the Member for Carlisle (Mr. Martlew) wants—
Mr. Eric Martlew (Carlisle) (Lab): No, no.
Ms Winterton: In that case, I shall take an intervention from the hon. Member for Teignbridge (Richard Younger-Ross).
Richard Younger-Ross (Teignbridge) (LD): I thank the right hon. Lady for giving way—in fact, I thank the hon. Member for Carlisle (Mr. Martlew) for not intervening. The Minister has been very generous and I know that she has spent a long time listening to local authorities and Members making representations. Does she accept that there is real fear among local authorities that the figures might be wrong? I hope that the authorities are wrong and that the Minister is right. If it turns out that the authorities are right and there is massive use of the provision—even though that would be a great success—that results in their ending up with great deficits, what mechanisms will be put in place to ensure that they are reimbursed not in three years’ time but in at least one year’s time?
Ms Winterton:
I met the hon. Gentleman and representatives of his council, as did my hon. Friend the Minister for Local Government, to discuss the issue. In the hon. Gentleman’s area, the increase on what was
spent in the previous financial year is 31 per cent. There is a particular problem in his area because some of the councils have opted out of the county scheme, and he was concerned about that. However, we have to balance that with the certainty that we are able to give with a three-year settlement, and we believe that it is very generous.
The fact is that most councils will receive around a 30 per cent. increase on average. The mechanism will be available in the future so that the funding can move from district councils to county level. In some areas, representations have been made about that, and we retain an open mind on some of the issues. However, it is important that councils have some certainty over the three-year period as to exactly what their funding will be. We need to get the balance right between the two.
The formula that we eventually arrived at distributes the funding on the basis of eligible local population, visitor numbers, retail floor space and current bus use. As such, we believe that it takes account of likely demand in areas such as coastal towns, urban centres and other places likely to experience an increase in bus journeys. Using that formula, we have drawn up the funding allocations for each of the travel concession authorities in England, as contained in the report today. As I have said, the average increase for local authorities is 29 per cent. above the figures for the last financial year.
The national concessionary fares scheme has been widely welcomed by older and disabled people. It gives a new freedom to millions of people and it is a very good scheme. The formula is generous in how it distributes money between local authorities to fund the scheme and I commend the report to the House.
11.2 pm
Stephen Hammond (Wimbledon) (Con): The motion before us tonight is to approve the local government finance special grant for the new concessionary bus regime—the new regime—and does not include any moneys for any other regime. It is the new regime that will come into operation on 1 April on the basis of the regime passed by the House in the Concessionary Bus Travel Act 2007 last summer. That extended the free off-peak concession to national travel, starting at 9.30 am for all those aged over 60 or disabled.
As the Minister said, the grant is not to do with what was already in place in terms of local concessionary travel, under which arrangements local authorities could offer a more generous scheme. Indeed, they still have the right to do so. However, the thrust of the debate tonight—the Minister has already made her case by saying that the settlement is generous—is not about what the Government have provided, as that is fine, but about the fact that the Government made a commitment to local authorities that they would fully fund the extended regime. The question is whether the Government have fulfilled that commitment, and I suspect that the answer, from the Opposition Benches, will be that, generous though the Government believe 29 per cent. to be, it does not represent the cost implications of the extension to a national free scheme. Therefore, the Government cannot be said to have fulfilled their commitment.
Mr. Martlew: Would the Conservatives provide more money for this scheme?
Stephen Hammond: That is not the point. I am happy to talk about the Opposition’s plans, but I and the Liberal Democrats pointed out over several sittings of the Committee considering the Concessionary Bus Travel Bill that neither the amount of money on offer nor the funding formula were likely to be sufficient to meet the Government’s commitment to fund the new regime in full. The short answer to the hon. Gentleman is that the debate will show that the Government have not met the commitment that they made.
At the outset, I can tell the House that we shall not vote against the motion. However, it is important that the Government understand that the criticisms and concerns raised during the passage through the House of the Concessionary Bus Travel Bill should not be forgotten. We have repeated those concerns and criticisms in questions on the Floor of the House, and local authorities have voiced the same message.
We have always made it clear that we are in favour of the principle of concessionary travel for elderly and disabled people. Just as much as the Minister, we recognise that the ability to travel is especially important, but we cannot support legislation that appears to be both ill thought out and insufficiently funded. The Government promised that the scheme would be fully funded—but tell that to the local authorities that will no longer be able to subsidise certain bus routes, or which are being forced to cut other services as a direct result of the settlement that they are receiving, or those left with no option but to raise council tax as a result of the new regime.
The Government promised that the scheme would be fully funded—but tell that to the bus operators who will be forced to cut frequencies, or who have indicated that they expect that they will be withdrawing services this time next year, or whose businesses will be threatened by the financial uncertainty inherent in the reimbursement system.
Mr. Philip Hollobone (Kettering) (Con): What is my hon. Friend’s view about how the system has been set up? There are 324 different travel concession authorities based on district councils, and bus operators have lodged more than 100 appeals to the Secretary of State. Does my hon. Friend believe that there should have been fewer travel concession authorities, perhaps on a county-wide basis? Would that not smooth the differentials that are going to occur?
Stephen Hammond: My hon. Friend makes an exceedingly good point. We have not suggested that the Government base the reimbursement authorities on different areas. The scheme offers national travel on a local basis. Both in Committee and on the Floor of the House, we have always said that the greater the number of local reimbursement authorities, the more complex the reimbursement procedures will be. Many people have spoken about hotspots and honeypots in respect of funding, and the problems with the scheme are evident in many of the responses that are being received.
Tom Levitt:
The hon. Gentleman will have heard that the Government will pay Cambridge local authority an extra £645,000, which is equivalent to an extra 600,000
journeys by qualifying elderly and disabled people. Is he saying that that figure for extra journeys is an underestimate? If he is not going to use the figures provided by local authorities, what figures does he intend to use?
Stephen Hammond: On the basis of the responses that I have received from local authorities, I am not convinced that £645,000 equals 600,000 journeys. Many authorities believe that journey costs have been underestimated, and therefore that the number of journeys covered by the money being made available has been overestimated.
David Howarth: It might help the hon. Gentleman to know that bus fares in the east of England are the second highest in the country. The average fare is £1.60, rather than £1. Another part of the problem is that we are not comparing like with like. The new rule is that the authority that pays for the journey is the authority in which the bus journey begins, not the authority of residence of the person making the journey. As a result, authorities will now be liable for journeys that already take place, but for which they do not currently pay.
Stephen Hammond: The hon. Gentleman makes a good point about an inherent aspect of the scheme—a point that has been made several times in debate.
Mr. Martlew: The hon. Member for Kettering (Mr. Hollobone) suggested that the Conservatives would take the responsibility for the concessionary fare away from the districts and give it to the county. Is that the policy of the Conservative party?
Stephen Hammond: My hon. Friend the Member for Kettering suggested that it might be simpler to do so in terms of reimbursement. What I said in response, as the hon. Gentleman will know, is that the current structure was always likely to be inherently difficult to administer, and to cause problems when it came to ensuring that the funding followed the journey, as the hon. Member for Cambridge (David Howarth) pointed out. It is clear that there are a number of ways in which local authorities and districts run the schemes, and we have not said that we would change that. We have pointed out that the way in which the Government chose to structure the reimbursement made it highly likely that there would be problems with ensuring that revenue followed the journey, and clearly those problems are occurring.
The Local Government Association has commented on the pressure on some local authorities. It says:
“Since the 2006 extension to the concessionary fares, councils report rises of over 150 per cent...to operators”.
“the government should keep under review”
“amount...in 2008/09...is sufficient”,
“Councils are reporting difficulties in estimating the precise cost in the run-up to April 1st.”
Richard Younger-Ross:
Earlier, the Minister said from a sedentary position that that point was covered by county-wide schemes. Does the hon. Gentleman
accept that county-wide schemes might cover part of those costs, but not all of them? In particular, in tourist areas—cities such as Cambridge or seaside resorts—there is a regular annual or monthly input of people who are not covered by those calculations.
Stephen Hammond: I thank the hon. Gentleman for making that point. My hon. Friend the Member for Kettering effectively made that same point, and in response I said that in these debates, we have recognised hotspots and honeypots. Those are exactly the places where people who are not resident in the area may well use buses.
The Minister talked about the percentage of extra money that was being funded by the Government, but as several hon. Members said in interventions, that does not recognise the extra cost of concessionary fares or the formula estimating the number of journeys. Also, she said that current usage would be our indicator for future usage, but because of a number of issues such as the hotspot issue, that is unlikely to be a good indicator.
A number of councils across the country have talked about the budget deficits that they will experience in 2008-09 as a result of the problems. The Minister mentioned extra moneys, but let me talk about the local councils that have provided me with data relating to budget deficits that will be created. The Basildon authority has given a £500,000 figure. Blackpool has talked about £200,000. Brighton and Hove is talking about a sum of about £1.7 million. The hon. Member for Carlisle (Mr. Martlew) has told us that Carlisle expects a budget deficit of £270,000. The local authority of my hon. Friend the Member for West Chelmsford (Mr. Burns) has indicated that it is likely to have a budget deficit of at least £500,000. Hastings has given a £200,000 figure. I could go on, mentioning places across the country.
When the Bill introducing the scheme passed through Parliament last year, time and again my colleagues and I expressed serious concerns about the funding system and whether the Government would put enough money into the system to fund what they were proposing. At the time, I tabled an amendment calling for a review of the funding mechanism, which would allow the Government to establish the costs borne by operators and authorities. Such a review would allow the Government to see whether the moneys that they were putting into the scheme were adequate for the new extension; to ensure that the distribution of those moneys went to the right place; to achieve efficiency and savings; and to re-examine whether the “no better off, no worse off” principle was being followed. The short answer is that the amendment was defeated by the Government, and no one knows whether the funding provided by the Government for concessionary travel is sufficient. Had the amendment been accepted, we would not be seeing some of the chaos that we see today, and a proper review could be performed with the aim of evening out those unforeseen inconsistencies.
The Government have talked about providing £212 million extra this year; £217 million in 2009-10; and £223 million the following year. That might be enough, but it may not be. The Minister said that it was extra money. It is not: it is the money that was going to be necessary on top of what was already available for
concessionary funding to implement the Government’s new scheme. Last year, when the Bill was in Committee, the then Minister was talking not about £212 million, but about £250 million. As for the £1 billion that the Minister has discussed again tonight, £400,000 of that is somewhere in the rates support system, and it is extremely difficult to trace whether the Government have really provided that sum, and whether it is reaching the places it should reach.
The moneys that the Government are providing may be enough, but from the experience of local authorities, that certainly does not appear to be the case. For the past couple of years, bus operator inflation, as recognised by all transport bodies, has been closer to 9 per cent. than to the consumer prices index of 3 per cent. The Government have proposed increases for the next two years of 2.3 and 2.7 per cent. Even if they think that the £212 million this year is enough, the position is not encouraging for the next two years. They must recognise that, up and down the country, local authorities face huge gaps in their funding. There may well be some generous funding, as the Minister said, but if it does not meet costs, there will be problems for local authorities.
Barnsley metropolitan borough council, for example, said:
“I do feel our authority is receiving inadequate compensation”.
Basildon council said, “We are seriously underfunded”. Bournemouth council said that
“this government grabs the headlines giving out concessionary fares”,
“leaving councils to pick up the mess and move on”.
“This situation is not financially sustainable.”
I could go on, right the way through the alphabet, but I will not do so, because I know that colleagues want to make a contribution to our debate. However, the Government are clearly not listening to local authorities. When the consultation on the distribution method for the special grant was analysed, the Department for Transport reported that
“the main concern raised by many was that the additional money allocated by Government would not be sufficient to pay for the extra cost of the new all-England concession.”
Since then, countless local authorities have made representations to the Government and to many others, but to little avail. Council planners’ confusion has been exacerbated by poor, overdue Government guidance. Indicative of that is the fact that the DFT required councils to publish draft scheme details and reimbursement guidance before 1 December last year, but it published its guidelines for doing so only in January 2008. The expected delays in the deployment of smartcard technology are further evidence that while the Government expect councils to cope with short lead times, they cannot do so themselves.
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