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“Local authorities are being forced to carry the burden for a government policy.”
That sentiment was also expressed by Worthing borough council. I have already cited the comments of Barnsley council, which is similarly dissatisfied.
What has been the effect on the worst-affected local councils? Council funding of local bus services has had to be reduced. A number of councils have had to withdraw subsidy from socially necessary bus services
that they paid for previously, so pensioners have a pass, but no bus to catch. In many rural areas, as my hon. Friends the Members for Shrewsbury and Atcham (Daniel Kawczynski) and for Macclesfield (Sir Nicholas Winterton) pointed out, there were no services anyway. To be fair, pensioners can use those passes further afield, but services such as dial-a-ride are under threat. The north-east passenger transport authority has had to cut concessions to young people and students.
A large number of councils, such as Basildon, Cherwell, High Peak, Medway, Chelmsford and Canterbury, which had previously offered enhancements to the statutory minimum such as extended hours or companion tickets for carers, have been forced to withdraw those benefits and revert to the statutory minimum.
Mr. David Clelland (Tyne Bridge) (Lab): The hon. Gentleman is correct that in the first round of the new concessionary fares system, when it was restricted to localities, we had a problem in the Tyne and Wear area, and there were cuts to concessions for young people. However, the latest round of expenditure has meant that that can be reconsidered, which is happening as we speak.
Mr. Goodwill: It is encouraging that the Government have been keen to bail out some constituencies in the north-east, but maybe they have not been quite so keen to help people in the south.
David Wright (Telford) (Lab): Will the hon. Gentleman give way?
Mr. Goodwill: I shall make some progress, if I may. I suspect that I anticipate the point that the hon. Gentleman wants to make.
Secondly, councils are cropping other services not connected to travel to balance their books. A recycling programme in Christchurch has had to be scrapped as a direct result of underfunding for concessionary fares.
Finally, a number of local authorities have been left with no option but to increase council tax. Adur in West Sussex, Worthing and Torbay are just three examples of that. According to a representative of Suffolk Coastal district council,
“last year’s Council Tax increase almost all went towards supporting the concessionary travel costs”.
The situation is little better for bus operators. Mr. Peter Shipp, the chairman and chief executive of the East Yorkshire Motor Services group, has described the situation as
“even more of a financial and operational disaster than I predicted”,
and he certainly was not very complimentary about it before it was introduced.
The new concessionary fare scheme is having a destructive effect on partnerships between local authorities and bus operators, which is jeopardising improvements to local networks. Bus operators have had to spend a considerable proportion of their time on concessionary fares administration and appeals—time that could more productively have been spent improving bus services. It is clear that the uncertainties of reimbursement are affecting the bus operators’ attitude to risk, which may be reflected in tender prices for bus contracts.
The principal bone of contention between local authorities and operators relates to calculating the so-called general travel factor, which means the travel pattern that would have been experienced without the concessionary fares. That factor is used as the basis of reimbursements paid to the operator. In many cases, that leads to appeals by operators. A bus operator can appeal if it feels that it has been inadequately reimbursed by the local authority, but it is worth noting that the local authority cannot appeal if it feels that it has been inadequately reimbursed by the Government. Will the Minister let us know how many appeals have already been lodged with her Department?
Another common complaint is that whereas operators can increase fares without consultation, the grant awarded to local authorities to reimburse operators will increase only with inflation. If a bus company is in financial difficulties, it can raise fares. Because local authorities must reimburse it for revenue forgone based on a percentage of revenue, it will be the council that loses out.
Mr. Shipp wrote to me at the end of May outlining the bureaucratic nightmare that is unfolding for companies such as his. He stated that one natural result of the new reimbursement arrangements is that he is paid a different amount by Scarborough borough council for a journey to Beverley than by East Riding of Yorkshire council for the return journey. Even worse, because East Riding is offering its residents a £15 pass to enhance the national scheme and provide pre-9.30 am travel to and from Hull, East Yorkshire Motor Services has to bill East Riding council for journeys made by its residents from Hull before 9.30 am, but Hull city council for the same journeys after 9.30 am. That is an example of the bureaucratic morass that such companies are having to deal with.
Such companies are also finding that on sunny days, a large number of people entitled to concessionary fares are turning up for leisure journeys. All well and good, one might say, but as a result they are leaving regular fare-paying passengers behind because there is no room. Because of that, East Yorkshire Motor Services has just cancelled a £6,000 summer marketing campaign for fear of encouraging fare-paying families who would otherwise have been using their cars to turn up for buses that they cannot get on because they are full of pensioners.
David Wright: The hon. Gentleman mentioned the minimum standards that the Government apply nationally, and then he developed a theme of local problems in his speech. Does he believe that we should extend the minimum national requirements or keep local flexibility?
Mr. Goodwill: It is important that, when local people vote for their councillors, they can vote for extensions to the scheme. I simply point out the bureaucratic difficulties that companies face through the anomalies that are thrown up. They make the scheme unpopular with some bus companies, which have to deploy their staff to administer the scheme rather than explore new services that they can provide or expand their businesses in the way in which they wish.
David Wright: The simple question is: what is the hon. Gentleman’s proposal?
Mr. Goodwill: We are not the party of government at this time. We are debating a scheme, which the Government introduced. The Select Committee has made some criticisms of it and it is only fair that the Government should respond to the points made in the debate. I simply make the point that companies throughout the country, not only in Yorkshire, are finding the scheme difficult to implement. Surely that cannot be laid at the door of the Opposition, who are not responsible for it.
Mark Hunter (Cheadle) (LD): The hon. Gentleman has been generous in giving way. He rightly said, in answer to the hon. Member for Telford (David Wright), that he does not speak for the party of government. However, will he confirm that he is not committing Her Majesty’s loyal Opposition to any additional spending to bridge the gap on concessionary fares?
Mr. Goodwill: We have made and continue to make the point that we feel that the funding that the Government have allocated—£214 million this year, increasing in future, with a total budget of approximately £1 billion for a billion journeys—is adequate for the scheme. The problem is its allocation to local authorities and the way in which some local authorities pocket a surplus and others, such as Worthing, which my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) represents, lose out. Those in Surrey have a surplus and I am sure that, although the authorities that labour under a deficit are knocking on the Minister’s door almost every day, the ones that have a surplus do not do that.
It is important to have equitable funding. I am not sure, even after reading the report, how the Government have arrived at some of the figures. Are they simply good guesstimates?
Tim Loughton: My hon. Friend has made it clear that anomalies already exist in the funding formula and they need to be addressed. However, he and others also clearly said that we proposed an amendment to the Concessionary Bus Travel Act 2007 to provide for an automatic review of the way in which the funding formula worked in two years to try to iron out some of the anomalies. Of course, the Government rejected that. They had an opportunity in the measure to ensure that the funding formula could be examined shortly. It is already going wrong, but the Government would not allow us to include in the Bill a provision for examining the matter in two years. Surely we have given that undertaking.
Mr. Goodwill: My hon. Friend is right—we are locked into that. The Local Government Association has suggested a way in which the scheme could be improved.
I would like the Minister to comment on some specific points, if possible. First, does she intend to tackle cross-border journeys in the United Kingdom? Hon. Members who have constituencies near the Welsh border have raised that point and the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) has raised the matter in the House in connection with the Scottish border. It can be frustrating for pensioners who live near a border and whose local market town is in a different country. Has the Minister managed to solve that problem? I will not admit to having any answers to
that, but the matter has been raised and places genuine limitations on those living near the border. We must bear it in mind that we live in a United Kingdom, not separate countries.
Secondly, will the grant—I believe that it is around £4.50 per pass—paid to local authorities for issuing passes be available for renewal after they run out in three years, or is it a one-off payment to local authorities for the initial issuing of the first passes?
Thirdly, although we do not argue about the amount of the Government grant to fund the scheme, will the Minister carry out an urgent review of the allocation process, and possibly consider the Local Government Association’s suggestion of distributing the grant on a per journey basis, as well as other solutions that could improve the scheme?
For the avoidance of doubt and before any impulsive parliamentary candidates—I am not thinking of any party in particular—suggest otherwise, there is no threat to the pensioner bus scheme from an incoming Conservative Government. The biggest risk is that it may be compromised and undermined by the Government’s inept introduction.
5.49 pm
Mr. Richard Caborn (Sheffield, Central) (Lab): I, too, welcome the report and welcome my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) to her position as Chair of the Committee. I know that she will do a sterling job in that post.
On behalf of my constituency, I would like to make particular reference to paragraph 56 of the report, which is headed “Ticket gates—not the only solution”. My hon. Friend will have received a letter from a Geraldine Roberts, who is the chair of the residents against station closures group, concerning Sheffield Midland station and the development there. Those who have had the opportunity—in fact, the pleasure—to come to Sheffield will have arrived at a station that has now been refurbished. The entrance has been developed and the walkway into the centre of Sheffield is now commensurate with a modern European industrial city.
There is a problem, however, to do with revenue protection. The franchise that has been obtained by Stagecoach, in its bid for the east midlands franchise, is now creating problems in the operation of Sheffield Midland station. There have been two major developments in Sheffield, on each side of the station, one of which is the Park Hill flats. Those who come into Sheffield will know that the block has been there since the 1960s. It has undergone a massive refurbishment by English Partnerships and Urban Splash. On the other side of the station is Sheffield Hallam university, a very good university that is driving major parts of Sheffield’s regeneration, part of which involves the creative industries quarter and the digital centre.
The franchise said that gating could be installed, in order to protect the companies from fraud and the lack of fares, as well as to reduce crime. Both of those considerations we accept. However, we want a proper cost-benefit analysis, because the movement of population from one side of the station to the other is very much through the station—indeed, it is an historical fact of the development of Sheffield’s railway network, city centre and university, as well as the residential area in and around Park hill. The point made in the report
under “Ticket gates—not the only solution”, which is a fair one, challenges some of the franchises that have been given out, particularly on the east coast main line. I hope that the issue can be revisited, as the report asks, to ensure that the cost-benefit analysis is done.
The unfortunate part, which is again brought out in the report, is that many franchises have worked in isolation, taking into account just transport and not the wider concerns about economic regeneration or other developments. There are a number of such issues on the midland main line, which has problems with the gating at some of the stations.
I welcome the report and its recommendations. I hope that the Government’s response to the recommendation in paragraph 60 means that they will look not just at Sheffield, but at all the stations on the midland main line, to ensure that the cost-benefit analysis for all those areas is both effective and commensurate with the public money that has been put into the economic regeneration there, as well as into the stations themselves.
Unfortunately, I have to speak just after 6 o’clock in another meeting, but I hope to return for the winding-up speeches, to listen to my right hon. Friend the Minister’s reply, which I hope will be very positive indeed.
5.54 pm
Norman Baker (Lewes) (LD): I, too, welcome the hon. Member for Liverpool, Riverside (Mrs. Ellman) to her new role. I am very pleased that she is there, although obviously we all regret the circumstances in which she inherited it.
To some extent, this debate is a revisiting of the debate that we had on 25 March about concessionary bus fares. It is not necessary to reiterate all the points that I made on that occasion, not least because some of them have been made already by the hon. Member for Scarborough and Whitby (Mr. Goodwill). However, I should like to stress the need for an evaluation, which the hon. Lady mentioned. The scheme is new and a lot of kinks and quirks have appeared, perhaps inevitably. It is very important indeed that there should be a proper evaluation, as she correctly said.
When I asked for such an evaluation in the debate on 25 March, the Minister made no commitment to one. I therefore hope that she will today give a commitment to an early evaluation of the scheme, to pick up the legitimate points made by hon. Members in all parts of the House about how it is operating. Like most hon. Members, I make that call not out of mischief, but because there are genuine problems and kinks in the scheme as it is currently working. If the hon. Lady’s Committee can pursue that point, that would be very welcome indeed.
Part of the conclusion that I have reached from writing to all transport authorities that administer a concessionary fares scheme is that there is a misallocation among authorities, which means that some have received grossly inadequate amounts for the schemes in their area. That is particularly the case for seaside towns and attractive areas such as Lewes, which is considerably out of pocket, as well Worthing, which has now been mentioned for the fourth time in this debate. However, some authorities have been gaining money for which, frankly, there is no justification. Obviously those authorities keep quiet about that; nevertheless, there is an imbalance in the way in which the money is distributed.
Mark Hunter: My hon. Friend is right to draw attention to the problems in funding the scheme. However, does he agree that another important consideration is that in many cases passenger transport authorities have underestimated what their response to the scheme should be? For instance, Greater Manchester passenger transport authority has been totally overwhelmed by the number of applicants for the new passes. As a consequence, many residents are still waiting for their passes, and will be waiting for another several months.
Norman Baker: My hon. Friend is absolutely right. Many local authorities were not entirely ready for the scheme when it was introduced, but that was not necessarily their fault. It is a question of how the scheme was rolled out, the availability of smartcard technology and other matters, which I shall come to. However, we have not yet seen the full picture, which is perhaps another reason for a full evaluation.
It is quite clear from the responses that I have received—I imagine that this is true of the responses that the hon. Member for Scarborough and Whitby has received, too, as I suspect that local authorities are saying the same thing to him as they are to me—that there is an overall deficit in the amount of money that councils require to run the scheme on a cost-neutral basis. Part of the reason for that deficit is that the Government have been successful in their concessionary fares scheme. They have encouraged more people to use public transport and, by getting people on to buses, met some of their objectives on social exclusion and even, one might argue, on climate change.
The Government can say, “Here is a success,” but they cannot say that there is no extra cost to councils as a consequence. I estimate that cost to be around £60 million per annum overall, even allowing for the redistribution of funds between those who have gained and those who have lost. I have talked to our shadow Chancellor, my hon. Friend the Member for Twickenham (Dr. Cable), who is a hard man to get money out of. He has agreed, in our overall tax-neutral arrangements, that £60 million extra will be allocated for concessionary fares in our Budget proposals.
I invite the Conservatives to follow suit. We have as much opportunity to speak from the Opposition Benches as the hon. Member for Scarborough and Whitby has. It is not sufficient in opposition merely to draw attention to the Government’s deficiencies; it is necessary to put forward constructive alternatives, too. Although the Conservatives are getting quite good at pulling apart the Government’s proposals, they are not very good at putting forward any alternatives.
Mr. John Redwood (Wokingham) (Con): On that point, could the hon. Gentleman remind us how big a local income tax would be needed to balance his Budget?
Norman Baker: This is not a debate about local income tax, but I am happy to tell the right hon. Gentleman that all our tax proposals balance. I would be happy to send him details, should he wish. Our proposals are open and accountable, they have been externally audited and they balance. More to the point, they exist, which is more than can be said for the Conservatives’ proposals.
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