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26 Jan 2009 : Column 141

Paul Clark: My hon. Friend refers to the number of variations that there are. The powers in the Transport Act 2000 that allowed local authorities to make additional provisions still exist, and they are a matter for local authorities. Equally, her point highlights the fact that in some areas the money in a given area is more than sufficient to meet the additional costs. That matter has been raised with me in a series of meetings with individual Members and their delegations.

The £212 million special grant will continue to rise, to £217 million in 2009-10 and to £223 million in 2010-11. That will give councils a significant increase in bus concession funding—typically around 30 per cent., and far higher in many places—so that pass holders can use buses anywhere in England. The change is having a real impact. The new national concession is of huge benefit to millions of eligible people, as I am sure that the House is well aware. It allows them free off-peak travel anywhere in England, and it also helps other Government goals, for example in respect of combating social exclusion, to be met.

The improved concession guarantees people access to facilities outside their local area and helps them to keep in touch with family and friends. It provides new leisure opportunities so that, when they visit other parts of England on holiday, eligible people can travel free on local buses at off-peak times. Moreover, the fact that the concession encourages people to visit popular tourist destinations brings benefits to the wider economy in those areas.

The latest extension to the statutory minimum concession brings the spending on concessionary travel to more than £1 billion each year, and I think that hon. Members will recognise that that is not an insignificant sum. We are confident that the funding that we provide is sufficient to cover the total cost of the statutory minimum concession. The size of the new grant is based on generous assumptions about fares, bus pass take-up rates, extra journeys and additional operating costs.

We also consulted extremely widely on how best to distribute the new funding. No formula will ever be perfect, but the one that we eventually used is based on four factors—eligible population, retail floor space, bus patronage and visitor numbers. All those factors correlate to the actual cost of the concession, but hon. Members need to be aware that an underlying principle of the concessionary scheme’s funding is that bus operators should be no worse and no better off. Obviously, filling an empty space on a bus does not cost as much as the fare that would normally be charged in the first place.

I accept that the discussions and negotiations with the bus companies will be complex, but I have met people from all the areas represented by those hon. Members who have spoken in the debate. That is, I have met people from Torbay and the Isle of Wight, and I am due to meet people from Chesterfield. Moreover, I know that my officials have met representatives from all the councils and areas referred to in the debate.

I am aware that reimbursement rates have reached as high as 70-odd per cent. in some areas. In contrast, reimbursement rates in other authorities have been in the region of 40 to 50 per cent.

David Howarth: If the Minister were to do the arithmetic in his head, he would realise that many councils, including Cambridge, would still be massively out of pocket even at the higher reimbursement rate that he mentioned.

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Paul Clark: I note that, through the special grant, Cambridge has received an increase on its 2007-08 allocation worth £650,000, or a 57 per cent. increase on the actual costs last year. In addition, the hon. Gentleman is claiming that it is anticipated that another £400,000 will be needed. That means that Cambridge will need in excess of £1 million on top of last year’s provision—and anyone can work out that the new amount is almost double the cost of last year’s provision. The formula that was provided was based on estimates that took account of exactly those points that he raised. The formula does not work against tourist destinations, as he claimed. In fact, it allows such matters to be taken into account.

The hon. Gentleman referred to urban districts surrounded by rural areas, but that is another factor that the formula takes into account. Obviously, the amount of retail floor space can be one of the attractions for visitors, and that is why South Cambridgeshire received an increase in its special grant allocation of only 29 per cent. on 2007-08. So the formula is working to reflect exactly some of the factors raised by the hon. Gentleman and some of the other hon. Members who have contributed.

David Howarth: There is all the difference in the world between a formula that takes into account factors and one that takes them into account enough. It is plain from what has actually happened on the ground that the formula is inadequate in the weighting that it gives. It might have some of the right factors, but that is not the same as doing the job.

Paul Clark: Let me add in response to that intervention that, when we looked at which formula should be used, we obviously had to take into account who should pay for the travel and at which end of the journey. When introducing a nationwide travel scheme throughout England, we soon realised that, if the old way had remained and areas paid for their own residents who travelled, a lot of cross-working out would have to be done and that that would be a terribly complex system. Therefore, the decision was not just taken in Great Minster house—discussions were held through the various normal channels, the travel concession authorities and the Local Government Association about the best and most appropriate way forward—and the system was based on where the travelling starts, so there was a need to take that into account.

On the other comments that have been made, the hon. Member for Chesterfield (Paul Holmes)—I am due to meet him shortly with a delegation, and I obviously look forward to that—claims that there is £1.7 million of underfunding. In fact, the out-turn for expenditure in 2007-08 was £1.44 million on bus fares. Again, it has been claimed that an increase of more than 100 per cent. has been happening, that the requirements have not been met and that all councils have been affected. May I respectfully point out that some 219 local authorities are involved as travel concession authorities and that by no means all of them are saying that they are suffering problems in the way that the hon. Gentleman suggests, so the issue needs to be put into balance?

Paul Holmes: Authorities all over the country, run by different political parties, are saying that the formula is not working and that the money is not adequate. The
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figures that I have quoted are not mine; they were proposed by Labour-run Derbyshire county council and show that three of the councils in Derbyshire are grossly underfunded by the scheme. Even if we took the overfunding for six of the councils, it would still only make up 40 per cent. of the underfunding for the three that are badly hit, such as Chesterfield.

Paul Clark: In all the discussions that I have had, invariably what is being indicated—if not on the record, certainly unofficially—is that people other than the Government believe that there is enough money in any given area, usually a county. Perhaps it is a question of how the formula is working in given areas. One of the reasons why we shall consult shortly is to consider how the scheme can be administered in a way that provides better distribution, or what is believed to be better distribution, across the board.

One reason why we said that if an area decides that one authority will be the funding authority and the others agree, we would follow that route, is that we can do the same thing now. What I cannot do is impose such a decision on an area. Equally, we must recognise that there is a three-year deal, and the vast majority of local authorities have planned on a three-year basis; hon. Members will appreciate that there would therefore be
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consequences to a change. I am meeting Members and their delegations to assess exactly what issues are being faced by some concessionary travel areas.

Mr. Andrew Smith: Let us be clear about what the Minister is saying: is he saying that following the consultations, such revisions could happen before the end of the three-year period?

Paul Clark: It is unlikely that we would be able to move before the three-year period ends in 2011, but we have made it clear that the aim of the process is to listen to the issues that hon. Members and their local authorities face.

I have constantly made it clear that the single grant was for the additional part of concessionary fares. Underlying that is the provision within the rate support grant. In total there is more than £1 billion to give 11 million people the opportunity to travel freely. We need to work through the issues, but I welcome our discussions as part of the debate surrounding the provision of concessionary travel to 11 million people across the length and breadth of the country. The scheme gives them additional freedom to travel and to meet friends.

Question put and agreed to.

11.26 pm

House adjourned.

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