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6 May 2009 : Column 127WH—continued
For all the funding that the Government have pumped into concessionary travel, my constituents cannot see any great improvement in their access, primarily because of the actions of the local district council. They are still being forced to choose between a form of free travel throughout England or a discounted rail card, and, in areas that are ill-served by the relevant forms of travel, they have to choose travel tokens.
The Prime Minister and the Government are, in my local pensioners’ views, on the side of the angels by seeking to offer an opportunity for all older and disabled people but, unacceptably, a local Tory administration is pocketing the profit. The local council is wilfully depriving local residents—and vulnerable groups, at that—of real transport choices and using the money to prop up other services. At worst, local pensioners would welcome at least the choice between a free bus pass or a free rail pass. At best, they could have the same as their local authority neighbours: free bus and local rail travel. Why not? This local authority is making a profit from the Government’s concessionary travel scheme, it has more than £20 million in reserve accounts, and it has spent more than £600,000 demolishing just four homes to make way for its new multi-million pound town hall, yet it refuses to listen to local pensioners and to give them a fair deal on transport—you really could not make it up.
I now turn to fraudulent tickets being issued by bus companies. Such practices genuinely threaten the credibility and viability of the concessionary travel scheme, so any actions that diminish the value of the scheme must be stopped now. This issue has also been highlighted by my hon. Friend the Member for North-East Derbyshire (Natascha Engel).
I am aware that bus companies are issuing tickets to concessionary passengers that do not reflect their journey. In a more reprehensible practice, bus drivers issue tickets from a pre-printed roll. I often joke that, as a new MP, I was not issued with the two things that I would have found most valuable: tarot cards and a crystal ball. However, it seems that that is not so for some bus operators. Are they telling me that they are able to predict each customer’s journey in advance, thus allowing them to pre-print their tickets? I would be surprised if that were so. I have complained to local bus operators about these practices and their response has been to change their ticketing policy so that the ticket states the destination. They no longer issue tickets from pre-printed rolls. I have made statements in the local press to raise awareness of such practice and encouraged people to complain if it happens to them.
Natascha Engel (North-East Derbyshire) (Lab): In Derbyshire, the bus companies operate on a basis whereby money is reimbursed not on the tickets that are issued, but on an average based on who travels. The people using those tickets—the over-60s who are travelling on the buses—are really concerned that if they are issued a ticket with a destination that is much further away than they are travelling, the bus companies are operating fraudulently, even when they are not. That undermines the credibility of the whole scheme, and people are worried that they will lose something that is important to them.
Rosie Cooper:
I share my hon. Friend’s concerns. It cannot be right that people operate a scheme that is not transparent and that people using do not understand,
even if it is like that which my hon. Friend outlines. Pensioners are clear that they love and value this scheme. They are really frightened by anything that they think damages the scheme or means that there will not be enough money in the pot at the end of the year. They worry if they hear people complaining that there is not enough money in the scheme at all, because they think that something that is valuable to them might be damaged.
The situation needs to be addressed. Even after asking local pensioners to be aware and after speaking to various bus companies, I have recently received further complaints that tickets have been issued to concessionary travellers for a longer journey than the one taken. I complained to Lancashire county council, the travel authority in my area, which told me that 61 per cent. of the complaints that it received would have involved an overpayment to the bus operator. It is clear that if the operator makes money 61 times out of 100, there will be less money in the scheme for proper journeys. I believe that that is just the tip of the iceberg.
Lancashire county council’s internal audit report on the matter was supposed to go to committee on 30 March, many months after the matter was brought to its attention, but there is still no news, no understanding of the scale of the problem, and no idea of the action to be taken or how quickly. The council must act soon to ensure that it gets real value for every pound that it pays, especially if it is underfunded, as it claims. There is no question but that those practices must be stopped.
If the bus companies are seeking to make a financial gain through fraudulent ticketing, that is illegal, so action must be taken. Any claim greater than the bus operator’s entitlement means that there is less money in the pot for deserving older and disabled people to benefit from the scheme, and that places a greater burden on council tax payers to fill the gap created by ghost journeys. Such practices erode faith in the concessionary travel scheme, as my hon. Friend agreed. Constituents who have contacted me make the case that they do not want to be part of that deception and fraud. There is a growing perception that someone somewhere is on the fiddle, and that does not appeal to the majority’s sense of fairness.
In conclusion, the national concessionary travel scheme delivers real benefits to thousands of West Lancashire residents, and I want local authorities with a positive grant settlement to maximise and extend the benefits of free concessionary travel to increase opportunities for older and disabled people. Merseytravel allows its older people to travel across its whole network, including cross-boundary travel to Chester and even Ormskirk and West Lancashire.
I understand that Merseyside and Greater Manchester passenger transport authorities’ arrangements operate differently from those in Lancashire, but why should my constituents not have the same opportunities as their neighbours, especially as the local Tory-run council is making a profit from the scheme? I want a fair deal on free travel for West Lancashire residents. Will the Minister urgently tackle those practices, attitudes and behaviour, because they will seriously diminish the value of the scheme if they are not dealt with soon?
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The Parliamentary Under-Secretary of State for Transport (Paul Clark): I congratulate my hon. Friend the Member for West Lancashire (Rosie Cooper) on securing this debate on an important issue, and I take on board her request for my Department to consider the issues that she raised. I am proud, as is she, of the Government’s achievements and our commitment to our older citizens and those with disabilities to provide the freedom and opportunities, which did not necessarily exist before, of widening the scope of travel. Indeed, in 2000, for the first time, older and disabled people in England were guaranteed some form of minimum concessionary travel regardless of where they lived. That scheme introduced half-price local travel.
In 2006, the Government developed the scheme to provide greater freedom and extended it to provide free local travel within someone’s local authority area. At that time, we allocated a further £350 million through the formula grant—the rate support grant mechanism—that funds local authorities to pay for that improvement in service. My hon. Friends will remember that in 2006 the then Prime Minister announced that 11 million older and disabled people would be able to use off-peak local buses free of charge anywhere in England from April 2008. That very scheme, to which my hon. Friend referred, is appreciated by the concessionaires who use it. Whenever I visit places in England, I always take the opportunity to ask people who might be using the concessionary fare about their experience of it, the freedom that it has given them, the improvement that it has made to their quality of life, and the inclusion in society that it has provided.
To expand the scheme to free local travel England-wide, we allocated a further £212 million through the special grant agreement, which was debated on the Floor of the House, and forms a three-year funding package. There was £212 million last year, and there is £217 million this financial year, and another £223 million for 2010-11. The special formula that we introduced made generous allowance for the number of those 11 million who would take up the option, and the number of journeys that they would make. The formula grant was consulted on widely, particularly with local authorities, and took account of hot spots, so that places to which people might travel regularly, such as tourist areas, shopping areas or areas with a large number of concessionaires aged over 60, received more of the pot than others. Overall, there is £1 billion in the system for the statutory concessionary scheme, to which my hon. Friend referred. It comes from central Government pots, and we believe that it is enough to cover the scheme overall.
I turn to some of the options and points that have been raised. My hon. Friend asked why her constituents cannot have the same benefits as people in Wigan, Southport and elsewhere. They can, because the Transport Act 2000 introduced a statutory national minimum scheme, and all local authorities may introduce additions, but they must obviously fund them over and above the £1 billion that we provide collectively.
Rosie Cooper: I am grateful for the Minister’s comments, and I appreciate that my constituents could have the same scheme if the council were prepared to fund it. The problem is that instead of trying to fund that and to help older and disabled people, it is too busy picking a pocket or two.
Paul Clark: It was agreed through the usual channels, principally the Local Government Association, that the special grant arrangement should be separate from the formula grant process that funds the lion’s share of local government expenditure, and that it should not be ring-fenced. Indeed, my hon. Friend will be aware that our general ethos is to give more power to local government and elected representatives whom we presume will be responsible in meeting the requirements of their constituents and the people whom they represent and work on behalf of.
At the beginning, my hon. Friend asked why those who were gaining did not use the money to improve the service. As the Minister responsible, I say that the powers exist for local authorities to use moneys that are there, whether those moneys have been given through the special grant formula and they have more money than they require or whether they are using their own funds to enhance the statutory minimum that applies throughout the country.
Let me talk about the reimbursement process, because that will allow me to go on to the claim that fraudulent tickets are possibly being used as a method of reimbursement. I ask hon. Members to bear with me on the reimbursement process. I am the first to admit that it is complicated. However, it should not be beyond the wit of all of us, and indeed it is not in the vast majority of cases throughout the length and breadth of the travel concessionary authorities.
Local authorities have the statutory responsibility to reimburse bus operators for the costs of carrying concessionaires. Therefore, individual authorities need to satisfy themselves that their payments are accurate and need to carry out relevant checks to validate the information passing between them and the bus operators. The underlying principle of the concessionary scheme is that bus operators should be no worse off and no better off. They should not be making a profit out of a national scheme; equally, they should not be making a loss. It is recognised that there are additional costs in carrying people who would not otherwise have travelled.
The Department for Transport issues guidance to local authorities and bus operators on how to calculate reimbursement. As I said, the process is complicated, which is why I ask hon. Members to bear with me. Two key factors have to be taken into account. The first is the lost revenue from the people who are now concessionaires but would have travelled anyway. Someone in that group might be, say, 61, still going to work and would have travelled anyway, but they will not be paying now because they have access to the Government’s generous scheme. The percentage of people who are travelling under the concessionary bus scheme and would have travelled anyway represent lost revenue to the bus company.
The second element is additional costs associated with people who would not have travelled without the free scheme that we have introduced. What are the costs associated with them? There is additional wear and tear from the use of the seats and so on. Additional fuel may be required because of the additional weight. All of those are real things. This is where the tarot cards might have come in useful, because judgments have to be made at local level about who those people are, how many would have travelled anyway and how many would not have travelled.
Then there is the issue of reimbursement and how payment is made. The most important factor to note is that the element of reimbursement for lost revenue should be based on the average fare that each concessionary traveller would have paid if there had been no scheme. We are starting to see some of the complications that come into the negotiations that have to be conducted at local level with local bus companies. Generally, the DFT advises that the average fare should be based on a basket of fares, taking into account the existence of commercially discounted and multi-journey tickets that would have been purchased by older and disabled people in the absence of a free scheme.
If local authorities are reimbursing bus operators in line with our guidance, it should not matter, for the purposes of reimbursement, what type of ticket is issued to a concessionaire on boarding a bus, because there is no direct correlation between the individual ticket issued and the amount paid to the operator. The most critical issue is where the journey started, because that authority will be charged for the person. Where the person travels to is not a factor in the guidance that we give in relation to the reimbursement to the local bus operator. The key pieces of information that bus operators need to record to facilitate accurate reimbursement are how many concessionary journeys have been made and in which local authority area those journeys began.
However, I will take on board this point; indeed, I raised it not long ago in the Department and my hon. Friend the Member for North-East Derbyshire (Natascha Engel) has raised it. I am referring to the confusion that arises if someone is given a ticket that says that they started at A, which is true, but that they are going to B when they are actually going only to C, which is in-between. People will assume that that is what is being charged for somewhere. The confusion that is caused could undermine the scheme if we are not careful, because people will think that that is what is being charged for and it is fraudulent.
I will come to the specific issue of Lancashire in a moment, having outlined how the reimbursement process operates. I share the concern that my hon. Friend has expressed about where the reimbursement is being undertaken using the method that has been described. There is potential fraud but, as I said, the DFT’s guidance is that the element of reimbursement should be based on the average fare and that that should be based on a basket of fares.
We have discovered through research done by Passenger Focus that 39 per cent. of passholders are making more local journeys by bus now than before they obtained their pass and that 13 per cent. are travelling further than they would have done, because it is free. The DFT guidance is clear. There should not be a correlation between the actual journey taken and the payment, because we would end up with the companies making a profit out of a concessionary scheme.
I am particularly concerned about the claims of fraud in Lancashire. As I said, there is no need for any local authorities to base their payments on tickets actually issued. My officials have made that point to administrators of the Lancashire scheme. I am confident that none of the bus companies would condone overcharging by its drivers. However, it does appear that in Lancashire, the scheme is paid for on the basis of tickets issued. That is certainly a cause for concern, because it is not in line with the guidance given by the DFT.
I take on board very strongly the issues raised in the debate. That is a reason why I have met a number of colleagues on both sides of the House to discuss issues relating to the concessionary scheme. We are talking about a minority of the 290-odd travel concessionary authorities, but there are some issues to be dealt with. It is one of the reasons why, since April of last year, we have been considering how we can change the administration of the scheme. In the last week or so, we have issued a consultation paper on the administration of the scheme—on keeping it as it is, taking it to upper-tier levels or even having a centrally based scheme. That is out to consultation. I urge all hon. Members to read the document themselves and consult, and to take the opportunity to get their local authorities to respond as well.
Rosie Cooper:
Will the Minister undertake to ask his officials to pay particular attention to the situation in Lancashire? It is clear that tickets have been issued for
journeys much longer than the journeys actually made. Lancashire is very worried that it may lose money over this. Taxpayers have to fund the difference, yet there is this hole right at the heart of it.
Paul Clark: Yes, most certainly we will take that on board. The issues that my hon. Friend has raised must be taken forward, and my officials will raise the matter with officials in West Lancashire and for the Lancashire scheme as a whole. I can confirm that, according to my figures, West Lancashire—her own authority—is well funded by the moneys that have gone through the special grant. I understand her campaign to ensure that that money is used for the benefit of the concessionary scheme.
4.59 pm
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