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Baroness Hanham: I am grateful for the Minister's response. The noble and learned Lord has given me credit for throwing the issue much wider than the words did. However, I am delighted that the amendment has given an opportunity for the Committee to have yet a further debate on the possibility of extending the concessionary fares scheme.
I tried to confine my remarks to my concern about anyone who was entitled to the benefit being disenfranchised from getting it; namely, those who might try to travel on rural buses which did not exist. None the less, the matter has had a pretty good airing for now. We may return to it later. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Attlee moved Amendment No. 2:
- After Clause 1, insert the following new clause--
The noble Earl said: Amendment No. 2 ensures that any person who may now become eligible for travel concessions is not inadvertently penalised under our tax laws. As my noble friend Lord Swinfen explained at Second Reading, the new concession could be seen as a taxable benefit. This could have unintended effects for men aged 60 to 64.
The purpose of the Bill is to equalise the age at which men and women become entitled to travel concessions and to end discrimination in granting concessions based on age. However, if the concession was taxed, working men would still be at a disadvantage and the overall purpose of the Bill would not be achieved. Presumably, the Government do not want to discourage men who are working from making use of the concessions now to be given to them. I beg to move.
Lord Swinfen: I support the amendment. At Second Reading I asked the noble and learned Lord the Minister a question:
Lord Falconer of Thoroton: Finding the answer for myself might be to overstate the point, but I have now received clear advice as regards the position. I can assure the noble Lord and the Committee that travel concessions are not chargeable to income tax. I quite understand why this came to the mind of the noble Lord when we considered it on Second Reading. As a result of the Bill, people will be able to take advantage of the new concession before they reach retirement age. The noble Lord has made clear his concern that this concession might be considered to be a taxable benefit, but a tax charge of this nature could arise only where a benefit is provided by reason of the employment. I cite, for example, an employer who provides goods or services for his employee's private use, such as hotel accommodation, holidays or work carried out at the employee's residence. Travel concessions in the context of the Bill and the legislation which it seeks to amend are available to eligible people regardless of whether they are employed, self employed or do not work. The question of tax liability does not arise.
I should point out to the noble Lord that a number of women aged over 60 and men aged over 65 who are still in work already take advantage of their travel concession to reach their place of employment without any tax charge arising. I hope that this assurance will set the noble Lord's mind at rest.
Lord Swinfen: I am grateful to the noble and learned Lord for taking the trouble to prepare what is in fact a full answer to my question. I thank him for that, even though it has taken him around a fortnight to produce it.
Baroness Hamwee: Before the noble Earl rises to speak, perhaps I may ask the noble and learned Lord whether that answer has come from the Government as a whole; namely, does it represent the view of the Treasury as well as the Minister's own department?
Lord Falconer of Thoroton: The noble Baroness is well aware that every answer I give is a response made on behalf of the Government as a whole.
Earl Attlee: I am grateful to the Minister for his reply, but I hope that we do not encounter an over-enthusiastic tax inspector. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 [Commencement and transitional provision]:
Baroness Scott of Needham Market moved Amendment No. 3:
The noble Baroness said: I beg to move Amendment No. 3 tabled in my name and that of my noble friend. At present, local authorities are still dealing with the impact of the half-fare scheme which was brought in under the terms of the Transport Act 2000. During the passage of that Bill, a number of concerns were raised by local authorities which were then reflected in our debates in this Chamber. Those concerns sought to confirm whether the moneys being made available by the Government would be sufficient to meet the costs. I think that it is fair to say that the then Minister, the noble Lord, Lord Whitty, understood those concerns. He gave an assurance that the costs would be monitored to ensure that local authorities were not severely damaged by having to fund the concessions.
However, I have to say that I was not entirely convinced by the Minister's reply in the debate on Second Reading. I did not understand exactly how the review mechanism would work. The mechanism is important in its own right, but the Bill will make it even more important. The provisions add not only a further group of people to those already entitled to take up the half-fare scheme, they also extend the eligibility to concessions on rail fares and so forth, where such schemes apply in local authority areas. Thus a significant cost to local authorities must be considered here.
In the debate on Second Reading, the Minister indicated that local authorities would be compensated when they bid for funds. Unfortunately the situation is not as simple as that because rate support grant contains an element entitled "new burdens" which is issued in one large block. That element is difficult to disaggregate even across local authorities in general. As a result, it is almost impossible to decide which local authorities will suffer more disadvantage than others. The perceived danger here--indications show that it is well founded--is that those authorities which in the past offered more generous schemes are now losing out because they did so. That is not equitable.
This amendment and, I imagine, the other amendments tabled in the grouping, is designed to ensure that a proper dialogue takes place with the Local Government Association and the Association of London Government to ensure that the mechanism for recompense is suitable. It would be useful if the Minister could take the opportunity presented by the Summer Recess to consider whether a more appropriate mechanism for recompense might be a time-limited specific compensation scheme which could be targeted at individual local authorities rather than using the somewhat blunt instrument of the rate support grant. I beg to move.
Baroness Hanham: My Amendments Nos. 4 and 5 are grouped with the amendment we are discussing. I
As I understand it, there is as yet no agreement between the Government and the local authority associations as regards the extra costs associated with the changes. Indeed, I am not yet aware that there has been any agreement on those associated with the provisions in the Transport Act 2000, never mind the extensions proposed in the Bill. It is incumbent upon this Chamber to ensure that the additional costs are carefully considered before there is any suggestion of the Bill's provisions being implemented; otherwise, those provisions, or those that we are considering, could be jeopardised and/or could result in cuts in the provision of concessionary fares for groups such as the blind and the disabled as well as older people.
The risks of inadequately funding local authorities can be demonstrated already by what is happening in some local authority areas where it has been reported to me that concessionary fares have been cut to the 50 per cent statutory minimum even before the implications of this Bill have been considered. The Royal National Institute for the Blind has particularly drawn my attention to its concern that such reductions would have a disproportionately serious effect on its members.
At Second Reading I drew attention to the position in London where there is a 100 per cent free fare scheme--not only on the statutory but also on the wide discretionary basis--which covers many other categories of recipient. The anticipated extra cost is some £25 million which is well in excess of the £16 million which has been suggested and half the total estimated for the whole additional expenditure. That is brought about because of the complexity of the compensation arrangements between the boroughs and Transport for London. If compensation to London were to be provided on the basis of a half fare on buses only--as has already happened with the Transport Act 2000--there would be significant extra costs to be borne by the London boroughs. I am a member of one of those boroughs. There is a danger that without proper compensation the scheme could, in some areas, have to be reduced.
The amendments in my name and that of the noble Baroness, Lady Scott, will, I hope, enable the Minister to reassure the Committee that these matters are already the subject of discussions between the department and the local authority associations. But whether or not that is the situation, I hope that he will accept the amendment so that both those who expect to benefit fully from the provisions in the Bill, and
"TAX STATUS
Changes made under section 1 above shall not affect the tax status of any person becoming eligible to receive travel concessions in consequence of those changes."
"I wonder whether the tax authorities will consider this to be a benefit in kind and that such men will have to pay tax on it. Can the Minister assure the House that that will not be the case until such time as the pension age is equalised and men and women retired at the same time?".--[Official Report, 9/7/01; col. 945.]
The noble and learned Lord answered a good many questions in his winding-up speech at the end of the debate, but he did not answer that one. I nearly got up to ask him to do so. However, he has now had time to think, to find out the answer for himself and to discuss it with other members of the Government. Perhaps he would now be kind enough to answer that question.
Page 2, line 5, after "Minister" insert "(after consultation with representatives of local authorities)"
3.30 p.m.
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