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Local authorities have only two ways in which they can deal with a shortfall in their funding. Either they can raise council tax—which is clearly not entirely desirable, and of course they face capping to prevent them from raising it too much—or they can make cuts in services. What usually happens is that a local authority will not cut other areas of service provision in order to pay for concessionary bus fares. They are more likely to make cuts in spending on public transport. That means cutting highly subsidised services in rural areas, Sunday services or evening provision. Ironically, concessionary fares are provided for a higher number of people but they will have fewer bus services on which to use them, while of course those without concessions are heavily penalised because there are fewer services available.
Broadly these are the financial concerns which local authorities are raising, and one way or another they are all covered in the amendments in this group. While technically the amendments may not be perfect, I am sure the noble Lord understands that they are a mechanism to use in Grand Committee to air these concerns. I beg to move.
Lord Hanningfield: I rise to support these amendments and to speak to Amendment No. 22 in the group, which is similar in intent. Indeed, many of the arguments I shall put forward have already been made by the noble Baroness, Lady Scott, and therefore I shall keep my remarks to the minimum.
It would not be incorrect to say that this entire scheme is dependent for its success on effective co-operation and administration by local authorities. I fully support that objective and it is a welcome move on the part of a Government who for too long have been unable or unwilling to trust local government to do this. I shall speak on that issue in more detail later. I feel strongly that this scheme should be administered by local authorities and it is therefore vital that we all
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The mechanism for the actual delivery of the scheme has not been determined. As the noble Baroness has just made clear, if it is to be made through the block grant, that might not be as satisfactory as it should be. Whatever arrangement is settled on, the key principle must be that local councils are fully funded and suffer no financial risk. We have talked about the concessionary and other elements that local authorities might take on, which is up to them. As everyone is aware, local government is under severe cost pressures in the form of adult social care provision, waste and so forth. Local authorities want to support this scheme and the Government have said they want them to do that, and therefore we must find the funding nationally to support the provisions that come out of this legislation.
I am not normally in favour of specific grants. Generally I prefer local authorities to be able to decide on their spending, but this might be an exception. I think the Government recognise that there may also be capital costs in setting up the scheme initially. Given that, will the Minister explain how he sees this being provided for? That is why we have tabled subsection (2) of the proposed new clause. Effectively it would allow local authorities to claim back any expenses they incur in setting up the scheme during its first year of operation. I shall be interested to hear the Minister’s response explaining the work being done in this area. I beg to move.
Lord Bradshaw: I intervene to offer an explanation of why I have not supported the amendments concerning disabled people moved by noble Lords. We are very unhappy about the funding of the scheme as it is and we want that put right before we talk about extensions to it. Like the noble Lord, Lord Hanningfield, I am very uneasy about whether there is enough money, or whether such money as there is is properly targeted to those who need it. That is why I emphasise the need to move as quickly as possible to a better scheme based on smartcards, which would enable us to direct the funding to where it is needed and to pay it directly.
Like the noble Lord, Lord Hanningfield, and my noble friend Lady Scott, I am extremely anxious to hear what the Minister has to say about investigation of a scheme which is showing huge promise in its first few months in terms of the number of people using it. In my locality, an increase in bus use of 43 per cent has been far more dramatic than that of any other initiative taken by the Government. The cost implications of such a scheme merit further careful consideration.
Lord Davies of Oldham: The real issues are being joined here by noble Lords who, I am conscious, have far greater experience of local authority finance than I have enjoyed. I am very grateful to the noble Lord, Lord Bradshaw, for his contribution. When I was struggling with the issue of how far we should extend the scheme, I automatically assumed that his preserved silence was one of assent for the government position,
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We are confident in broad terms that the £1 billion that we will be spending in total on concessionary fares will be sufficient to meet all demands in the system. The extra £250 million related to the Bill includes provision for increased pass take-up—the noble Lord, Lord Bradshaw, made the point that there are early indications of the enthusiasm with which people who are qualified will take advantage of the new opportunities—and assumptions about costs and fares. I heard what the noble Baroness, Lady Scott, had to say about the increased cost of bus fares, but we think that we have taken those adequately into account.
I respect her point that the impact of free or concessionary travel may be disproportionate for some authorities, which will take much more of the strain than others because of the nature of what they provide and the advantages that concessionary travellers will see of going to those “honey pots”—I think that that was her term. I have heard Blackpool described in many terms—generally favourable but sometimes unfavourable—but never have I heard it called a honey pot before. On behalf of the good folk of Blackpool, I shall take that as a compliment. We are working very hard to ensure proper collaboration between local government and the Treasury so that when we allocate the £250 million, it takes into account the disproportionate effects. There is no doubt that a national scheme has disproportionate effects on local authorities.
5.15 pm
I should like to put the issue of local authority funding to bed. Amendments Nos. 20 to 22 seek to ensure that local authorities are adequately funded by central government to provide reimbursement for the national concession. I am aware that issue of local authority funding goes far wider than the scope of the Bill. I bore in mind the point made by the noble Lord, Lord Hanningfield, that he was beginning to think in terms of hypothecation on this issue in relation to local authorities. We are aware that powerful voices will still argue against that for all sorts of reasons, but local authorities will certainly want to be assured that they will be adequately refunded for the costs of operating the scheme, which was the burden of the noble Lord’s remarks. Concessionary fares reimbursement is only one of many obligations that authorities must face, and we know their skill in managing matters in this area.
We have made provision for the principles of the Bill to be adequately funded. There is the issue of how the funding should be distributed, but that will involve extensive discussion and collaboration with local authorities and I cannot come forward with a blueprint at this stage. No noble Lord in the Committee would
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Amendment No. 40 drifts into the general issue of how passenger transport authorities are funded by their metropolitan districts. I see no reason why concessionary fares should be different from other aspects of transport policy that a PTA, through its executive, delivers on behalf of the districts of which it consists. The proposed change interferes with a well established and adequate system for funding the PTAs. It is also worth pointing out that under our proposals in the Bill, no PTA would be obliged to agree a joint scheme with a metropolitan district council. If the PTA felt that funding was not forthcoming, it might reasonably refuse to agree to the joint scheme. I can therefore see no reason for changing that mechanism, which has worked in the past. I recognise the challenges posed by the Bill, but they should not create difficulties in this area.
On the issue of operator reimbursement, at the moment local authorities are required to reimburse bus operators only for concessionary journeys made wholly within their area. From April 2008, elderly and disabled people resident in England will be able to travel for free on off-peak local bus services anywhere in England. Therefore, the basis on which operators are reimbursed also needs to change. Amendment No. 19 is not the right way in which to go about that, and the concern that may have prompted it has already been addressed in the Bill. Section 149 of the Transport Act 2000, as it would be amended by the Bill, will require travel concession authorities to reimburse operators for providing the national concession on journeys beginning in their area. The national concession must, under Section 145, be provided to those holding passes issued by any travel concession authority in England, as well as those issued under the London schemes. Hence, travel concession authorities will already be obliged to reimburse operators for trips begun in their area and made by concessionaires resident outside their area.
This approach renders the authority in which the eligible person resides totally irrelevant. This must be right under a national scheme. It also negates the need for unworkable billing arrangements whereby 300 local authorities could be billing each other for trips made by each other’s eligible residents. The whole Committee would react in horror to any such concept. We reacted in horror in advance of the concept being adumbrated in the Committee, which is why we are putting forward these proposals.
Amendment No. 20 also calls for a standard scheme for reimbursing the bus operators for all the costs incurred in carrying concessionaires. Current legislation already requires that operators should be no better or worse off as a result of carrying concessionaires. As such, operators are entitled to be fully reimbursed for any additional costs incurred. There are acknowledged
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We are working with operators and local authorities to put in place revised and more efficient arrangements for the new 2008 concession. It is important that we secure the best deal for the taxpayer and reduce the burden placed on the industry. Any decision to make a change via an order will, of course, be after proper consultation and a regulatory impact assessment.
It is clearly premature to adopt the amendment at this stage. It is best to conclude this work by passing the Bill and making any changes through regulations rather than by seeking to pre-empt them, which the amendment would do. The amendments identify with total accuracy the problems of the national scheme that we have to confront and the impact of the scheme on local finances. I seek not to minimise those problems but to reassure the Committee that they have been anticipated effectively and that the Bill provides a framework in which the necessary regulations can work.
Baroness Scott of Needham Market: I am grateful to the Minister for taking the time to go through the points that I have made. I appreciate, as I am sure local authorities will, what he said about ensuring that the scheme is fully funded. Ultimately, we need a scheme that works for the passengers, that local authorities can afford to provide and that provides bus operators with a commercial opportunity. We need to recognise that, because this new scheme is being built on a scheme that was amended only a few months ago, and we are to a certain extent working on assumptions that may need to be reviewed if the scheme is to remain sustainable.
I am very keen to avoid the results of this scheme being added to the long list of matters on which local authorities are taking issue with central government, so that it does not become part of the annual ritual of local authorities saying, “This is where we are short of money”, and the Government saying, “No, you are fine. Look, we have given you X amount of money”. Although that may be quite good for scoring debating points, it would not achieve very many bus journeys if local authorities ended up cutting services, which is usually what happens when they are short of money.
I will stick with my assertion that Blackpool is a honey pot, not least because my revered leader comes from Blackpool and I am sure there must be extra brownie points to be stored up through mentioning it. Nevertheless, the local authority there is as concerned as others are about this element of the Bill. I fear that there are a lot of problems with that concept.
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Finally, like the noble Lord, Lord Hanningfield, I am normally against ring-fencing, but there are occasions on which we must at least consider it. The noble Lord and I feel that this is different because we are now moving to a national scheme. If we were starting from a blank piece of paper, I imagine that the Government would introduce and run the scheme nationally. It would probably not be administered by local authorities in any event. Where local government is in effect acting as an agent for a central government scheme, as it is here, that makes us feel less sensitive about the notion of ring-fencing, because it does not restrict the scope of what a local authority can do. It is simply a mechanism to ensure that the funding is adequate.
Lord Davies of Oldham: Before the noble Baroness sits down, I made a slight slip that I would like to correct. I said that the deliberately flexible regulation powers of the Bill appeared in Clause 3. They actually appear in Clause 9. I apologise for that slip and hope that the Committee will accept my apology.
Lord Hanningfield: I thank the Minister for his reply and concur totally with what the noble Baroness, Lady Scott, said. I know that we are having a Comprehensive Spending Review next year and that there could be different systems of funding beyond the winter of 2008, but the basis of local government funding now was sorted out two or three years ago.
Essex, like all the southern counties, has a fixed-floor grant, so that, whatever happens, we get only 2.7 per cent. It therefore frustrates us enormously when the Government say that we have extra money, because we cannot have extra money. The Government say that they have included £250 million for rail fares. Essex gets none of that because we get only 2.7 per cent regardless, and the same will be true next year. I do not think that many people understand that, but it frustrates me enormously when Ministers say that there is £500 million here and £400 million there when most of the counties get none of it. We get 2.7 per cent regardless. Although everyone else gets more than that, we get none of that money. When the Government impose new duties—as the noble Baroness, Lady Scott, said, this is a national scheme—there must be some way of giving those who spend more money more money. All we will get next year is 2.7 per cent again. We know that now. There must be some new way of funding those new things. Otherwise, that builds up enormous problems. We cannot continue to absorb the extra cost of extra legislation at the level of 2.7 per cent. I do not think that many Ministers understand that. They think that they have given us money when they have not. We do not get any of it.
We all want this scheme to succeed, so money somehow needs to get directly to where things will happen. I am sure that we will come back to this matter. I cannot agree with the Minister, although I often do, that we must wait for regulation. We need to know where the Government are going on the funding of the scheme before we complete the legislation. We need to understand that the money
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Amendment, by leave, withdrawn.
[Amendments Nos. 20 and 21 not moved.]
Clause 4 [The national concession: journeys beginning on London bus network]:
Clause 5 [Reserve free travel scheme]:
Lord Bradshaw moved Amendment No. 24:
(1) After section 240 of the 1999 Act (travel concessions on journeys in and around Greater London) insert—
If immediately before 1st January in any financial year it appears to Transport for London that there are not for the time being in force arrangements under section 240(1) in relation to bus travel for the next financial year, the arrangements for the current financial year will be carried forward with such adjustment to take account of inflation as the Secretary of State may in writing specify.”
(2) Section 241 of the 1999 Act (reserve free travel schemes for London residents) is amended as follows.
The noble Lord said: The amendments, which are supported by London Councils—by the way, that is the body that represents all councils in London, not some of them—are intended to remove the London reserve free travel scheme in Section 241 of and Schedule 16 to the Greater London Authority Act 1999, following the introduction of the mandatory national bus concession. The free reserve scheme applies only to London and, in negotiating travel concessions, London Councils has to reach agreement with Transport for London for a scheme on its services by 31 December before the financial year of the scheme comes into effect.
If agreement is not reached, the statutory reserve scheme comes into effect at a cost determined by Transport for London. This puts London Councils at a disadvantage when negotiating with Transport for London, because Transport for London can determine the costs of the reserve scheme. Uniquely in London, the costs of the concessionary fares scheme are in effect determined by the operators who benefit, whereas elsewhere they are determined subject to appeal to the Secretary of State by the local authorities. We shall come to that matter later.
5.30 pm
With the introduction of a national free fare concession on buses, there is no real need for elaborate special legislation to ensure a concessionary fares scheme in London. London Councils would like the Bill to be amended to remove the application of the reserve scheme for buses, and for the Government to undertake
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Lord Davies of Oldham: As I was completing a 12,000-mile air trip yesterday, I had a nightmare that there might be at least one amendment that I would not understand at all. The noble Lord, Lord Bradshaw, has kindly provided that amendment. As he said, this is an extremely difficult issue, but he will rest assured that the all-seeing, all-knowing Government have talents at their disposal besides my own humble ones. Therefore, people have been working on this issue and can do rather better than he foresaw; namely, that we can give him some kind of answer, although not one that he will wholly approve of because we do not agree that his amendments, which seek to remove bus travel from the reserve free travel scheme that guarantees concessionary travel in London, are in the interests of either Londoners or the rest of the country.
The Committee will be well aware, because the noble Lord, Lord Bradshaw, has already informed us, that the purpose of the reserve scheme is to ensure that, should there be no agreement between the London boroughs or between the boroughs and TfL on arrangements for concessionary travel in the capital, a fallback scheme guaranteeing certain minimum concessions applies. This arrangement has been in place since the Greater London Authority Act 1999. What the noble Lord suggests will not help. The amendments do not serve the interests of Londoners or, indeed, the interests of others from outside London who want to enjoy concessionary travel in the capital when the Bill becomes law.
The amendments would be to remove the fallback arrangements that guarantee the delivery of the national concession in the capital. I understand the argument the noble Lord puts on behalf of the local authorities. He said that it weakens the bargaining position of the local authorities vis-Ã -vis TfL because of the fallback position, but the proposed replacement for this guarantee would be the rolling-over of existing arrangements for another year.
If there are no arrangements offering the free concession on buses in London under Section 240(1) at the end of a year, then rolling the same arrangement on for a further year will make no difference: there will still be no arrangements for free bus travel. Amendments Nos. 24, 52 and 62 remove the obligation for free bus travel for eligible people at off-peak times on local bus services. Therefore, arrangements might offer a half discount with no consequences.
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