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However, the most intractable problem is the way in which the rollercoaster of local government finance has left some councils with, in effect, a cap on how much money they can receive from central government in grant in any form at all. We heard from the noble Lord, Lord Hanningfield, who I am sure will intervene on this, that government departments can tell us as much as they like how much money they are putting into Essex but Essex is in effect capped in terms of how much it can get from central government. The danger in this scheme is that, although there might be a theoretical amount of money coming in, it will not amount to anything in practice.
The real problem for local authorities is that, if there is a shortfall in this scheme, where will they get the money? Most of them will not want to put up the council tax to meet these costs and some will not be able to because they will be capped. They can have a look at other areas of spending, but they cannot touch education because that is ring-fenced and the
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In Grand Committee, the Minister said that he could not provide a blueprint for dealing with this issue. I am sure that that is right and that the House would not expect a detailed, blow-by-blow discussion of exactly how this will be done. However, I think that the House and local government need a bit more assurance that the Government have understood how difficult this is going to be for local authorities and have ensured that mechanisms are in place to deal with this.
It struck me on re-reading the Second Reading debate that a similar question arose about how these concessionary fares are to be refunded along the borders with Wales and Scotland. That was another area on which the Minister said, “Well, it will all happen in the fullness of time”. We do not expect everything to be worked out in finite detail, but neither can we accept the “Trust me, I’m a politician” reply that everything will all right if we only have faith. I do hope that the Minister will take the opportunity simply to put a little more flesh on the bones and say how these difficult issues will be resolved. Local authorities are currently putting their budgets together for next year, and several of them have been in touch with me to say that this area is causing them some difficulty. The authorities that will be the beneficiaries tend to keep quiet; that is in the nature of these things. We hear from the authorities that are in trouble. I beg to move.
Lord Hanningfield: My Lords, I support the amendment. We had an extensive debate on this in Committee, and the noble Baroness, Lady Scott, has referred to my local authority again today. There are basically three settlements now in local government. It is nice to know how much money you will get for three years, but a lot of new legislation is introduced in those three years. The Government do not stand still for three years. The amount of money that local authorities will receive for three years is announced, and it is all floors and ceilings and all very technical. My authority is on a floor, as are the local authorities of 15 other counties, and will receive only 2.7 per cent. The Government may bring in new legislation and say that money is available, but that money does not get through to those authorities at all. The authorities must cope with the same amount of money that they have received for three years, plus 2.7 per cent, under not only this legislation but all other legislation that is introduced in that time. This varies a little—as the noble Baroness, Lady Scott, said, there are demographic changes—but the true effect of this money does not come through. There will be another Comprehensive Spending Review and another resetting of things for
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I do not normally support specific grants or ring-fenced money but, as the noble Baroness said, under legislation such as this, the money must go to where the expenditure happens. As I said in response to another amendment, we spend £75 million altogether on transport in Essex. That money subsidises buses, community transport, school buses—you name it. We try to get best value by seeing how we can use the money to get a better service and how we might introduce some of the other things that we talked about today, such as helping disabled people use facilities. If we are never going to get any extra money—we are not likely to get any more, the way things are going—bringing in this new legislation will not help us.
There must be some way, not only in this legislation but in others, of getting the money that Ministers announce. When you ask Ministers about that, they do not know. I hope the Minister knew before we told him the last time that some authorities do not receive any extra money. Ministers may think that they have put £200 million or £500 million into a pot, but none of that materialises for many of us. Ministers look at you as though you are daft, but it is true; we do not receive that money, as the noble Baroness, Lady Scott, has said. We must find some way of delivering the money if this legislation is to be fair. We all support this; we all want to make it work. We even want local authorities to have some of the discretionary things that we have talked about today—I know I do in Essex—but we must at least have a little of this money to be able to do that. I therefore hope that the Minister will respond to some of the points that we made in Committee so that the money actually goes to local authorities that need it to provide this service.
Lord Davies of Oldham: My Lords, I am grateful to the noble Baroness, Lady Scott, and the noble Lord, Lord Hanningfield, for contributing to the debate. I must roundly disabuse the noble Baroness of the notion that I cowered at the idea of Blackpool as a honeypot. This busy bee has been there quite often, so I would not dream of suggesting that Blackpool did not have singular and attractive features. I would not be rash enough to engage in a great deal of detail—or principle, for that matter—with the noble Lord, Lord Hanningfield, or the noble Baroness, Lady Scott, about local government finance, as I am all too aware that they know a great deal more about the difficulties in that area than I do. I reassure them both that the Government heartily subscribe to their sentiment that local authorities should be adequately funded by central government for the costs of administering this mandatory concession. We intend to fund fully the new statutory burden. That is why the money was quoted in the Budget Statement and why we have clear figures for each of the next three years for how much it will cost and how much will need to go to local authorities.
The reason why we are not including money in the Bill is that we recognise that circumstances change. Flexibility needs to be built into legislation, otherwise we would never be able to effect improvements except
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I hesitate to ask the noble Lord, Lord Hanningfield, this question—he may well answer me and take me down paths that I shall not follow very far—but is he actually saying that the solution to this is a hypothecated grant or a specific grant? I have the greatest sympathy with him; I am all too well aware of the difficulties that local authorities face—and I am delighted to give way to him.
Lord Hanningfield: My Lords, I think that, in this case, I am saying that. I repeat that I am not normally in favour of that, but we want to see the benefits of the Bill and that is probably the only way to do that. Will the Minister comment further?
Lord Davies of Oldham: My Lords, I hear what the noble Lord says. That is not a representation that we have been receiving widely on the issue. In fact, we are still working on the premise that the last thing that local authorities want is to be tied down by hypothecated funding schemes. Concessionary fares are an important issue and I am delighted that the noble Lord is treating them with the great seriousness that he is. As he said, this is only a part of even his overall transport budget, let alone of the total expenditure of his local authority and the obligations that it must meet. I am surprised that he is arguing that the Bill should introduce a hypothecated fund.
I hear what the noble Lord says. I must say that issues of local government finance are rather wide of my immediate brief, but the Government do not share that perspective, nor are the present discussions on settlements premised on the assumption that the legislation should have a hypothecated element. The noble Lord will forgive me if I am slightly leery of that argument. The Secretary of State anyway has the power to fund local authority concessionary fares via direct grant if he wishes. If a local authority puts up a case that shows how it can constructively extend the scheme and persuades the Secretary of State of its virtues, that power exists. It would be inappropriate to require in the Bill the use of a funding mechanism in perpetuity in circumstances where we have not discussed the matter with any of the organisations that we consulted on the Bill.
Lord Hanningfield: My Lords, I repeat what both I and the noble Baroness, Lady Scott, said: it is important that the money goes where the expenditure is. Some way must be found to do that. It would be nonsense to make a request to the Secretary of State for expenditure. We must find a way of delivering the scheme that ensures that the money does not go into a big black hole and disappear but goes where the extra expenditure will take place. I do not think that that is
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Lord Bradshaw: My Lords, I point out that while the Minister tells us that expenditure in Essex is very large and that the authority spends £75 million, many transport authorities on which the Bill will bear heavily are very small, with overall budgets a good deal less than Essex’s transport budget. He must understand the pain being suffered by those authorities. I hope that he can say something a bit more encouraging.
4.30 pm
Lord Davies of Oldham: My Lords, it is ever my bent to be encouraging. I am merely indicating that I am not going to have this provision in the Bill because I do not think it is the solution. What I will be encouraging about is this. The Department for Communities and Local Government settlement working group will shortly start discussions with local authorities on the formula grant system and the provision of funding to local authorities over the next few years. Consideration of the funding of the new national bus concession will be taken forward as part of that forum. So there is already a framework for the discussions on which the noble Lord, Lord Hanningfield, is pressing me. But I hear what he says, as will the members of the Government taking part in that exercise. They will be all too well aware of the strong representations made in our debates on the Bill.
I am not convinced that the Bill should be changed to take account of these particular problems. Subsection (2) of the noble Lord’s proposed new clause specifies that a contingency fund will be set up. The extra funding for the national bus concession, up to £250 million a year, already includes an adequate contingency. We are confident that the extra funding we have earmarked is sufficient to cover the total extra costs to local authorities. We are also sensitive to the issue of set-up costs, and the department is working on that in dialogue with the concessionary fares working group. While I recognise the difficulties, what I think the noble Lord, Lord Hanningfield, is seeking to do is to recast a significant concept of local government finance within the framework of the Bill. There are virtues in the points he has made, but there are other fora in which those have to be deliberated upon and resolved.
Reference has been made to Wales during our debate. The current approach whereby local authorities pass on the full costs of their schemes to the Welsh Assembly Government is leading to some very substantial additional costs, and those costs have been increasing every year. In an obvious sense, the Assembly is underwriting all negotiations and all costs being produced by the schemes. We maintain that that is not a good basis on which to ask local authorities to act in developing these schemes. We need to make sure that public funds are spent wisely and, quite straightforwardly, we want an incentive for local authorities to reimburse their costs effectively and by a fair amount. We also want the right of appeal for operators who believe they have been disadvantaged.
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I recognise the importance of the points made by the noble Lord, Lord Hanningfield, and supported by the noble Lord, Lord Bradshaw, and the noble Baroness, Lady Scott. This Bill is not the basis for recasting the whole of local government expenditure. We believe that it provides and guarantees a structure within which the resources to which both the Chancellor and the Government are committed for each of the next three years are sufficient to meet the costs of the scheme. They are built into the forward projections on national expenditure. I hope it will be recognised that it would be inappropriate to change the Bill for a concept of local government finance which is still wide open to substantial debate. Indeed, it is not a debate into which we have entered with our partners in quite the way envisaged by the amendment. I therefore hope that the noble Baroness will feel able to withdraw her amendment.
Baroness Scott of Needham Market: I thank all noble Lords who have supported the amendment.
There is an issue here in how the Government regard their relationship with local government. We are moving from the historical position where free bus fares were a concession given by local authorities, to a national scheme. If we were starting from first principles and the Government were introducing a concession, I have no doubt that the Government would bring in a national scheme and that local authorities would have almost nothing to do with it. But we are at an intermediate point. As a result of this legislation, local authorities will simply be the administrators of a national scheme. They will retain discretionary powers to extend the scheme in certain ways if they wish, and it is right that they should pay the costs when they exercise that power; but in situations such as this where local authorities are required to implement legislation introduced by central government, central government should find the means of enabling local authorities to meet the costs.
It may not be necessary for the Bill to specify minute details of the financial settlement, but the House should consider whether implementation of the legislation will be properly funded and whether local councils can meet its intentions. There are severe doubts whether that is the case.
It is interesting that on such occasions we hear from Ministers arguments about why we should not have a specific ring-fenced grant, and yet local authorities are completely tied up with all kinds of specific grants from all sorts of sources. I wonder why the Government are so resistant in this case when in other instances such grants are usually their first port of call. I would have more respect for the non-specific grant route if the Government had the courage of their convictions and allowed local authorities to spend their money as they wished in every other sense. In fact, local councils would not be in this position if
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The Minister has not answered the question of what will happen if local authorities face a significant funding shortfall for this scheme. On quantum, the Government may allow the right amount, but if you are local authority X and facing a huge shortfall, the fact that local authority Y next door has made money from the scheme is of very little benefit. There has to be a mechanism that links the provision of the grant with expenditure. That is not unreasonable and brings me back to the question of the use of a specific grant. I hope the Minister will give a little more thought to this issue. Simply saying that a DCLG working group will look at the formula grant system and come back in, say, two years’ time with a convoluted formula which may tangentially touch on the question of concessionary fares will not help the local authorities that have to fund the legislation from April.
When the noble Lord referred to the problem in Wales, he highlighted the kind of situation we can already see coming down the track. The bill to the National Assembly is increasing not because local councils are doing anything wrong but simply because the scheme is so successful. It has to be funded by someone, either the authorities or government, and we are seeking clarification on who will pay.
I shall withdraw the amendment at this stage, but we will have to return to the matter at Third Reading because I do not think that local government will be happy with the responses received today. I beg leave to withdraw the amendment.
Lord Williams of Elvel: My Lords, before the noble Baroness withdraws her amendment, she is certainly aware of the guidance in the House that major points of principle should be decided before the end of Report stage.
Lord Bradshaw: My Lords, perhaps I may reply to the noble Lord. We gave notice to the Government that we expected to have a reply today that would satisfy us, and that if we did not, we would press the matter at Third Reading. That has been accepted by the Government Chief Whip. We have been extremely quick in handling this Bill, mindful of the pressures of time on the House. In this case, we have gone to great lengths to ensure that the time of the House is used to best advantage.
Lord Davies of Oldham: My Lords, I merely wish to confirm that statement by the noble Lord, Lord Bradshaw.
Amendment, by leave, withdrawn.
Clause 4 [The national concession: journeys beginning on London bus network]:
Lord Bradshaw moved Amendment No. 9:
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“(1A) The London Authorities shall enter into arrangements with Transport for London under subsection (1) above in respect of journeys falling within section 242(2) below.””
The noble Lord said: My Lords, I return to the effect of the Bill on London. The Minister will recall that I raised the issue of the London reserve scheme in Committee on 8 January. I sought to raise it on behalf of London Councils, the representative body of the 33 local authorities. With Amendment No. 9 and those grouped with it, I am returning to the subject today.
Briefly, the statutory requirement for concessionary fares in London differs from that for the rest of England. Uniquely in London, the powers for local authorities to negotiate concessionary fares are underpinned by a reserve scheme, should the local authorities fail to reach agreement with Transport for London by 31 December each year for the following financial year. If a reserve scheme were invoked, Transport for London would determine the cost of the scheme. We have to bear in mind that Transport for London is the bus operator. London boroughs are therefore at a disadvantage when negotiating with Transport for London. In no other part of the country does the bus provider have so much power. In effect, Transport for London is able to call the shots, when elsewhere in the country concessionary fare schemes are determined by local authorities, subject to appeal to the Secretary of State.
With the national concession on buses provided for in the Bill, there does not seem to be a need for elaborate special legislation for a reserve scheme in London, which takes up a whole schedule to the Greater London Authority Act. With these amendments we seek to take away that reserve scheme; we are simply saying that rollover would apply at 31 December each year if an agreement had not been reached between Transport for London and the London local authorities. I want to point out that London local authorities negotiate collectively for the concessionary travel scheme, and they now have a system that if two-thirds of the authorities agree, the agreement is binding on the remainder of the authorities.
A rollover would apply after 31 December each year, with an appeal to the Secretary of State if there was not agreement. That is not at all different from the rest of the country. The Minister will know that if a bus operator is not satisfied with the settlement, he may appeal to the Secretary of State.
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