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We are firmly in favour of the Bill. We believe in the travel concessions that have been granted. We are not quarrelling with the end; we are quarrelling with the means that the Government have chosen. It is essential before more money is pumped in at one end that the method of distribution at the other is faced up to. As the Bill progresses on its parliamentary course, the Government must take careful notice and table some amendments that will make it work. There is a real problem: a real problem for pensioners and a real problem for local authorities. It is the Government's responsibility to come forward with a proper mechanism to fund the scheme. I beg to move.
Lord Hanningfield: My Lords, my name is attached to the amendment. We have had a discussion about the financing of the Bill, which, as the noble Lord, Lord Bradshaw, said, we all support. The first time that we had that discussion, I got the same look that I usually get from Ministers when I refer to the fact that the Government say that they have put money in for something but that some people do not get it because of how the system works. With 15 counties and other authorities on the floor, one gets only a certain amount of grant whatever legislation is passed. That can go on for three years or so.
That is totally unfair, because if we want to implement legislation, it is not right if the Government announce it and announce supposedly new money for it but no one gets it. A mechanism must be found if the Bill is to work that gets the money that the Government say that they are giving to local authorities to implement the legislation. I think that my noble friend Lord Bruce-Lockhart may be commenting from the LGA perspective in a moment. I very much support the measure, but ways must be found to make certain that the money gets to where the spending is. That is the point of the amendment.
Lord Bruce-Lockhart: My Lords, as chairman of the Local Government Association, I seek clarification from the noble Lord, Lord Davies. We very much support the Bill and the concessionary fares scheme. We believe that it is beneficial and desirable. It was effectively administered by local authorities in the change from half to full fare in April 2006 and we look forward to the 2008 national scheme.
There is an issue of payment and the issue of principle. In introducing a free concessionary fare scheme, we assumeI feel surethat the Government were not saying simply that it would be free as you get on the bus but you pay the extra through your council tax. However, in places such as Tewkesbury, a 9 per cent increase in council tax above the cap is being talked about because of the pressure
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The first point of principle was that adopted by the Deputy Prime Minister and the local government Minister in his Statement to the other place in November 2005, when he introduced the new burdens mechanism. That stated clearly that spending departments would pay the full cost of new legislation. First, can we have a recommitment from the Minister to that principle of what the Government called the new burdens policy? Secondly, we assume that that covers both the revenue cost and the capital start-up cost.
We then come to the point introduced by the noble Lord, Lord Bradshaw, and my noble friend Lord Hanningfield about distribution. That is not easy and we are not seeing consistency across the country. Because we cannot judge demand and do not know what the inflation costs of the bus fares will beat the moment, they are rising at about 10 per cent a yearwe believe that in the first instance, perhaps in the first two years, the best mechanism is simply a reimbursement scheme; the automatic repayment to local authorities on costs that are verified by their independent external auditors. That would be fair. After two years, when we understand the distribution and the demand across the country, we could change back to a block-grant scheme. Will the Minister confirm who will administer this? I think that the Bill still leaves room for this to be administered either nationally or regionally and locally because of the Governments commitment to devolving. Will the Minister confirm that it will be administered locally?
Finally, some very effective working groups have been set up between the Local Government Association and the Department for Transport, and the Local Government Association has pressed for the mechanisms and the procedures to be known soon. We did ask early in 2007 whether we could know those so we could get on and plan for the new scheme, to which, as I say, we very much look forward.
Lord Davies of Oldham: My Lords, it is with delight that I return to this subject, not least with the noble Lord, Lord Bruce-Lockhart also present, as if reinforcements were necessary after our debates on the preceding stages of the Bill. I do not have the level of expertise in local government of all three noble Lords who have spoken in this debate, but start by reiterating what I said on Report. Of course I agree with the sentiment that local authorities should be adequately funded by central government for the reasonable and additional costs to them of administering this mandatory concession. It is government policy to ensure that the net additional costs of new burdens that they place on local authorities are fully funded. That is why, when the Budget announcement on the concessionary fares was made, the Chancellor was emphatic about the costs that were involved and predicted those costs for a number of years. He indicated that this was a proper burden on the national Exchequer.
The Government are providing up to an extra £250 million of funding per year for the improved concessions that the Bill introduces. This includes a contingency over and above what we currently estimate the actual financial impact of the new concession to be. This is in addition to the £350 million in 2006-07 and the £367.5 million in 2007-08 that we have provided to cover the extra costs of free local bus travel. I hear what the noble Lord, Lord Bruce-Lockhart, says about bus fare inflation, but I remain confident that the overall level of funding will be sufficient.
As I have said on a number of occasions, from April next year the Government will provide around £1 billion a year to fund concessionary travel. That will be recognised as an obligation that the Government have clearly undertaken. I think that many in local authorities agree that this funding is sufficient in aggregate. The issue is therefore not how much we have provided and whether we have provided enough, because we believe we have. The issue addressed by the amendment is distribution. We think that the cake is big enough. How do we slice it up to be fair?
I note that the amendment has dropped the previous call for the full costs to be funded through a direct annual grant. Noble Lords will recognise why I objected to that, and I appealed to their perspective on local authority finance when I thought that they should withdraw that proposal. Nevertheless, the amendment would require the adoption of a specific grant for funding the mandatory concession by default. There is no other way of implementing the amendment.
As I explained on Report, such an approach goes against government policy. We have been supported by local government in moving away from specific grants and in providing local authorities with freedom and flexibility in how they use their funding. If, as the amendment proposes, central government were forced to fund the full cost of schemes run by local authoritiesand I emphasise to the noble Lord, Lord Bruce-Lockhart, that the local dimension is emphatically envisaged for this policywhether those costs were reasonable or not, where would the local authorities incentive be to negotiate cost-effective schemes with operators and to manage overall costs effectively? They would be the negotiators. The Government would be the payer. The implications of offering a full indemnity for costs, which is what this amendment does, would be profound.
The existing arrangements contain checks and balances to ensure that public funds are spent wisely: an incentive for local authorities to reimburse cost-effectively by a fair amount and a right of appeal for any operator who believes he has been disadvantaged. This amendment would mean that claims will be made for all costs, whether or not they are reasonable or could have been mitigated. The Secretary of State might also be faced with claims for remote consequential costs such as those costs to an authority of defending operator appeals or the costs of poorly negotiated service contracts that are poor value for money. Noble Lords constantly emphasise
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The system we have now may not be perfectI almost said is not perfect but that is too categoricbut it is fair to the taxpayer and operator alike. It is important that we get a good deal for the taxpayer. Giving an unconditional commitment to fund full costs, with no reference to such costs being reasonable, and with the removal of any incentive for efficient negotiation, does not provide that.
On Report, noble Lords pressed for reassurance that the Government recognise local authorities concerns with the funding distribution for the national concession and are doing something about it. Well, we are. I take on board the point that the noble Lord, Lord Bruce-Lockhart, made. I would not be able to speak so assertively from this Box if I did not know that effective action is being taken.
I reiterate that the Department for Transport, the Department for Communities and Local Government and Her Majestys Treasury are looking at options for distributing funding for provision of the statutory concession. It is in all our interests to try to ensure that this distribution matches as closely as possible where the costs actually fall. This includes proper consideration of those authorities that have not featured in the debate today but did in our earlier considerations. Those honeypot authorities referred to in Grand Committee and on Report are where special factors obtain.
The various options are also being discussed with the Department for Transports concessionary fares working group, which includes representatives from all tiers of local governmentdistricts, counties, unitaries and PTEsand operators. The group meets monthly and is making a valuable contribution to the department's work in considering implementation arrangements for the national concession. We welcome the expertise that its members bring to the table.
In addition, the Department for Communities and Local Government's settlement working group will shortly be starting discussions with local authorities on the grant settlement for the next three years. Consideration of funding the new concession will be taken forward within this proper forum. Statutory consultation will take place over the summer, not in one or two years' time. As noble Lords will see, we are consulting extremely widely on this issue on an ongoing basis and we understand its importance for local authorities. 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 set-up costs, which were emphasised by the noble Lord, Lord Bruce-Lockhart, and the department is carefully considering this in dialogue with the concessionary fares working group.
Funding is of course important. We do not, however, believe that the best way forward is to address it in the Bill. Surely it is better to allow the departments, and the Governments, extensive consideration and consultation on funding to run its
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Finally, the drafting suggested would seem to include an obligation on the Secretary of State to refund local authorities in Wales for reimbursement provided to operators providing concessions in Wales. Since concessionary travel is a devolved issue, it would not be appropriate for us to legislate in this area. I am sure that the noble Lord, Lord Roberts, on the Liberal Democrat Benches will recognise the importance of this point. This may not have been the intention of his colleagues, but it makes the amendment unworkable and therefore even more unacceptable.
We of course recognise the concerns that noble Lords have raised on numerous occasions with regard to the Bill. Equally, I would hope that they recognise that we are doing the necessary work to address their concerns. With this in mind, and with the noble Lord having recognised the generosity with which I responded to his previous amendment, I hope that he will show similar generosity and withdraw his amendment.
Lord Bradshaw: My Lords, we have heard from the Minister. No local authority is seeking an indemnity against other costs which arise. We seek simply to pay the bus fares of concessionary fare passengers in the future. There are ways out of that. A national fare could be set, as the National Assembly for Wales has done. Each local authority issues the bus passes, but they issue against a national fare. We have put down this amendment because the Government have not come forward with satisfactory funding arrangements. I have sat upstairs in the Public Bill Office trying to find ways to amend this legislation. We have used our best endeavours and have put down something which tells the Government that this is unfinished work. As I said previously, the Government have legislated for the ends without legislating properly for the means of delivery.
In the circumstances, I believe that the amendment should be in the Bill so that when it goes to another place it will remain a thorn in the Governments side and will constantly remind them that they have not properly finished the business. Therefore, the amendment should stand, so that the Commons has time for other thoughts. I am sure that the concessionary fares working group is working hard and that discussions are going on with the Treasury. We want action, which is why I wish to test the opinion of the House.
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