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Concessionary Bus Travel Bill [Lords]

As amended in the Public Bill Committee, considered.

New Clause 3

Review of reimbursement arrangements

‘Two years after the commencement of this Act the Secretary of State shall conduct a review of arrangements for allocating funding to local authorities necessary for the reimbursement of operators under section 3(2) of this Act; and shall lay before Parliament a report setting out his findings.’.— [Stephen Hammond.]

Brought up, and read the First time.

1.42 pm

Stephen Hammond (Wimbledon) (Con): I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss the following amendments: No. 14, clause 9, page 7, line 8, after ‘may’, insert

No. 15, page 7, line 24, after ‘may’, insert

Stephen Hammond: There was no dissent in the House on Second Reading or in Committee as to the intent of the Bill. The Opposition support the extension of concessionary travel for eligible people on eligible journeys in the transition from a local to a national scheme. We support the freedom pass in London and will do everything to ensure that it continues. However, the Government cannot will the end unless they will the means. I recognise that we debated this issue in Committee, but it is key to the Bill. Without the finance, the “end” of concessionary travel cannot be achieved, or can be achieved only at the expense of cuts in services or increased council tax. So far, the Government’s response has been to say that enough funding will be available. Although I have absolutely no doubt as to the Minister’s integrity or the sincerity of her belief that that is correct, that cannot be sufficient for the purposes of the Bill.

Philip Davies (Shipley) (Con): Does my hon. Friend agree that this is not just about the overall amount of money that is in place but about whether it is allocated to the right places? Many local authorities and local transport executives are concerned not necessarily about the overall level of funding but about whether it will follow the passenger.

Stephen Hammond: My hon. Friend makes a good and pertinent point. I will talk about that in more depth in a moment.

In Committee, I sought support for several measures that would have forced the Government to be more transparent in their financial obligations, to reconsider the funding package to local government, and to clarify how they would interact financially with operators. This afternoon, I seek support for new clause 3.

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Let me set out some of the background to the new clause. As all Members will appreciate, council tax has doubled in the past 10 years and now constitutes a heavy burden for those on low and, in many cases, middle incomes.

David T.C. Davies (Monmouth) (Con): My hon. Friend raises an important and pertinent issue. Is he aware that in Monmouthshire, where we have a concessionary bus scheme and have done for several years as a result of measures taken by the Welsh Assembly, over the past 10 years council tax has gone up by the highest amount of any local authority in the United Kingdom—by 184 per cent.—and that one of the many reasons for that is the lack of proper funding by the Welsh Assembly Government for the concessionary bus transport scheme? Does he agree that it is vital that we ensure that constituents in England do not also suffer 184 per cent. council tax increases as a result of flawed funding formulae?

1.45 pm

Stephen Hammond: Indeed I do. Again, I shall come to that point shortly. The new clause would ensure that the situation that my hon. Friend describes does not happen again.

As I was saying, council tax now constitutes a heavy burden for those on low, and even middle incomes. Naturally, a large number of those affected by the sharp increases are elderly or disabled, whose lives the Bill, commendably, aims to improve by offering them free access to local travel nationally. Those two groups are most likely to be affected, and indeed financially disadvantaged, by the Bill’s potential side effects. There are several ways in which its financial effects will be felt by the people whom it was intended to help.

Let me give a brief snapshot of my experience in local government. Prior to becoming a Member of this House, I had the privilege of serving as a councillor at the London borough of Merton. I stood down when the Conservatives took control of the borough last May. While serving on that council, I became all too familiar with the impact that mayoral demands on money for concessionary travel were having on the local authority’s finances. In 2004-05, the Mayor imposed on the borough a 9 per cent. increase for the freedom pass. As the Minister knows, local authorities in London have no option but to find that extra sum of money, and in that year the local authority had no option but to find it from the social services budget. That resulted in cuts to day care, disadvantaging exactly the groups who benefit from the freedom pass—the elderly and the disabled.

Angela Watkinson (Upminster) (Con): Does my hon. Friend agree that one of the difficulties for London local authorities is being able to compare the cost of their contribution to the pan-London scheme with the value that they get for the use of the passes? Some boroughs might get better value than their contribution; others might get less. Does he agree that if freedom passes could be made smarter, so that their usage could be tracked, that would provide a way of knowing whether any individual London authority was getting value for money out of the scheme?

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Stephen Hammond: Indeed I do. The implementation of smartcards across the country would have that impact, as well as making more transparent usage and where the financial obligations should lie. I hope that later this afternoon we will be able to explore the London situation in rather more detail.

Mr. Lee Scott (Ilford, North) (Con): Does my hon. Friend agree that however noble a cause may be, this Government have on many occasions announced proposals, funded them insufficiently for a short period, and then not funded them at all, leaving local authorities such as mine, the London borough of Redbridge, to pick up the bill and ultimately, as my hon. Friend says, to have to make cuts to other services to pay for them?

Stephen Hammond: My hon. Friend makes an excellent point—I intend to make exactly the same one later.

From my experience as a local councillor, I remember the standards fund for, for example, education. We were expected as a local authority to introduce new measures and we were funded for three years. The funding was taken away but we were expected to continue with those measures. The implications for the local authority’s finances were clear.

Let me consider the 2006 scheme, which was the forerunner of the 2008 scheme that the Bill introduces. The 2006 concessionary travel scheme made concessionary travel available to eligible persons on eligible services in local travel concessionary areas. The Government stated that they had made enough money available to local authorities to fund that scheme fully. Early last year, I contacted 15 local authorities to ascertain whether, according to their estimates and calculations, the Government had introduced that funding. When we phoned, for example, Brighton and Hove council, it said that the central Government grant that it is due to receive is considerably less than the consultants’ forecast of the new concession’s cost.

Ms Celia Barlow (Hove) (Lab): The hon. Gentleman refers to my local authority of Brighton and Hove. May I mention an additional concern of the local authority to my hon. Friend the Under-Secretary? It is worried about whether it will have enough time to implement the scheme and whether it will be given enough guidance when the Bill is introduced.

Stephen Hammond: I am grateful to the hon. Lady for that point. When we phoned the local authority back to check whether its initial suspicions had proved correct, we found that its concerns had been realised. On 15 March this year, it told us that it will experience a severe shortfall in the budget. It also made the same point as the hon. Lady: it needs more time for implementation.

We spoke to Cheshire, which made the same point. It was worried that the obligation to provide free fares will mean trimming services that it already provides. Indeed, when we phoned back this year, it made exactly the same point. The grant is not sufficient to cover its liabilities.

I could go on—I spoke to 15 authorities, but I am sure that I do not need to detain the House by going through them all.

Philip Davies: Oh go on.

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Stephen Hammond: It is a temptation that I can resist.

For the 2006 scheme, only one local authority out of the 15 believed that it had been given sufficient resources. I accept that that is only a straw poll, which is random in its selection and, I suspect, not necessarily statistically sound.

Let us consider in depth the case of Christchurch. The chief executive of the local authority wrote to me last year. He said that Christchurch has the highest percentage—36 per cent.—of population over the age of 60 of any local authority in England and Wales. In 2005-06, Christchurch’s half-fare scheme cost the council approximately £138,000. For the scheme that was to be introduced in April 2006, the Government increased the grant by £237,000. Christchurch added £20,000 of its own money to that. The total concessionary grant was therefore £395,000. However, the take-up was significantly greater than expected and the budget was overspent by 87 per cent.—some £345,000, which is equivalent to an increase of 11 per cent. in the borough’s element of the council tax. Christchurch had to make budget cuts elsewhere, including in its recycling programmes.

However, not only Christchurch or the leafy south have such problems. Let us examine the problems of implementation in the north-east. Recently, The Journal in Newcastle ran the headline: “More bus services could be cut as transport chiefs prepare for changes to a free travel scheme.” It reported:

The problem applies throughout the country.

Mr. Alan Beith (Berwick-upon-Tweed) (LD): While the hon. Gentleman is in the north-east, may I refer him to the problem of border areas? The Government are not willing to negotiate a reciprocal arrangement with Scotland at the same time as the introduction of the Bill, and local authorities such as Berwick will therefore have to find the money to maintain current enhancements and also bear the additional cost of the greater take-up, which is expected when the national bus pass is introduced and people elsewhere will be able to travel further on it.

Stephen Hammond: The right hon. Gentleman makes a good point, which was explored in Committee. Indeed, that consequence was presented forcefully and we wait to hear whether the Government have changed their position on the matter.

The Journal in Newcastle also reported:

Shirley Atkinson, director of finance at Nexus, said:

Jim Cousins (Newcastle upon Tyne, Central) (Lab): The hon. Gentleman has set out the position in the former metropolitan county of Tyne and Wear. I hope, if I have the opportunity, to refer to that later. He has set out a problem. Will he suggest a solution?

Stephen Hammond: Indeed. If the hon. Gentleman votes for the new clause, he will have a solution. It is that the Government should conduct a review of the funding after two years—

Jim Cousins: So we wait two years and then—

Stephen Hammond: If the hon. Gentleman would let me finish, I can explain. After that period, we can ascertain where the funding shortfalls are and where money needs to be reallocated. The absolute solution to the problem is to vote for new clause 3.

Jim Cousins: I apologise for my sedentary interjection. I shall now make the same point in a more proper fashion. The new clause says, “We might have a big problem. Let’s not do anything about it for two years and then let’s have a review.” If the analysis of the problem that the hon. Gentleman has set out from Nexus in Tyne and Wear is correct, the new clause is hardly a sufficient method of dealing with it.

Stephen Hammond: I am bound to disagree with the hon. Gentleman. When he hears the rest of my remarks, he will realise why we have chosen the two-year period. Several problems may occur in the transitional year. Indeed, the finance director of Nexus refers to a couple of years, during which there may be transitional problems. It is therefore right to conduct a review after two years. I repeat that the solution to the problem is to vote with us for the new clause.

To finish in Tyne and Wear, the free off-peak local bus passes were introduced in April 2006, with the council paying for the travel within its boundaries. To pay for that, Nexus had to change 11 bus services, raise the cost of child fares and scrap plans for a teen travel card. Travel chiefs are warning that, unless funding is certain and correct for the 2008 scheme, similar cuts might have to be implemented.

Only yesterday morning I received an e-mail from the new incoming Conservative administration of Carrick council in Cornwall. The concern there is exactly the same. The Carrick scheme this year is more generous than is necessary to satisfy the Government scheme. The e-mail states:

if the council chooses to take that route.

The national bus concessionary travel scheme will impose considerable financial problems on Carrick, particularly as it is an area with a high number of tourists. That could have a major impact on the council tax.

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Around the country, a number of councils are expressing concern about the adequacy of central Government funding to support the scheme that is being introduced.

2 pm

Mr. Fraser Kemp (Houghton and Washington, East) (Lab): Let us suppose that the hon. Gentleman’s new clause is accepted, and that in two years’ time we discover a substantial shortfall that cannot be addressed through redistribution, perhaps by taking money from Derbyshire, Staffordshire or even Tyne and Wear. Will he give an unequivocal commitment that any future Tory Government would match that shortfall? Will he give the House a clear financial commitment that they would find the money to address any shortfall that his amendment would create?

Stephen Hammond: The hon. Gentleman wishes to lead me down an interesting road, but I shall not pursue him. Even the Minister would not create such a hostage to fortune. Will she stand up now and unequivocally make exactly that commitment now? I am sure that she will not, but if she will, I invite her to do so now. It is not a road that any sensible person would go down, two years ahead.

Angela Watkinson: Does my hon. Friend agree that one possible way of reducing the cost of these schemes would be for local authorities to identify within the body of people who have accessed a free pass those who were making good use of them, and others who might be claiming them because they were entitled to do so, but not using them at all? There should be an opportunity to cut out that waste. People could be made aware that, if they claimed a free pass but did not use it, they would be making an unnecessary charge on the council tax.

Stephen Hammond: My hon. Friend makes a good point. Following the discussions in Committee, I hope that when the Government introduce the scheme in April next year they will be able to introduce it with a smartcard. If they can do that, we will be able to see clear ridership patterns and identify who is using the scheme. If a person is not using the card, they will not be attracting any recompense or reimbursement, but it will be possible to follow the ridership pattern. That is the overwhelming advantage of smartcards, and I believe that the Minister said in Committee that it was her intention, if possible, to introduce the scheme with smartcards.

Let me turn now from the adequacy of central Government funding to the relationship between operators and local authorities. I shall explain why new clause 3 is relevant and applicable in this regard. As the experience of the 2006 concessionary bus travel scheme has shown, there has been considerable disagreement between local authorities and the Government. There was also considerable disagreement between local authorities and bus operators as to the level of reimbursement provided for carrying concessionary fares.

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