Mr. David Clelland (Tyne Bridge): I, too, congratulate my hon. Friend the Member for Manchester, Blackley (Graham Stringer) on securing this important debate. I join my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) in praising the Labour Government for introducing the free transport scheme for elderly and disabled people and for rolling it out nationally next year. That is not something new for many metropolitan areas and certainly not for Tyne and Wear, where we introduced a free travel scheme in the late 1970s for pensioners and disabled people. Charges had to be introduced in 1979, when the Tory Government came in, and I certainly objected to that at the time. I felt that the free scheme ought to have been protected at all costs, but unfortunately that was not done, and fares have increased ever since, so I welcome the new scheme; indeed, it has been widely welcomed in Tyne and Wear.
As has been pointed out, however, there have been unintended consequences because of the way in which the funding for the scheme has been distributed. There must be a rethink on the distribution of funds when the new national scheme comes in. It is crazy that the Isles of Scilly received a share of the money when they have no bus services at all, that Scotland and Wales received a share of the money through the Barnett formula when they have their own funded schemes anyway, and that some local authorities received more than they needed to run the scheme in their areas and others received less.
As my hon. Friend the Member for Manchester, Blackley pointed out, that cost Tyne and Wear dearly. I am referring not to the £3.5 million to which he referred, although we did have to make £3.4 million-worth of cuts. Some £2 million also had to be taken from balances, so the total cost to Tyne and Wear of introducing the scheme in the last financial year was £5.4 million. As I have said, £3.4 million of that related to cuts. There was a 25 per cent. rise in child concessionary fares to 40p, a 50 per cent. rise in the cost of teen travel tickets for 16 to 18-year-olds in further education, and the scrapping of 11 subsidised bus routes providing services where no other public transport could be provided. Those were the consequences of introducing the scheme under the formula that applied.
If the national concessionary travel scheme will be funded in the same way as it has been up to now - on the basis of population, not journeys - Nexus, which is the Tyne and Wear passenger transport executive, faces the certainty of further cuts in years ahead. It is also certain that urban Tyne and Wear will be a hotspot area in attracting greater numbers of journeys than the net journeys made by its own citizens. That is because of attractions such as the Metro shopping centre and the Newcastle and Gateshead cultural and other leisure attractions, which bring people into the area. In 2008, local authorities and PTEs will have to cover the costs of all concessionary journeys that start in their areas, including those of non-residents, so we will be severely disadvantaged. We would therefore like the Government to reserve funds from the national concessionary travel budget to compensate hotspot areas as they emerge.
If possible - this is a serious request to the Minister - we would also like Tyne and Wear to receive some compensation, if not 100 per cent. compensation, for the £5.4 million that it lost last year. If we do not get it, we will start next year not on a level playing field with other PTE areas, but with a severe disadvantage, as we try to get back, if we ever can, to where we started from.
Will the Minister therefore give an assurance that the subsidy for the scheme will follow the passengers and that no local authority or PTE will be left underfunded? Will she provide an assurance that concessionary fares schemes for children and young people will not have to be cut because local authorities or PTEs have received insufficient funds for the Government's national concessionary fares scheme for pensioners? And will she reassure me that the introduction of the new national free scheme will not lead to the withdrawal of local authority-supported bus services, which would undermine the scheme's value to its users?
There is also the question of appeals by operators. PTEs and local authorities currently reimburse operators for the cost of providing free travel by means of local formulas, which are broadly based on a proportion of the off-peak fare. Operators have appealed against such reimbursement arrangements, and appeals in PTE areas alone gained operators additional revenue of about £12 million in 2006. That resulted in some PTEs having to raise fares for other groups, and fares for children in Greater Manchester had to be increased from 50p to 70p to cover the cost of appeals. A further 40 appeals are already in the pipeline for 2007.
There is a further problem. As the number of fare-paying bus passengers continues to decline, while the number of state-subsidised non-fare payers increases, there is a perverse incentive on operators to raise off-peak fares. As my hon. Friends the Members for Manchester, Blackley and for Sheffield, Attercliffe have said, the answer is the introduction of quality contracts or a franchising system, under which local authorities can have some control over fares and bus services in their areas. That would simplify the arrangements for concessionary fares and eliminate the perverse incentive to increase off-peak fares. The provision of a concessionary fares scheme would be part of the quality contract, and operators would have to build that into their overall tender price. Fare levels could also be regulated as part of the contract.
Finally, there is the question of attempting to prevent fraud when the national scheme is introduced. The Department for Transport has been slow to produce a strategy setting out how the national scheme will work, and it is already too late to have a working national smart card scheme in place for April 2008. Will the Minister guarantee that the national scheme will be secure? What measures will the Department take to minimise the dangers of fraudulent passes and applications? Will she provide an assurance that pensioners will have a new nationally valid pass in their hands by April 2008? Finally, will she provide an assurance that the scheme will continue to be locally administered so that local authorities and PTEs can offer a more generous scheme if they wish to?
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Mr. Clelland: I hear what my hon. Friend has said about local discretion, but local discretion in the Tyne and Wear area before the free bus pass system was introduced was that an extra £3.4 million should be spent on local services because of the introduction of the free pass.
The Parliamentary Under-Secretary of State for Transport (Gillian Merron): Perhaps it would be helpful if I turn to Tyne and Wear. I was pleased recently to have the chance to go to Newcastle for continuing discussions with Nexus about its good work to develop bus services in the area.
On Tyne and Wear, the Government accept that in such schemes there will be winners and losers. However, that is not specific to the issue of concessionary fares. Indeed, local authorities have long argued in favour of unhypothecated funding. The issue is not unique to concessionary fares. The Department for Communities and Local Government continues to talk to concerned local authorities, such as Tyne and Wear. It is in all our interests to ensure that local authorities are adequately funded to provide the statutory concession.
Mention has been made of the Isles of Scilly, particularly by my hon. Friend the Member for Tyne Bridge (Mr. Clelland). I have no brief to speak specifically for the Isles of Scilly, but their eligible residents will be entitled to the national concession on the mainland, so they will need to administer passes for their residents.
On reimbursement and appeals, which a number of hon. Members have mentioned, we have acknowledged that there are some problems with the current arrangements for reimbursing operators, which are rather complex and open to too much interpretation. Appeals are time-consuming, costly and in no one's best interests. We are working closely with operators and local authorities to put in place revised and rather more efficient arrangements for the new 2008 concession. We aim to issue new guidance on reimbursement in the autumn, and I hope that hon. Members will take an interest in them.
On the general issue of appeals, it is right that bus operators should have a right to appeal. They should be reimbursed on a not-better-off, not-worse-off basis, and the Secretary of State has appointed an external, independent decision maker to determine appeals on his behalf.
On the allegations of operators putting up fares, it is worth reminding hon. Members that "Putting Passengers First" will give local authorities a role in the determination of maximum fares as and where appropriate. It is also worth reminding ourselves that the majority of bus passengers are not in receipt of concessionary fares. Bus operators must take account of the fact that putting up fares will be a deterrent to fare-paying passengers. Operators receive not the full fare charged, but an average fare, taking into account the whole range of tickets, including discounted tickets.
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