Mr. David Clelland (Tyne Bridge): I am grateful to my right hon. Friend for giving way and I apologise for intervening so early in his speech, but I do so as he has mentioned the importance of bus services to vulnerable people. What would he say to vulnerable people in Tyne and Wear whose essential services have been cut because of the way that the funding formula was applied when the concessionary fares scheme was introduced, and will that be corrected under this Bill?
Mr. Alexander, Secretary of State, Department for Transport: My hon. Friend is a tireless campaigner on this issue; indeed, he spoke in the most recent Adjournment debate on buses and received an answer from the Minister with responsibility for buses, my hon. Friend the Member for Lincoln (Gillian Merron). As I recall, she said that she had visited Newcastle and that discussions had taken place with the Department for Communities and Local Government. I can assure my hon. Friend the Member for Tyne Bridge (Mr. Clelland) that I will come to the financing of the national concessionary scheme - in the North-East and across the rest of England - during my remarks.
+++
Mr. Alexander: As I mentioned, in the 2006 Budget the Chancellor committed up to £250 million of new money each year to pay for the change. It will mean for the first time that about 11 million older and disabled people will be able to use off-peak local bus services free of charge anywhere in England from 9.30 am until 11 p.m. on weekdays and all day on bank holidays and at weekends, allowing travel, for example, from Cornwall to Cambridgeshire or from Durham to Dorset. ... Our overriding principle is that the extra £250 million of funding should be directed to where the extra costs will fall, to ensure that we recognise passenger hotspots as far as we can. We are looking carefully at a number of funding options together with the Treasury and the Department for Communities and Local Government. We are discussing the options in detail with our concessionary fares working groups, which consist of representatives from all tiers of local government. We have met with Nexus, London councils, Transport for London and other key stakeholders. We hope to have taken a decision on the preferred funding route by the summer, and we intend to consult widely on our preferred formula for distribution.
We recognise the importance of ensuring that operators receive fair payment for carrying concessionary passengers. Reimbursement will continue to be offered on a "no better off, no worse off" basis, so no operator should be disadvantaged. Operators can appeal if they believe that reimbursement is too low. We also want the power to simplify the administration of concessionary fares. There is a wide variety of concessionary travel schemes across the country, and 291 separate travel concession authorities, which means that some bus operators have to negotiate with many different authorities each year. There is therefore provision in the Bill to transfer reimbursement and administration powers to higher-tier local authorities or to the Secretary of State. That could improve efficiency and save money, but any such change would be subject to extensive consultation and indeed parliamentary scrutiny. It would not be made until after April 2008, so local authorities have plenty of time to prepare for it. We continue to work closely with local government, the bus industry and, of course, with groups representing older and disabled people. ... I can assure my hon. Friend that that issue is exactly why we have undertaken such detailed work, not just with local authorities but with bus operators and others, to ensure that we devise a mechanism and formula that recognise that resources should be allocated where costs fall. We are looking at a number of different options to make sure that we anticipate where bus usage is likely to be heaviest as a consequence of the national concession.
+++
Mr. David Clelland (Tyne Bridge): When the scheme was introduced in 2006 - or, at least when it was announced by the Chancellor in 2005 - it was widely welcomed, not least in Tyne and Wear because it returned us to a position that we were in 30 years ago. The Labour Tyne and Wear authority introduced a free travel scheme around the county 30 years ago, which had to be abandoned because of the Conservative party policy of introducing charges. I have to say that I resisted it at the time, because I felt that if charges were introduced, they would inevitably be increased, which is precisely what happened.
The return to free fares was widely welcomed - until the sting in the tail was discovered. The funding allocated to the scheme used the standard local authority funding formula, which meant that it was tied to population, not to bus usage. In Tyne and Wear, of course, there is a high take-up of public transport, so we ended up with a shortfall of funding. In 2006-07, £5.4 million of cuts in bus services had to be made - cuts to vulnerable people and to young people, as the teen travel scheme of subsidised travel for students had to be severely cut back. Furthermore, £2 million had to be taken from the reserves, adding up in total to an actual cut of £7.4 million last year for one of the poorest regions in the country.
This year, of course, the scheme continues under the same formula and has to be subsidised yet again by Tyne and Wear council tax payers. Further subsidies will have to be found, so by the time we get to the national scheme next year, it will have cost Tyne and Wear £10 million to run the free travel scheme over the two-year period.
Mr. Paul Truswell (Pudsey) (Lab): My hon. Friend is detailing one problem with the current use of the revenue support grant, but are there not two further ones? It also depends on the money being passported from districts through to passenger transport authorities in areas such as my hon. Friend's and mine, while it does nothing to help when some authorities - I understand including the Isles of Scilly - get some cash under the system even though they do not have any buses.
Mr. Clelland: My hon. Friend raises a couple of points that I shall come back to later. There are several anomalies in the distribution of this money and nowhere else in the country has suffered to the extent of Tyne and Wear. Meanwhile, because of the method of distribution, some authorities with lower public transport usage than Tyne and Wear will once more gain from the funding formula as my hon. Friend has just pointed out. Indeed, funding for Scotland, Wales and Northern Ireland will be found from this cache of money despite the fact that they already have fully funded schemes. My hon. Friend is right to point out that the Scilly Isles will receive a share, even though they do not have any bus services at all. The distribution of this money is therefore a nonsense and I hope that Ministers will accept that it has to be corrected.
Ministers could correct the problem if they devised a system whereby funding went directly to the concessionary travel authorities through a specific grant. We could have a ring-fenced grant to transport authorities, with 75 per cent. allocated for the running of the scheme and 25 per cent. held back in a contingency to provide additional resources where the formula does not fully reflect the cost of concessionary journeys in any particular area. That would iron out many of the anomalies that we face today.
The opportunity must also be taken to correct through the Bill the funding anomalies relating to Tyne and Wear, which I cannot stress too strongly. It is grossly unfair that Tyne and Wear should be put in the position in which it finds itself, so I ask the Minister to give an assurance in her wind-up speech that the acknowledged underfunding of Tyne and Wear will be addressed and that revised arrangements will be made for the distribution of funding in future. If she cannot give that assurance, will she then acknowledge that the introduction of the national scheme will leave Tyne and Wear at a severe disadvantage; that cuts in services and concessions to young people will have to continue; that the area will be denied the level playing field it needs when the scheme begins in 2008; and that we shall also be denied the Secretary of State's comment earlier that this should be looked at as a floor rather than a ceiling, which will mean little to Tyne and Wear unless the funding formula is corrected?
Mr. Mullin: My hon. Friend is absolutely right to underline the dire underfunding of the scheme in Tyne and Wear. Has he had elderly constituents come to him, as I have, who say that they do not want the concessions if they can be obtained only at the cost of cutting, for example, the student concession?
Mr. Clelland: Indeed I have. In fact, among the early complaints that we received from elderly people about the scheme was that, although they welcome the idea of returning to free fares, they did not want them at the cost of student concessions and other bus services, which is how the increase was paid for. We still receive those complaints, which is why the issue needs to be ironed out. Some elderly people were upset that that was the outcome of this otherwise welcome scheme.
What measures do Ministers propose to deal with the problem of bus companies exploiting concessionary fares to their advantage?
Mr. Doug Henderson (Newcastle upon Tyne, North) (Lab): Does my hon. Friend agree that there is a particular problem in the areas in the city that are most heavily dependent on buses, such as the outer west area of Newcastle?
Mr. Clelland: Yes, indeed. In fact, some of the services that were cut were to outlying areas, to which it is not profitable enough for bus companies to run services. Certain subsidised services that were run by the passenger transport authority have therefore been cut back, in order to pay for the concessionary fares scheme. People in areas such as those to which my hon. Friend referred have suffered as a result.
Chris Grayling: I would be curious to know whether the hon. Gentleman thinks that the problems that he is describing are a direct consequence of the funding mechanism for buses or part of a broader pattern that has left the North-East receiving the second-lowest transport funding per head from the Government of any region in the country?
Mr. Clelland: The hon. Gentleman refers to a point that will come up in other debates and in other Bills, although I acknowledge that the North-East of England is unfunded so far as transport provision generally is concerned. That is something that some of us will be taking up tomorrow with the Minister responsible for roads.
The exploitation of the system by bus companies also needs to be addressed, if the scheme and the Government's ambition to increase public transport usage are to be successful. With the introduction of the scheme, surely it is even more important that we move to a system of local franchising of bus services and bus routes. Unless public transport is accessible, affordable, comfortable and convenient, we will never get motorists to abandon their cars, and buses will increasingly become transport for concessionaires and no one else, with taxpayers providing the profits of the bus companies.
There is a further problem that will arise from the Bill as currently drafted and which needs to be addressed, namely the proposal that transport authorities cover the cost of all concessionary journeys that start in their areas, including those of non-residents. That will impose an additional burden on areas such as Tyne and Wear, to which huge numbers of people come to visit the Metro centre, Newcastle city centre, and the cultural and leisure attractions of Tyneside. All those people coming into the area and beginning a bus journey there will create a burden that will fall upon the Tyne and Wear passenger transport authority, on top of the problems from which it already suffers. It is essential that we should have a more flexible funding system that can take care of all those extra burdens.
Mr. Kevan Jones: As my hon. Friend knows, many of my constituents travel over the border from Chester-le-Street into Gateshead and the Tyne and Wear conurbation not only to work, but to visit the large number of well managed attractions on Tyneside. Does he agree that one proposal that we perhaps need to consider in the North-East is a passenger transport authority that covers not only Tyne and Wear, but the region as a whole, and which could address some of the broader issues to which he has referred?
Mr. Clelland: My hon. Friend tempts me down a road that would extend this debate longer than was intended. I certainly agree that we need to put in place a regional facility for transport issues generally. Public transport would probably be included in a regional look at such issues, now that we have acknowledged that transport can go beyond local government boundaries.
As I said at the outset, the scheme is a good one, and has been widely welcomed. It is a huge step forward in public transport provision. The Bill, however, has two possible outcomes. The problems that it faces are technical, and can be overcome. If they are, the introduction of free travel will go down as one of the great achievements of the Labour Government. If they are not, I fear that the unfairness that results will lead to dissatisfaction and disgruntlement when there should be celebration. My right hon. Friend the Secretary of State and the Under-Secretary of State for Transport, the hon. Member for Lincoln (Gillian Merron), will want to strive to achieve the former and avoid the latter.
+++
Gillian Merron, Parliamentary Under-Secretary, Department for Transport: ... My hon. Friend the Member for Tyne Bridge (Mr. Clelland) asked about the distribution of funding of the national concession to hot spots. It is in the interests of all of us to ensure that funding reflects usage. We are confident that the overall level of funding will be sufficient, and our overriding principle is that the extra £250 million will be directed to where the extra costs fall, to recognise such hot spots as far as we can. Various options are being discussed with the concessionary fares working group, which includes representatives from all tiers of local government as well as operators.
We will consult widely on the formula for distribution, and I can assure the hon. Member for Rochdale that the data sources examined will include, for example, tourist beds, retail floor space and bus patronage. I can also assure the House that it is our policy to ensure that the net additional costs and new burdens placed on local authorities will be fully funded. I agree with my hon. Friend the Member for Tyne Bridge that this Bill should be cause for celebration. I do understand the situation in Tyne and Wear, and I know that the Department for Communities and Local Government continues to talk to concerned local authorities.
We are working closely with local authorities via the concessionary fares working group, which includes representatives from Nexus and other passenger transport executives. I met Nexus representatives on my visit to Newcastle to explore the best way of distributing additional funding. In fact, officials were in Newcastle only last week to discuss these issues with local authority officers and operators in the North-East.
Mr. Clelland: I am not quite sure that my hon. Friend has answered the point that was made. The Bill deals with the national roll-out of concessionary fares. Is there any reason why it cannot deal with the shortfall in Tyne and Wear last year and this, which was quite unique, as it goes through its parliamentary stages? It is all very well saying that discussions are going on in the background; in my view and in the light of advice from the Clerks, the Bill could contain provisions to compensate Tyne and Wear for the money that it has lost. Will it or will it not?
Gillian Merron: I am sorry to disappoint my hon. Friend but the Bill has the scope only to expand the geographical extent of concessionary fares. It is about setting out a national scheme and cannot deal with local points. ... My hon. Friend the Member for Tyne Bridge asked why the local authority where the journey starts has to pay. The answer is that that is the only practical solution before us for reimbursing operators; otherwise, places such as London would have to cross-charge hundreds of other local authorities across England. We are seeking to provide a workable, practical and easily understandable scheme.
| Promoted by Ken Childs on behalf of David Clelland, both of 19 Ravensworth Road, Dunston, Gateshead. NE11 9AB |