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The Parliamentary Under-Secretary of State for Transport (Norman Baker)
I begin by congratulating my hon. Friend the Member for Redditch (Karen Lumley) on securing this debate on a very important issue. This debate has probably set a record in the House of Commons for the number of interventions in 15 minutes. I counted 10 interventions—so 11 speeches, as it were, in 15 minutes perhaps sets an example to other Members in other debates.
Let me say right away that the coalition Government are committed to protecting the concessionary bus travel scheme. We made that clear in the coalition agreement, the Chancellor reconfirmed that commitment in the recent spending review, and the Prime Minister has given his own support for the continuation of the scheme.
The scheme is of huge benefit to millions of people, allowing free off-peak travel anywhere in England and providing older and disabled people with greater freedom and independence. The concession enables older and disabled people to access facilities both within and outside their local area, and it helps them to keep in touch with family and friends. It also provides new leisure opportunities, so that when eligible people are visiting other parts of England on holiday, they can travel free on local buses at off-peak times, and it encourages those people to visit popular tourist destinations—such as Brighton and Hove—which brings benefits to the wider community.
About £1 billion is spent on concessionary travel every year. The Government currently provide funding for the scheme through two channels. The majority of the funding comes through the formula grant system, and since 2008, when the England-wide concession was first introduced, the rest of the funding has come through a special grant from the Department for Transport.
In line with the reduction in separate funding streams to local authorities, from April 2011 all funding for the scheme will be provided through formula grant, giving local authorities the freedom and flexibility they want in their use of funding. Overall, the Department for Transport is reducing the number of funding streams for local authorities from 26 to just four, which is in line with the Government’s general trend towards localism.
The Government are aware of how precious this benefit is to older and disabled people, which is why we are focusing our efforts on assisting local authorities to find efficiencies through reforms to the administrative and reimbursement arrangements for the scheme, rather than cutting back on the entitlement.
Only one change has been made to eligibility for the scheme—to increase the age of eligibility in line with the changes that are taking place to the state pension age. In fact, that change was introduced by the previous Government, and I understand that it was done on the basis that people are living longer, staying healthier for longer and tending to stay in work until later in life. That change will clearly assist with the financial sustainability of the scheme.
From April 2011, responsibility for administering the scheme will move from lower-tier local authorities such as district councils to upper-tier local authorities such as county councils. This reform will assist in overcoming a number of problems that have been identified by local authorities, stakeholder groups and operators. The change will enable efficiencies to be realised, through economies of scale and by reducing the number of negotiations with bus operators. It will also make accurate funding by formula easier, because there will be less variation in the size and characteristics of authorities. Furthermore, it will harmonise concessionary travel and wider transport authority responsibilities.
If individual councils have had a rough deal, such as the one in Harrogate, and other councils have benefited rather more in the same county area, such problems should therefore be eliminated by this scheme. I accept that it will not solve all problems, but that is one problem that can be eliminated by this move from districts to counties.
The Department for Communities and Local Government recently consulted on how the transfer of responsibility for concessionary travel will be taken into account in authorities’ funding allocations from 2011-12. That consultation was an opportunity for local authorities to influence decisions on the final distribution method. By the way, I should say that many of the points that have been raised by Members today are actually points for the Department for Communities and Local Government, in a sense, rather than for the Department for Transport. Clearly, I will do my best to answer those points, but the funding allocation is through the DCLG rather than the DFT.
A number of authorities, especially district councils—including my own district council in Lewes—have expressed concerns about the potential implications for their future financial position as a result of the administrative changes. That is the nub of the case that is being put today. Discussions have been taking place at official level between the DFT and the DCLG to try to ensure that the distribution method taken forward after the consultation does not result in unintended consequences for authorities.
It is important to remember that the figures presented in the DCLG consultation were only illustrative and that the actual effect on authorities is likely to differ, following final decisions on matters such as the amount of funding to be transferred from lower-tier to upper-tier authorities for concessionary travel and the level of floor damping to be applied to particular types of authority. In other words, the change will be phased in, which I think was one of the concerns expressed today. My hon. Friend the Member for Redditch talked about “top-up” funds. The DCLG’s preferred method is through damping and the provision of floors, to ensure that there is not a sudden cliff-edge. I am sorry to use all these terrible metaphors; they are official DCLG metaphors.
The overall amount of funding available for local government was set out in the spending review. DCLG will publish details shortly about the outcome of its formula grant consultation and how the overall funding pot will be distributed among authorities. The formula grant is allocated on the basis that the level provided overall is sufficient to enable authorities to deliver effective local services while ensuring that they do not set excessive council tax increases. In a sense, local authorities will be more able to decide how they allocate their funds than they have hitherto been.
The hon. Member for Brighton, Kemptown (Simon Kirby) asked about the effect on unitary authorities. I am afraid that I cannot give any specifics on that matter until the DCLG makes its announcement on the spending review, but I can say in general that all the comments made today are being noted by officials and will be passed back to the DCLG as part of ongoing discussions between our Departments. I also mentioned that the impact will be mitigated by the use of floors to prevent sudden changes in local government finance for individual authorities.
In her introductory comments, my hon. Friend the Member for Redditch asked whether the date for the publication of local authority schemes could be moved from 1 December. I am afraid that that is not possible. Travel concession authorities are required by the Transport Act 2000 to publish schemes four months before they come into force. It is not possible to amend the date without primary legislation, which she will understand could not be enacted before 1 December.
I am aware that concerns that have been expressed about the potential impact of the administrative changes on local discretionary concessions; I believe that the hon. Member for West Lancashire (Rosie Cooper) mentioned it. It is not the intention that the change in responsibility should have any impact on the additional entitlements offered by local authorities. The order laid before Parliament earlier this year to enact the change does not prevent upper-tier authorities from maintaining or introducing district or local level discretions where needs differ within different parts of a county boundary, for example. Nor does it prevent district councils from providing funding to county councils to administer discretionary concessions on their behalf.
Furthermore, district councils will remain able to consider discretionary travel schemes using the well-being powers in the Local Government Act 2000, so in theory, they could introduce concessionary rail travel within their areas if they wanted, irrespective of any move from district to county. However, local authorities should take legal advice when creating, amending or withdrawing discretionary concessions and should also ensure that they comply with their own disability equality schemes.
We are assisting local authorities to make efficiencies through reforms to the arrangements for reimbursing bus operators, on which we recently published draft guidance. We held a consultation on the new concessionary travel reimbursement guidance and will be issuing the final guidance to local authorities shortly, with a view to introducing changes to the reimbursement regime for schemes beginning in April 2011. I stress that it is for local authorities to decide whether they wish to take advantage of that guidance, but it will nevertheless be issued by the Department for Transport in order to enable local authorities to engage more effectively with bus operators.
The consultation sought views from stakeholders on the revised reimbursement guidance, which adopts a more directive approach to reimbursement calculations, requiring fewer data inputs and assumptions but leaving scope for local flexibility where appropriate. Analysis of historic reimbursement by travel concession authorities indicates that councils could make up to £130 million in savings under the revised reimbursement arrangements. The proposed new guidance is based on extensive new research carried out by the Institute for Transport Studies at the university of Leeds and will help to simplify the current system and enable more accurate reimbursement.
My hon. Friend the Member for Redditch mentioned the bus service operator grant. As she will know, all sorts of wild suggestions were made in the national press that BSOG was being abolished. I made it perfectly plain to the House in June or July that the Department values BSOG as a sensible contribution to ensuring good public transport. I therefore hope that it was not surprising that BSOG was retained with a cut of just 20%, which is below the average cut for revenue budgets in the spending review. That is a recognition from the Treasury and the Department for Transport of the value of its contribution to bus services. I spoke to the chief executive of the Confederation of Passenger Transport UK, which represents the five main bus companies, after the Chancellor’s spending review. The chief executive was hopeful that in general terms, the cut in BSOG could be absorbed without any increase in bus fares. That was a good outcome.
The concessionary fares scheme remains based on the same solid principle as ever: bus companies should be no better and no worse off as a consequence of the scheme. That is relevant when we consider the new guidance on reimbursement arrangements. Concern was expressed that the changes might affect the level of service provided. As I said, bus companies should be no better and no worse off as a consequence of their dealings with local authorities. Therefore, in principle, irrespective of anything else, there is no reason why service levels should be affected. The concessionary fares scheme, if it delivers its outcome, should not lead to a reduction in bus services.
I point out that the vast majority of bus services are commercial rather than subsidised, so the secondary and understandable concern expressed by my hon. Friend and others that local authority budgets will be stretched, as undoubtedly they will, would in any case relate at maximum level only to subsidised services, not commercial services, which are independent of local authority funding. That said, local authorities, particularly rural ones, provide subsidies for some bus services in their area, and they will want to consider how best to use their funding. I hope that when it comes to difficult decisions, local authorities will consider—as central Government have done in recent months—where they can make savings without affecting front-line services. Affecting front-line services through cuts is the easy option. Rather than resorting to unfortunate cuts, local government can make a number of savings—for example, by combining back-room functions—without affecting the public. I hope that local authorities will approach their budgets in that way.
I hope that I have been helpful in responding to hon. Members’ comments. I recognise that the issue is important—the turn-out has reinforced that—and I take it seriously. The Government’s overall intentions are, first, to protect the concessionary fares scheme, and secondly, for good environmental and social reasons, to get more people on buses. We do not want to pursue policies that have the opposite objective or consequence. We will take back the comments that hon. Members from all parties have made this afternoon and feed them through to the Department for Communities and Local Government, which will ultimately decide the allocation for local authorities.