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Public Transport

Volume 478: debated on Monday 7 July 2008

[Relevant documents: The Fifth Report from the Transport Committee, HC 84, on Ticketing and Concessionary Travel on Public Transport, and the Government response, HC 708.]

Motion made, and Question proposed,

That, for the year ending with 31st March 2009, for expenditure by the Department for Transport—

(1) further resources, not exceeding £8,777,927,000, be authorised for use as set out in HC 479,

(2) a further sum, not exceeding £7,136,325,000, be granted to Her Majesty out of

the Consolidated Fund to meet the costs as so set out, and

(3) limits as so set out be set on appropriations in aid.—[Alison Seabeck.]

I very much welcome the decision to have in this important estimates debate a discussion on the Transport Committee’s report on ticketing and concessionary travel on public transport. That report focuses on the new national concessionary local travel scheme for older and disabled people. It also discusses a number of other important issues, including integrated ticketing, smartcard technology and revenue protection, which includes looking at how to minimise fare dodging. All those issues are extremely important for passengers and public alike and it is extremely important that we have the opportunity today to discuss both the report and the issues raised in it.

A great deal of attention was attracted by the inquiry. More than 40 organisations and individuals submitted written evidence and the Committee held four oral evidence sessions, questioning 24 witnesses including the Under-Secretary of State for Transport, my hon. Friend the Member for Glasgow, South (Mr. Harris). The Government published their response on 16 June.

The English concessionary free bus travel scheme, benefiting up to 11 million older and disabled people at a total cost of £1 billion, is extremely welcome. We have been discussing the scheme for England. Of course that is because the schemes for Scotland and Wales have already been operating following decisions from the devolved Administrations. It is an important scheme about which there was a great deal of campaigning over a long period.

It is important that the scheme be properly funded and that the extra £223 million allocated to local authorities by special grant this year—with more to follow next year and the year afterwards, in addition to the £31 million provided for the new passes— reimburses operators and authorities fairly. There is currently a great deal of dispute, not only about the amount of funding made available but about the way in which it is allocated. Perhaps through the review of the bus service operators grant, this matter can be addressed. It is extremely important that a scheme that is popular and welcome should be funded properly and fairly. Although the concessionary passes are Integrated Transport Smartcard Organisation—ITSO—compliant smartcards, only 5 to 10 per cent. of the bus fleet will be equipped to process them by the end of 2008. Part of the reason for that appears to be the cost to the bus operators of installing the equipment to use those cards to their full. That is not a satisfactory situation. The Government must speed up this process, both to secure the best and optimum use of the card and to obtain more accurate information about who is travelling using the card. That is extremely important in relation to the revenue issues to which I have referred.

Will the hon. Lady address the inequality of the service in respect of those areas of the country where there are no public bus or coach services? I fully support and welcome a Government—or taxpayer—contribution to public transport, but what are we going to do for the people who live in those rural areas where there is no, or very little, bus transport?

The hon. Gentleman makes an important point, and anticipates my next comment. The report considered this issue. Concessionary fare schemes are very much to be welcomed, but the transport has to be there for people to be able to enjoy them. The Committee raised the question of community transport, and called for more support to enable more community transport to be provided and for that to be eligible for the concessions, or equivalent concessions, so that people, and particularly those living in rural areas, would be able to benefit from widened opportunities in terms of transport. That is what the scheme is all about.

I wish to reiterate what my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) said about rural counties. In Shropshire this month, many bus services are being stopped. Although it is great that the Government want to have concessionary travel, my constituents are extremely concerned that if there are no services in some places, there will be two classes of citizen. Those who live in London and other cities can take advantage of such schemes, but those who live in rural areas such as Shropshire cannot.

The absence of bus services in some areas is a very important issue, and it is one of the consequences of deregulation. That issue is being addressed through the new Local Transport Bill, which is before Parliament. It is important that that Bill is sufficiently strengthened to enable the services that are required to meet local needs to be developed.

Does my hon. Friend agree that although the inequalities that have been talked about do exist, this system is of benefit even to people who live in rural areas, because when they visit towns or go on holiday or come to London, they can now travel on the buses if they have a pass, whereas before they had no service whatever?

My hon. Friend makes an extremely important point. A point that was consistently raised during the long campaign for such a national scheme was that when people went away from where they lived to other areas, they were not able to take advantage of concessionary local transport. Because of the existence of this concessionary scheme, people can take advantage of such local transport schemes everywhere, even in places where they do not live.

The point the hon. Lady makes rightly suggests that, as the Government have acknowledged, the number of people visiting tourist resorts, including coastal towns such as mine of Worthing, is likely to put greater pressure on bus services in those areas, leading to the costs falling disproportionately on those areas. Does she think the formula the Government have drawn up to decide how to reimburse local authorities accurately reflects those extra pressures, particularly on tourist areas?

The important point the hon. Gentleman makes underlines the need for an evaluation of the way the scheme is working and a closer look at how the available revenues allocated to local authorities are to be disbursed. His point has been raised by a number of local authorities, and our Committee’s report talks about the importance of evaluating the scheme and of a re-evaluation of how the money is allocated. The point he makes was one of the ideas that we had when we put that proposal forward.

I share the concern of my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton). Would it not have been better if the Government had said that, for the first couple of years, local authorities would be able to work out their costs, indent for them, and then have an evaluation and a formula? Instead, we will have winners and losers and will have to work out what to do about that. If local authorities could claim their actual costs, it would be much fairer to our rate payers, nearly half of whom are elderly and are having to bear the costs of the Government’s error.

It was important that the scheme went ahead, and it is equally important that a proper evaluation is made and anomalies are put right.

Does my hon. Friend also accept the obverse argument on the evaluation, expressed by some of the companies, that local authorities have not always made the payments for the number of passengers carried? Much as I would want to comment about the services that the companies offer, evaluation is needed by both sides, as I am sure she would agree.

My hon. Friend raises an important issue. Discussions are needed between the transport authorities and the operators, as well as the Government. Many of the issues involve the accuracy of information on who is travelling, when they are travelling and where they are travelling. That is why it is important that the appropriate technology is installed as quickly as possible on the buses involved.

The Committee’s report also looked at the broader question of integrated ticketing, or having a single ticket to cover several legs of a journey—if not the whole journey. Here we found a great difference between rail travel and bus travel. On rail, because of the Government’s actions in ensuring that provision was made through the franchises, arrangements ensure through ticketing on the national network, and that is of great importance to passengers. However, wider concerns remain about the wider issue of ticketing, including the availability of tickets.

Closure or minimal staffing of ticket offices may force passengers to use the internet or ticket machines when they do not want to. Indeed, some tickets are available only on specific websites and machines do not operate for all ticket types. It is important that all passengers have access to all tickets and can get the best deal when they travel by train.

Since the report was completed, announcements have been made that fares, and the tickets that go with them, are to be simplified. It will be important to look at that in more detail. Simplification of the fare structure is to be welcomed, but concerns have been raised about whether the simplification will mask large price rises. That is a matter that we will need to look at in the future.

The situation with integrated ticketing on buses is highly unsatisfactory. Concerns about breaching competition law have impeded action in addressing the problem that several different tickets may be required for one journey. The Government must ensure that the new Local Transport Bill provides the means, perhaps through quality contracts, to resolve that. It is important that any measures introduced should be strong enough.

I am pleased to see in the Government’s reply to the report that they will consider a recommendation that traffic commissioners have the power to arbitrate if local authorities and bus operators cannot agree on the pricing of multi-operation travel cards. More needs to be done on integrated ticketing on buses, and the Bill may help, but we must ensure that the problems are resolved. The Committee also noted that insufficient attention is given to travelling by coach. Many people travel by coach, yet there is little integrated ticketing and little attention is given to coach travel as a mode of transport.

We were told in one of our Committee sessions by the director of fares and ticketing at Transport for London that tickets were introduced in 1853 to prevent bus conductors from pocketing fares. He told us that 70 per cent. of revenues used to disappear and that was why tickets were introduced. It now appears that tickets are giving way to the plastic smartcard and, indeed, to other technologies. We looked at the successful Oyster card scheme in London and at other local smartcard schemes. TFL anticipates that the Oyster pay-as-you-go system will be linked to the national rail network in London by 2010. Indeed, we received evidence from many people who told us that they wanted the Oyster scheme to be linked more widely to the national network.

The Government should articulate a clearer strategy for integrated ticketing in general and smartcards in particular, but they must show the costs and the benefits of the high expenditure involved. Industry experts assess the costs of smartcards and rail franchises at £100 million per scheme and it costs £3,000 to equip a bus with equipment for the cards. Technology is important but the Government must show the benefits and how the cost is justified.

To go back to the subject of concessionary fares, and as the hon. Lady has been talking about trains, did her Committee consider the merits or otherwise of extending the concessionary fare scheme for pensioners to allow them to travel on trains, too? Obviously, train operators have expressed some concerns that they are losing out on some of their custom. Given her talk about integrated ticketing systems, does she think that the future for concessionary bus fares is that they will be extended to rail services, too?

We received some limited evidence on that issue. We felt that we were not in a position to make recommendations, but that it might well be considered in the future. We stated that it was very important for local additions to the national scheme to be considered locally.

We also looked at revenue protection and preventing fare dodging. We felt that that should have a much higher priority, particularly as fare evasion is often linked to antisocial behaviour. In 2006-07, there were 299 recorded attacks on staff connected with revenue collection in London stations alone. The Association of Train Operating Companies reported that 8 per cent. of revenue—that is, £400 million—is lost through passengers not paying fares. How much of that is deliberate evasion is unclear. It is clear that the availability of staffed ticket offices is important both to prevent fare evasions and to minimise aggressive behaviour, which has been reported when there are no staff in the area.

Should not the train operating companies and bus operators that allow off-duty police constables on their services for free be applauded? When fare evaders are caught, they can often cut up rough, and it is reassuring for passengers and revenue protection officers if off-duty police constables are encouraged to use public transport where appropriate.

I agree with the hon. Gentleman. Indeed, we recommended that there should be additional staff involved and we were sorry that the Government did not accept some of our recommendations on that. We also called for a more independent appeals process for passengers who were accused of deliberate evasion. Again, we regretted that the Government did not feel able to support our cause. We hope that they will reconsider.

I praise the work that Passenger Focus, the national passengers’ group, has done to draw attention to the issue of penalty fares and how passengers are treated; the subject needs more attention from Government, and Passenger Focus has done very good work on it.

The Committee’s report welcomed the beginning of the new concessionary fare scheme. We looked to the future and suggested that concessionary schemes for young people could be considered. We decided to broaden the terms of reference of the inquiry that we are conducting on school transport to enable us to consider in more detail matters such as concessionary schemes for young people. I hope that we will receive appropriate evidence on the subject, because it is extremely important. All the issues that the Committee considered in its inquiry—concessionary fares, ticketing, revenue protection and integration—are important for passengers. They all contribute to the important task of making public transport accessible and attractive.

The hon. Lady has not really touched on the issue of the complexity of buying the best value ticket. I am concerned about the elderly who need to use public transport, whether they travel by bus, coach or train. Is she concerned about the fact that elderly people, in particular, may not be getting value for money or a fair deal, because the system is so complicated that they do not understand how to go through it, and ticket sellers at bus stations or railway stations will not always give them the best-priced ticket?

The hon. Gentleman is right to emphasise that point. The Committee conducted an inquiry on the issue, in which it drew attention to the problems that older people and other passengers had in accessing the best value tickets simply. Earlier this afternoon, I referred to people being forced to use the internet or machines, and mentioned the problems relating to that. The announcement that there are to be simpler fares and ticketing is to be welcomed, but the charges need to be looked into more fully.

The Government gave a full, considered reply to the Select Committee. Some of our recommendations have been accepted, some have been ruled out, and others are being considered. I say to my right hon. Friend the Minister of State that all the issues in the report are important. We welcome the Government’s considered reply, but we look forward to action, and hope that it is taken very soon.

I congratulate the hon. Member for Liverpool, Riverside (Mrs. Ellman) on the way in which she presented the report. The Transport Committee, of which I was a member for my first 18 months in Parliament, has a reputation for having formidable Chairmen, and I am sure that she will establish her credentials in that regard. First, I must declare a non-pecuniary interest: one of the largest employers in my constituency is the Plaxton coachworks, part of the Alexander Dennis group, which makes not only coaches but buses. Some 550 people in my constituency rely on the public taking buses and making coach journeys, so I certainly have a constituency interest in promoting the use of buses and coaches.

I am pleased that we have an opportunity to discuss concessionary fares, particularly the new national concessionary bus scheme introduced in April this year. Both the Government and the Opposition face problems in selecting subjects for such debates. In our case, we are spoiled for choice, having to choose from a long list of issues on which we wish to expose the Government’s shortcomings. Conversely, the list of topics that could be considered relatively safe ground for the Government, which includes the topic that we are discussing, is rapidly dwindling.

My hon. Friend describes concessionary bus fares as a relatively safe topic, but he might like to know that the Minister for Local Government had to make himself available between Christmas and new year to deal with a very irate group of councillors and chief executives from councils in Sussex, who were protesting at the fact that our constituents will have to subsidise the scheme to the tune of more than £600,000 this year. Perhaps it is not as safe a topic of debate as he suggests.

I thank my hon. Friend for that intervention. My speech contains good news and bad news; I will not disappoint him by coming to the bad news soon.

Some people have described the concessionary scheme for the disabled and over-60s as a vote-catching gimmick. I reject that categorically, as to judge from the polls it has not caught many votes. I suspect that last month some of the voters of Crewe and Nantwich may even have used their concessionary tickets to go to the polling stations to vote Conservative for the first time. Eleven million people are now able to take advantage of their new right to off-peak bus travel across the borders of their travel concession authorities, whereas previously they could only use that concession locally. Our concern is about how the scheme may have been implemented and funded, and that is echoed by many of the points raised in the Select Committee’s report.

I do not often say this, but in many ways the Government have been a victim of their own success.

The Minister should not get carried away.

Since April, there has been a significant increase in the number and length of bus journeys made. Nationwide, the use of concessionary fares has increased by between 30 and 50 per cent., and by even more in some areas—for example, Gloucester and Cheltenham have experienced growth of 120 per cent. In Greater Manchester, passenger journeys have increased by more than 10 million since the introduction of free travel for the over-60s and disabled. That is in the context of falling bus ridership outside London.

The bill is picked up by the local authority where the trip originates. That has led to an increase in costs for some authorities, particularly in hot-spot destinations such as coastal towns and urban centres, where the share of the extra £212 million for this year has fallen short of the demand. Other local authorities in places such as Surrey have made a profit where resources have been over-allocated. Examples include Basildon, where a £500,000 shortfall was projected this year. In Blackpool, a £200,000 shortfall was projected. That does not cover the scheme that the council has had to introduce for its trams—because no one would use the trams when they had a concessionary ticket to use the buses, the authority has had to introduce a parallel scheme for the trams at additional cost to it. In Carlisle, a £272,000 shortfall has been projected. All the Essex authorities, including Chelmsford, Maldon—

I suspect that most of those are Conservative authorities. Can the hon. Gentleman tell the House what his party would do?

As my hon. Friend says, this debate is about scrutinising the Government. We are arguing not with the overall budget for the scheme but about its allocation—some local authorities have been allocated more money than they have used. The Government have patently failed to identify where the expenditure would be needed, and places such as coastal resorts and cities where people go shopping have borne the brunt.

I interpret the hon. Gentleman’s remarks as meaning that the Conservative party will take money away from some local authorities to give it to others. Is that correct?

My point is that it is important that the money allocated for the scheme is allocated correctly.

Carlisle told us that it had a £272,000 shortfall. If the hon. Member for Carlisle (Mr. Martlew) would like to dispute that figure, I would be pleased to hear his estimate, but the council tax payers of Carlisle are certainly picking up that bill.

The hon. Gentleman is drawing me into this; I did not want that to happen. The reality is that the Conservative party in Carlisle said that it would cut the hours of the scheme to after 9.30 am, then changed it and said that the disabled could travel all the time, and then, three days before the local elections, found extra money to say that everybody could travel all the time. The idea that it had a shortage of money is absolute nonsense.

Perhaps I could run this one past the hon. Gentleman. If he thinks that I am mentioning only Conservative-controlled authorities, Barnsley metropolitan borough council, which is hardly a Conservative stronghold, told us:

“I do feel our local authority is receiving inadequate compensation from Central Government for funding concessionary fares.”

This is not restricted to Tory authorities. Because of that uncertainty about take-up, which the Government failed to predict, local authorities are having great difficulty in planning ahead.

On the alphabetical list, I started with the Bs, and I shall end with the Ws. Winchester has a shortfall of £300,000; Worthing has a £600,000 shortfall; and Wyre has a £100,000 shortfall.

I am grateful to my hon. Friend for the mention of Worthing. In fact, the figure for the Worthing and Adur authorities combined, which are in partnership, is about £624,000 for the current year. When I brought the deputy leader of Worthing council, Ann Barlow, and the leader of Adur council, Neil Parkin, to see the Minister, they said that they would rather the scheme were not funded through them. Why do local authorities need to control this scheme? They are losing money that will be made up by council tax payers, or by the cutting of local services. Why can the Government not fund what is supposedly a fully funded scheme and operate it themselves, rather than operate it through local authorities, which have to pick up the bill for what is, in our case, not a fully funded scheme?

I am sure that the Minister has had a number of suggestions about how the scheme could have been better funded. With regard to local authorities, it would be hard to think of a worse way of funding it. As the Select Committee report says:

“The anomalies within, and disputes over, the distribution of concessionary travel grant to local authorities look set to continue, despite the ‘generous’”—

I am not sure whether the Government put those inverted commas around the word generous, or the Select Committee—

“funding provided by the Government and the new funding formula.”

That was written in March, before oil and diesel prices reached their current dizzy heights. If things were bad then, they are worse now.

The hon. Gentleman is right to say that the scheme is not functioning properly and that the financial arrangements are haphazard at best, but does he accept that local authorities—we have done some work on the matter, as has his party—estimate that, overall, they are £60 million short of the money that they need just to break even, were the distribution correct? That is the case not least because of the massive increase in bus patronage that the scheme has generated. Would it not be more honest to say that the figure of £60 million—or whatever he thinks it is—should be met by extra money from the Treasury? If he does not pledge extra money, as my party has, the consequence will be that all local councils will be short of money.

The hon. Gentleman makes a valid point, but making pledges on behalf of the Treasury is slightly above my pay grade.

I am grateful to my hon. Friend for giving way—it will give him a chance to look at his notes. He mentioned a long list of areas that had lost out as a result of a lack of Government funding, but he did not mention Shropshire. Shropshire county council—rather the borough council—has lost hundreds of thousands of pounds as a result of the shortfall, and I hope that my hon. Friend has those figures.

I will not bore the House by going through the entire list of local authorities that responded to our questionnaire to let us know their shortfall, but Shropshire is one of them.

As well as providing us with financial information, some local authorities took the opportunity to vent their spleen. Bournemouth borough council said:

“Again this government grabs the head lines giving out concessionary fares but do not fund it leaving councils to pick up the mess and move on.”

Medway council commented:

“Local authorities are being forced to carry the burden for a government policy.”

That sentiment was also expressed by Worthing borough council. I have already cited the comments of Barnsley council, which is similarly dissatisfied.

What has been the effect on the worst-affected local councils? Council funding of local bus services has had to be reduced. A number of councils have had to withdraw subsidy from socially necessary bus services that they paid for previously, so pensioners have a pass, but no bus to catch. In many rural areas, as my hon. Friends the Members for Shrewsbury and Atcham (Daniel Kawczynski) and for Macclesfield (Sir Nicholas Winterton) pointed out, there were no services anyway. To be fair, pensioners can use those passes further afield, but services such as dial-a-ride are under threat. The north-east passenger transport authority has had to cut concessions to young people and students.

A large number of councils, such as Basildon, Cherwell, High Peak, Medway, Chelmsford and Canterbury, which had previously offered enhancements to the statutory minimum such as extended hours or companion tickets for carers, have been forced to withdraw those benefits and revert to the statutory minimum.

The hon. Gentleman is correct that in the first round of the new concessionary fares system, when it was restricted to localities, we had a problem in the Tyne and Wear area, and there were cuts to concessions for young people. However, the latest round of expenditure has meant that that can be reconsidered, which is happening as we speak.

It is encouraging that the Government have been keen to bail out some constituencies in the north-east, but maybe they have not been quite so keen to help people in the south.

I shall make some progress, if I may. I suspect that I anticipate the point that the hon. Gentleman wants to make.

Secondly, councils are cropping other services not connected to travel to balance their books. A recycling programme in Christchurch has had to be scrapped as a direct result of underfunding for concessionary fares.

Finally, a number of local authorities have been left with no option but to increase council tax. Adur in West Sussex, Worthing and Torbay are just three examples of that. According to a representative of Suffolk Coastal district council,

“last year’s Council Tax increase almost all went towards supporting the concessionary travel costs”.

The situation is little better for bus operators. Mr. Peter Shipp, the chairman and chief executive of the East Yorkshire Motor Services group, has described the situation as

“even more of a financial and operational disaster than I predicted”,

and he certainly was not very complimentary about it before it was introduced.

The new concessionary fare scheme is having a destructive effect on partnerships between local authorities and bus operators, which is jeopardising improvements to local networks. Bus operators have had to spend a considerable proportion of their time on concessionary fares administration and appeals—time that could more productively have been spent improving bus services. It is clear that the uncertainties of reimbursement are affecting the bus operators’ attitude to risk, which may be reflected in tender prices for bus contracts.

The principal bone of contention between local authorities and operators relates to calculating the so-called general travel factor, which means the travel pattern that would have been experienced without the concessionary fares. That factor is used as the basis of reimbursements paid to the operator. In many cases, that leads to appeals by operators. A bus operator can appeal if it feels that it has been inadequately reimbursed by the local authority, but it is worth noting that the local authority cannot appeal if it feels that it has been inadequately reimbursed by the Government. Will the Minister let us know how many appeals have already been lodged with her Department?

Another common complaint is that whereas operators can increase fares without consultation, the grant awarded to local authorities to reimburse operators will increase only with inflation. If a bus company is in financial difficulties, it can raise fares. Because local authorities must reimburse it for revenue forgone based on a percentage of revenue, it will be the council that loses out.

Mr. Shipp wrote to me at the end of May outlining the bureaucratic nightmare that is unfolding for companies such as his. He stated that one natural result of the new reimbursement arrangements is that he is paid a different amount by Scarborough borough council for a journey to Beverley than by East Riding of Yorkshire council for the return journey. Even worse, because East Riding is offering its residents a £15 pass to enhance the national scheme and provide pre-9.30 am travel to and from Hull, East Yorkshire Motor Services has to bill East Riding council for journeys made by its residents from Hull before 9.30 am, but Hull city council for the same journeys after 9.30 am. That is an example of the bureaucratic morass that such companies are having to deal with.

Such companies are also finding that on sunny days, a large number of people entitled to concessionary fares are turning up for leisure journeys. All well and good, one might say, but as a result they are leaving regular fare-paying passengers behind because there is no room. Because of that, East Yorkshire Motor Services has just cancelled a £6,000 summer marketing campaign for fear of encouraging fare-paying families who would otherwise have been using their cars to turn up for buses that they cannot get on because they are full of pensioners.

The hon. Gentleman mentioned the minimum standards that the Government apply nationally, and then he developed a theme of local problems in his speech. Does he believe that we should extend the minimum national requirements or keep local flexibility?

It is important that, when local people vote for their councillors, they can vote for extensions to the scheme. I simply point out the bureaucratic difficulties that companies face through the anomalies that are thrown up. They make the scheme unpopular with some bus companies, which have to deploy their staff to administer the scheme rather than explore new services that they can provide or expand their businesses in the way in which they wish.

We are not the party of government at this time. We are debating a scheme, which the Government introduced. The Select Committee has made some criticisms of it and it is only fair that the Government should respond to the points made in the debate. I simply make the point that companies throughout the country, not only in Yorkshire, are finding the scheme difficult to implement. Surely that cannot be laid at the door of the Opposition, who are not responsible for it.

The hon. Gentleman has been generous in giving way. He rightly said, in answer to the hon. Member for Telford (David Wright), that he does not speak for the party of government. However, will he confirm that he is not committing Her Majesty’s loyal Opposition to any additional spending to bridge the gap on concessionary fares?

We have made and continue to make the point that we feel that the funding that the Government have allocated—£214 million this year, increasing in future, with a total budget of approximately £1 billion for a billion journeys—is adequate for the scheme. The problem is its allocation to local authorities and the way in which some local authorities pocket a surplus and others, such as Worthing, which my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) represents, lose out. Those in Surrey have a surplus and I am sure that, although the authorities that labour under a deficit are knocking on the Minister’s door almost every day, the ones that have a surplus do not do that.

It is important to have equitable funding. I am not sure, even after reading the report, how the Government have arrived at some of the figures. Are they simply good guesstimates?

My hon. Friend has made it clear that anomalies already exist in the funding formula and they need to be addressed. However, he and others also clearly said that we proposed an amendment to the Concessionary Bus Travel Act 2007 to provide for an automatic review of the way in which the funding formula worked in two years to try to iron out some of the anomalies. Of course, the Government rejected that. They had an opportunity in the measure to ensure that the funding formula could be examined shortly. It is already going wrong, but the Government would not allow us to include in the Bill a provision for examining the matter in two years. Surely we have given that undertaking.

My hon. Friend is right—we are locked into that. The Local Government Association has suggested a way in which the scheme could be improved.

I would like the Minister to comment on some specific points, if possible. First, does she intend to tackle cross-border journeys in the United Kingdom? Hon. Members who have constituencies near the Welsh border have raised that point and the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) has raised the matter in the House in connection with the Scottish border. It can be frustrating for pensioners who live near a border and whose local market town is in a different country. Has the Minister managed to solve that problem? I will not admit to having any answers to that, but the matter has been raised and places genuine limitations on those living near the border. We must bear it in mind that we live in a United Kingdom, not separate countries.

Secondly, will the grant—I believe that it is around £4.50 per pass—paid to local authorities for issuing passes be available for renewal after they run out in three years, or is it a one-off payment to local authorities for the initial issuing of the first passes?

Thirdly, although we do not argue about the amount of the Government grant to fund the scheme, will the Minister carry out an urgent review of the allocation process, and possibly consider the Local Government Association’s suggestion of distributing the grant on a per journey basis, as well as other solutions that could improve the scheme?

For the avoidance of doubt and before any impulsive parliamentary candidates—I am not thinking of any party in particular—suggest otherwise, there is no threat to the pensioner bus scheme from an incoming Conservative Government. The biggest risk is that it may be compromised and undermined by the Government’s inept introduction.

I, too, welcome the report and welcome my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) to her position as Chair of the Committee. I know that she will do a sterling job in that post.

On behalf of my constituency, I would like to make particular reference to paragraph 56 of the report, which is headed “Ticket gates—not the only solution”. My hon. Friend will have received a letter from a Geraldine Roberts, who is the chair of the residents against station closures group, concerning Sheffield Midland station and the development there. Those who have had the opportunity—in fact, the pleasure—to come to Sheffield will have arrived at a station that has now been refurbished. The entrance has been developed and the walkway into the centre of Sheffield is now commensurate with a modern European industrial city.

There is a problem, however, to do with revenue protection. The franchise that has been obtained by Stagecoach, in its bid for the east midlands franchise, is now creating problems in the operation of Sheffield Midland station. There have been two major developments in Sheffield, on each side of the station, one of which is the Park Hill flats. Those who come into Sheffield will know that the block has been there since the 1960s. It has undergone a massive refurbishment by English Partnerships and Urban Splash. On the other side of the station is Sheffield Hallam university, a very good university that is driving major parts of Sheffield’s regeneration, part of which involves the creative industries quarter and the digital centre.

The franchise said that gating could be installed, in order to protect the companies from fraud and the lack of fares, as well as to reduce crime. Both of those considerations we accept. However, we want a proper cost-benefit analysis, because the movement of population from one side of the station to the other is very much through the station—indeed, it is an historical fact of the development of Sheffield’s railway network, city centre and university, as well as the residential area in and around Park hill. The point made in the report under “Ticket gates—not the only solution”, which is a fair one, challenges some of the franchises that have been given out, particularly on the east coast main line. I hope that the issue can be revisited, as the report asks, to ensure that the cost-benefit analysis is done.

The unfortunate part, which is again brought out in the report, is that many franchises have worked in isolation, taking into account just transport and not the wider concerns about economic regeneration or other developments. There are a number of such issues on the midland main line, which has problems with the gating at some of the stations.

I welcome the report and its recommendations. I hope that the Government’s response to the recommendation in paragraph 60 means that they will look not just at Sheffield, but at all the stations on the midland main line, to ensure that the cost-benefit analysis for all those areas is both effective and commensurate with the public money that has been put into the economic regeneration there, as well as into the stations themselves.

Unfortunately, I have to speak just after 6 o’clock in another meeting, but I hope to return for the winding-up speeches, to listen to my right hon. Friend the Minister’s reply, which I hope will be very positive indeed.

I, too, welcome the hon. Member for Liverpool, Riverside (Mrs. Ellman) to her new role. I am very pleased that she is there, although obviously we all regret the circumstances in which she inherited it.

To some extent, this debate is a revisiting of the debate that we had on 25 March about concessionary bus fares. It is not necessary to reiterate all the points that I made on that occasion, not least because some of them have been made already by the hon. Member for Scarborough and Whitby (Mr. Goodwill). However, I should like to stress the need for an evaluation, which the hon. Lady mentioned. The scheme is new and a lot of kinks and quirks have appeared, perhaps inevitably. It is very important indeed that there should be a proper evaluation, as she correctly said.

When I asked for such an evaluation in the debate on 25 March, the Minister made no commitment to one. I therefore hope that she will today give a commitment to an early evaluation of the scheme, to pick up the legitimate points made by hon. Members in all parts of the House about how it is operating. Like most hon. Members, I make that call not out of mischief, but because there are genuine problems and kinks in the scheme as it is currently working. If the hon. Lady’s Committee can pursue that point, that would be very welcome indeed.

Part of the conclusion that I have reached from writing to all transport authorities that administer a concessionary fares scheme is that there is a misallocation among authorities, which means that some have received grossly inadequate amounts for the schemes in their area. That is particularly the case for seaside towns and attractive areas such as Lewes, which is considerably out of pocket, as well Worthing, which has now been mentioned for the fourth time in this debate. However, some authorities have been gaining money for which, frankly, there is no justification. Obviously those authorities keep quiet about that; nevertheless, there is an imbalance in the way in which the money is distributed.

My hon. Friend is right to draw attention to the problems in funding the scheme. However, does he agree that another important consideration is that in many cases passenger transport authorities have underestimated what their response to the scheme should be? For instance, Greater Manchester passenger transport authority has been totally overwhelmed by the number of applicants for the new passes. As a consequence, many residents are still waiting for their passes, and will be waiting for another several months.

My hon. Friend is absolutely right. Many local authorities were not entirely ready for the scheme when it was introduced, but that was not necessarily their fault. It is a question of how the scheme was rolled out, the availability of smartcard technology and other matters, which I shall come to. However, we have not yet seen the full picture, which is perhaps another reason for a full evaluation.

It is quite clear from the responses that I have received—I imagine that this is true of the responses that the hon. Member for Scarborough and Whitby has received, too, as I suspect that local authorities are saying the same thing to him as they are to me—that there is an overall deficit in the amount of money that councils require to run the scheme on a cost-neutral basis. Part of the reason for that deficit is that the Government have been successful in their concessionary fares scheme. They have encouraged more people to use public transport and, by getting people on to buses, met some of their objectives on social exclusion and even, one might argue, on climate change.

The Government can say, “Here is a success,” but they cannot say that there is no extra cost to councils as a consequence. I estimate that cost to be around £60 million per annum overall, even allowing for the redistribution of funds between those who have gained and those who have lost. I have talked to our shadow Chancellor, my hon. Friend the Member for Twickenham (Dr. Cable), who is a hard man to get money out of. He has agreed, in our overall tax-neutral arrangements, that £60 million extra will be allocated for concessionary fares in our Budget proposals.

I invite the Conservatives to follow suit. We have as much opportunity to speak from the Opposition Benches as the hon. Member for Scarborough and Whitby has. It is not sufficient in opposition merely to draw attention to the Government’s deficiencies; it is necessary to put forward constructive alternatives, too. Although the Conservatives are getting quite good at pulling apart the Government’s proposals, they are not very good at putting forward any alternatives.

On that point, could the hon. Gentleman remind us how big a local income tax would be needed to balance his Budget?

This is not a debate about local income tax, but I am happy to tell the right hon. Gentleman that all our tax proposals balance. I would be happy to send him details, should he wish. Our proposals are open and accountable, they have been externally audited and they balance. More to the point, they exist, which is more than can be said for the Conservatives’ proposals.

I am grateful to the Committee for its comments on the concessionary fare scheme, and I hope that it will follow them through, because this is an important area of delivery not only for people up and down the country but for the new Government policy, which needs to be examined. That is exactly the sort of thing that the Committee should be doing.

The report is not just about concessionary fares; it also deals with other matters. The hon. Member for Liverpool, Riverside mentioned fare evasion, which is an important issue. I support her suggestion that there should be a better independent appeals body. It is quite right that those who are seeking to avoid paying their fare should be caught and dealt with properly. It is unacceptable to the proper fare payer that others are getting free travel by seeking to avoid payment. However, people are sometimes given unjustified penalties. A constituent of mine, a young student, got on a train without having paid the fare because there was no one in the booking office. They were subsequently charged a penalty fare because they had not seen the conductor on the train to get a ticket as soon as they got on. That cannot be right, and we need to resolve issues such as those. An independent appeal body that works would be the right way forward, and I fully endorse the hon. Lady’s proposal for such a body.

One way of dealing with such problems is by gating stations. I do not pretend that that is the full answer, but I know from speaking to Transport for London that it has massively increased its fare income—by 15 to 20 per cent., I think—by putting gates on the North London line, which it has taken over from a British Rail-type body. I am not sure which of the train operating companies it was. TFL has improved its income stream markedly by gating those stations. Technology can therefore help to provide answers.

I want also to deal with integrated ticketing, but I shall preface my remarks by saying that we need to recognise that there is a problem with the bus services that are provided in this country. The problem dates partly if not wholly back to deregulation in the 1980s. The statistics from the Department demonstrate that the average cost of bus fares has increased markedly above inflation in the intervening years, and particularly since this Government came to power in 1997. The average cost of bus fares has increased by 13 per cent. above inflation since 1997.

Those who use buses are often among the poorest in society. They do not all qualify for free passes as they are often working people, and this is a significant cost for them to meet. The cost of travelling by bus has gone up by more than the cost of travelling by train and, dare I say it, by more than the cost of motoring in those years, notwithstanding recent fuel price increases.

The cost of travelling has gone up, but the cost of subsidy has gone up as well. The subsidy to bus services in 1986 was £847 million. When this Government came in, it was largely unchanged at £881 million. By 2006, however, it had rocketed to £2,452 million. That represents a tripling of the subsidy in the 11 years of this Government, at a time when fares have been increasing at above the rate of inflation and bus passenger numbers have continued to fall. That is not a success. Between 1985 and 2006, the number of bus journeys in Scotland fell by 30 per cent., in Wales by 28 per cent. and in the non-metropolitan areas of England by 22 per cent. It is only in London that there has been any success in driving the numbers up. The subsidy per head in London is markedly higher than elsewhere in the country.

In a moment.

A further element of the equation is the fact that the profits of the bus companies have rocketed over that period. Therefore, we have seen rocketing profits for bus companies, rocketing fares for passengers, rocketing subsidy by the taxpayer and a decrease in services and passenger numbers. That is not a success story.

The hon. Gentleman has just made the very point that I was going to raise, in recognising that the profits of the bus companies have indeed rocketed in that period. What proposals does he have to deal with those rising profits and with falling bus ridership?

To be fair to the Government, they have started to go along that track with their proposals in the Local Transport Bill. They will make it easier to bring in quality contracts and give local authorities more control over the type of bus operations in their area. We would go further than the Government are going, however, and I have tabled amendments to the Bill to try to achieve that, as the Minister knows. Collectively, however, we all have to recognise that the statistics that I have just given demonstrate a failure of bus policy over 20 years, and unless there are proposals to remedy that—such as those that we have put forward and, to some extent, those from the Government, though they are not enough—the failures, including decreasing patronage and increasing costs, will continue. That cannot be sensible.

The report refers to integrated ticketing, which is an important issue. It is easier for people to use public transport if their tickets are integrated. They want to be able to buy just one ticket for their whole journey. Integrated ticketing also helps to avoid extra costs. The hon. Member for Liverpool, Riverside rightly drew attention to the fact that people often have to buy multiple tickets, which drives up the cost of their journey. Even in London, someone who gets off one bus and gets on another has to pay again, until they have reached the ceiling on their Oyster card.

The fact is that no real attempts are being made to make integrated ticketing work. Paragraph 1 on page 30 of the report states:

“Ten years after it expressed its commitment to promoting integrated bus ticketing, the Government has achieved too little of practical value. It is a nonsense that the everyday act of changing buses is still made unnecessarily inconvenient and expensive by poor ticketing arrangements. The Government needs to pay more attention to resolving these basic problems which penalise passengers and deter others from using buses at all.”

That is absolutely right, and the Committee is right to draw our attention to that point. However, I do not see much in the Government’s response to suggest that they are taking it on board or that anything is going to happen as a consequence.

The Government talk about the voluntary schemes that are working, including plusbus. They are indeed working, and I am glad that plusbus is there, but less than a quarter of rail tickets that are sold have any sort of cross-ticketing arrangement with buses. More than 200 towns and cities outside the metropolitan areas are covered by the scheme, which is fair enough, but there are many areas that are not covered. It is not sufficient to rely on local initiatives to make up the difference. It would take a very long time to achieve that, and the Government need to be more proactive in encouraging integrated transport ticketing, between rail and bus services in particular, but also between bus operators.

I have to tell the hon. Member for Liverpool, Riverside that we have tabled amendment after amendment to the Local Transport Bill to try to make integration part of the thought process. For example, we wanted to make it a requirement for those involved in local quality contracts to consult Network Rail and the train operating companies, but that proposal was rejected by the Government, so our proposal to help to achieve integration was actually voted down by her colleagues. I hope that she will take that up with the Minister at some point.

Integrated ticketing will be helped by the roll-out of smartcard technologies, and I think that we are all in favour of that. We have only to look at London to see what a great success the Oyster card has been. Incidentally, I hope that we will soon reach the stage at which Oyster cards can be used on mainline suburban rail services as well as on the underground. Not all train operating companies accept them, but I hope that that can be rectified before long.

The fact is, however, that 78 per cent. of travel concession authorities do not comply with ITSO standards. By the end of 2008, only 5 to 10 per cent. of the bus fleet will be ITSO equipped. Therefore, we have a situation in which people who are being given smartcards cannot use them because there are no facilities for them on the buses. In an answer to the hon. Member for Manchester, Blackley (Graham Stringer), the Minister said:

“We currently have no plans to require buses in England to be equipped with smart readers.”—[Official Report, 22 October 2007; Vol. 465, c. 17W.]

That is the official Government position, but I have to ask why there are no such plans. This is the way forward for dealing with all the problems that the Transport Committee has identified, and for getting justice and ease of use for the passengers who want to use the buses.

I want to ask the Minister a direct question, and I hope that she will answer it when she winds up the debate. How much does she estimate it would cost to put smartcard readers on all buses? I understand that the Department for Transport has made a rough estimate of the cost, but we have failed to see answers to these questions so far. She doubtless shares our vision that that system should be rolled out, so, having given us an estimate, will she tell us how she thinks that the system should be applied to buses? In her judgment, who should pay for it?

Having acknowledged that the bus companies are making massive profits, does not the hon. Gentleman think that they ought to make a contribution to that?

I do as a matter of fact, because it is in the bus companies’ interests to do so. There is a need to reverse the decline in bus patronage, and they ought to realise that it is in their own interests to do so. It is also in the interests of all those who believe in tackling climate change, including the Government, who must lead the process and explain how it can be achieved. Simply standing back and saying, “We’ll let the market sort it out,” does not work; we need more Government intervention and leadership.

I understand that ITSO-based smartcards are being used much more in Scotland and Wales. I do not know how they have managed it—perhaps the same way that railway lines have been re-opened in Scotland and Wales, but not in England. Transport needs south of the border seem to be different from those north and west of the border.

I hope that the Minister will be able to say something very much along the lines of integrated ticketing, and something about how she intends to enable a person who turns up at Lewes railway station, for example, to get a train to Brighton and then a bus from Brighton to wherever they are going.

Perhaps to Worthing, who knows? They can of course get a train to Worthing, changing at Brighton. There is a good service.

How will the Minister facilitate such journeys? How are they going to happen? Who is going to drive the process whereby somebody says at a train station, “I want to get off at this particular bus stop,” and they receive a ticket? It is our ultimate goal. I suggest to her that the Government must lead that process, and that it requires the roll-out of smartcard technology and readers on buses, and the availability of a type of Oyster card throughout the country, not just in London. Why should London get the benefit of a good system when it is denied to the rest of the country?

My hon. Friend the Member for Scarborough and Whitby (Mr. Goodwill) made a very good speech highlighting some of the deficiencies in the Government’s concessionary travel funding for local councils. I applaud the fact that he has raised the issue, because Shrewsbury and Atcham borough council has been grappling with it for a long time. When he raised it, various Labour Members tried to suggest that we were making party political points, but it is a genuine issue, and my local council’s finance director, Mr. Campbell Thomson, has written to me on more than one occasion to highlight the deficiencies—the big gaps—in Government funding. The council has to find funding from elsewhere to cover the concessionary travel scheme, and it is running to hundreds of thousands of pounds. That is a point well worth making, and I hope that the Minister will assure us of increased funding for Shrewsbury and for Shropshire.

We will have a unitary authority—I fought tooth and nail against it—as of June next year. It will cover the whole of Shropshire, apart from Telford, and I shall be watching carefully to see how much the authority receives for the concessionary travel scheme, that the amount is adequate and that local taxpayers in Shropshire do not have to cover the difference.

I want to highlight for the Minister some specific points about Shropshire. Shropshire has a much higher percentage of over-85-year-olds than anywhere else in the country, and Shrewsbury has been voted the number one retirement destination in England, because it is such a beautiful town. [Interruption.] It is much nicer than Worthing. I want the Minister to take that into consideration, because with so many senior citizens in Shrewsbury, the travel scheme will be even more popular.

The Minister will know just how rural Shropshire is. There are some very big distances between the many villages in my constituency and the county town of Shrewsbury, and as I said in an intervention on the hon. Member for Liverpool, Riverside (Mrs. Ellman), we have a genuine problem with the growing number of bus services that are being cut in rural Shropshire. I say so impartially again. Just last week, a delegation of senior citizens from the village of Pontesbury highlighted yet another bus service that, regrettably, must stop. They are obviously determined to ensure that I campaign to try to save it, so I should stress to the Minister that, although I applaud her Government for having introduced the concessionary scheme, and I rarely praise socialists or indeed this socialist Government, the scheme must be funded properly and there must be special, extra help for rural areas such as Shropshire, which have large numbers of senior citizens.

My hon. Friend the Member for Scarborough and Whitby also mentioned the important issue of cross-border traffic. Shrewsbury is a border town—my constituency ends on the Welsh-English border—and many constituents on both sides of the boundary travel backwards and forwards across it. Shrewsbury is the main destination for many people living in Wales who travel across the border from villages to shop there, and they also use vital services in Shrewsbury. There are no major hospitals in mid-Wales, so they use the Royal Shrewsbury hospital. They also use education services. I noticed that when that point was made, the Minister looked somewhat perplexed, because the issue is very thorny and potentially costly. However, as my hon. Friend said, we live in the United Kingdom. We live in one country, and some of us feel very passionately about that, so we want to ensure that citizens—our constituents—on either side of the border, living cheek by jowl, are not discriminated against because they live on the wrong side of it.

In preparation for the debate, I met representatives of the Shropshire Disability Forum. Mrs. Sue Wood, who runs it, wanted me to raise the following issue with the Minister. I do not know whether things have changed since Mrs. Wood acquired this information, but she is under the impression that the concession is available only after 9.30 am. I agree with what was said earlier. Local councils should have the freedom to decide some of the scheme’s nuances, and no mandate from central office—I mean central Government; there’s a Freudian slip—should dictate that everything be done uniformly. The Opposition are always calling for local flexibility, but I very much hope that the Minister will assure us that there will be certain guidelines for councils. It would be rather iniquitous for any council to allow a disabled person to use the scheme only after 9.30 am if that person were trying to get to work. Very few people whom I know start work at 9.30 am. [Interruption.] The Minister says that it is up to the councils, but I am asking her whether there are any guidelines.

I turn to the most important part of my speech. I should like to inform the Minister that the largest organisation in my constituency is the Shrewsbury Senior Citizens Forum, which has 5,000 members and is rapidly becoming one of the largest senior citizens organisations in the country. It liaises with other senior citizens forums throughout the country, and a few months ago, it organised a national conference in Shrewsbury, with organisations throughout the country attending to debate various senior citizens issues. Bill Harris, the organisation’s eminent chairman, would like to meet the Minister to discuss some of the concessionary scheme issues that the forum thinks are important. I very much hope that rather than just talking to politicians such as me, she will take an interest in that body and extend an invitation to its members. I could bring them to the House to meet her, so that she could hear about the issues directly from them.

After having campaigned for almost four years for a direct rail service from Shrewsbury to London, I am delighted to inform the House that we finally have the link. It is hugely important for Shropshire and for business investment. Obviously, a lot of senior citizens will want to use the service; I am constantly asking senior citizens in my constituency to do so. I hope that the Minister will give me an assurance on what programmes or Government incentives there are for train operators to have the most imaginative and innovative policies for senior citizens. She may think this an outlandish suggestion, but perhaps there could be Government awards or a national competition for train operators. In that way, we would know which United Kingdom train operator had brought out the most innovative and imaginative schemes to get senior citizens on the trains and give them the best concessionary fares.

I nominate Grand Central Trains, which is running a new service from Sunderland to London via York. The service offers half-price fares for pensioners and gives a 50 per cent. refund if a person cannot get a seat on the train. That is another interesting idea, which operators in the south-east of England might consider—although it might bankrupt them.

I am sure that the service is very good. I would like to nominate the Shrewsbury to London train service, on which some good schemes for senior citizens are already starting.

My point to the Minister is made sincerely. She will agree that it is important to get train operators to compete with one another to show that they are serious about concessionary fares for senior citizens.

I am grateful to the hon. Gentleman, whom I would call an honourable friend on this issue. I agree with him about the service between Wrexham, Shrewsbury and Telford. Is he aware that the service is providing a superb improvement for wheelchair users? A constituent of mine recently told me that he caught the train from Telford and that the new company provided a fantastic return service between Telford Central station and Marylebone. It was fantastic, and there has been a significant improvement for wheelchair users who want to use the service from Shropshire. I am sure that the hon. Gentleman will join me in congratulating the company on that.

Yes, I absolutely join the hon. Gentleman on that. Interestingly, I have also heard positive comments from wheelchair-using constituents who have used the Shrewsbury to London service. The attitude of the people operating the trains in dealing with people in wheelchairs is critical. In the past, I have had complaints from wheelchair users about how they were treated by train operators, and that is regrettable. The hon. Gentleman is right about the new operator of the Wrexham-Shropshire-London service. It has won awards and I congratulate its staff for the empathy, kindness and professionalism with which they deal with senior citizens and wheelchair users.

I conclude by reiterating to the Minister that I hope that she will come to Shrewsbury and meet the 5,000-strong Shrewsbury Senior Citizens Forum to hear its views about the future of concessionary bus travel.

I had not intended to speak in this debate, but I have been goaded—not least by the lack of mention of my constituents, particularly those in Worthing. I thought it might enlighten the House if I discussed the experiences of my local councils and my constituency. I repeat the welcome given to the hon. Member for Liverpool, Riverside (Mrs. Ellman) and commend her Committee’s report, although it was produced under the chairmanship of the late former hon. Member for Crewe and Nantwich.

I take issue slightly with my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), who tried to claim that his constituency had the highest number of pensioners. Although not now No. 1 in the pensioner stakes, Worthing still has, proportionately, the highest number of over-85-year-olds, who form 4.6 per cent. of the population. We greatly appreciate the contribution that they make to our town. They seem to travel on buses disproportionately more than other members of the community, so our getting this issue right is of particular relevance to them.

Although I greatly welcome the scheme and supported the Concessionary Bus Travel Bill that brought it in, there are clearly winners and losers. The Government have increased the funding to £1 billion. I am not trying to detract from the generous funding that they have made available, but whatever one thinks about the funding, the issue is whether it is going to the places it is needed most and whether it reflects the usage of buses by local populations. I have a problem in that regard.

Worthing borough council and Adur district council, the two local authorities in my constituency, have been working in ever closer partnership. That has been greatly encouraged by the Government and it is to be applauded; it has produced many efficiency savings. However, those savings and more have gone out of the window because of the necessity of subsidising a scheme that the former Transport Minister, the hon. Member for Lincoln (Gillian Merron), made absolutely clear on 28 June 2007 would be fully funded. Overall, that may be so—it is too early to tell—but in Adur and Worthing it is anything but fully funded.

The Minister knows that full well because, in her absence over Christmas, I took a delegation to see the Minister for Local Government, the hon. Member for Wentworth (John Healey), and I had a follow-up meeting with her later. She has had a number of detailed representations from council leaders, council officers and the two Members of Parliament representing the Adur and Worthing authorities. She is in no doubt about the problems that the scheme is causing us.

I will cite the figures: the estimate is that there will be a shortfall of between £600,000 and £650,000, possibly in Worthing alone. In Adur district next door, the shortfall for this year has been estimated at £238,000, which is equivalent to 4.3 per cent. on the council tax. The council leader has estimated that if we had not had to subsidise this supposedly fully funded Government scheme, we virtually need not have increased council tax this year at all. All the other savings that have been made have been wiped out by the additional costs of the scheme, which have fallen on Adur council tax payers; the scheme has not been fully funded as the Government had claimed.

There are winners and losers among the 324 authorities that are operating the scheme. There are particular losers among authorities that include resorts, particularly seaside resorts, that rightly attract people on day trips or short-stay holidays. That is why Sussex, which has a number of seaside resorts, has been disproportionately hit. I repeat that the scheme is good, but it has already become subject to the law of unintended consequences, and that is having a detrimental financial effect on my councils and therefore my council tax payers. Sarah Gobey, the assistant director of financial services at Worthing council, has provided me with a brief. She writes that Worthing borough council

“is extremely disappointed to see that the Department for Transport is only willing to consult on proposals to distribute the grant on a formula basis. At this early stage in the scheme it is almost impossible to derive a formula which will match the pattern of actual costs—the empirical information is simply not there.”

I should remind the House that the Government adopted a reimbursement formula based on a combination of eligible population, bus passenger journeys, overnight visitors and retail floor space—a very difficult calculation to make.

Sarah Gobey went on:

“This Council would prefer to see the grant paid to reimburse the actual additional costs experienced at a local level. This would ensure that there are no ‘gainers’ or ‘losers’ in the new system. The preliminary forecast received from the Council’s consultants would indicate that whilst Worthing will be a ‘loser’ under the proposed arrangements, other Councils within West Sussex would appear to ‘gain’. We fail to see how this can be justified, yet the Department for Transport refuses to see why using a formula to distribute the funding is flawed. The Government has told local government that there is sufficient funding available for the new scheme, consequently there is absolutely no rationale in allocating grant on any other basis than actual expenditure.”

The situation, however, is actually worse than that.

For the past few years, again to their credit, the Government have been operating a free local bus pass scheme, but its operation and funding have been to the detriment of my councils. The note continues:

“However, all of this masks another problem which is that the Council believes that the current statutory scheme is also underfunded. By 2008-09, the Council estimates that the cost of the current scheme will have increased by £860,000 since the introduction of the free bus pass. In 2006-07, the Council received additional funding of £610,000 via Revenue Support Grant. As a ‘floor’ Authority, this funding has barely kept pace with inflation, whilst over the same period the Council has seen costs increase by over 20 per cent. per year. Consequently, the Council estimates that the current scheme is underfunded by at least £200,000.”

On top of the additional underfunding element of the national bus pass scheme, we have been accumulating losses on the existing local scheme. So there has been an accumulation of losses over some years, to which the national bus scheme is a further addition. It is a double whammy. As Sarah Gobey concludes:

“There is the distinct possibility of financial meltdown for Worthing Borough Council for the sake of a formula and it is particularly galling to think that all of our hard work on achieving savings from partnership working”—

with Adur—

“could be wiped out at a stroke.”

That briefing came from Worthing, but the same principles apply to Adur council next door, which is a slightly smaller one whose total figures are slightly lower.

The Government announced this scheme to great acclaim and we all support it and want to see it flourish because it is good for transport, good for the environment and, most of all, good for elderly and disabled people who can travel more, but it is clearly having a very detrimental effect as certain councils, particularly mine, are suffering from a large shortfall.

That explains why certain councils, including mine, have chosen to time their scheme so that it starts at 9.30 am rather than at 9 o’clock, as 9.30 is the latest allowable time for authorities to commence the scheme. Some neighbouring councils, which are not suffering from the same shortfall, have been able to start their scheme from 9 o’clock, so further confusion is ensuing. My local councils are, quite understandably, trying to limit the impact that the shortfall in funding is having by just about the only mechanism available, which is to start the scheme at 9.30 rather than earlier.

Now, however, we have people travelling between local authorities whose start time is different, which is causing a good deal of confusion and no little resentment by some people who think that certain councils are pulling a fast one. Well, if anyone is pulling a fast one, it is the person who invented this funding formula, which is leading to serious underfunding for my councils, which are then quite unreasonably getting the flak for what is happening.

As my hon. Friend the Member for Scarborough and Whitby (Mr. Goodwill) said, the scheme has also been a victim of its own success, as there has been a big increase in the number of bus journeys. On the face of it, that is absolutely right, and I see many people around Worthing getting on buses, so the buses are being well used. I have to say, however, that many of the people who get on those buses do not get off them—[Interruption.] The Minister might say “Not ever”, but there have been a number of cases involving people who, knowing that they can travel for free, get on the bus and travel all the way down the coast to Chichester or Lewes or perhaps on to Hastings or wherever without getting off. They go for the trip. That is terribly nice and lovely, but they do it again the following day and the one after that and the one after that. Bus drivers now have regular customers who travel on the bus for the sake of it. That may not be typical, but some people are making use of the system, travelling up and down the coast and having a lovely ride. To be honest, that is not the purpose for which the scheme was intended.

I have another extraordinary situation in my constituency. There is a residential building of about 90 sheltered flats where a number of pensioners live. It is very well run by the local housing association. It is on a busy road just on the outskirts of Worthing. The bus going into town picks up pensioners from that building so that they can do whatever they want to do in Worthing. When they come back, however, the bus stop is on the other side of the road, but the road is so busy that many of these pensioners are too scared to cross it, so they stay on the bus, travel several more miles into the next town until the bus turns around and comes all the way back in order to deposit them on the right side of the road. That seems absurd, but it is happening. It provides another example of excessive bus journeys, which have to be accounted for by the local bus company. I am trying to address the problem by getting the local authority to put a pedestrian crossing of some description on that part of the road, which should help. [Interruption.] The serious point I am making is that many more people than were ever anticipated are using the buses; and I have to say that it seems to be happening to a greater extent in Worthing and Adur than in other parts of the country, which exacerbates the problem of the number of journeys and the underfunding.

Well, Lewes is a nice place to get off. Has the hon. Gentleman seen a copy of Scotland’s Sunday Post, which drew attention to a different sort of problem with bus journeys? Operators were said to have given out tickets to passengers for the entire length of a journey, knowing that they would be getting off after a couple of stops in order to claim back a higher rebate.

I am afraid that I have not seen this week’s Sunday Post, which is very remiss of me, but again, that is not an isolated incident, as there are many concerns about the accuracy of ticketing.

Finally, the other problem looming is the cost of the scheme, inflated by additional passengers, to bus operators themselves, as they face the double whammy of increased petrol costs and so forth—irrespective of whether the buses are run on recycled chip fat or whatever other wonderful environmentally friendly schemes are happening—because local bus companies are increasingly appealing against local authorities on the amount they can claim for bus fares.

The scheme is very good and well intentioned, but it is facing real problems. That is why, when my local authorities went to see the Minister, they basically said, “Great scheme, but we don't want to run it. We want all our council tax payers to have the benefit of it, but we don't want our council tax payers to have to pay for it as well, given that this is supposed to be fully funded.” My local council leaders would prefer the scheme to be taken out of their hands and to be run nationally or by some other body—[Interruption.] This may well appear to be “Stalinist” to the hon. Member for Telford (David Wright), but I do not often hear him or members of his party speaking up against Stalinism.

The problem is this: why should my council tax payers in Worthing and Adur have to pay for a scheme that is supposed to be fully funded by the Government? As I have explained, the councils are saying that the scheme is great, but they do not want to have to run it and pick up the tab. The Government have to acknowledge that however well intentioned the scheme, and whether or not £1 billion is or is not sufficient to run it nationally, in certain parts of the country—Adur and Worthing are not untypical—councils are having to pay a substantial amount to run it. I urge the Government to look again at the formula and see whether they can better reflect journey usage. They need to refine the formula and ensure that a good scheme does not become a victim of its own success, leading to the law of unintended consequences, whereby my council tax payers effectively have to pay twice. I am not saying that I want the scheme reduced in any way. I want to ensure that it achieves its intended purpose of enabling more pensioners and disabled people to get out of their houses, use essential services or go out for pleasure journeys or whatever; at the same time, however, it should not be unfair to other council tax payers who have to foot a bill—in the case of Adur, a bill of 4.5 per cent., which could have wiped out the council tax increase this year.

I urge the Minister to think again about enacting a review of the formula, in no more than the two years suggested by my colleagues when the Bill went through the House last year. Will she consider doing so more urgently, to ensure that moneys are being fairly distributed where they are needed for the scheme, and that councils are not pursuing a profit-making venture, which was not the Government's intention?

This has been an excellent debate on a good and interesting report. I pay tribute to the Transport Committee for considering integrated ticketing and concessionary travel. The report was carried out when Mrs. Dunwoody was the Committee’s Chairman, and it is a great tribute to her that she wanted to consider the subject, which might not appear to be at the heart of transport debates. Such issues are incredibly important, however, especially if we wish to increase the use of public transport. I also congratulate my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) on taking over the chairmanship of the Committee. She is already making great strides, as we all expected that she would, in ensuring that the Government’s transport policies are properly scrutinised.

I hope that right hon. and hon. Members will feel that the Government’s response to the Committee has been helpful and constructive. As I shall outline, we have taken on board the Committee’s recommendations in a number of areas and, in some instances, have agreed with the Committee where it said that we are taking the right approach. We should not overlook ticketing, which is an important aspect of public transport.

As Members have said, the Oyster card in London has shown the potential of smartcards both to speed up and simplify journeys. In addition, the sale of rail tickets over the internet and the introduction of advance ticket machines have freed up railway staff to do other jobs, particularly helping out passengers on the concourse or platform. My hon. Friend the Member for Telford (David Wright) said how important it was that staff were able to help people with disabilities. Many of the new technologies available in the world of transport have the potential to revolutionise public transport.

Although I endorse my right hon. Friend’s statements about the benefits of technology, does she agree that technology should not be an absolute substitute for people, who are there to help passengers?

I certainly agree with that. We have discussed today the need to ensure that people can navigate their way around the system using new technology. Of course, people need assistance to do that, but at the same time staff can be freed up to undertake other duties.

The Government are committed to ensuring that ticketing choices are fair, transparent and convenient, as my hon. Friend said. Last year’s White Paper, “Delivering a Sustainable Railway”, set out our vision of simpler fares, modernised ticketing and information, and how best to meet the needs of disabled passengers. In April, we welcomed the announcement by train operators of the new, simplified and more transparent fares structure to be introduced next year. In May, the operators introduced standard names and conditions for advance fares, increasing the availability of railcard discounts. From September, the names of the main walk-up fares will be common across the whole network, so they will be easier for passengers, and Members of Parliament, to understand.

The Government recognise, however, that the arrangements for bus ticketing are not so well advanced. We want integration not only on the railways, but on buses. We understand the importance of a simple and flexible integrated approach. We should remember, however, that bus operators often work in a commercial world, and are free to set their own fares and determine conditions on ticket validity.

I was pleased that my hon. Friend the Member for Liverpool, Riverside spoke about the importance of the price promise for rail. I shall refer later to the Local Transport Bill. With the agreement of the Association of Train Operating Companies, we plan to introduce a price promise, whereby anyone who buys a train ticket in person from a ticket office and who subsequently discovers that they could have bought a cheaper ticket for the same journey will be entitled to a refund of the difference. That was a concern of the Committee.

My hon. Friend also emphasised the importance of community transport. I absolutely agree with her. More quality partnerships and, if necessary, quality contracts are needed. In that way, it could be easier for local authorities in some instances to insist on integrated ticketing. I am sure that she needs no reminder that those on the main Opposition Front Bench have consistently voted against the changes in the Local Transport Bill—[Interruption.] I said those on the main Opposition Front Bench. It is astonishing that they have done so, because Conservative councillors have said that Opposition Front Benchers are totally out of touch with local authorities, which need the ability to work more closely with bus operators and to introduce quality contracts if that is the right approach. Conservative Members shake their heads, but I suggest that they consult more closely the councillors in their areas. If they do so, they will find that those councillors are reflecting what the public are telling us as Members of Parliament: they want better bus services. We intend to introduce those through the Local Transport Bill. I urge those on the Conservative Front Bench to take heed of that.

Following on from my hon. Friend the Member for Liverpool, Riverside, my right hon. Friend the Member for Sheffield, Central (Mr. Caborn) made an important point about gating. Of course, we need to protect revenues, and gating can be an important part of that. However, I assure my right hon. Friend that we would not expect a station operator to install gate lines outside the boundary of the station lease, or unreasonably to restrict access to a pedestrian route shared with other facilities. I am sure that, having heard my right hon. Friend’s speech, my hon. Friend the Under-Secretary will consider the points that he made.

The Select Committee report called for a more holistic policy on gating, which may involve economic regeneration and other factors. “Holistic” is a lovely word that encompasses everything, and I am therefore hopeful of a solution to the particular problem that I am experiencing in Sheffield.

I am sure that my hon. Friend the Under-Secretary will raise that point with the train operating companies.

Some £1 billion is being spent on concessionary travel, which was mentioned by many Members. I hope that they will rejoice in the fact that people over 60 and eligible disabled people can now use their bus passes anywhere in the country. That gives older people enormous freedom, but I sometimes feel that certain Members are a bit grudging in their support for it. We have allocated an extra £212 million for 2008-09, rising to £217 million and £223 million in the following years, to travel concessions in England. That is enough to fund about 200 million additional bus journeys in local authority areas across England.

When we consulted local authorities on how the scheme should be extended, they asked us to provide a special fund rather than allocating money through the rate support grant, which we agreed to do. We then consulted the authorities on how they wanted the money to be distributed, giving them four or five options, and we have since distributed it on the basis chosen by most of them. I can tell our seaside colleagues, the hon. Members for Scarborough and Whitby (Mr. Goodwill) and for East Worthing and Shoreham (Tim Loughton), that the allocation took account of the number of overnight visitors, which is greater in some areas. I think that local authorities should welcome the fact that they can attract visitors, because of the knock-on effect on their local economies. Although some welcome it, others sometimes complain.

I hope the Minister recognises that I was in no way grudging about the scheme. We certainly welcome visitors to Worthing and Adur, both tourists and others. However, I should like to know how she calculated the number of additional visitors to Worthing who were likely to take advantage of the scheme. The figure is entirely arbitrary, and we are not convinced of the exactness or the rigorousness of the formulae that the Government used.

As the hon. Gentleman probably knows, there are clear mechanisms for local authorities to submit returns about their visitor numbers and available retail space. It is not for the Department to tell Worthing how many overnight visitors it has; it is for Worthing to tell the Department. I should have thought the hon. Gentleman knew that.

Of course we believe that bus operators are entitled to reimbursement for carrying concessionary travellers, but local authorities should provide it on a “no better off, no worse off” basis: operators should neither gain nor lose money as a result of carrying concessionary travellers. That is laid down in legislation. It is important for authorities to reach agreement with operators on how they should be reimbursed in relation to the numbers carried.

There is clearly overwhelming support for the concessionary scheme. Will my right hon. Friend undertake to re-evaluate the way in which it is working and, in particular, examine the allocation of available funds to ensure that it remains universally popular?

The issue has been raised by a number of Members. The hon. Member for East Worthing and Shoreham, for instance, said that his local authority did not necessarily want to participate. Some smaller district councils have said that they would prefer the county councils to carry out this function. We said in our response to the Select Committee report that, later this year, we would consult on whether the function of district councils should be transferred to county councils.

As I am sure Members will appreciate, the matter is not necessarily as clear-cut as it may seem. The concessionary fares element represents a considerable part of the budgets of some district councils.. A number of issues need to be taken into account as we move from a system that includes an element of rate support grant to a new system, but we have said that we will consult on it.

Worthing invited officers from the Minister’s Department to open the books and look at all the figures, but the Government did not use the figures that we had provided. Either the Minister believes that my local authorities are giving her Department the wrong figures, or she thinks that we are inventing the shortfall, or she thinks that the authorities are paying too much to the bus operators. Those are the only possible explanations. Which does she think my local authorities are guilty of?

The hon. Gentleman seems to have got into a bit of a muddle about the order in which the allocations were made. As I have said, when we consulted local authorities about the approach that they wished us to take, the formulae that I have set out proved the most popular. It is up to authorities to inform the Department of, for instance, visitor numbers or the amount of retail floor space. I should add that, according to the most recent annual figures available to us for Worthing’s expenditure on concessionary fares, its special grant allocation for this year is 42 per cent. higher than the amount they said themselves was previously spent on concessionary fares.

In our response to the Committee’s report, we said that we would commission research on reimbursement arrangements to look at the latest evidence on the number of passengers generated by local and national schemes, the revenue forgone by bus operators and the additional costs. We also want to work closely with bus operators and local authorities to share the evidence. The research will explore the scope for more simplistic and deterministic ways of setting reimbursement, such as, perhaps, a table of payments for different regions and area types. But it is important to remember that, within this framework, local authorities have three-year settlements. We want to make sure that we do not disrupt agreements that have been reached, but we want to make sure that we are researching in the way that the Committee has suggested to look at potential suggestions from bus companies and authorities.

I welcome the terms of the review that the right hon. Lady has set out. It is indeed sensible and good news but I am slightly worried by the three-year time scale. I understand that there is a three-year settlement for local government, to which she has referred, but I think she will accept that certain local authorities are, for whatever reason, deeply out of pocket as a consequence of the present arrangements. It seems unjust to make them wait a further couple of years before any recompense is available to them.

At this stage, we are commissioning research to look at some of the issues. I reiterate: it is not easy to come up with brand new formulae that could in some circumstances upset arrangements reached with bus operators. There is an appeals process, which I will come to later.

I am doubly grateful to my right hon. Friend, first for giving way, and secondly for providing in a parliamentary answer the fact that, on the commercial network, the average subsidy per bus is £37,500 per year, comprising the bus service operator grant and concessionary fares. Is she worried that with that huge level of subsidy, bus operators are directing their operations more to how much public subsidy they can get rather than to the interests of the passenger?

As my hon. Friend knows, there are some areas where it is clear that bus operators and local authorities are working closely together and are producing a good service for passengers. However, it is also true that does not happen in other areas, which is why we are making some of the changes in the Local Transport Bill and which, as I pointed out, the main Opposition party does not support.

The hon. Member for Scarborough and Whitby asked about cross-border travel. There is nothing I can add to what I have said previously in the House, which is that we want the scheme to settle down in England before we look at what could be an immense financial commitment in extending it to Scotland and Wales. If the hon. Gentleman is committing his party to that, I suggest that he cost it very carefully and look at some of the technical issues that surround it. However, that does not prevent individual local authorities on the border coming to agreements with authorities on the other side.

The hon. Gentleman also talked about funding. The Government are certain that a generous settlement was made; the increase in his local authority was 58 per cent. on what was spent previously on concessionary travel. He also asked whether the £4.50 grant would be repeated. We felt that it was right to pay local authorities for the initial issue of smartcards to make the changes. We covered the full cost of that issue but it is not unreasonable to ask local authorities to cover the cost of renewal.

The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) is not in his place so I will not answer his points.

The hon. Member for Lewes (Norman Baker) talked about putting smartcard readers on all buses. He raises an important point. We felt that it was important, given the change in terms of the national concessionary scheme, to say, “Let us have a system that can be interoperable.” That is why we designed the ITSO smartcard approach. Readers are not yet available on all buses, but there are different ways of looking at that issue and it is important that we do so. The hon. Gentleman will know that we are looking at BSOG, the bus service operators grant, to see where there are incentives. Quality contracts and quality partnerships could well be ways to make it easier to introduce smartcards. He raises an important point, but if we had not got a system that could be smartcard-compliant everywhere, it would have been a missed opportunity. He also raised the issue of penalty fare appeals. In the response to the Select Committee, we said that we would look at the penalty fares rules of 2002.

I think that I have addressed most of the points made by the hon. Member for East Worthing and Shoreham, particularly in terms of the increase in funds available. I am glad that he is campaigning for the pedestrian crossing that he has now decided is the answer to the problems. I am very glad that he is not asking me to install it.

I asked the Minister about the number of appeals that bus companies had lodged, which is a way of measuring the level of dissatisfaction.

Yes, the hon. Gentleman is absolutely right. Some 102 appeals were received in respect of travel concession schemes for the financial year 2007-08. Of these, 27 were subsequently withdrawn. A handful did not proceed owing to lack of data. Of the 71 appeal determinations, 33 were successful and 38 dismissed. They have been notified to the applicant bus operators and each relevant transport concession authority.

This has been an interesting and constructive debate. I hope that my hon. Friend the Member for Liverpool, Riverside and other Committee members will feel that our response to the Committee’s report was helpful. I certainly believe that it was extremely useful to discuss some aspects that, in the normal course of most debates, are not necessarily raised but that have enormous implications, particularly when we are trying to encourage more people to use public transport and examining how to improve our bus services. I congratulate the Committee on the report.

Question deferred, pursuant to paragraph (4) of Standing Order No. 54 (Consideration of estimates Etc.).

DEPARTMENT FOR INNOVATION, UNIVERSITIES AND SKILLS