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Concessionary Bus Travel Act 2007 (Variation of Reimbursement and Other Administrative Arrangements) Order 2010

Volume 718: debated on Monday 15 March 2010

Considered in Grand Committee

Moved By

That the Grand Committee do report to the House that it has considered the Concessionary Bus Travel Act 2007 (Variation of Reimbursement and Other Administrative Arrangements) Order 2010.

Relevant document: 9th Report from the Joint Committee on Statutory Instruments.

My Lords, buses are the most widely used form of public transport in this country. Over two-thirds of all public transport journeys are made on them. Buses are particularly important for some of the most vulnerable people in our society. For many older and disabled people, buses provide the only link to the places they want to go and the people they want to see.

As your Lordships will be aware, the statutory minimum bus concession was extended in April 2008 to provide free off-peak local bus travel anywhere in England for older and disabled people. The England-wide bus concession is now hugely popular. It provides an opportunity for greater freedom and independence to around 11 million older and disabled people. I should at this point declare an interest as a holder of a national concessionary bus travel pass—in common, I believe, with 84 per cent of Members of your Lordships’ House.

The structures in place to administer concessionary travel and to reimburse bus operators for providing it have remained largely the same today as they were when a statutory minimum bus concession was first introduced in 2001. Taking into account the significant increase since 2001 in both the number of concessionary trips being taken and the amount of money consequently at stake, the Government in April 2009 launched a consultation to consider what improvements could be made to resolve some of the problems with the current system.

The consultation expressed the Government’s preference for a shift in responsibility for both the statutory minimum and discretionary concessions to upper-tier local authorities. Discretionary concessions are those that are offered as enhancements by local authorities, such as peak travel, companion passes and travel on other modes of transport, such as the railway. The majority of respondents to the consultation were in favour of moving the administration of the statutory minimum concession to a higher tier of local government. Only 23 per cent of respondents considered the current level of responsibility to be the most appropriate.

The responses to the question as to who should administer discretionary concessions were more mixed. The Government believe that it will be more efficient for operators and authorities to keep responsibility for the statutory minimum and discretionary concessions together. Therefore, given the majority view in favour of upper-tier administration for the statutory minimum concession, the order moves the responsibility for administering both types of concession to upper-tier local authorities.

The Government believe that the change in administrative responsibilities will bring with it many benefits, including: enabling efficiencies to be realised through economies of scale and by reducing the number of negotiations with bus operators; making accurate funding by formula easier, due to less variation in the size and characteristics of the authorities; harmonising concessionary travel and wider transport authority responsibilities for the first time; and assisting with the widespread implementation of smart ticketing.

I am sure that your Lordships will agree that the changes being implemented by the order will assist in securing the sustainability of this hugely popular scheme for the future. I commend the order to the Committee.

My Lords, I thank the Minister for introducing the order and confirm that we on this side of the House have always been supportive of the national concessionary bus fare scheme. We recognise that access to public transport is particularly important to the elderly and those with disabilities, as he said. However, we have always been worried about the mechanism for funding the scheme set up by the Government, and have felt that it was not fit for purpose. Our fears have been realised since the introduction of the scheme, as a huge number of local authorities have been left with a shortfall in funding. For some years, we have called on the Government to review the funding mechanisms.

I therefore welcome the fact that, belatedly, the Government have acknowledged the problems with this scheme and have proposed three measures to address them. The first is to reopen the final year of the agreed three-year funding settlement. That is highly controversial and most unfortunate, and has led already to great uncertainty, especially in London. The second is to link the eligibility criteria to the state pension age, which we think is sensible as it ensures that the scheme is targeted at those who need it most.

The third is the subject of today's order and relates to moving the administration of the scheme from travel concession area to county level. We also consider the move to county level to be sensible and something that will help iron out local inconsistencies, as the Minister described. We need to rid ourselves of the situation where one area receives inadequate funds and is left with no choice but to cut services and raise council tax, whereas its neighbour has plenty of funds. The whole system has therefore become little more than a postcode lottery. It might be worth looking at Lancashire for a moment. The borough of Preston faced a shortfall of £824,000 in respect of the scheme, yet just down the road in Blackburn the council had surplus funds. Half the boroughs in Lancashire were getting too much money, and half were not getting enough. Those unfortunate enough to live in one of the boroughs with a shortfall could expect reduced services and the possibility of increased council tax. The concession areas were too small, and widening them will be of benefit.

I am therefore happy to support the order. However, I would like reassurance from the Minister on one or two points. First, can he confirm that the change will apply to all travel concession areas outside of the passenger transport executives and London? Secondly, what will the administrative costs of this change be, and who will bear them? Thirdly, what impact will this have on the revised three-year funding settlement? Fourthly, what does the Minister believe the impact will be on previously agreed reimbursement deals between travel concession areas and bus operators? Is it likely that those will have to be renegotiated?

Pending the answer to those four questions, we are happy to accept the order.

My Lords, the move to the upper-tier authority is long overdue. A plethora of negotiations has fallen very heavily on small bus operators that are negotiating with several local authorities about very small sums of money, and the administrative burden has certainly been far too high.

Will the Minister reconsider the problem of the border areas? The other day, someone from Church Stretton told me that they could go to Norwich on their bus pass but not to Knighton, which is the nearest market town. That may or may not be true, but there are problems in border areas and I hope that, through discussions with the Welsh Assembly and Scottish Parliament, these problems will in time be removed.

The real problem, as the noble Baroness, Lady Hanham, said, is that some authorities are getting more money and some are getting less. The move towards upper-tier authorities will help to put this right, but probably the only way in which to put it right is to introduce smart cards. There will be some time lag from now to when these are introduced. I urge the Government to keep a firm eye on the allocation of money to people who need it to be certain that it is not going to people who do not need it. Will the Minister assure me that this subject will continue to be kept under review?

There is also provision in the arrangements to ensure that bus operators will be no worse or better off as a result of the scheme. However, my attention is drawn to a number of areas that have capacity problems. So many pensioners are travelling that bus routes have to be duplicated at least. I was in Swanage recently when five buses had to be provided to take all the people home who had gone there during the day. This creates very bad peak problems for the operator.

I also draw the Minister’s attention to the fact that the system does not work very well in rural areas, where people make long journeys. People who make journeys within a town generally make fairly short journeys, and one can understand why. Old-age pensioners have found that they can make very long journeys in rural areas, often through attractive scenery; it is an opportunity to have a day out. Again, however, the operators of these local services suffer. Will the Minister assure me that the Government continue to review what is happening so that the burden of cost falls fairly and is adjusted as and when necessary? Other than that, I am quite happy to support the order.

My Lords, I have just one point about concessionary travel to raise with my noble friend as a follow-up to paragraph 7.1 of the Explanatory Memorandum, which states:

“The introduction of free off-peak local bus travel throughout England from 1 April 2008 has given the opportunity for greater freedom and independence to around 11 million older and disabled people. The policy recognises the importance of public transport for older people and the role access to transport has to play in tackling social exclusion and maintaining well-being”.

Many people feel that it would extend still further the opportunity for greater freedom and independence to older and disabled people if the national concessionary bus pass in England and the senior railcard, which entitles holders to a significant discount on rail fares, were brought together. In other words, holders of the concessionary bus pass would also be able to claim the discount on rail fares but would not have to pay what is currently £26 each year for the railcard. Will my noble friend confirm that the Government are aware of this view, which I support? Will he also say whether the Government either have considered it or would at some stage be willing to consider it? In conclusion, I declare an interest as a holder of both a senior railcard and a concessionary bus pass.

My Lords, I had not intended to intervene in the debate until I heard the noble Lord. I declare an interest as a holder of both a senior railcard and a concessionary pass that in London is called the Freedom Pass. This is free: on it is written,

“paid for by your local council”.

The senior railcard costs me £26. Does the noble Lord propose to cancel the £26 payment, to charge for the Freedom Pass, or to have two different regimes?

I would propose—obviously we would need a date for this to come in—that the concessionary bus pass should entitle you to go to a railway ticket office and use it as a senior railcard without having to pay £26 to get a separate card. In other words, it would also serve as a senior railcard to give you the discount that the senior railcard currently gives older people.

My Lords, it has been a very interesting debate, and I thank all noble Lords who have taken part. I will do my best to answer the points that were made in the course of it. I sense from the Committee that we are all agreed on how important the concessionary bus travel scheme is for older and disabled people, and on the need to ensure its sustainability for the future. There is no political difference between the parties on that issue. The Committee understands the benefits of the administrative changes that the order before us will bring about, by harmonising concessionary travel and transport authority responsibilities to enable efficiencies to be realised by —for example—reducing the number of negotiations with bus operators.

As I indicated earlier, the Government have consulted widely on the improvements needed to the current system. The changes being taken forward, particularly with respect to the mandatory concession, were supported by the majority of respondents. The Government understand the concerns expressed by some about the loss of lower-tier discretionary powers under the option that is being taken forward. However, the order does not remove the ability of district councils to consider discretionary travel schemes using the “well-being powers” contained in the Local Government Act 2000. Furthermore, the order does not preclude upper-tier authorities from maintaining or introducing district or local-level discretions—for example, where there are differing needs within different parts of a county. Neither does it preclude district councils from providing funding to county councils to administer discretionary concessions on their behalf.

The Government acknowledge that there will be financial implications for both lower-tier and upper-tier authorities as a result of the changes being introduced. It is expected that from April 2011, all funding for concessionary travel will be provided to local authorities via the formula grant funding system. Therefore, it is not possible to consider the financial implications of this change at an individual authority level in isolation from the wider local government finance settlement. I will address more specifically the point raised by the noble Baroness in a moment.

The Department for Communities and Local Government will consult later this year on how the financial implications of the changes will be taken forward as part of the overall consultation on the next local government finance settlement. These changes provide an opportunity to look again at how the totality of funding for concessionary travel is distributed from April 2011. We will also be able to look at the issues that the noble Lord, Lord Bradshaw, raised.

I shall deal with some of the questions that were raised in the discussion. The noble Baroness, Lady Hanham, asked whether the order impacts on London or the PTEs. The answer is that it does not impact on London, but it does impact on the metropolitan districts in PTE areas. They will no longer be able to enter into discretionary schemes under the 1985 Act. We expect administrative costs to be minimal in terms of transitional costs but, if the counties feel that they will incur any additional costs in 2010-11, the DfT is willing to consider that. Overall, however, we estimate that the changes will generate approximately £3 million in efficiency savings each year.

On special grant, by comparing concessionary travel spending in 2007-08 and 2008-09, we have been able to estimate where there might be funding shortfalls and where some authorities might have been receiving excessive grant. As it transpires, the vast majority of authorities have received sufficient grant funding to cover the costs of the recent improvement in the statutory minimum concession. However, we are aware that around 30 authorities out of the 264 which now receive the grant may have a genuine cause for concern over the level of grant they have received, which is the point made by the noble Baroness. We decided that the fairest course of action was to consult on a revised grant distribution for the final year, 2010-11, of the original three-year settlement. That consultation process began on 4 November 2009 and closed on 30 December. Our aim in this work was to deliver a fairer distribution, but to minimise the impact on local authority finances by changing as few payments as possible. Where grant payments have been reduced, the new distribution still leaves those authorities which benefited from the original distribution receiving more than sufficient funding to meet the additional costs of the new statutory minimum concession in 2010-11.

I hope that the Minister will be able to answer a question, although I am happy for him to write to me. A curious aspect of the scheme is that it seems that a negotiated settlement can be reopened in the third year. How often does this happen? Is this normal practice or was it quite unusual in these circumstances?

I understand that it is something that is possible with the special grant formula. However, if it would be of help to the noble Baroness, I will write to her with a more detailed explanation.

The noble Lord, Lord Bradshaw, raised the question of border journeys. As we have heard, this affects people living in, say, Craven Arms wanting to do their shopping across the border in Wales. The order does not impact on the ability of local authorities to implement discretionary cross-border schemes, other than that, from April 2011, changes to these schemes will need to be agreed with the relevant upper-tier authority in England rather than with the district authority. We hope, therefore, that people will be no worse off as a result.

I turn to the question of “no better off and no worse off”, also raised by the noble Lord, Lord Bradshaw. I remind the Committee that travel concession authorities are required by law to reimburse bus operators for carrying concessionary bus travellers on the principle that the operators are no better off and no worse off by taking part in concessionary travel schemes. The existing reimbursement arrangements involve a need to make a number of assumptions and estimations with regard to matters such as average fares and the number of trips that would have taken place in the absence of a concession. This can make the negotiation of reimbursement terms quite complicated, as I am sure the noble Lord will recall from his days of running a railway and similar considerations applied there. The department is considering options for improving the current method of reimbursing bus operators for providing the statutory minimum concession, and we hope to implement any changes at the same time as the administrative reform in April 2011.

My noble friend Lord Rosser asked about the senior railcard, while the noble Lord, Lord Jenkin of Roding, in a most welcome intervention, raised the same issue. We are aware that there has been a lobby—led, I think, by the National Pensioners Convention and some trade unions—for the possibility of combining the senior railcard with the concessionary bus pass. I think that they had in mind, as my noble friend Lord Rosser indicated, that the senior railcard would effectively be merged with the concessionary bus pass, and the concessionary bus pass would carry with it the entitlement to the sort of discount on railway travel that the senior railcard does.

Research was carried out on this in 2003 by Oxford Research, which indicated that journeys made by the senior railcard appear to be revenue abstractive, and become generative—worth while for the train operators—only if you include the revenue generated by the sale of the card. However, the Government are aware that there is great interest in this issue and that people are asking for the roles of the senior railcard and the concessionary bus pass to be considered. We are considering how best to take this forward and what further evidence might be required.

The noble Lord, Lord Jenkin, raised the question of the Freedom Pass in London, which is available to all eligible older and disabled people whose sole or principal residence is in London. Residents outside London, but in England, are now eligible for the England-wide bus pass and therefore can use that pass to travel on buses when they visit London.

I do not think that the noble Lord is able to use his bus pass in Scotland. I do not think that it entitles him to free travel on buses there.

I am sorry—it may have been some months ago, but I certainly did. My wife has relations who live in Edinburgh, and when we got the bus from Waverley station to where they live, I asked, “Am I entitled to use this pass?”. The driver said, “Yes, of course”.

That is probably because it is granted on a discretionary basis. I had exactly the opposite experience in Cardiff two weeks ago when I attempted to use my Worcester bus pass and was told very firmly that it did not operate outside England.

I hope that I have allayed concerns about the ability of local authorities to maintain the existing discretionary enhancements that are provided for residents, and that I have also made clear that the financial implications of the changes will be considered alongside other changes being made in the overall finance settlement for local government. I hope that the Committee will agree that the changes being implemented by the order will assist in securing the sustainability and the long-term life of this hugely popular scheme for the future. I commend the order to the Committee.

Motion agreed.