The Liberal Democrats force a parliamentary debate on the concessionary bus fares scheme.

Norman Baker (Lewes) (LD): I welcome this important debate and thank the Government for making time available for it. I agree with the Minister, who said that the scheme is welcome. It will tackle social exclusion, help the environment and enable people who would otherwise be in their houses to get out and travel. All those outcomes are good. I do not subscribe to Mrs. Thatcher's view that anyone over 30 who uses a bus is a failure, as she said on one occasion. I am happy that people over 60 use buses, as do people of my age.

The Government have managed to reverse the decline in bus usage, as the Minister said. That, too, is welcome. Bus journeys declined from 9 billion journeys a year in the 1970s to 5 billion in 2005-06-a cut of almost a half. The concessionary fares scheme will enable that to be reversed. All that is good, but the problem for the Government is a problem of success. Large numbers of people will use buses-far more than the Government imagined-and local authorities will have to pick up the bill because the increase in funding that the Government have made available, significant and welcome though that is, is not equivalent to the costs that local authorities will have to pay. There is a shortfall.

I should tell the Minister that I conducted a survey of what she calls travel concession authorities. Well over half of those responded to my survey. Of those, almost half of the councils said that they were underfunded. The hardest hit councils were underfunded by £1.7 million. Those were Brighton and Hove, and Nottingham. That is equivalent to council tax rises of £40 per family. Many councils reported problems, as we have heard from hon. Members intervening on the Minister and from the Conservative Front-Bench team.

Mr. Martlew (Carlisle): The hon. Gentleman is generous in giving way. He said that about 50 per cent. of the councils responded. Does he think that the other 50 per cent. are doing well out of the scheme, and wanted to keep quiet about it?

Norman Baker: For the record, what I said was that more than 50 per cent. of councils responded, and almost half of those said that they were underfunded. It is perfectly possible that within the allocation given by the Government, some authorities are doing very well indeed, and keeping quiet about it. That is perfectly true. I believe that overall the scheme is probably underfunded by about £60 million. It should be around £270,000 million. Some authorities are doing very well from the allocation, but many are doing very badly indeed. It is crucial that the Minister reconfigure the scheme in the light of experience and take account of factors which, with the best will in the world, she may not have been aware of when the scheme was put together. She and her officials have probably done their best, but the reality on the ground is that local councils up and down the country are telling us that the scheme is underfunded for them. They cannot all be wrong. We have heard the list from the hon. Member for Wimbledon (Stephen Hammond).

Norman Baker: We shall hear of more now, I suspect.

Mark Hunter (Cheadle) : Does my hon. Friend accept that one of the key issues is that the Government have failed to forecast the take-up of the scheme accurately? That is the real crux of the matter. In many places it is manifested by the funding shortfall about which we have heard so much already-not only that, but in areas such as Greater Manchester, which covers my constituency of Cheadle, there is the key problem of the authorities not being able to deal with the applications in time. That has led to lots of constituents telling their MPs that there have been unacceptable delays in the processing of the applications. The Greater Manchester transport authority has now said that it will make the current passes valid for an extra six months, until September this year. Frankly, that will get people from one side of Manchester to the other-not to destinations further afield, although that was one of the principal points of the scheme in the first place.

Norman Baker: My hon. Friend is right: the problem is one of success. The Government have had a huge policy success: people out there love the concessionary bus fares and want to take up the free passes. As a consequence, local authorities are having difficulty coping with the sheer volume, and find great shortages of funding. The Government have miscalculated the allocation to local councils. They may have made their best guess, but that is clearly well out. To compound the matter, they have arranged a three-year formula. That is a good idea when matters have settled down, but to base such a formula on an outcome that the Government cannot possibly predict accurately will in the short term compound the problems of the authorities that will be underfunded.

Julia Goldsworthy (Falmouth and Camborne) : Does my hon. Friend think that the Minister would acknowledge that another problem of the formula is the fact that it does not take into account the number of routes available, although it may take the demographics and potential number of visitors into account? Truro is a hub for many visitors from my constituency, who will park and ride into the town to use the bus scheme, because the routes are available there. That, in turn, gives the local authority additional costs.

Norman Baker: My hon. Friend has made a good point. There are a number of kinks in the system, and they will manifest themselves only as the scheme gets under way. That is happening as local authorities make proper assessments. No one blames the Government for making their best guess, but I am telling the Minister that it is an underestimate by some distance, and there is mis allocation between authorities.

Earlier, my hon. Friend the Member for Teignbridge (Richard Younger-Ross) intervened to ask what the Government would do if it turned out that their best guess was wrong, and the local authorities' predictions were accurate. We have not had an answer to that. The Government need to accept that there has been a problem and correct it at the earliest opportunity.

Mr. Adrian Sanders (Torbay) : Are there any common factors among the authorities that got told my hon. Friend that they were underfunded? From what the hon. Member for Wimbledon (Stephen Hammond) said, it seems that a disproportionate number of seaside resorts are involved. Areas that attract tourists could end up carrying the biggest proportion of the underfunding.

Norman Baker: My hon. Friend is absolutely right. The areas tend to be very attractive: Lib Dem constituencies, for example, are badly affected. Undoubtedly, areas such as seaside resorts and historic towns are affected.

The Minister talked about the funding mechanisms that she was employing. She wrote in a letter to me:

"The Department's recent consultation on the funding distribution offered four formula options based on data that is likely to be closely related to the key drivers of the extra cost...Our proposed distribution formula is based on the most popular option in the consultation responses." She used that latter phrase again tonight. With due respect, I suggest to her that it was not the most popular option but the least unpopular option with which local authorities were faced. Surely the only accurate way of addressing the issue is to recognise the actual costs incurred by local authorities in the scheme that is now to come into force, and ensure that there is a reimbursement process to iron out some of the difficulties. Without that, many local authorities will be well out of pocket-and that situation will be compounded for three years, which would be wrong.

Mr. Hollobone (Kettering): I am listening to the hon. Gentleman with great interest. What is the Liberal Democrat policy on the idea of having fewer travel concession authorities and aligning transport authorities-for example, county councils-with travel concession authorities?

Norman Baker: That is rather a red herring. The transport concession authorities are now in place. Had the allocation been made accurately, and had some of the points made previously been listened to, we would not be in this position. Even if the Government have done the best that they can, they can still put things right. There is undoubtedly complexity in this arrangement, but it still could have been got right. That has not happened, and that is part of the problem. My hon. Friend the Member for Torbay mentioned some of the areas that have lost out, which are indeed seaside resorts. Brighton and Hove is short by £1.7 million, Scarborough by £0.94 million, Southampton by £0.74 million, Southend-on-Sea by £0.7 million, Worthing by £0.6 million, and Torbay, his own authority, by £0.5 million. In other tourist areas, Harrogate is short by £0.77 million and City of York by £6.5 million. My own authority, Lewes district council, is £0.6 million short, and Chester city council is £0.4 million short. Shopping areas such as Nottingham, Chelmsford and Braintree are also well out of pocket. Local authorities all over the country are finding shortfalls, and the Government must answer the question about what they are going to do if those local authorities are proven right.

Let me deal with one or two other relevant issues. Many local authorities faced with unprecedented increases in budget demands will look to make savings, and unfortunately some will look to make savings in concessionary fares. One of the unforeseen consequences of the Government scheme is that local authorities are taking away discretionary concessions and ensuring that some who currently benefit from bus pass concessions will no longer do so. For example, there is a problem with travel between 9 o'clock and 9.30 in the morning. Many local authorities start their services at 9 o'clock in the morning, but are now moving to 9.30 in a desperate attempt to save some money. In Seaford, in my constituency, there is a bus every half hour. The 9.29 bus would previously have been available to constituents with a bus pass, but is now not available: they will have to get the 9.59 bus, half an hour later, which means, in many cases, that they will miss a doctor's appointment or whatever else they are doing in the middle of town. That is disadvantaging certain people who currently have access to bus pass arrangements.

Mr. Roger Williams (Brecon and Radnorshire) : One of the aspects that my hon. Friend has not touched on is travel between the devolved nations and England. Let me point out the difficulty that some of my constituents experienced in travelling from Knighton in my constituency to Hereford, where there is a district general hospital and major shopping centre. They were able to make the trip from Knighton to Hereford, but had to change in Knighton on the way back. The bus company refused to take their concessionary fare, so they were stuck in Knighton-a very fine town, I might say. The explanation is that when all this settles down it will work, but in the meantime my constituents, who expect some co-ordination, are stuck in Knighton.

Norman Baker: I hope that they are not all stuck there. My hon. Friend raises an important point about cross-border issues. He may know, as may the hon. Member for Forest of Dean (Mr. Harper), that residents in Brockweir, which lies on the English bank of the River Wye, are unable to use their concessionary passes on their only local bus service as it runs wholly within Wales, over the bridge from the village. That is an example of the nonsense thrown up by this scheme, which the Minister and her colleagues need to rectify. My right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) also raised the consequences for cross-border services. He will know, as will the Minister, I hope, about Borders general hospital near Melrose. It is on the Scottish side of the border but is the nearest hospital for many people living in England. People who have to cross the border are disadvantaged by the way in which the scheme is operating. That is a key issue.

The position becomes worse when local transport authorities say that they cannot afford to run all the buses that are subsidised, which leads to the ludicrous situation whereby more and more people qualify for concessionary bus passes yet the number of buses that they can use is diminishing. They have the piece of paper entitling them to use a bus but there will not be a bus to use, because local authorities are forced into cutting services. That has not been factored into the equation. Neither has the fact that there will be successful appeals by bus companies. They are keen to make appeals, and of course they will test the water and try to get as much money as possible from local councils. It would be strange if they did not behave in that way.

The Minister said earlier that £6.5 million had been awarded to bus companies from successful appeals, and she took some comfort from the fact that they had applied for £28 million and received only a quarter of that amount. I have to say that it will not provide much comfort to the local authorities paying out the £6.5 million that the other £21.5 million was not granted through the appeal process. That is money that could not have been anticipated, but it has had to be spent by the local authorities. So a number of major problems have been thrown up by the scheme.

The Government have introduced a popular policy that has been well received by the population at large, but we are now seeing the problems that are resulting from its success. The Government cannot close their eyes and say that they have a fair solution that meets all the local demands, and that it is for the local authorities to sort the problems out. The Government have created a mess. I do not blame them for creating the mess, but it is a mess in financial terms, and the local authorities have been lumbered with tidying it up. The Government must recognise that many local authorities are now genuinely well out of pocket, and provide a guarantee that they will review the scheme not after three years but at the end of the first year. If the case can be made to stand up-as I believe it can-that a significant number of local authorities are well out of pocket, and that the overall settlement of £212 million is inadequate, the Minister should pledge to ensure that the scheme will be properly funded in future, and that the costs that local authorities are incurring will be reimbursed.