Concessionary Bus Travel Bill [HL]

My Lords, it is with delight that I return to this subject, not least with the noble Lord, Lord Bruce-Lockhart also present, as if reinforcements were necessary after our debates on the preceding stages of the Bill. I do not have the level of expertise in local government of all three noble Lords who have spoken in this debate, but start by reiterating what I said on Report. Of course I agree with the sentiment that local authorities should be adequately funded by central government for the reasonable and additional costs to them of administering this mandatory concession. It is government policy to ensure that the net additional costs of new burdens that they place on local authorities are fully funded. That is why, when the Budget announcement on the concessionary fares was made, the Chancellor was emphatic about the costs that were involved and predicted those costs for a number of years. He indicated that this was a proper burden on the national Exchequer. The Government are providing up to an extra£250 million of funding per year for the improved concessions that the Bill introduces. This includes a contingency over and above what we currently estimate the actual financial impact of the new concession to be. This is in addition to the£350 million in 2006-07 and the £367.5 million in 2007-08 that we have provided to cover the extra costs of free local bus travel. I hear what the noble Lord, Lord Bruce-Lockhart, says about bus fare inflation, but I remain confident that the overall level of funding will be sufficient. As I have said on a number of occasions, from April next year the Government will provide around £1 billion a year to fund concessionary travel. That will be recognised as an obligation that the Government have clearly undertaken. I think that many in local authorities agree that this funding is sufficient in aggregate. The issue is therefore not how much we have provided and whether we have provided enough, because we believe we have. The issue addressed by the amendment is distribution. We think that the cake is big enough. How do we slice it up to be fair? I note that the amendment has dropped the previous call for the full costs to be funded through a direct annual grant. Noble Lords will recognise why I objected to that, and I appealed to their perspective on local authority finance when I thought that they should withdraw that proposal. Nevertheless, the amendment would require the adoption of a specific grant for funding the mandatory concession by default. There is no other way of implementing the amendment. As I explained on Report, such an approach goes against government policy. We have been supported by local government in moving away from specific grants and instead providing local authorities with freedom and flexibility in how they use their funding. If, as the amendment proposes, central government were forced to fund the full cost of schemes run by local authorities—and I emphasise to the noble Lord, Lord Bruce-Lockhart, that the local dimension is emphatically envisaged for this policy—whether those costs were reasonable or not, where would the local authorities’ incentive be to negotiate cost-effective schemes with operators and to manage overall costs effectively? They would be the negotiators. The Government would be the payer. The implications of offering a full indemnity for costs, which is what this amendment does, would be profound. The existing arrangements contain checks and balances to ensure that public funds are spent wisely: an incentive for local authorities to reimburse cost-effectively by a fair amount and a right of appeal for any operator who believes he has been disadvantaged. This amendment would mean that claims will be made for all costs, whether or not they are reasonable or could have been mitigated. The Secretary of State might also be faced with claims for remote consequential costs such as those costs to an authority of defending operator appeals or the costs of poorly negotiated service contracts that are poor value for money. Noble Lords constantly emphasise their roles in regard to highly responsible local authorities. Therefore, they are surely not supporting an amendment which might lead to such recklessness and a lack of accountability? The system we have now may not be perfect—I almost said ““is not perfect”” but that is too categoric—but it is fair to the taxpayer and operator alike. It is important that we get a good deal for the taxpayer. Giving an unconditional commitment to fund full costs, with no reference to such costs being reasonable, and with the removal of any incentive for efficient negotiation, does not provide that. On Report, noble Lords pressed for reassurance that the Government recognise local authorities’ concerns with the funding distribution for the national concession and are doing something about it. Well, we are. I take on board the point that the noble Lord, Lord Bruce-Lockhart, made. I would not be able to speak so assertively from this Box if I did not know that effective action is being taken. I reiterate that the Department for Transport, the Department for Communities and Local Government and Her Majesty’s Treasury are looking at options for distributing funding for provision of the statutory concession. It is in all our interests to try to ensure that this distribution matches as closely as possible where the costs actually fall. This includes proper consideration of those authorities that have not featured in the debate today but did in our earlier considerations. Those honeypot authorities referred to in Grand Committee and on Report are where special factors obtain. The various options are also being discussed with the Department for Transport’s concessionary fares working group, which includes representatives from all tiers of local government—districts, counties, unitaries and PTEs—and operators. The group meets monthly and is making a valuable contribution to the department's work in considering implementation arrangements for the national concession. We welcome the expertise that its members bring tothe table. In addition, the Department for Communities and Local Government's settlement working group will shortly be starting discussions with local authorities on the grant settlement for the next three years. Consideration of funding the new concession will be taken forward within this proper forum. Statutory consultation will take place over the summer, not in one or two years' time. As noble Lords will see, we are consulting extremely widely on this issue on an ongoing basis and we understand its importance for local authorities. We are confident that the extra funding we have earmarked is sufficient to cover the total extra costs to local authorities. We are also sensitive to set-up costs, which were emphasised by the noble Lord, Lord Bruce-Lockhart, and the department is carefully considering this in dialogue with the concessionary fares working group. Funding is of course important. We do not, however, believe that the best way forward is to address it in the Bill. Surely it is better to allow the department’s, and the Government’s, extensive consideration and consultation on funding to run its course properly rather than binding the Secretary of State’s hands in primary legislation. Time is of the essence in order to hit the 2008 deadline. Finally, the drafting suggested would seem to include an obligation on the Secretary of State to refund local authorities in Wales for reimbursement provided to operators providing concessions in Wales. Since concessionary travel is a devolved issue, it would not be appropriate for us to legislate in this area.I am sure that the noble Lord, Lord Roberts, onthe Liberal Democrat Benches will recognise the importance of this point. This may not have beenthe intention of his colleagues, but it makes the amendment unworkable and therefore even more unacceptable. We of course recognise the concerns that noble Lords have raised on numerous occasions with regard to the Bill. Equally, I would hope that they recognise that we are doing the necessary work to address their concerns. With this in mind, and with the nobleLord having recognised the generosity with which I responded to his previous amendment, I hope that he will show similar generosity and withdraw his amendment.