Concessionary Bus Travel Bill [Lords]

I am grateful for that intervention. It draws attention to two significant things. First, the national scheme will compound the difficulties of financing. Secondly, the hon. Gentleman is right to say that a formula basis of distribution of support cannot inherently deal with the difficulties that we are talking about. There is a difficulty with formula grant support. By its very nature, it cannot pick up the striking local variations that we are likely to see and which will increase as the scheme goes national. The formula approach produces winners and losers. It is in the nature of winners and losers from formula funding support that the losers become clear immediately. The winners, very wisely, tend to keep quiet about it. That there are winners and losers, however, cannot be doubted. It is a direct result of the formula funding. I have studied the Public Bill Committee debates carefully, and that problem exercised hon. Members. In the course of those debates, my hon. Friend the Member for Tyne Bridge (Mr. Clelland) offered a solution, which was to withhold a certain amount of formula grant support in a special pot so that it could be paid out later to mitigate the effect of the variations in take-up. I have thought carefully about that, and new clause 1, tabled by the Conservatives, in a sense reflects that. However, I do not favour that solution for two reasons. First, if we withhold a proportion of grant, it will generate all sorts of knock-on problems. Secondly, the increasing use by local councils of judicial review against the Government will become a significant problem in the distribution of the retained money because the factual basis for that will be challenged. That was the Government’s difficulty in dealing with the problems of Tyne and Wear at the outset in 2006. Had they gone down the path of introducing a special scheme to deal with the special problems of Tyne and Wear—I know that they considered that—there is no doubt in my mind that that special scheme would have triggered a range of judicial reviews by authorities that felt that their position had been worsened by it. Given the particular place of London in this context, London boroughs would undoubtedly have taken the Government to court had a special scheme for Tyne and Wear been introduced. I have recognised the Government’s difficulty throughout the controversy about these matters in the county of Tyne and Wear. Had they attempted to deal with the specific problems facing Tyne and Wear—and similar problems affect other authorities, such as Brighton—legal challenges would have followed immediately, and the whole scheme might well have been unpicked. A rich crop of judicial reviews should not be the object of any proposals made in the House. My amendment would take advantage of the very important clause 9. Clearly, the Government have prepared against some of the difficulties that have been set out becoming serious problems. The clause provides that the Secretary of State can take over responsibility for the financial support of the statutory national scheme to be introduced in April 2008, and the consequential responsibility for reimbursement. I also understand the Government’s concern about negotiations over reimbursement for the purposes of the statutory concessions, local or national. Authorities around the country will deal with different operators, with the result that different methods of reimbursement may be adopted. The Department for Transport is worried that that pattern of variable negotiations over reimbursement may in turn create perverse incentives. The talks may also be influenced by incompetent negotiating skills, or informal collusion between authorities and the major operators in their areas. Those are the difficulties inherent in the reimbursement negotiations, but it is very important to ensure that the standards of reimbursement have common characteristics that apply nationwide. Apart from the very small local operators, the bus industry is now a big national operation made up of three or four main providers. It is extremely important that local authorities work to common standards in their reimbursement negotiations, and that they do not allow themselves to be picked off. They must not accept fare increases for the non-statutory schemes that are being introduced, as they would then trigger consequential increases in the costs of the concession—a difficulty that is built into the present architecture of the way that reimbursement is conducted.