06 July 2007
Town halls could be forced to scrap some bus services from 2008 because they face a multimillion pound deficit under Whitehall plans to extend free travel for pensioners.
Councils with major urban centres or those with high tourists levels could suffer under central government plans for a national system of concessionary fares.
From next April, free off-peak bus travel anywhere in England will be introduced for pensioners and disabled people. The cost of providing services will have to be met by the council in which the bus is boarded.
But a similar scheme which introduced free travel within local authority boundaries in 2006, has cost councils millions of pounds – and some have been forced to slash services.
The Tyne and Wear transport region, which provides services across five local authorities, found itself £5.4m in deficit last year and was forced to alter 11 bus routes, increase child fares and scrap plans for a travel card system for teenagers.
Teignbridge District Council in Devon has a deficit of £1.3m – a quarter of its budget for services.
Councillor Martin Edwards from the City of Nottingham warned: 'Local government faces an almighty mess if this system is imposed on us.'
The problem has emerged because Whitehall funding, distributed through the Department for Communities and Local Government's revenue support grant, is calculated on a per capita basis.
The government has set aside £300m for the introduction of the national scheme – and claims it will be cost-neutral to taxpayers. But critics say the cash is insufficient and does not match allocations with bus use.
A spokesman for Nexus, the group responsible for bus services in Tyne and Wear, told Public Finance that the area 'faces another bout of cuts or reforms if the government fails to act on the flaws in the current funding regime'.
He added: 'We're home to large urban centres, including the Metro Centre in Gateshead, and will be forced to pay for all concessionary journeys back out of the centre. We also have a higher proportion of retirees who use buses regularly compared with most parts of England – the current funding regime does not account for that.'
David Sparks, chair of the Local Government Association's transport board, warned that while councils supported the idea of free travel, the policy faced 'chaos and confusion' because it was 'bogged down' by ministerial bureaucracy.
The LGA wants the government to allocate funding on a 'per journey' basis, or create a contingency fund for authorities adversely affected by a per capita calculation.
The Department for Transport, which is co-ordinating the government's plan alongside the DCLG, reiterated that the details of the funding mechanism had yet to be decided. Its consultation on the proposal ends shortly – leaving councils little time to implement the new regime.
'We have made clear that we are committed to funding any new burdens that the national concession imposes on local government,' a DfT spokeswoman said.
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