Yes, indeed, and the welcome new move forward will have a similar effect on ridership. Some 36 million bus journeys a year are subsidised under the current scheme in Tyne and Wear. It was estimated after the Chancellor’s announcement that the additional cost to the Tyne and Wear passenger transport executive of free local travel would be £20 million a year. The Minister said that the Bill applies only to buses and not to other modes of transport, but matters are not quite that simple.
In Tyne and Wear, we have the publicly owned and run Metro system. At the time, it had a charge of 50p to the eligible concessionary travellers. If we had left it as it was, it would have meant that buses would be free, but that it would cost 50p to travel on the Metro. That would have had two effects: first, it would be unfair to those who rely heavily on the Metro to travel from the east end of Newcastle into the centre. They would have had to pay, as opposed to people in the west end of Newcastle where there is no Metro who would have had free bus services. That could not be tolerated.
Secondly, such a system would have had a detrimental effect on the Metro itself. If there were a charge to travel on the Metro, but buses were free, people would obviously be tempted to move their mode of travel from the Metro to buses. Bus operators would be tempted to compete with the Metro, and they would be receiving the benefit of the additional public subsidy, while the Metro system would suffer from the loss of ridership, something that a Labour Government would not want to encourage.
On 28 November 2005, my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck), then a Minister at the Department for Transport, wrote to hon. Members saying that
“we are providing an extra £350 million” to finance the scheme. “We” was used rather riskily because it was not the Department for Transport that was providing the money. The Government were providing the money through what was then the Office of the Deputy Prime Minister, which we now know as the Department for Communities and Local Government. It was to be distributed through the revenue support grant mechanism.
By the way, there was no attempt at the time by the Department for Transport to negotiate anything in return from bus operators who were already receiving £1.3 billion a year in public subsidy. The local government revenue support grant system is not fit for the purpose of distributing the money. Calculations on the basis of population are okay for most services, but not for the particular service that we are discussing. It does not take account of the high levels of use, low car ownership and higher dependency on public transport in areas such as Tyne and Wear.
Tyne and Wear was told to expect £12.7 million from the formula grant system, which was £7.3 million short of the estimated cost of introducing the new scheme. Meetings with Ministers and civil servants were to no avail and we were told that it was impossible to correct that anomaly through the revenue support grant system. I thought that that was a rather curious argument because the education system already has a system for financing schools on the basis of bums on seats. I still do not know why we cannot have such a system for public transport. The result was that in 2006-07, £2 million had to be taken from Tyne and Wear passenger transport authority balances. There were cuts in secured bus services, which was rather bizarre as it meant that we were saying to elderly and disabled people, “There is a new free travel scheme, but the services on which you most rely—the subsidised, secured services—will have to be withdrawn in order to pay for it”. There were cuts in subsidies for students and young people, which was unpopular with elderly people, who felt that they did not want the advantage of free travel if it was at the cost of cutting travel for young people and students. Indeed, some elderly people feared that when they travelled on buses there may be some backlash from young people as a result. Thankfully, our young people are more sensible and that has not happened.
That was the situation in 2006-07. During 2007-08 there will need to be further adjustments to continue the current scheme. In total, by the time we get the national scheme in 2008, it will have cost Tyne and Wear—one of the poorest regions in the country—some £9 million to run the Government scheme up to the introduction of the national scheme.
I was one of the first people to call for a national scheme. Indeed, days after the Chancellor’s announcement, I suggested to him that the scheme should be extended nationally because the way it was being proposed at the time was nonsense. I welcome the increased flexibility, but, if the same formula for distribution is to be employed, which the Bill suggests is the case, the funding problems will remain. I still have not given up hope that some way will be found to refund Tyne and Wear the £9 million that it has lost over the past two years.