Sunday, January 18, 2009

The concessionary fare scheme for buses - good news and bad news

I was intrigued by a question that Ros asked in the Lords recently, regarding the impact of the extension of the concessionary fare scheme for buses across England, in terms of local government finance. And so I did some research...

Firstly, I was keen to find out what the grant position was for the three years ended 31 March 2011. As it turns out, the grant is due to increase by 2.36% in 2009-10, and by 2.76% in 2010-11. Why is this good news?

Here is the November prediction for forward inflation, courtesy of the Bank of England... As you can see, the Bank is predicting inflation as averaging about 1% over the two years. Therefore, presuming that grants remain at the level stated, there will be a little bit of slack available.

And that's where the good news ends. Sadly, there appear to be a number of cases where local councils are finding that the costs exceed the grant quite considerably.

Ros and I visited Teignbridge last year, and Cllr Alan Connett noted his concern about the looming gap between the grant and the additional expenditure that was being incurred. If spending turns out to exceed the grant, local councils will be forced to make choices as to what to cut, in order to meet the difference.

Given that District Councils are bearing the brunt of the cuts in local government grant support, and that capping will be applied to any council seeking to raise its precept by more than 5%, this will be all the more difficult to manage. Worst of all, it is virtually impossible to manage demand, especially for those authorities which attract large numbers of tourists.

I sense from Lord Adonis's answer to Ros's question that he really didn't fancy answering the question because, in answering the question, he will demonstrate that, once again, the Government has bought some short term popularity at the cost of locally provided services. And of course, who will be held accountable? Yes, you guessed it, the local councils that will have to cut services to fulfil someone else's gift...

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