Public Transport (Financial Inducements) (Hansard, 16 February 1994)

§ Mr. Freeman

It is not Government policy to offer travellers direct financial inducements to use public transport. The Government believe that the prices people pay for transport should reflect the costs and benefits of their use. However, local authorities have discretion to provide concessionary fares for pensioners and some other groups of people, which are funded with central Government assistance.

There are also substantial grants and subsidies available to public transport operators. In 1992–93, British Rail received £1.15 billion in PSO grant, representing an increase of 40 per cent. in real terms on 1991–92. The 1993 autumn Budget settlement will provide nearly £3 billion in support to London Transport over the next three years. This includes funds for the Jubilee line extension.

The bus industry will also benefit from fuel duty rebate. In 1993–94 this will total around £200 million. Bus operators can also reclaim all VAT paid on the pump price of fuel provided they are VAT registered. VAT on passenger transport is zero rated. The Government are also working with the bus industry and local authorities on ways to make bus travel more attractive, for example through traffic management measures to speed up journey times.

The Government have also introduced other measures which should indirectly encourage the use of public transport services. These include the commitment in the 1993 autumn Budget to increase road fuel duties in future Budgets by at least 5 per cent. in real terms which should act as an incentive to road users to minimise their transport costs through the use of more fuel efficient vehicles and, where appropriate, the use of public transport alternatives.

In addition, central Government and local authorities are carrying out research on the feasibility of city congestion charging. If implemented this could significantly improve the viability and attractiveness of public transport.