Free travel to cost £10m taxes

Council tax payers in the Black Country will reimburse bus companies for carrying the elderly and disabled by an extra £10million a year after the region's transport authority lost the right to a court appeal.

Centro, which is funded by seven regional councils, failed to get a High Court judge to overturn a government decision which would make it pay more money to Travel West Midlands and Go Ahead. Centro is legally obliged to compensate bus firms so they do not lose out by picking up free-travel passengers.

But Travel West Midlands and Go Ahead – the largest bus operators in the region – believed the way the cash was worked out was unfair.

Centro lost its court bid yesterday and now has been forced to ask councils for an extra £10million a year as part of its £146million budget for 2008 and 2009.

It applies a "no better or worse off" policy and pays for the transport by taking into account the number of passengers who would have discount passes, or who would pay the full fare if they were not otherwise entitled to free travel. After the Department for Transport (DfT) found in favour of the companies, Centro asked for a judicial review.

In a report to councillors on its committee, Centro said the DfT decision was "fundamentally flawed" and accused the Government of misunderstanding the scheme.

Centro spokeswoman Babs Coombes said: "Centro is extremely disappointed that the Secretary of State has ruled in favour of Travel West Midlands and Go West Midlands and that its legal challenge was not granted.

"Centro believes it was paramount to launch a robust legal challenge in order to protect the public purse and prevent a substantial amount of taxpayers' money being given, it felt unfairly, to private companies. The financial effect of this judgment was provided for in the 2006-07 financial accounts.

"The ongoing implications will be addressed as part of the annual levy-setting process with the districts."