By Mark Smulian
Concessionary bus fares could open a black hole in councils' finances, after a Department for Transport bulletin raised the prospect of unlimited demand-led costs.
Bus operators will claim reimbursement from the council in whose area a journey is made under the£367.5m scheme.
The DfT bulletin said: 'Local authorities should approach concessionary fares reimbursement as demand-led rather than cash-limited.
'It may therefore be appropriate to retain a contingency fund for higher than expected uptake or additional cost claims.'
The prospect of unlimited claims for free travel has alarmed transport directors.
One said: 'The DfT is fouling this up at every turn and its latest bulletin is an absolute classic and will cause a lot of grief.'
The Local Government Association warned councils would have to cut services if the government failed to fund the scheme sufficiently.
David Sparks (Lab), chair of its transport and regeneration board, said: 'Ministers still need to make their minds up on a way of funding that covers the costs for all councils and we need clarity on this so local authorities can plan for the services they deliver.'
Because reimbursement is by councils where journeys are made - not those where passengers live - councils in popular tourism and retail areas and major cities are threatened with huge bills.
Money has been distributed among councils by the DfT according to numbers of retired people, not by their use of buses.
There are also fears the concessionary scheme will harm the service offered to other bus users and make it hard for councils to secure improved buses as part of traffic reduction and social inclusion programmes.
'If buses fill up with people using free travel, operators can push fares up and just claim reimbursement from councils, which makes bus travel more expensive for everyone else,' the transport director said.