BUS passengers are facing a fresh round of service cuts over the next three months as a funding shortfall in the Scottish Government's free travel scheme widens, industry sources have warned.
Operators have been told privately that public money available to reimburse them for carrying elderly and disabled passengers could be as much as £15 million below the costs of running the flagship scheme by the end of this financial year.
It is expected to put a further squeeze on their ability to run less lucrative services in the evenings and at weekends and could see some smaller operators put out of business. "There are a number of bus companies that are already teetering. This could push them over the edge," one industry source said.
"The actual shortfall will depend on what happens with the weather. If we get another really bad bout of snow and ice, that will actually help as fewer people will be travelling. But we've been told that we could be as much as £15m out."
It comes as a review of the Concessionary Travel Scheme, which offers free bus travel to those over 60, disabled passengers and veterans, looks set to recommend a cut of up to 13% in the rate at which bus companies are reimbursed. Steeper cuts of up to 22% appear to have been ruled out.
Despite a succession of official reviews finding that free bus travel was unsustainable and, according to Audit Scotland, could cost more than £500m by 2023 as Scotland's elderly population increases, ministers fought off suggestions that access to it should be restricted.
Funding was cut from £192m a year to £185m in 2011 but then restored to its 2010 level and subjected to a three-year freeze from 2011 to 2014. The cap meant that bus firms had to repay between £7m and £9m to the Scottish Government last year under a claw-back mechanism that comes in when costs exceed the available funding.
The latest difficulties follow a torrid year for bus passengers, who have seen fares rise above inflation rates while routes have been cut. Figures published by the Department for Transport show that bus fares in Scotland went up 5% in 2012 while the total miles travelled by registered bus services fell by 4%.
Last year's cuts appear to have been concentrated on subsidised routes, which are unprofitable but considered "socially necessary".
According to the DfT figures, 91% of the reduction in bus mileage was among council-funded routes while commercially-operated services, which account for 76% of the total, dropped only marginally. Under the terms of the national Concessionary Travel Scheme, which was established by the then Labour/Liberal Democrat coalition in 2006 in place of a number of council-run schemes, bus firms could claim 73.6p reimbursement for every £1 nominal fare under a formula designed to ensure they were "no better or worse off" for carrying the passengers.
This reimbursement rate was cut to 67p in 2010 and reviewed by Transport Scotland last year.
The Confederation of Passenger Transport (CPT) Scotland, the industry body for bus and coach firms, is due to meet government officials next week to discuss reducing this rate, with the likely range being between 58p and 62p, sources said. A spokesman for CPT declined to comment ahead of negotiations.
A spokeswoman for Transport Scotland said: "The Scottish Government has established an impressive record in funding bus travel, providing some £250m annually to support a range of schemes including Bus Service Operators Grant, Concessionary Travel and the Scottish Green Bus Fund."
Discussions with the bus industry to agree an "appropriate" reimbursement rate for the 2013/14 financial year were continuing, the spokeswoman added.