EMERGENCY talks to discuss the funding crisis affecting Scotland's bus industry are to be held next week, Transport Minister Keith Brown has announced.

The meeting on Tuesday will include senior figures in the bus industry, councils and local authority transport partnerships, and follows concerns that cuts to Government subsidies are driving up fares and forcing operators to withdraw routes.

The Herald revealed on Wednesday that a funding shortfall of at least £7 million in the flagship concessionary travel scheme, which offers free bus trips to those aged over 60, disabled passengers and veterans, was likely to add to the problems.

Operators are already reeling from a 20% cut to the Bus Service Operators Grant (BSOG), which subsidises running costs. The cut is due to take effect from Sunday after being announced during last September's Scottish Budget.

The Bus Stakeholder Group was set up three months ago to co-ordinate council investment in bus infrastructure and discuss how to reverse a dramatic slump over the last three years in the number of people taking the bus.

However, following talks with Neil Barker, regional director of First Bus UK for Scotland, and Ronnie Park, managing director of First Glasgow, Mr Brown agreed to put Government funding on the agenda, with a spokesman saying the meeting presented "an ideal opportunity for further dialogue on cost pressures and how Government and local subsidies fit into the wider picture".

Mr Brown emphasised that increased fuel prices were having a significant effect on bus fares. He said: "Bus services are of great importance to the travelling public and we have committed substantial levels of funding to support concessionary travel, keep down fare costs, support the bus network and enable investment in low-carbon vehicles.

"These discussions are a major step forward in terms of finding some common ground and agreeing that next week's Stakeholder Group can deliver more solutions."

Mr Barker added: "I was pleased to meet with the Transport Minister to discuss the pressures faced by bus operators in today's climate, and we had constructive dialogue around a range of issues including the need to have certainty around future funding to allow us to plan our business going forward.

"We were all agreed that the overall aim is to improve bus services and ultimately increase patronage, and I look forward to us working together to take this forward through the Bus Stakeholder Group."

However, a bus industry source said he was wary of the emphasis on fuel costs as the root of the problem. "Yes, it is one of a number of reasons that operators have to put up fares. But so are cuts to BSOG and the cap on the concessionary travel budget," he said.