THE EXTENSION of a free bus fare scheme for pensioners looks like leaving Oxford City Council with a bill in excess of £2m.

From April 1 pensioners will be able to travel where they like within England and Wales for free.

But with the financially-stretched city council already having to making savings of £8.1m, it is faced with having to subsidise hundreds of travelling pensioners from outside the city.

For under the new arrangements the city council must reimburse bus companies for journeys by pensioners from any area, if they use a bus service that starts in Oxford.

A report to council says the reimbursement will have to cover the cost of journeys starting from Oxford "to anywhere in the country", although in reality the situation is more confused.

For it turns out the scheme entitles pass holders to travel for free on local service buses, but not with cross-country coach operators.

It is therefore expected to mean that pensioners would be able to travel for free to places such as Aylesbury but not on an Oxford Tube to London.

But it will mean the city having to meet the cost of many pensioners from Cherwell or West Oxfordshire for example, who might change buses in Oxford.

One factor of particular concern is the cost of bus journeys from the city's park-and-rides.

If many more people come to Oxford than expected, it could have serious implications on future budget plans. The city council is now undertaking a user survey to assess the potential uptake of the new concessionary fare scheme, which will be extended from April 1.

The current, more limited scheme is already costing the city council £1.1m. But a report to the city council's executive board, which meets on Tuesday, warns that the final cost of the new scheme will not be known until it has been in operation for several months. One senior councillor predicted the cost would double.

The financial impact has been made worse because, after considering various grant systems, the Government has gone for the one least favourable to Oxford. The city will receive £500,000 less towards the scheme than it hoped.

Jim Campbell, executive member for finance, said the city council would be submitting two appeals to the Government: one covering the cost of concessionary fares and the second about the size of the grant settlement announced in December. This showed an overall grant increase to Oxford of 2.15 per cent for 2008-9 and 1.25 per cent for the two years after that.

Mr Campbell said: "We believe free bus travel is in principle a good thing. But the Government has not provided enough money to support it."

The current concessionary bus scheme is paid for by local authorities, with the councils in towns or cities to which OAPs have travelled picking up the cost for their journey home.