Oxford City Council has ruled out means testing for over-60s’ bus passes, but admitted the scheme had left council finances in crisis.

A national report commissioned by the Local Government Association concluded that free bus passes were an “inefficient” use of public money and should only be available to the less-well-off.

Last year, free bus passes for over-60s cost Oxford City Council £3.95m, or 14 per cent of its total budget, and left it £1.5m out of pocket because of a refusal by the Government to reimburse it for the full amount.

Ed Turner, the city board's member for finance, said: “When you think of everything that the council does, 14 per cent of the money is now being spent on writing cheques to bus companies.

“If we were to pass the whole amount on to council taxpayers, we would be talking about a ten per cent increase in Oxford’s council tax.

“We cannot do that and wouldn't do that, but that's the scale of the problem — we have a whacking great hole in the budget.”

He urged the Labour Government to fully fund the scheme.

He said: “I know how much older people value it. We support the bus pass, and won’t support means testing for it.”

The new report said giving bus passes to wealthier pensioners with cars was not “value for money”.

In May, the chief executive of Go-Ahead Group, which owns Oxford Bus Company, said that giving over-60s a “blank cheque” was “unsustainable”.

But Colin Cockshaw, 68, who in April led a group of over-60s on a journey from Canterbury to York aboard 20 different buses to raise money for St Edburg’s Church, Bicester, said: “If there’s an issue about how it’s being paid for, that’s an issue for Government and local government, rather than for pensioners.

“We shouldn’t be suffering because of the way the system is set up.”