WORCESTER’S neighbouring councils made huge profits from a key government scheme last year while the under-funded city had to slash services, new figures reveal.

A report obtained by Worcester MP Mike Foster has confirmed previous predictions that government grants for the free bus pass scheme for pensioners were not distributed fairly between Worcestershire’s six district councils – and that the people of Worcester were the big losers.

The funding shortfall hit the city hard, with Guildhall bosses forced to cut spending on services mid-way through last year.

Although the final figures were not as bad as predicted – at one point city chiefs feared losses of nearly half a million pounds – the report shows Worcester was still under-funded by almost £150,000.

By contrast, surrounding areas benefited hugely – Wychavon profited by £166,000, Malvern Hills by £155,000, Redditch by £95,000 and Wyre Forest by £70,000.

But finance chiefs at those authorities – which, like Worcester, are all Tory-led – have rejected calls for any cash to be handed back.

Labour MP Mr Foster said this was simply unfair.

“These figures demonstrate exactly what happened last year,” he said. “The county as a whole is getting more money from the Government than it needs for this. But while Worcester made a deficit on the scheme, Malvern Hills and Wychavon made huge profits – they are cheating the taxpayers of the city.”

Under the scheme, introduced in April 2008, bus companies charge the local council a set amount each time a pensioner catches a bus for free – regardless of the distance travelled.

But it has become clear that as the county town, Worcester’s costs are far higher than those of neighbouring authorities, as it is charged every time a visitor from the surrounding area uses a city bus.

Mr Foster denied the Government was to blame for wrongly allocating grants.

“The Government has clearly given Worcestershire more than it needed,” he said. “But this was the first year of a new scheme – it was impossible to predict the exact number of journeys in each individual district within the county.

“Now we have the full-year figures it’s time it make the necessary adjustments.”

Mr Foster has found an unlikely ally in the city’s Conservative leader, Councillor Simon Geraghty.

Coun Geraghty said all six council leaders will meet next month to discuss the issue – and admitted the repayment of cash “would be a topic for discussion”.

But he said: “I don’t want to start this debate by finger-pointing – I want to solve the long-term problem. This should be a centralised scheme administered at county level. Then, if there are savings and losses, they are distributed fairly.”

But council chiefs at the other authorities, who spent much of last year denying they would make any profit, show no sign of relenting.

Wychavon managing director Jack Hegarty said: “We regard this as part of the ups and downs of government grant allocation systems.”

Mr Hegarty said Wychavon had lost money on other grant allocations, such as for free swimming for children and pensioners.

Malvern Hills head of finance Andy Baldwin said there was “no case at all” for handing back any cash, insisting Malvern has been under-funded in previous years.

“This just redresses the balance,” he said.

Wyre Forest leader John Campion, who last year “totally refuted” predictions his council would profit from the scheme, declined to comment until he had spoken to his head of finance.