OXFORD'S two main bus operators and the city council are in dispute over the cost of free bus travel for pensioners.

The Oxford Times has learned that Stagecoach and Oxford Bus Company have asked for more money to cover the cost of the concession, which began in April.

The council has put aside £1.95m to fund the service in the 2006-7 financial year, but it may not be enough, because pensioners are making more journeys than predicted.

The bus companies - which by law cannot be any better or worse off through providing the concession service - say they are out of pocket. A consultant is advising the council.

Graham Smith, the council's parking and transport manager, said: "When the free scheme started, nobody was sure what effect there would be.

"We estimated what we thought would happen and put in an interim solution on the basis that if things varied during the year, we would renegotiate. The bus companies should not be better or worse off because of the scheme, but that's almost impossible, so it's a grey area."

He said that bus operators around the country had lodged 44 appeals with the Government to seek higher levels of funding for free fares schemes from councils.

Mr Smith added: "At the moment it's amicable (between the city council and bus companies) and there are a lot of other authorities in a worse situation than us, putting them over budget."

To further complicate matters, the local scheme is to be scrapped soon anyway to make way for a free national service, allowing pensioners to use buses anywhere in the UK free of charge. At present, OAPs living in the city can only travel free within the city boundary.

Elsewhere in the county, pensioners are able to travel free into Oxford or towns in other districts and some neighbouring counties, depending on agreements between the councils and bus operators.

Currently, those over 60 can make unlimited journeys with the city's main bus operators, including Stagecoach, Oxford Bus Company and Thames Travel.

Until April, pensioners paid 30p for a single journey and 40p for a return. It was estimated an extra 500,000 journeys would be made in Oxford in the first year of the free scheme - about 20 per cent more than in 2005-6.

Oxford Bus Company spokesman Phil Ashworth added: "We have commissioned a report from the respected independent transport company TASF, who have come up with a higher figure of reimbursement. So far we have not had a response from the city council."

Although details of the national free travel scheme are still being prepared by the Government, city councillors fear it will cost the authority yet more money.

City councillor Jean Fooks added: "It's a horrendous situation - should we be helping people travel further, or those who can't use a bus at all?"