MCGILL'S stand to lose hundreds of thousands of pounds leading to cuts in services because of the spiralling cost of free bus passes.

The boss of the Greenock-based company, Ralph Roberts, has warned of the impact of a 29 per cent reduction in Scottish Government funding for the popular concessionary travel scheme.

Introduced by the then-Scottish Executive 13 years ago, the flagship policy allows pensioners and disabled people to travel on buses for free.

Operators usually receive 56 per cent of the fare from the government but that figure is being reduced.

Bus companies will now have to foot a bill of around £6 million during March - the final four weeks of the financial year - because the government's £202m budget for 2018/19 has almost been used up.

It means bus companies now have to make tough decisions to try and cover the shortfall.

Speaking on the BBC's Good Morning Scotland programme, Mr Roberts said: "Effectively it leaves a funding gap. "The overrun of budget range is £4.7m to £6.4m so the share for McGill's runs into the hundreds of thousands of pounds, the shortfall.

"The government has a policy and they really need to fund their policy properly.

"Another policy is free prescriptions, so if we talk about free travel and free prescriptions, they wouldn't say to a chemist shops 'we're going to cut your payment by 29 per cent in the last month of the financial year and let you pay for all those medications you dispense yourself'."

The McGill's chief says operators now face the difficult task of trying to trim fat from a 'fairly lean' bus industry, which he added has suffered from falling passengers numbers because of factors like the decline of the high street, fluctuations in the jobs market and squeezed household budgets.

He said: "Footfall’s been declining on buses since 1952, there was 20 years of relative stability but the last four years have been pretty tough so most bus companies have cut out wastage and they’re fairly lean organisations so the only way to do it is the direct costs and that’s things like cutting bus routes."

Further fare increases have been ruled out for fear of pushing people 'further away' from buses so routes will now come under the microscope.

Government officials insist the concessionary scheme is being properly funded.

A Transport Scotland spokesperson said: "We are continuing to spend over £250m a year to support our vital bus industry, working with operators to keep fares at affordable levels and providing free bus travel to older and disabled passengers.

"Last year we announced that there will be no change to the age of eligibility and that the scheme will be extended to include carers of under-fives with disabilities. "It is a principle of the scheme that operators should be no better or no worse of as a result of their participation.

"The model used to set reimbursement terms was agreed with Confederation of Passenger Transport Scotland and has been used since 2013/14. "It is based on our agreed projections of fares increases and numbers of journeys taken. "A budget cap is the norm and it safeguards taxpayers interests. "Without it, there would not be a legal mechanism to control expenditure under the scheme."