THE row over free bus travel for pensioners in Lancashire has intensified after a council refused to hand over surplus cash — and vowed to spend it on other services.

Pendle Borough Council has withdrawn from a county-wide agreement over the administration of the travel scheme.

Council bosses plan to keep the £400,000 surplus and spend it on other services, saying the money was not ring-fenced.

Critics have accused Pendle councillors of breaking a ‘gentleman’s agreement’ — but they said they would lose out if it had not taken the action.

While some councils look set to end up with a cash surplus from the money given to them by the Government for the scheme, Blackpool could be left with a £1.2million shortfall because of the rules over who picks up the bill.

Other borough councils in Lancashire expected to make a surplus now face a dilemma about whether to go it alone or subsidise the loss-making regions.

Bosses stress that whatever the outcome of the talks, the free travel scheme for the over 60s will not be affected in the short-term.

Councils have to pay for a single leg of the journey which leaves their patch.

Therefore, popular destinations such as Blackpool are facing a deficit as it has to pay for the return journey sending home the many tourists descending on the resort.

Blackpool Council is facing making cuts to its general services to plug the gap.

In an arrangement similar to the doomed Parkwise parking ticket arrangement, it was expected the 14 district councils would pool their resources and County Hall would administer everything centrally.

Lib Dem Pendle councillor Tony Greaves said his council was expected to make £385,000 from unused grants, making it worthwhile to go it alone.

He said discussions were underway with neighbouring authorities to set up a new administration for the project, which the government imposed on councils from April 2008.

He added: “If we continue with a Lancashire-wide scheme we would lose out very badly.”

Blackpool council leader Peter Callow said “We had a gentleman’s agreement, but I can’t blame Pendle.

"We didn’t think it would end with such an imbalance.”