In message , Graham Harrison
writes

If I (with a Somerset County Council pass) travel on a London bus using
that pass, who pays?

The London boroughs. In the same way that if I used my London Freedom
pass in Somerset, then Somerset County Council pay (although local
authorities get quite a substantial government grant towards the cost).

Based on what happened to me when I did it the driver made no attempt
to determine where I was from and unless he was Superman I doubt very
much if he was able to read the pass given that it was in the bit of my
wallet with a little window which obscured the pass enough for him to
see it was a pass and the date on it but not much more. Oh and I
didn't go out of my way to shove it under his nose I just flashed and
he seemed quite happy with that.

In London, the London Boroughs agree a lump sum with TfL (£251 million
for the current year, of which the bus element is £188.6 million).

This payment covers the use of both Freedom passes and National
Concessionary Permits throughout the area. I imagine that it is reckoned
that use of National bus passes within London roughly balances the use
of Freedom passes outside of London, so there is no clearing house
system of passing relatively small amounts of money between councils for
"out of area" use of passes.

I've always assumed that the National Concessionary Permit scheme works
similarly outside of London - local councils agree a lump sum with the
bus operator(s) concerned. No doubt this is verified by means of
sampling, but I doubt that it would be worth collecting data on every
individual journey in order to calculate the precise sums involved.
--
Paul Terry