Rainbow Travel runs a minibus service to take passengers into Harrogate and York for their weekly shop, but its owner says it is in danger of being cancelled unless arrangements can be made.

Harrogate Council has said the bus company, which calls at Nidderdale, Hampsthwaite, Newby, Weeton, North Rigton and Scotton, is not providing value for money.

Council transport bosses claim the fares are significantly higher than other companies and it has told Rainbow Travel it will stop its funding in two months' time.

Bus owner Peter Ingham has pledged to look at extending his routes and timetables, revamp his fares scale and promote his service more widely in an attempt to address the council's concerns.

Mr Ingham said: "This service is a lifeline to most of our customers. When the concessionary fares scheme was introduced, we were told we would be no better or worse off. But we are 38 per cent worse off.

"I am prepared to make all the changes they want, but I don't know if I can stay in business."

Under the current scheme, pensioners and disabled residents can travel for free on community busses, such as Rainbow Travel which has 120 regular users.

The company can then submit its receipts to Harrogate Council, which will reimburse around two-thirds of the fee.

But the council's cabinet member for planning and transport Don Mackenzie said tax payers should not have to fund expensive "bespoke" shopping trips to York when the service could be provided much cheaper.

The council has now written to Rainbow Travel, saying it will stop funding its concessionary fare travel in mid-October unless a host of changes are made.

Coun Mackenzie said: "In some cases the fares are far, far higher than some of the others and he was also starting his service in several unusual places rather than in a central location in Harrogate.

"We have to make sure we are spending council tax payers' wisely but we are optimistic and hopeful that he can resurrect his business in an acceptable way."

Graham Smith, from Hollins Lane, Hampsthwaite, said Rainbow Travel provides an essential service which enables many old people to maintain their independence and Mrs Allen, of Windsor Lane, Knaresborough, said people will struggle to get to a supermarket without this "valuable aid".

Mrs Allen said: "Harrogate Council is encouraging people to use public transport but these routes do not get us to where we want to be without some walking involved."