ITEM CMDGI3
CABINET MEMBER FOR GROWTH & INFRASTRUCTURE 2 JULY 2009
CONCESSIONARY FARES FOR ELDERLY AND DISABLED PEOPLE
Report by Head of Transport
Introduction
1. The Department for Transport has issued a consultation on ‘possible changes to the administration of concessionary travel’; the full document is available in the Members’ Resource Centre. The deadline for response is 21 July 2009.
2. Government is considering changing, probably from April 2011, the tier of government which is responsible for administering the national scheme under which people who are elderly or disabled are given free travel on local bus services. At present it is administered by district councils (the Travel Concession Authority or TCA). Alternatives considered are instead giving the responsibility to county councils, regional government or national government. The consultation questions are ‘open’; however, it is clear from the text of the consultation that the government’s preferred option is to give responsibility to county councils. The outcome of this consultation could thus have a major impact on the council and it is important that the county council presents a robust response to it. Your officers understand that each Oxfordshire district council is likely to present a separate response.
Existing Situation
3. In two tier authorities district councils have for many years had the role of offering travel concessions for elderly and disabled people on local bus services. Prior to 2001 it was discretionary, but most districts did offer a scheme. Within Oxfordshire details differed by district – and there were changes from time to time within each district – but broadly speaking by 2001 Oxford City Council offered a flat fare concession on buses, whilst the rural districts offered eligible people the choice of a half fare pass usable on local buses only or tokens usable as ‘surrogate cash’ on all public transport including taxis and community transport.
4. From April 2001, under the Transport Act 2000, it became compulsory for district councils to offer at least a half fare pass, valid for travel on local buses within the district of residence, between the hours of 09.30 and 23.00 on Mondays to Saturdays, and all day Sundays. From April 2006 this changed to entitlement to free travel – but still only within the district – and from April 2008 it became compulsory for holders of passes issued anywhere in England to be able to travel free on local buses anywhere in England between the hours specified.
5. The strict terms of the legislation require that bus companies carry free any holder of a valid pass; that TCAs must issue passes to any resident of their area who appears to them to be eligible and that TCAs must reimburse bus operators for all journeys made using a valid pass. Prior to 2008 the reimbursement was payable only for journeys made on a pass issued by that TCA (in other words only for journeys made by eligible residents of the district) but from April 2008 this changed to require each TCA to reimburse all pass-holder journeys starting in their area, irrespective of the place of residence of the pass-holder.
6. The legislation is generally held to require that bus operators be ‘no better and no worse off’ as a result of the existence of the concessionary scheme. This means that they do not get the full value of the fare which the pass-holder would have paid had they been an ordinary passenger; the reimbursement rate is reduced (typically by 50% or more) to reflect the fact that some pass-holders would have chosen not to travel had they had to pay full fare. Each TCA calculates its own reimbursement rate; bus operators are constantly unhappy with the rates paid and (nationally) there are several hundred appeals a year through the independent appeals system, including several in Oxfordshire.
7. The pre-2001 discretionary power still exists and is used by many TCAs to offer enhancements to the national minimum. Locally, Oxford City, West and South Oxfordshire allow free travel from 09.00 (whilst Vale and Cherwell apply the national minimum of 09.30); Cherwell, West and South Oxfordshire offer travel tokens (or, in West, a Senior Railcard) as an alternative to a free bus pass; Oxford, West and Vale allow free travel on Dial-a-Ride services as well as local buses. The financial impact of these discretionary enhancements is small compared to the national free concession, but inter-authority differences have tended to generate much controversy.
Problems with the existing system
8. The consultation document lists 6 “problems with current arrangements”. · Scheme variation across TCA boundaries: this causes confusion both for some pass-holders travelling into another district and drivers of bus services which cross district boundaries. It is of course due to discretionary enhancements rather than to the national minimum scheme. · Too many negotiations: bus companies have to put considerable resources into negotiating with different TCAs; resources which would be better spent on developing bus services. There are also significant staff implications for TCAs. · Lack of capacity in TCAs: some small authorities are said to have less ability to manage the complex processes now involved. · Difficulty of accurately funding TCAs: since funding for concessionary travel is by formula rather than repayment of expenditure incurred this is a significant concern for local authorities (discussed further in the Financial Implications section). The consultation document, in your officers’ view unreasonably, says the system gives TCAs “freedom and flexibility to decide their own funding priorities”, despite the vast bulk of the scheme costs being non-discretionary. · TCAs not aligned with Transport Authorities: the County is of course the Transport Authority. · Conflict: since bus operators are constantly dissatisfied with reimbursement rates, “relationships between operator and authority can be jeopardised for many months”.
9. The consultation document suggests that the first four of these would be eased by the scheme being administered at a higher tier of local government. This might be true in Oxfordshire, but would make much less difference elsewhere where most urban authorities are Unitaries. In particular, the authorities where government funding is currently considered to be grossly inadequate are these urban ones which, since 2008, reimburse many more trips. In your officers’ view these four problems would all best be addressed were the scheme administered nationally, and they provide strong arguments for national administration.
10. The fifth concern does point towards administration at county level. For example it would slightly ease introduction of a county smartcard system were there no need to negotiate separately with each district on that part of the scheme relating to concessionary fares. (However the main objectives of a smartcard scheme would be likely to be to speed up bus boarding and simplify ticket purchase for those who do have to pay for their bus travel, and it is quite likely that any scheme would be introduced commercially by the bus companies rather than the Transport Authority anyway).
11. On the other hand, the final concern points to ‘anybody but the Transport Authority’ as administrator, since it is arguably the Transport Authority which has most need to maintain good relations with bus operators to implement its transport policies and achieve good value bids for subsidised services.
Other Issues
12. Availability of local offices to handle pass issue and enquiries may be an argument in favour of lower tier authorities as administrators. However, in practice some Oxfordshire authorities accept postal applications only, with no apparent problems; they could be handled in this way at any level of government.
13. Changes to reimbursement arrangements consequent upon a change of administrator would be likely to create ‘winners and losers’ amongst operators, which could impact upon the need for bus subsidy in some cases. This represents a risk, but is difficult to predict and therefore cannot effectively be taken into account.
14. At the moment, a recorded increase in travel by pass-holders on a particular local service tends to feed back into a reduction in the reimbursement rate for that local operator; this provides a disincentive to improving services in ways which might increase pass-holder travel. A single national reimbursement arrangement would remove this disincentive.
15. It is difficult to see how, practically, discretionary enhancements could be managed other than by the same tier of government as administers the main scheme. The different discretionary arrangements in different districts at present would be difficult to maintain by any higher tier authority, which would be faced with the option of ‘levelling up’ to the best at higher total cost than at present, or ‘levelling down’ to the lowest with disbenefits to some individuals in some districts. This represents a reputational risk.
16. Many pass-holders are from the less well-off sectors of the population and/or have a disability, and the existence of the concessionary scheme thus benefits people in these categories. It also encourages travel by bus rather than private car, thus benefiting congestion and the environment. However, the extent of these benefits does not change whoever administers the scheme.
Conclusion
17. The existing administration arrangements have their faults, but most of these faults would not be greatly changed by transferring administration to county level – and there would be the inevitable difficulties of managing a transition. The government’s own arguments for change mostly point towards administration at national level being the best solution (it is difficult to see any argument for administration at regional level instead of national, though it might have benefits over local authority administration).
Financial and Staff Implications
18. There are two main areas of cost involved in administration of concessionary travel: the cost of procuring, issuing and administering passes; and the cost of reimbursing bus operators. Both are substantial for a scheme offering completely free travel using expensive smartcards (which are a national requirement).
19. The Government has paid additional funding to TCAs in at least three tranches, corresponding with the changes in national minimum requirements in 2001, 2006 and 2008 respectively. In addition, it was understood that the amount of the first tranche assumed that authorities were already running a discretionary scheme, which was already recognised to some extent in authorities’ formula funding. The consultation document maintains that the total government funding for concessionary fares is adequate to cover total costs, although it recognises that there may be misallocation between individual authorities. However, it says that this consultation does not consider possible changes to funding arrangements, which is a “separate workstream”.
20. Extra funding was received both through changes in formula grant to local authorities and through specific grant. It is thus difficult to identify precise amounts. However, it appears that a total of £4.526million has been added to funding from central Government to Oxfordshire districts for this purpose since concessionary fares schemes became compulsory in 2001, while combined spending by Oxfordshire districts on concessionary fares has gone up from £1.6million in 2000/01 to just over £6million now. Taking the County as a whole, the extra funding since 2001 appears to cover the extra cost incurred since then, but is well short of the full cost being incurred to operate the schemes.
21. The balance of spending between authorities changed significantly in 2008, when those authorities to which many people from other districts regularly travel (mainly large towns and cities) started having to pay for the ‘trip home’ of non-residents. This has caused financial pressure on Oxford City Council and other urban authorities.
22. Since some current funding is through formula grant, it is difficult to predict what would be the financial impact of changing the level of authority at which schemes are administered. Changes in the formula could “accidentally” lead to some existing TCAs losing more in grant than they save in avoided costs (no doubt each district authority will be considering the possible implications of change for their own finances). Similarly, it is difficult to have any confidence that any extra funding allocated to the county council would fully cover the extra cost; especially if the ‘floor authority’ damping also takes effect. This must be a major risk for any county take over of this scheme.
23. It is understood that each district employs around 2 FTE in administering the scheme. There may be some economies of scale of administration at a higher tier. However, there are generally no district council staff employed only on concessionary fares administration, it being shared with other work. This might make economies of scale difficult to realise in practice.
RECOMMENDATION
24. The Cabinet Member for Growth & Infrastructure is RECOMMENDED to ask the Head of Transport to respond to this consultation by expressing support for administration of concessionary travel at national level, in the terms outlined in the officers report, and particularly emphasising the importance of adequate funding were the scheme to be transferred to county level authorities.
STEVE HOWELL Head of Transport Environment & Economy
Background papers: Nil
Contact Officer: Dick Helling Tel 01865 815859
June 2009 |