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ITEM CA10

CABINET – 20 DECEMBER 2005

HOME TO SCHOOL AND COLLEGE TRANSPORT

Report by Director for Learning & Culture

1. Oxfordshire County Council provides either free or subsidised transport to over 12,000 young people travelling to school or college. The policy reflects statutory requirements, which are set out in the 1996 Education Act and the 2002 Education Act.
2. The budget for home to school transport for 2005/06 is £14,197,000 but as at November 2005 the projected total overspend is £590,000. However, the Cabinet has already approved a virement request of £370,000 from other Special Educational Needs (SEN) services to meet the SEN/Post16 transport overspend, thereby reducing the overspend overall to £220,000.

Table 1. Home to School Transport 2005/06

Category	Budget £	Projected outturn £	Variation £
Mainstream	8,541,000	8,761,000	220,000
Special	4,726,000	4,807,000	81,000
Post16	560,000	849,000	289,000
Virement	370,000	-	-370,000
Total			220,000

3. This report sets out the reasons for the projected overspend and reports back on the management actions that have already been taken over the last year to address some of the budget pressures, including a rise in the concessionary fares. The report also identifies options where some of the non-statutory elements of the transport policy may result in savings. However, any changes to policy will need to be phased in, given that parental decisions about choice of school will have been made on the basis of the current policy.

Analysis of the budget pressures

4. A breakdown of the overspend for 2005/06 is shown in Table 2.

Table 2. 2005/06 Overspend as at November 2005

Explanation	£
Projected total overspend	590,000
New vehicles/routes to address overloading	49,000
Inflation shortfall – 4.5% inflation added to budgets when contracts are being uplifted by actual inflation of 4.93%	52,000
Underlying pressures from 2004/05 Virement from SEN Developer contributions	60,000 41,000
2004/05 Overspend Carry Forward	18,000
SEN/Post16 Overspend	370,000
Approved virement	- 370,000
Total 2005/06	220,000

5. The known budget pressures for 2006/07 are shown in Table 3 below. It is not yet clear whether any of the expenditure shown in Table 3 can be charged against the new Dedicated Schools Grant. Further work is being undertaken to analyse the full implications of the regulations and audit arrangements for this grant.

Table 3. Known budget pressures for 2006/07

Item	£
Underlying pressure
Inflation on re-tendered routes at 13.1%(5 year average of shire county increases on like for like contracts)	141,000
Annual inflation at 5% rather than the 3% allowed for	268,000
Transport for post 16 SEN pupils at Thorney Hall and increase costs due to changes in organisation of college provision	150,000
Full year effect of new vehicles/routes to address overloading from 05/06	74,000
Total	1,223,000

6. Transport inflation is higher than general inflation, at least with regard to mainstream home to school transport, not only in Oxfordshire but in the country as a whole. The national picture for mainstream transport is shown in Table 4 and for special educational needs transport in Table 5.

Table 4. Like for Like Price Increases 1998-2004

Home to school contracts: Average price increases for contracts renewed on a like for like basis		Publicly subsidised bus services: Average price increases for renewed contracts on a like for like basis
Year	English counties %	Year	English counties %
1998	12.7	1998	16.3
1999	16.6	1999	16.1
2000	12.7	2000	17.8
2001	18.1	2001	23.2
2002	15.2	2002	20.8
2003	11.5	2003	16.4
2004	8.0	2004	10.2
2005	6.3	2005	8.7

Table 5. Like for Like Price Increases 2003-2004, Special Educational Needs Transport

Year	English Counties %	English Unitaries %	Welsh councils %	Scottish councils %	All %
2003	7.4	5.6	4.3	3.8	5.6
2004	3.4	2.1	*	*	2.8
2005	3.5	2.1	-8.3	*	1.2
* Insufficent authorities reported the results of SEN tenders

Source ATCO

Table 5 is based on 37 authorities

7. Other possible short term pressures include:

• Price increases on re-tendered routes exceeding the 5 year average
• Single point of admission leading to additional transport capacity being required
• Fuel costs increasing at a higher rate than 5%

8. There are also the following medium and long term pressures:

• The extended schools programme leading to a potential need for more journeys/greater capacity and flexibility in the school day
• Fulfilling the choice agenda set out in the latest White Paper, including the provision of free transport to those on free school meals/maximum Working Tax Credit to any of the three nearest schools to their address within an envelope of 2 to 6 miles. This is likely to take effect in September 2008.

Increasing concessionary fares

9. An increase in concessionary fares was recommended in the December 2004 report to the Executive and was confirmed by the Cabinet in July 2005 following a consultation with parents and schools. Concessionary fares were increased to a level 10% below that of commercial services at the 3 and 5 mile points with effect from September 2005. Previously fares had been increased annually on the basis of the general inflation figure and this had led to a proportionate annual increase in the subsidy since transport costs have been rising at well above the general inflation figure for many years. Fares will be pegged to 10% below commercial prices in future years. The latest estimate for income for 2005/06 is £218,000, an increase of £31,000 on 2004/05 with a reduction of 203 travellers. While the return is significantly greater than in 2004/05 it is less than the estimate of £297,000 made at the time of the budget.

Route reviews

10. A thorough route review is now carried out prior to any major re-tendering as recommended in the report to the Executive in December 2004. Banbury and Bicester were re-tendered in 2005. The outcome was mixed with a disappointing increase of 19.87% in prices in the Banbury area but a 9.56% reduction in the Bicester/Kidlington area.
11. In the Banbury area:

• Competition is relatively limited and there is one dominant operator
• There were no savings to be made through combining subsidised public routes/home to school routes

12. In the Bicester /Kidlington area:

• No single operator dominates the market for home to school bus services in the Bicester/Kidlington area and there is therefore effective competition (approximately 3 bids per route). This feeds through to lower prices.
• The publicly subsidised services in the Bicester/Kidlington area offered some opportunity for joint operations with home to school transport. This meant that two services could be jointly operated (part of the journey home to school and part public service route) which led directly to a lower price for these services.
• The review identified two routes that could be terminated.

13. The Bicester/Kidlington re-tendering exercise resulted in a daily saving of approximately £368 which represents an annual saving (based on 190 days) of approximately £69,920. This saving illustrates the different market conditions that exist for home to school transport as distinct from that for publicly subsidised services. In both cases contracts were awarded through a competitive tendering process, held at the same time, and with information provided to the same operators, but fewer bids were received for the public service contracts and like for like prices for them increased by 11.25%.
14. In a full year (190 education days) the new costs for the two re-tendered areas for 2005 represent an overall increase of 6.1%. This is approximately 2% less than the average for like for like increases in shire counties in 2004 and is approximately the same as like for like price increases reported for English shire counties.

Variation to term dates

15. In February 2005 schools were officially informed of the Executive’s decision that any variation to the agreed term dates resulting in additional transport costs would be charged to the school concerned. There is no impact to report at this stage.

Reducing transport costs for the Pupil Referral Unit and Integration Service (PRUIS)

16. Currently PRUIS transport costs are approximately £225,000 per annum. The Directorate is at present exploring the possible delegation of funding for PRUIS for 2007/08 and more localised provision through school collaborative working. This is expected to lead to a reduced need for travel in the longer term.

Altering the date at which the annual inflation increase is fixed

17. Home to school transport operators are awarded an annual increase on a formula basis. This formula produced an annual inflation linked increase of 2.72% for 2004/05 and 4.93% in 2005. The inflation figure used is the Transport Index figure for April of each year. This approach is different from that used by Public Transport where an annual inflation award is given based on the Transport Index figure on the annual anniversary of the contract.
18. This year there was an inflation shortfall since 4.5% was added to the budget for inflation but the actual inflation figure was 4.93%. Greater predictability could be achieved by using a date prior to the setting of the budget for determining the inflation figure. Therefore the figure available at the start of the budget planning process in September will be used for future re-tendered areas. This will take effect from 2006.
19. Consultation will need to take place with existing operators before this new approach can be adopted for existing contracts. It will be open to operators to retain the existing arrangements until the end of their contracts. It is expected to that the new approach will be used with all operators by 2007.

Tactical contract management

20. Work is underway to identify routes with high unit costs and, where appropriate, to re-tender these routes. This approach is being taken with both SEN and mainstream transport.

Best Value Review of Funded Transport

21. The following options are being explored as part of the Best Value Review of Publicly Funded Transport, which is due to report in March 2006 and is exploring a range of options, including:

• Considering a proposal to develop a central management and procurement team for all of the Council’s funded transport services. If approved this will take some time to implement. In the short term as a first step towards this, an integrated team will be established by April 2006 by amalgamating the 2 teams currently in Learning & Culture and Social & Health Care as proposed in the realignment of Directorates.
• Increasing the use of the Social & Health Care Fleet for transporting SEN Pupils; although there are issues of availability at the required times and therefore of capacity as well as cost.
• The possibility of leasing a small bus fleet for use on selected high cost routes. There are issues of cost and expertise since no such fleet operation currently exists in Oxfordshire.

21. Expenditure on home to school transport is driven by policy, which determines eligibility for free or subsidised transport. It is some time since there has been a substantial review of the Oxfordshire Home to School Transport Policy. Like other authorities, Oxfordshire’s policy exceeds the statutory entitlement and areas of discretion have evolved over time. There is scope to review some of those discretionary areas and potential opportunities for some savings or greater income to be realised. Many other authorities are taking a similar approach to policy review. However, as with all policy areas there are potential implications that may be undesirable, particularly in relation to the impact on access to education, that would need to be taken into consideration.
22. The transport policy for 2006/07 was published, as required by the School Admissions Code of Practice, in the composite prospectus for Oxfordshire schools. This provides the information parents need to make decisions regarding school placements for 2006/07. The consultation on potential changes could take place alongside the consultation on admissions arrangements in Spring 2006 for adoption in April 2006 and publication in the admission brochures used for admission to school in September 2007.
23. The following areas of policy review are proposed for consideration and would need to be subject to full consultation with service users, the Dioceses, neighbouring authorities and schools.

Travel to faith schools

24. In Oxfordshire young people receive free transport to attend their nearest faith school if they are of that faith and the distance from home to school is:

• more than 2 miles but less than 6 miles and they are of statutory school age and under 8; or
• more than 3 miles but less than 10 miles and they are of statutory school age and are aged 8 or over.

25. Currently 153 children receive free transport to a faith primary school and 108 to a faith secondary school. In addition 130 Catholic children receive subsidised travel to BGN from the Bicester area. This gives a total of 391 children receiving free or subsidised travel on faith grounds. The full year cost of the transport contracts for faith travel is approximately £443,840 (see Appendix 1) (download as .doc file). However, this is offset by some income which, given current charges, is estimated to be worth £32,000 per annum. This means that in a full year, at current charging levels, the total cost of faith transport would be £411,840.
26. This provision is non-statutory. Therefore it is open to the County Council to end this provision.
27. One option would be to cease to provide transport to faith schools. This represents a significant potential saving but there are a number of drawbacks to this approach:

• The Council’s own legal advice, and that from the DfES, is that it would be necessary to phase the introduction of any change and therefore transport would need to continue for at least a further 5 years from the implementation of any change;
• It is likely that there would be an increase in car travel;
• There are possible implications for access to faith based, particularly Catholic, education ;
• It would run counter to the spirit of the latest White Paper, which has a strong "choice agenda" and looks to greater transport provision being made available;
• 9 primary schools and two secondary schools would be affected.

28. A second option that would have a lower impact on families and that would also help maintain parental choice of school would be to continue to provide the transport but to charge for the travel at the concessionary rate for the relevant distance. This could take effect from September 2007 and would:

• Maintain good access to Catholic education; and
• Not run counter to the choice agenda of the latest White Paper.

29. However, assuming a phased introduction and the use of distance related charging (as used for new non-denominational travellers) it is unlikely that the additional concessionary income would be greater than £4,000 in the first part year of operation. This additional income would increase in subsequent years by £12,000 in the second year of operation, £18,000 in the third year, £24,000 in the fourth year and £30,000 in the fifth year. Nevertheless, given the current estimated income, this would mean that in the fifth year the total income would be £62,000, which at current prices would mean that the net cost of faith travel would be reduced to £349,840 pa.

Free transport for those not resident in the county

30. There are three Oxfordshire secondary schools with designated areas that extend beyond the county boundary.
31. Oxfordshire does not provide any transport assistance to non-residents attending two of these schools. However, it does currently provide free transport to 259 children from the Caversham area of Reading to Chiltern Edge School. This arrangement was agreed between the then Berkshire County Council and Oxfordshire County Council in 1992 and in 1995, after a phased transfer of responsibility, Oxfordshire assumed full responsibility for the cost of transport. This raises the issue of equity over the approach to non-Oxfordshire residents attending an Oxfordshire school.
32. The ending of free transport for Reading children attending Chiltern Edge School may affect recruitment to the school but it would not alter the availability of places for Reading children (approximately 75% of the pupils at the school are non-Oxfordshire residents although only some of these receive free transport).
33. Ending the current provision of free transport to Chiltern Edge School would make the transport policy more equitable. However, given that some families may find it difficult financially, it would be possible to help facilitate the school and the parents by expanding some existing transport organised directly by the school, to help ensure continued good access to the school. It is therefore recommended that:

• The transport policy should be amended to clarify that entitlement to free transport is for children resident in Oxfordshire only. This is in line with most other authorities policies.
• There should be a review of the designated areas of the three secondary schools which overlap the county boundary with a view to aligning them with the county boundary. Again this would bring Oxfordshire into line with practice elsewhere.

34. Transport to Chiltern Edge School costs Oxfordshire approximately £140,000 and there is no compensating income. Therefore assuming a phased ending of free transport from the Caversham area there would be a potential saving of £140,000 pa.

Charging for post16 SEN students

35. Currently post16 students who have SEN receive free transport to the nearest appropriate educational placement. This type of transport is high cost and low volume and must be provided to enable access. However, there is a lack of equity with other post16 travellers since charging at the concessionary rate is the norm for non-SEN post16 students. Any free travel would be provided on the same basis as that for other post16 concessionary travellers. This measure would result in a maximum income of approximately £18,000 in 2007/08 and £36,000 in 2008/09.

Using free school meals and maximum working tax credit as reasons for waving the concessionary charge

36. Exempting those in receipt of free school meals or whose parents are in receipt of maximum working tax credit from the concessionary charge for transport would be consistent with the approach set out in the recent White Paper " Higher Standards, Better Schools For All", published by the DfES on 25 October 2005. Currently those within the following categories are exempt from the concessionary charge:

• Income support or Income Based Job Seekers Allowance
• Child Tax Credit – if in receipt of free school meals
• Working Tax Credit - if in receipt of free health benefits, for example dental prescriptions
• Council Tax Benefit
• Housing Benefit

37. This possible change could form part of any consultation on a new home to school transport policy. The change would simplify the policy and reduce time spent on administration.

New home to school/college transport policy

38. A revised draft home to school transport policy is set out in Appendix 2 (download as .doc file) and is proposed for consultation.

Conclusion

39. There is no significant action that can be taken to further reduce the remaining estimated overspend of £220,000 for 2005/06.
40. Transport inflation is rising at a far higher rate than general inflation as measured by RPI (Retail Price Index), RPIX (Retail Price Index excluding mortgage costs), or CPI (the Consumer Price Index), and has been doing so for approximately a decade.
41. There are only limited policy options for reducing costs in the medium and long term. The most radical action would be to end transport to faith schools and from Caversham to Chiltern Edge for non Oxfordshire residents. These two measures would result in eventual savings of approximately £489,840. This represents approximately 3.4% of current expenditure. Even if it was possible to implement these changes for April 2006 there would still be a projected overspend of approximately £733,160. However, the requirements for consultation and phased introduction mean that it would not be possible to introduce these measures at that date.
42. The Best Value Review is exploring options for improvements in transport management and procurement and will report in March 2006.
43. The latest White paper offers the prospect of an expansion of statutory obligations to provide transport which will have potential future budget implications.

RECOMMENDATIONS

44. The Cabinet is RECOMMENDED to:

1. ask officers to consult on a revised transport policy, including the following changes to current practice, and to bring a report back to Cabinet:

1. the phased ending of transport to faith schools and/or continuing to provide transport to faith schools but charging for seats on the same terms as those set out in the concessionary scheme;
2. the phased ending of free travel for non-Oxfordshire residents to Chiltern Edge School;
3. the introduction of charging for post16 SEN students;
4. using free school meals and maximum working tax credit as the reasons for exemptions to the concessionary charge for transport.

2. include as part of the annual consultation on admissions arrangements a review of the designated areas of those secondary schools which have areas that overlap the county boundary, with a view to realigning them with the Oxfordshire boundary;
3. endorse the establishment of an integrated Transport Management Team in the Children, Young People & Families Directorate by April 2006 as an interim step towards the longer term strategy of developing a centrally managed team for all of the Council’s funded transport arrangements.

KEITH BARTLEY
Director for Learning & Culture

Background Papers: Local Authority Bus Contracts: Price, Expenditure and Competition Survey 2004

Contact Officer: Neil Darlington, Education Officer, Admissions & Transport, Tel: 01865 815844

December 2005

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