Ticketing and Concessionary Travel on Public Transport - United ...

Ev 194 Transport Committee: Evidence
reimbursement which was a source of debate rather than a point of reference to resolve disputes in
negotiation. Even after authorities have received judgements on appeals by the bus operators they still did
not know how much to pay their operators.
10.3 Because the situation has been fast moving, DfT have not been able to answer questions in a
consistent <strong>and</strong> unambiguous way. For example one of the basic concepts of the legislation is that it should
be an objective for the operators to be in a position where they are “no better <strong>and</strong> no worse oV”. This can
be interpreted in a number of ways <strong>and</strong> some operators may have exploited the lack of guidance.
10.4 It would have been helpful to have support from central Government to enable local authorities to
develop a coherent negotiating position. For example in the run up to the new scheme local authorities could
have been oVered funding to employ their own technical <strong>and</strong> legal experts to help them in the negotiations
<strong>and</strong> administration of the schemes. Some kind of information channel could then have been opened up to
enable local authorities to compare notes on the negotiating position they are adopting. Instead the local
authorities have had to resort to phoning round, informal networks etc. Again all this adds to the
administrative overload. For the simple issue of reimbursement there is an alarming variety of
reimbursement formulae. For example:
— Fixed fee schemes such as Nottinghamshire <strong>and</strong> Derbyshire.
— Mileage based schemes such as Surrey.
— Capped schemes such as Essex (now declared illegal).
— Uncapped journey based schemes at a variety of diVerent rates (such as ours, Torbay <strong>and</strong> StaVs).
— “Pooled” schemes such as Merseyside.
— Uncapped in-district schemes with a diVerent reimbursement formula for out of district
concessions.
In some cases this confusion has been to the advantage of the bus operators but in most it has served the
interests of neither side.
10.5 On the other h<strong>and</strong> the bus operators have, after an initial hiatus, through the CPT developed a welloiled
machine with the legal <strong>and</strong> technical resources to fight appeals <strong>and</strong> to dictate the agenda over the
benefits of the scheme as outlined below.
Distribution of funds
10.6 The Cheshire Scheme could have given the operators an adequate settlement had all the money been
allocated to the county tier of Government. There were legislative obstacles to this. The DfT did not have
a mechanism to distribute the funding <strong>and</strong> gave the responsibility to the erstwhile ODPM, now the
Department of Communities <strong>and</strong> Local Government. The formula that was then arrived at was based
largely on variables such as population which only have an indirect link to bus use <strong>and</strong> therefore the levels
of reimbursement required. As a result in most two tier areas that we are aware of at least one district has
been overprovided for <strong>and</strong> one underprovided for. In Cheshire’s case for the 2006-07 settlement:
— Chester City Council received £775,000 but need £1.5 million to meet their share of the costs. Even
with the revenue they had allocated in previous years they only had a “kitty” of £1.25 million,
£250,000 short.
— Congleton Borough Council received £444,000 but only need £344,000 to meet their share. They
therefore have a £100,000 surplus <strong>and</strong> keep the £100,000 they contributed in previous years.
10.7 This problem is compounded by the fact that the revenue is not ring fenced <strong>and</strong>, in spite of it being
suggested numerous times, there is no willingness by the districts to pool the cash.
10.8 In addition the subtleties of concessionary fares financial issues are outside the experience of many
District Treasurers. Due to the relatively small size of District Council budgets, the variance <strong>and</strong> uncertainty
on the concessionary scheme may represent a very high proportional variance. Because of the findings of
the independent arbitrator, their preferred option of capping the risk by oVering a fixed reimbursement has
been disallowed. The fact is that there is considerable financial risk as the level of reimbursement required
is subject to changes in the level of dem<strong>and</strong> <strong>and</strong> that there is no way of capping these. In the first years of
the operation of a new scheme, this is subject to considerable volatility, which is a challenge to District
Councils which are on fixed budgets. The scheme has of course been so successful that bills are tending to
rise. In Cheshire this is a marked contrast to previous experience when costs of the half fare scheme have
risen only gradually over the 20 years the scheme has operated.
10.9 For 2007–08, the money to pay for concessionary fares (with the addition of 5% for inflation) is no
longer itemised separately in the FSG settlement. This follows the pattern of the Government revenue
funding for the previous half fare scheme where the purpose of the funding is not transparent.