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

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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.
Confusion over what local authorities are expected to deliver Transport Committee: Evidence Ev 195 10.10 One of the points the bus operators make is that there is suYcient money in the pot to deliver what the Chancellor promised in March 2005: free in-district oV-peak travel. There seems to be a move on their part to impose this <strong>and</strong> appeal against schemes which oVer enhanced benefits. In Cheshire if the new scheme had delivered just this, concessionaires would have a scheme which was worse than the previous half fare scheme. They would lose all cross boundary <strong>and</strong> cross border travel <strong>and</strong> any peak time concessions. For the scheme to deliver something eVective, cross boundary travel is required where for a significant minority the nearest market town, hospital or other facility is in the next District. A hybrid of free up to the district boundary <strong>and</strong> half fare thereafter would have left everyone involved with an administrative nightmare. Even from the bus operators’ point of view their drivers would be faced with confusion over what concessions to oVer passengers for each journey. Our estimate is that non-statutory concessionary travel accounts for only 16.5% of the total. If only statutory concessionary fares were available there would also be some transfer as passengers chose the free alternative. 10.11 The DfT has described these additional benefits as enhancements which should be funded locally. This shifts the problem on to local authorities <strong>and</strong> has added to the burden of administering <strong>and</strong> negotiating the scheme. 10.12 The introduction of the national scheme goes some way towards ameliorating this problem but local authorities will still have to consider maintaining any existing concessions at peak times. Suggested requirements for the new scheme 10.13 We are less than one year away from the second major change in the scheme in two years. Again it looks as though the burden for shaping the future scheme will rest with local authorities <strong>and</strong> the support <strong>and</strong> guidance which needs to be there may again be lacking, late or confusing. We suggest that the following ought to be considered for the 2008-09 scheme: 10.13.1 Transferring the responsibility <strong>and</strong> funding (including the funding for the half fare scheme) to the higher tier of local government in two tier areas. We underst<strong>and</strong> that the Department for communities <strong>and</strong> Local Government has already begun preliminary discussions for the national scheme based on the current formula. A change in the responsible level of local government is allowed for in the current Bill but urgent decisions have to be taken if it is to happen by 2008–09. 10.13.2 Adequate funding to be made available in this financial year to fund pass re-issue <strong>and</strong> the development of new systems to manage the national scheme. 10.13.3 The Government to take over the responsibility for reimbursement at a national level. 10.13.4 An agreed national rate of reimbursement to operators to be negotiated. 10.13.5 The Government to reimburse local authorities against verified operator claims <strong>and</strong> legitimate costs for setting up the new scheme. 10.13.6 Discussion with local authority representatives how part of the Government funding can go to giving them eVective legal <strong>and</strong> technical support <strong>and</strong> much better information. 11. Are concessionary fares schemes suYciently integrated across diVerent modes of transport <strong>and</strong> diVerent geographical areas? 11.1 The maintenance of a Cheshire-wide concessionary fares scheme for over 20 years has assisted integration on bus travel for the people of Cheshire. The current scheme allows for concessions for all journeys beginning or ending in the County. 11.2 However there are a number of significant cross border <strong>and</strong> multi-modal issues: 11.2.1 The County has a long border with Wales. The Welsh scheme is more generous than other schemes in that it oVers free travel at all times. The reimbursement formula is also more generous than English schemes in that a higher “generation factor” is paid <strong>and</strong> compensation is based on single fares rather than taking into account the eVects of returns <strong>and</strong> day tickets. 11.2.2 There is considerable cross border travel with Merseyside using both rail <strong>and</strong> bus. In the initial transition from the half fare to the full scheme, there was some confusion about passengers’ entitlements but this has been resolved. However post April 2008, diVerent reimbursement formulas could have an impact on the smooth running of the scheme. This goes beyond the Welsh issue where the rates are diVerent but the basis for calculation is the same. Merseyside pay a fixed amount for all operators <strong>and</strong> divide up the “pot” based on survey information. The problems are exacerbated by the extent of cross border operations by the larger operators. 11.2.3 Cross border links with other areas outside Cheshire are more limited although there are some issues centring on entitlements to travel. For example the StaVordshire scheme entitles passengers to free journeys at all times. This can lead to confusion as passengers think that their entitlement extends beyond their County boundaries.
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House of Commons Transport Committe
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Contents Report Page 1 Introduction
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4 5. Smartcards offer a range of ne
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6 Integrated bus ticketing 10. Thro
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8 Long distance coach services are
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10 strategy, including those in the
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12 long-distance rail passengers ma
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14 services have not been put in pl
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16 Oyster on rail services in Londo
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18 4 Revenue protection and
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20 Staff safety 61. Transport staff
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22 66. An integrated ticketing syst
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24 Transport should commission an e
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26 concession authorities that attr
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28 operators and a
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30 List of recommendations Integrat
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32 Concessionary t
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34 Formal Minutes Clive Efford Mrs
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36 List of written evidence 1 Dr Ro
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38 List of Reports from the Committ
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Oral evidence Taken before the Tran
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14 November 2007 Mr Chris Austin, M
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Transport Committee: Evidence Ev 11
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14 November 2007 Mr Keith Halstead
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definition of severe disability <st
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about how the data on the smartcard
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Mr Harris: I am sorry, I am not goi
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3.2 Conclusion—Smartcard St<stron
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Is the legal framework within which
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The Use of Smartcard Technologies I
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Integration Nationally Transport Co
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Concessionary Fare
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