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

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Ev 22 Transport Committee: Evidence 5 December 2007 Mr Roy Wicks, Mr Neil Scales, Mr David Cook, Mr Adrian Jones <strong>and</strong> Mr Greg Yates Mr Wicks: It has been an interesting experience because we have been on that project for four or five years <strong>and</strong> certainly at the beginning the operators were concerned for two principal reasons. They needed to be convinced, first of all, that it would actually give them productivity benefits in terms of speeding up the buses. They actually thought some of the processes might take longer in fare collection. I think we can demonstrate that is not the case. The second real issue for them, which is the diVerence between London <strong>and</strong> outside London, is how the revenue is allocated because at the moment a bus operator collects all his money, if you like, on the day in cash <strong>and</strong> knows he has got it. If you have a smartcard system you actually have to put in place a back oYce which allocates the money between operators, <strong>and</strong> operators were concerned that might represent a threat to their revenue – Q173 Chairman: Why would it represent a threat unless they are not giving you accurate figures now? Mr Wicks: I think it is probably a threat because basically they would not get their money straight away, they would get it through some h<strong>and</strong>ling system, <strong>and</strong> secondly there might have to be commission paid to agents who sold the tickets. So if you went to top up your smartcard somewhere else, at a pay point or somewhere like that, that company might charge a commission. What we have said <strong>and</strong> what we want the pilot to prove is that whilst there may be risks, they are more than outweighed by the benefits to the customer <strong>and</strong> the passenger, <strong>and</strong> it should actually give you two critical things. The first one is a growth in patronage, which should be good for the bus operators’ business, <strong>and</strong> secondly they should get a lot more information about their customers, which is certainly helpful for them in being able to target oVers to those customers <strong>and</strong> other things. What I said at the beginning was that yes, the operators were sceptical. Recently, it has been quite interesting to see the sea change <strong>and</strong> now certainly companies like Stagecoach are very keen to see the products implemented, as they have seen the Government encourage, particularly through rail franchises, the take-up of smartcards <strong>and</strong> as Oyster cards become more successful. It did take some persuasion to translate the London lessons outside London, but I think now they can actually see those benefits for themselves <strong>and</strong> I think they believe they can capture the productivity benefits. Q174 Mrs Ellman: So you think there is a change now? Mr Wicks: I think there is a definite change, <strong>and</strong> that is why I am optimistic about the pilot when it starts in SheYeld next March. Q175 Mrs Ellman: You also mentioned problems of smartcards in a deregulated environment. What diVerence will the Local Transport Bill make? Mr Wicks: It will oVer local authorities the option of moving to a more regulated market, which would clearly enable two things to happen. First of all, apart from all the other benefits that might flow from that, you could have a single operator eVectively because you will have franchised the services. You can simplify the fares structures <strong>and</strong> you can integrate better with the other modes without having to worry about the issue of preferential pricing for any one operator. Also, it would have benefits in terms of the concessionary fares issues my colleagues were referring to earlier because you would not be into this complex round of negotiations with operators about what they might claim for concessionary fare reimbursement costs, you would be dealing with the actual costs themselves. So certainly the Local Transport Bill through the quality contract route oVers the most eVective way of achieving both integrated ticketing <strong>and</strong> good concessionary fare reimbursement. Mr Scales: The wellbeing powers contained in the Act will also allow us to oVer concessionary travel to other market segments such as asylum seekers, maybe, or diVerent groups of children that are not captured by the concessionary travel regulations now, so that would be another benefit we would get from the Act. Q176 Mrs Ellman: Are you satisfied the provisions in the Bill will be adequate to deal with these issues? Mr Wicks: Provided the quality contract process is deliverable within the timescales of the political aspirations of the authorities which want to do it. Provided we have a speedy process for implementing the franchising <strong>and</strong> it does not become a drawn-out bureaucratic process, then I think all of the provisions in the Bill are very helpful. Mrs Ellman: Thank you. Q177 Mr Martlew: Can I concentrate, gentlemen, on the concessionary fares scheme which is about to come within the spread. Mr Cook, I think you initially said there were reservations about this. Can you exp<strong>and</strong> a little on that? Mr Cook: I think the issues are in respect of reimbursement of the costs, so if the scheme goes to a national scheme there will be additional costs. We start with the proposition that neither the bus operators nor the local authorities should be out of pocket or in pocket as a result of these changes. One of the very good things is that a specific amount has been set aside for local government, £212 million, to ensure that local authorities get reimbursed for reimbursing the operators for the cost of travel. As colleagues have said, the smartcard would allow us to be more accurate about which people are getting on buses <strong>and</strong> what the price of journeys are, but that aside I think the first concern might be is £212 million the right amount of money? That question might be raised because experience in Scotl<strong>and</strong> <strong>and</strong> Wales has shown that take-up is quite high. Anecdotal evidence we have from local authorities is that people have persistently <strong>and</strong> consistently joined concession travel schemes such as, for example, the local one which came in in 2006. So take-up does not step up <strong>and</strong> then plateau, take-up continues to rise, so £212 million may or may not be the right amount of money. Secondly, we have a distributional problem in that the £212 million may not go where
Transport Committee: Evidence Ev 23 5 December 2007 Mr Roy Wicks, Mr Neil Scales, Mr David Cook, Mr Adrian Jones <strong>and</strong> Mr Greg Yates it is needed <strong>and</strong> there are four options being consulted on by Government in terms of how one distributes the money. Just as a little colloquial example— Q178 Mr Martlew: It seems to me—<strong>and</strong> I live in an area where it is two tiered <strong>and</strong> the local district councils are like ferrets in the sack at the moment about who is going to get the money. Surely it makes logical sense for the Government to give it to the transport authority, which in our case is the county council? I realise you are a district council representative, but surely there is a logic in that? There is no logic in giving it to the district council? Mr Cook: Chairman, the logic is that it is the districts that are reimbursing the operators <strong>and</strong> therefore the districts which need to be reimbursed, even if it went through some sort of collective agreement, <strong>and</strong> the capacity exists at the moment for authorities to get together in clusters to manage this in a certain way if they want. So we could get together in clusters, but that would not deal with the fundamental issues of (a) is it the right amount of money, <strong>and</strong> (b) is it being distributed correctly, because even if it was county-wide <strong>and</strong> you have a county agreement, it still does not take account of the fact that distortions occur depending upon whether or not one is a destination for journeys, or not, <strong>and</strong> there is too wide a spread in the consultation options at the moment. Q179 Mr Martlew: Can I ask Mr Yates, who I underst<strong>and</strong> is from a county council? Mr Yates: Yes. We broker a county scheme on behalf of six districts <strong>and</strong> two unitaries. I broadly support Mr Cook’s point that we have both a funding <strong>and</strong> distribution problem. It would be diVerent if the funding went to county councils because our main diYculty is the inequities between the individual districts because they have all got very diVerent settlements so far, <strong>and</strong> are likely to get again, which brings out certain authorities which have got a 5% shortfall on their overall expenditure <strong>and</strong> others are in surplus. Q180 Mr Martlew: That is the failure of the present system? Mr Yates: It is the failure of the present system, <strong>and</strong> that was based on a district scheme, which was meant to just provide local travel, but obviously we recognise that local district travel is of limited use to lots of people who live in a rural-ish county like Cheshire with a lot of boundaries. So we strove early on to make sure the county-wide facility was there, even though it was above the basic scheme. The diVerence is now that the new scheme is going to be a country-wide scheme, so there is even less argument for targeting the pockets of money into small district-based things which are bound to pick out little inequities by virtue of doing that. Q181 Mr Martlew: So you would support it going to the county, would you? Mr Yates: I think I would support something that either provided an open-ended—well, I cannot say open-ended, but a more responsive method of funding so that the settlement responded to the actual amount of travel or that there was an aggregation of the authorities that dealt with it, because at the moment there is a massive amount of what I call non-Gershon eYcient energy that has gone into all these separate little negotiations. Q182 Chairman: Sorry, Mr Yates, what was that lovely phrase? Mr Yates: Non-Gershon-like, you know, the – Mr Martlew: We remember it, yes. Chairman: Yes, we remember it only too well. I thought we had made another new name. Sorry, go on. Q183 Mr Martlew: Does anybody else want to comment about the way the money is distributed? Mr Jones: I am sort of neutral, being for a unitary, but there are lots of inequities in the way the money is distributed under all of the formulae <strong>and</strong> I think the key thing is that we have got to readdress this because it is going to happen in April <strong>and</strong> I think it is really important that quickly the Government comes back <strong>and</strong> learns from what happens in the first six months rather than just leaves us to solve the problem. Q184 Mr Martlew: What you are saying is that you think it will not go right <strong>and</strong> we need to look at it very quickly? Mr Jones: That would summarise my view, yes. Q185 Mr Martlew: The two gentlemen at the end are very quiet! Mr Scales: We are very happy because the grant is going to the passenger transport authority in a direct grant, rather than going through our district council colleagues. Q186 Chairman: I do not want to spend too long on this. What you are really saying is that if the unit is big enough you get economies of scale <strong>and</strong> everybody will come back if the units are too small? Mr Scales: Yes. Q187 Chairman: It is not a new theory. Yes, Mr Cook? Mr Cook: I think there is also an issue about reviewing the quantum, whether the amount of money is right. The Government has indicated a 2.5% increase in the £212 million for the next two years. Our concern is that as the number of people eligible for the scheme rises significantly— Chairman: Yes, I think you made that point actually. Q188 Mr Hollobone: Mr Cook, you cited examples from Wales <strong>and</strong> Scotl<strong>and</strong>, where take-up has been rather higher than was initially expected, <strong>and</strong> therefore the same could happen in Engl<strong>and</strong>. What is the LGA’s view of the potential under-funding of that £212 million? What is your best estimate of what that £212 million ought to be?
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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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Page 17 and 18: 16 Oyster on rail services in Londo
Page 19 and 20: 18 4 Revenue protection and
Page 21 and 22: 20 Staff safety 61. Transport staff
Page 23 and 24: 22 66. An integrated ticketing syst
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Page 27 and 28: 26 concession authorities that attr
Page 29 and 30: 28 operators and a
Page 31 and 32: 30 List of recommendations Integrat
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Page 35 and 36: 34 Formal Minutes Clive Efford Mrs
Page 37 and 38: 36 List of written evidence 1 Dr Ro
Page 39 and 40: 38 List of Reports from the Committ
Page 41 and 42: Oral evidence Taken before the Tran
Page 43 and 44: 14 November 2007 Mr Chris Austin, M
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Is the legal framework within which
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The Use of Smartcard Technologies I
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