Select Committee on Transport Fifth Report

5  Concessionary travel

English national concessionary travel scheme

72. Since April 2006, in England, residents aged 60 and over and disabled people have been entitled to free bus travel within their local area after 9.30am and before 11pm on weekdays and at all times on weekends and bank holidays. Some people have enjoyed additional concessions, such as travel before 9.30am, as a result of local enhancements paid for by their local council (travel concession authority).

73. We have looked before at the issue of concessionary travel. Whilst we have welcomed the principle, we have also raised concerns about the implementation, costs and anomalies: in 2006 we concluded that it was a mess.[69]

74. On 1st April 2008 the English national concessionary travel scheme will be launched and the national entitlement will be extended to allow free bus travel across England. This is the latest stage in the development of concessionary travel in England (see box), the result of the Concessionary Bus Travel Act 2007. We again welcome this move which will benefit millions of older and disabled people. It brings England closer to the standards of concessionary travel already enjoyed by residents in other parts of the UK.

75. The evidence presented to this inquiry shows that the extension by the Government of the national concessionary travel standard is popular and generally supported but the overall policy objectives are unclear. It has stimulated demands for further concessions. A few witnesses object to the free travel concession in principle but most are concerned about the costs, distribution of funds, reimbursement of operators and the unintended consequences, all of which are expected to increase with time.

76. Older and disabled people are travelling by bus more often as a result of the free concessionary fares scheme. However, the extent of the current and future benefits (economic, health, congestion, environmental, etc) and value for money are unclear. It is important that the anecdotal benefits of concessionary travel—reduced social exclusion and isolation for older people, improved health, fewer car trips, etc—are substantiated by rigorous research. We were not reassured by the Minister's response that national concessionary travel was a "political decision".[70] It may be that concessionary travel represents such good value for money that it should be extended to other sections of society or modes of transport, as it has been in London. The Government has undertaken some preliminary evaluation of the benefits but this needs to go much further.[71]

77. The ability to travel for free across the country by bus is a great boon for those who enjoy it and we welcome it. There is, however, no such thing as a free lunch and such funds—over £1 billion per annum—must give value for money. The Department for Transport should commission an evaluation of the benefits of the national scheme for free local bus travel.
Development of concessionary travel
  • Under the Transport Act 1985, local authorities have discretionary powers to provide concessionary travel for elderly and disabled groups. Most provided half-fares on off-peak buses within the local area. Although this is largely superseded by subsequent legislation, the power to provide local enhancements, such as concessionary rail travel and taxi tokens, continues.
  • The Transport Act 2000 introduced a national minimum standard across England and Wales for concessionary travel. It imposed a duty on district and unitary councils to provide half-fare travel on buses within the council area between 9.30 and 23.00 and all day on Saturday, Sunday and bank holidays. A concessionary travel pass had to be issued at no charge.
  • The Travel Concessions (Eligibility) Act 2002 equalised the age of eligibility between men and women at 60. The age for entitlement will increase for both sexes between 2010 and 2020 in line with women's retirement age.
  • From April 2006, the national standard was extended to provide free off-peak bus travel in the local area. The additional cost of free local concessionary travel is £350m pa for England, (£450m for UK).
  • From April 2008 around 11 million older and disabled people will be entitled to free off-peak bus travel throughout England, as a result of the Concessionary Bus Travel Act 2007. The Act allows for reciprocal arrangements to be made between England, Wales, Scotland and Northern Ireland to recognise their respective concession schemes. The additional cost is £212 million in 2008/09. The Department for Transport has introduced a new funding distribution formula for travel concession authorities in respect of this element of 2008 concessionary bus travel.
  • Concessionary travel is a devolved matter. Wales and Scotland introduced free national off-peak bus travel for elderly and disabled people in 2002 and 2003 respectively. The Wales concession now includes free rail travel for certain residents on Conwy Valley and Heart of Wales Railways on a 12-month pilot basis. Since April 2007 all Northern Ireland and Republic of Ireland residents aged 65 and over can avail of free internal travel on bus and rail in both jurisdictions.

The costs and funding arrangements

78. There are 324 travel concession authorities in England. These are the passenger transport executives, the London boroughs, the district councils and unitary councils. In London and the shire counties, the travel concession authorities are not the transport authorities, which can have repercussions for coordinating expenditure on bus services.

79. Concessionary bus travel costs around £1 billion each year. Local authorities in England reimbursed bus operators some £712 million for concessionary travel in 2006/07.[72] The additional cost of the national scheme from April 2008 is £223 million in 2008/09, allocated to local authorities in Special Grant. The Government has also paid local authorities some £31 million to issue the new national concessionary travel passes. In addition, it has funded ITSO Services Ltd to support the 253 'non-smart' travel concession authorities.

80. The experience of Scotland and Wales is that free national travel leads to significant additional demand and questions have arisen regarding the overall affordability of these schemes.[73] In England, growth in ridership as a result of the free local bus travel introduced in 2006 has been significant. "For example all PTE areas who previously had flat fare concessionary schemes are reporting 20%-30% increases in use, and this may rise further as pass-holders gain a better understanding of the travel opportunities presented by the bus network."[74] The Government acknowledges that the turn-around in bus ridership outside London is primarily due to concessionary travel.[75]

81. The costs of concessionary travel are set to grow in real terms as bus industry costs and fares are increasing faster than inflation. Outside London, concessionary travel support exceeds the amount spent on supporting non-commercial bus services. (The Mayor of London provides a high level of revenue support for all bus services.) It is important that national concessionary travel is properly funded.

82. Concessionary travel authorities continue to be concerned about the rising costs of concessionary travel and the distribution of funds by the Government.[76] The Government has described the new funding as "generous" and says "We are confident this funding will be sufficient in aggregate."[77] We accept that the Government has increased the funding to local authorities for concessionary travel and that, in aggregate, it may be sufficient. However, this does not mean that the right amount always goes to the right places.

83. The Government has consulted on funding arrangements and modified them in the light of representations.[78] For 2008/09, the Government has adopted a formula based on a combination of eligible population, bus passenger journeys, overnight visitors and retail floor space. However, this is a least-bad system and there remain winners and losers.

84. Some travel concession authorities receive significantly more than they spend whilst others are out of pocket. We were given the examples of Cheshire, Cumbria and Northamptonshire which show that, although the aggregate grant may be adequate, travel concession authorities that attract large numbers of visitors are underfunded. This problem could be substantially relieved if the Government reduced the number of travel concession authorities. Concessionary travel is an increasingly large financial risk for local authorities, particularly district councils and passenger transport executives[79] and one over which they have little control: they cannot (and should not) constrain demand and they are not permitted to set a cap on reimbursement to bus operators. Although district councils are generally reluctant to cede functions and funding to county councils, it appears that, in respect of concessionary travel, this is something that at least some, such as Carlisle City Council, would now welcome.[80] It would still be possible for district councils to issue the travelcards, under a voluntary arrangement with the county council, if this was deemed locally beneficial.

85. These budget constraints and distribution anomalies have had some worrying consequences. For example, in Greater Manchester, in order to balance its budget, the Passenger Transport Authority increased the child concessionary fare from 50 pence to 70 pence.[81]

86. The anomalies within, and disputes over, the distribution of concessionary travel grant to local authorities look set to continue, despite the 'generous' funding provided by the Government and the new funding formula. We find it is unhelpful that the transport authority and the travel concession authority are often not the same body and may inadvertently work against each other. These problems could be considerably reduced if the Government exercised its powers under section 9 of the Concessionary Bus Travel Act 2007 to transfer the travel concession functions from district councils to county councils. This would have the additional benefit of making the transport authority the travel concession authority in these areas. We recommend that the Government proceeds with this as soon as possible.

Reimbursement of bus operators

87. Reimbursement of bus operators is based on the principle that they should be no better and no worse off for carrying concessionary travel passengers.[82] They are reimbursed for the fare revenue foregone and for any additional expenses incurred, for example if additional staff or vehicles are required. This is based on the premise that off-peak concessionary travel passengers will take up empty seats, at little marginal cost to the bus operator. Whilst this may seem simple in principle, it is far from simple in practice.

88. Although we strongly support the concessionary travel scheme, we have some concerns about the mechanics of the reimbursement calculation, which requires not only data on the actual level of concessionary travel (passenger numbers) but also an estimate of how much of the travel has been generated by the concessionary travel scheme. There are further assumptions to be made about the types of fare that would have been paid (standard or discounted fares, singles or travel cards, etc). It is almost impossible to work out what would happen in the absence of concessionary travel and what revenue has genuinely been forgone. Such calculations have kept bus operators, travel concession authorities and consultants busy of late. They have led to prolonged and acrimonious disputes between bus operators and travel concession authorities, resulting in over 100 appeals to the Secretary of State for Transport. Some authorities have accused bus operators of overcharging. Some bus operators claim they are running services at a significant loss.[83] This is hardly conducive to partnership working.[84]

89. Despite guidance from the Government and various rulings by adjudicators on behalf of the Secretary of State for Transport, the problem does not appear to be abating. For example, according to the Centro-WMPTA Chief Executive, the major bus operators in the West Midlands are "unhappy with almost all the key aspects" of the reimbursement scheme for 2008/09.[85]

90. Even if the 'no better, no worse' calculation could be ascertained with confidence, there must also be questions about this funding principle in the long run. As concessionary travel increases, it is unclear where the incentive will come from for operators to invest in services where concessionary travel passengers form a high percentage of the customers.[86]

91. Some witnesses have argued that concessionary travel is distorting fare structures and having a negative impact on fare-paying passengers by giving a perverse incentive to operators to disproportionately increase off-peak and single adult fares.[87] This may be the case but local authorities are not obliged to base reimbursement on a particular fare, as in Scotland. The Government has published a toolkit for local authorities to use when calculating reimbursement. Whilst some local authorities do base reimbursement on single fares they are encouraged to use a basket of fares. It is up to the local authority to negotiate a mutually acceptable deal.[88]

92. ITSO concessionary fare smartcards should make local enhancements easier to handle from the operator's perspective (but passenger confusion may remain). A programme for ITSO readers on buses is needed.

93. The current "no better, no worse off" mechanism for reimbursing operators is unsatisfactory. It is arcane, time consuming and a recipe for disputes. It does nothing to promote good partnership working between travel concession authorities and bus operators. It is also questionable whether it provides a viable long-term funding model for the industry. A new, more transparent mechanism is required that compensates operators and avoids the waste and rancour generated by the current system. The Government should investigate this as part of its review of Bus Service Operators Grant. Some people argue for a national reimbursement mechanism as in Scotland. Whilst this appears attractive we do not support it at this stage. England is much larger, with greater variation, and we fear this would simply increase costs as the Government would be unlikely to scrutinise claims as closely as local government. A rapid roll-out of ITSO equipment on buses would help improve the accuracy of ridership data. Fewer travel concession authorities would also help.

Extending the scope of concessionary travel

94. The concessionary travel scheme is in danger of becoming a victim of its own success and there are calls for it to be extended to other modes of transport and to other categories of people. The National Pensioners Convention is seeking "free nationwide travel on all public and local transport". This would give concessionaires greater choice and would include tram, rail and community transport services and tokens for taxis.

95. Many local authorities continue to use their powers under the Transport Act 1985 to enhance the national concessionary travel scheme for older and disabled people living locally. Typically, the passenger transport executives will provide concessionary travel on local trams and trains; other councils permit travel before 9.30am; and in rural areas some councils provide tokens for taxis or allow concessions on community transport or dial-a-ride services. This can cause confusion and accusations of 'postcode lottery' but this is an inevitable corollary of allowing local enhancements.

96. The Government's view is that this is a matter for local authorities. For example, regarding rail "The Government recognises that there will be people, particularly in rural areas, who have better access to a rail service than to a bus service. It remains open to local authorities to provide free travel by rail in such circumstances."[89] Travel Watch SouthWest and others have pointed out that, in some areas, free bus travel has abstracted significant numbers of passengers from local rail services, which makes no sense as both receive public subsidy.[90]

97. Help the Aged, the Joint Committee for the Mobility of Blind and Partially Sighted People, the Community Transport Association and other groups representing older and disabled people argue for a range of specific extensions to the national scheme. They point out that conventional buses are, in practice, not accessible to many older and disabled people and so the neediest are often unable to take up the concession to which they are entitled. This is not simply a lack of low-floor buses but a more fundamental point that many people entitled to concessionary travel find it difficult, if not imposable, to use public transport.[91] Separate grants are available to people with more severe mobility impairment but these are much more limited and the freedom the freedom to travel at no cost, nationwide, is denied to them. These groups also make a cogent case for widening the range of people entitled to concessionary travel to on grounds of mental health difficulties.

98. We continue to believe that local enhancements to the national concessionary travel scheme can offer important benefits. We agree with the Passenger Transport Executive Group and others that these enhancements are best determined locally. Extending concessionary travel to rail services would be costly and it is doubtful if rail services currently have adequate capacity. There may be scope and a good value-for-money case for extending the national concession to include lightly-used rail services, such as community rail partnerships, as in Wales. The Government should also consider in greater depth than it has so far the costs and implications of providing greater support for community transport, particularly in areas where bus services are sparse. Where local authorities are currently profiting from concessionary travel funding, perhaps as a result of a sparse local bus network, they should be encouraged to enhance local concessionary travel arrangements.

99. Concessionary travel schemes have been linked with major ticketing changes. In Scotland, where free national concessionary bus travel was introduced in 2003, the concessionary travel pass forms part of the Citizen smartcard (an ITSO-compliant card) which has other potential applications. In England, the Government has stipulated that the new travel passes (issued by the local travel concession authorities) must be ITSO smartcards. If and when buses are equipped to read the concessionary fare smartcards that have been issued, the operators should be able to handle local enhancements more easily. The current situation whereby 11 million concessionary travel smartcards have been issued but most buses are not equipped to read them is daft. The Government needs to agree a programme with bus operators for installation of ITSO smartcard equipment on buses.

100. There is a good case to be made for concessionary travel to be extended to other groups. Many young people and those on low incomes find bus fares expensive. In 2002, the Commission for Integrated Transport advised that greater benefits would be achieved at lower cost by extending half-fares to young people and those on low incomes, rather than free travel for those over 60.[92] It is unclear why the Government ignored this advice. Local authorities have a well-being power.[93] If the Local Transport Bill is enacted as proposed, the well-being power will be extended to passenger transport executives. Amongst other things, this permits these authorities to provide travel concessions for other groups of people. Implementation, however, depends very much on local priorities and the availability of local funding, which is unlikely if they are struggling to pay for existing concessionary travel schemes. If the Government is minded at any stage to extend the English national concessionary travel scheme, young people and others identified by the Commission for Integrated Transport should receive priority consideration for concessionary travel.

69   Transport Committee, Eleventh Report of Session 2005-06, Bus Services across the UK, HC 1317, 26 October 2006 Back

70   Q 440  Back

71, National Bus Concession Survey for Department for Transport, Feb 2008 Back

72   Department for Transport, Transport Statistics Great Britain 2007, Table 6.14 Back

73   Local Transport Today 488, 22 February 2008, p9 Back

74   Ev 87 Back

75   Department for Transport, Autumn Performance Report 2007, Cm 7266, December 2007, p31 Back

76   Ev 196 and, following the announcement of the 2008/09 Special Grant allocation, Local Transport Today 484, 20 December 2007, p1 Back

77   Department for Transport, National Bus Concessionary Fares: Additional Special Grant Funding Key Points and FAQs, Back

78   Department for Transport, Consultation Response Document: Local Authority special grant funding for the 2008 national bus concession in England, 19 February 2008 Back

79   Ev 78 Back

80   Ev 197 Back

81   Ev 78 Back

82   Regulation 4 of the Travel Concession Schemes Regulations 1986 (SI 1986/77), made under section 94(1) of the Transport Act 1985 states: It shall be an objective (but not a duty) of an authority when formulating reimbursement arrangements to provide that operators both individually and in the aggregate are financially no better and no worse off as a result of their participation in the scheme to which the arrangements relate.


83   Q 113 Back

84   See, for example, the exchange of letters between South Yorkshire PTE and Stagecoach Yorkshire in Local Transport Today 477, 13 September 2007, p17 and Local Transport Today 478, 27 September 2007, p16. Back

85   Local Transport Today, 22 February 2008, p9 Back

86   Q 111 and The Guardian, 10 March 2008, p28  Back

87   Ev 87 Back

88   In Scotland operators are reimbursed at 73.6% of an operator's adult single fare, capped at £63 million in 2007/08, under a three-year agreement between the Scottish Executive and the Confederation of Passenger Transport.  Back

89   Cm 7176, para 10.34 Back

90   Ev 102-112 Back

91   Ev 145-149 Back

92   Commission for Integrated Transport, Public Subsidy for the bus industry, 25 February 2002 Back

93   Part 1 of the Local Government Act 2000 provides local authorities with a discretionary power (the well-being power) to undertake any action to promote or improve the social, economic and environmental well-being of their area. Back

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