Free bus travel for the elderly and disabled may be attractive to those that use it, but can cost a lot of money to local taxpayers.
As a consequence of recently working with a Combined Authority, David Young, Director at SCP looked at their English National Concessionary Travel Scheme (ENCTS) reimbursement costs.
SCP’s work for the Combined Authority showed that their fixed deal arrangements offered poor value for money, exacerbated over time. This conclusion was reached by utilising data which showed that the bus miles being operated had reduced and there was falling concessionary patronage, but also accounting for cost increases due to fares going up and rises in operating costs.
If the DfT model was used this could yield savings of around 18%, possibly even higher, with most Travel Concessionary Authorities (TCA’s) paying £2-£16m per annum this could mean considerable savings to some. Yet 30% of authorities are paying more in absolute terms (+8.3% in one case), whilst 70% are paying less. This suggests that some Councils could benefit from reviewing their approach to operator reimbursement.
By way of an example, Central Bedfordshire Council has recently moved from a fixed deal to using the DfT model and this is yielding a 14% saving, although it is too soon to fully understand the impact on and response of bus operators.
Over the last year, falling mileage operated (-1%) and patronage (-1.4%), needs to be offset by increased fares (+2.8%) and operating costs (DfT suggest +1% but +3.0% say CPT). The risk of a fixed deal is that it gets varied each year by a negotiated inflation, rather than considering all the variables. A fixed reimbursement rate at least removed the patronage changes from the negotiation. An arrangement perhaps linked to the DfT model makes greater allowance for these variables but the “garbage in/garbage out” truism applies.
David said; “I have been considering the range in reimbursement rates across the Country which vary between 71p per trip in West Berkshire up to 174p in Rutland (2016/17 DfT data). The day fare in the former is £6 and in Rutland £6.80, so a 13% difference in day tickets but a 245% difference in reimbursement paid. Can anyone explain why?”
David continued; “In these continued times of Council budget challenges and threats of Councils failing financially, for example Northamptonshire, it is perhaps time that TCA’s look at this more closely. To stick with Northamptonshire they paid 128p per trip, 14% above the national average of 112p.”
Whilst the consequences of savings will have an impact of bus operator budgets and this needs to be considered, after all the bus network has shrunk enough as it is. The reimbursement paid needs to be fair to the tax payer and be paid in line with the laws of State Aid and the “no better and no worse off” principle.
David is keen to speak to any Councils or bus companies to explore how this affects them and understand their view, please get in touch with David Young on 0113 887 3323.