Time for a rethink on concessions reimbursement?

Analysis of statistics show that concessionary fare anomalies persist as spending stabilises. Reimbursement rates fall to below 76% of average fare but stay above 99% in London.

New statistics published last month by the Department for Transport highlight once again the discrepancy between spending levels on concessionary fares in London and the rest of England.

Analysis shows that there has been a real term increase in spending in London of over 15% since 2010/11, whereas spending levels have fallen in the rest of the country, by 7.0% in the Metropolitan (PTE) areas and by 8.1% in the other counties and unitary authority areas (“the Shires”).

Spending on free travel in England for elderly and disabled people reached a total of £942m in 2015/16. London authorities spent £238m compared with £206m at current prices in 2010/11. The shire areas of England spent £445.5m, down from £484.5m and the English PTE areas spent between them £258.3m compared with £277.8m six years ago

However, a comparison between the two most recent years shows some reversal of the trends, with London spending falling by 0.8% in 2015/16, on the back of a 4.4% fall in demand for passes and a 2.6% drop in passenger journeys.  Elderly and disabled people made 288.7m bus trips in the capital, down by 6% from a peak of 307m in 2011/12.  

In the PTE areas, spending rose by 2% in cash terms (1.6% real terms in 2015/16). This was driven by a 3% rise in passes in issue, reaching a total of 2.3 million. However, demand for travel continued to fall. The total of 266.8 million trips was 3.8% down on the year and 14.4% down from the 311 million taken in 2010/11. 

Spending on concessionary reimbursement in the Shire Areas continued to fall in 2015/16, and was 1.1% lower in cash terms than the year before (1.5% after allowing for inflation). The cut came despite a continuing rise in demand for passes (up 1.1% on the year to a total of 6.5m).  Again, however, trip rates continued to fall: the total of 412.2m was 3.2% down on the year, taking the total fall for the period since 2010/11 to 8.6%.

London continues to generate the highest number of concessionary journeys per pass issued at 239.4 per year. This will reflect the attractions of the capital to passholders throughout the country as much as the trips of elderly and disabled Londoners.  This number rose by 1.8% last year but remained 6.7% below the 2010/11 figure. The other conurbations attracted 117.6 trips per pass per year (7% down) and the Shires 63.9 trips, a fall of 4.4%.

After adjusting for inflation, the average reimbursement per journey in 2015/16 was 1.7% higher than the previous year at 82.52p in London. This compared with 69.82p in 2010/11, a rise of 18.2%.  

In the PTE areas, reimbursement per journey has also risen in real terms, reaching 96.85p in 2015/16. This is a rise of 8.4% since 2010/11, and of 5.2% last year. 

In the Shire areas, meanwhile, levels have remained much more stable. The figure in 2015/16 was 108.07p, 1.6% up on the year, but only 0.6% higher than in 2010/11.

These figures compare with estimated average fares for paying passengers in 2015/16 of 83.24p in London, 121.82p in the PTE areas and 147.29p in the Shires.  In 2015/16, therefore, Transport for London was receiving 99.1% of its average fare from the Boroughs for concessionary journeys, compared with 79.5% in the PTE areas and 73.4% in the Shires. 

Comment

Though not as controversial as it has been in the past, concessionary travel still attracts occasional attention as a possible means of reducing “middle class benefits” in an age of continuing austerity. However, these statistics offer a reminder about the sums involved, and how difficult it would prove to make any further savings in this area. 

In truth, however, the total bill of £942 million for concessions for elderly and disabled people in England is a mere drop in the ocean of public spending. As I have pointed out before, even total abolition would barely pay for a half a week's expenditure on the NHS or a month of the Civil Service pay bill. 

Thus, the saving that would be achieved is simply not worth the political pain that would be caused by abolition. It is, if you like, another illustration of how difficult it is to achieve genuine reductions in public spending.

Meanwhile, though, the bus industry has to live with the anomalies and unfairness of the scheme, which can see London's spending rise by a double-digit amount whilst everybody else experiences a real-terms cut; and – as I have pointed out before – when TfL receives almost the whole of its average fare, compared with the poor old shire operator on 73% and falling. 

Of course, the schemes are different and come under different legislation, but this is after all supposed to be the English National Concessionary Travel Scheme. And if operators in King's Lynn or Newquay are “no better off and no worse off” receiving 73% of their average fare, why can TfL claim – and be paid – 99%?  And why have the London Boroughs been able to fund a rise of 15% in their spending since 2010/11, when the operators in the shires have to put up with cuts of over 8%?

The truth – and the tragedy – of the situation is that nobody actually 'owns' this issue. Central government claims that concessionary travel is the responsibility of local government, whilst local government blames the centre for not funding it properly. It continues to poison the well in relationships between local government and local bus operators. The EU (for so long as it has any say in the matter) thinks it is state aid whereas the truth is that it is helping few if any bus operators. And everybody continues to wonder what the policy is for. Is it transport or welfare? Social inclusion or carbon reduction? Redistribution or mobility? Or all of the above, as was suggested by KPMG’s work for Greener Journeys? 

We need a system which adequately pays operators for the journeys which people make: after all, bus operators need to earn a living. The idea of “no better off, no worse off” goes with the abstruse calculations which calculate “generation factors”: this is all increasingly obsolete in a world where it is ever more difficult to imagine a life without concessions. 

In truth, the government is acting as bulk purchaser for what are effectively annual season tickets for all those entitled to a pass. As a bulk purchaser, they should be entitled to a discount, and annual season tickets already attract a significant discount. 

Surely it is time for everybody to sit down and negotiate a new agreement which recognises all this, and sweeps away all the arcane nonsense which entails issuing zero value tickets, increases bus boarding times, makes front line staff’s job more difficult, takes up a disproportionate amount of time and scarce resources and leaves nobody satisfied. 

Concessionary Fares Spending and Reimbursement 
Year to 31 March 2016 2015 2014 2013 2012 2011
£ Million, Current Prices
London 238.2 239.2 234.2 220.1 211.5 192.4
Metropolitan Areas 258.4 253.2 255.0 248.2 252.4 258.9
English Shires 445.5 450.3 447.2 437.4 435.1 451.7
England 942.0 942.7 936.4 905.6 899.0 903.0
England o/s London 703.8 703.5 702.2 685.6 687.5 710.6
Source: DfT Bus 0830            
GDP Deflator (HM Treasury, September 2016)
Multiplier for previous years 1.0000 1.0044 1.0194 1.0362 1.0579 1.0726
£ Million, Constant (2015/16) Prices
London 238.23 240.23 238.72 228.03 223.71 206.42
Metropolitan Areas 258.36 254.31 259.92 257.18 267.03 277.76
English Shires 445.46 452.28 455.92 453.21 460.34 484.47
England 942.04 946.82 954.55 938.42 951.08 968.64
England o/s London 703.82 706.59 715.83 710.39 727.37 762.23
Reimbursement per journey, 2015/16 prices
London £ 0.8252 £ 0.8114 £ 0.7963 £ 0.7651 £ 0.7285 £ 0.6982
Metropolitan Areas £ 0.9685 £ 0.9183 £ 0.9080 £ 0.8880 £ 0.8798 £ 0.8931
English Shires £ 1.0807 £ 1.0631 £ 1.0590 £ 1.0527 £ 1.0164 £ 1.0747
England £ 0.9735 £ 0.9483 £ 0.9390 £ 0.9217 £ 0.8942 £ 0.9161
England o/s London £ 1.0366 £ 1.0060 £ 0.9987 £ 0.9864 £ 0.9616 £ 1.0006
Passes in Issue
Year to 31 March 2016 2015 2014 2013 2012 2011 Last year Since 2011
London 1,206 1,259 1,325 1,306 1,217 1,152 -4.4% 4.6%
Metropolitan Areas 2,268 2,200 2,170 2,202 2,189 2,284 3.0% -0.7%
English Shires 6,447 6,374 6,240 6,263 6,272 6,163 1.1% 4.6%
England 9,921 9,833 9,735 9,771 9,678 9,600 0.9% 3.3%
England o/s London 8,715 8,574 8,410 8,465 8,461 8,447 1.6% 3.2%

Source: DfT Bus 0820

Elderly and Disabled Trips
Year to 31 March
Thousands
2016 2015 2014 2013 2012 2011 Last year Since 2011
London 288.7 296.1 299.8 298.0 307.1 295.6 -2.6% -2.3%
Metropolitan Areas 266.8 276.9 286.2 289.6 303.5 311.0 -3.8% -14.2%
English Shires 412.2 425.4 430.5 430.5 452.9 450.8 -3.2% -8.6%
England 967.6 998.4 1,016.5 1,018.2 1,063.6 1,057.4 -3.2% -8.5%
England o/s London 679.0 702.4 716.7 720.2 756.5 761.8 -3.4% -10.9%

Source: DfT Bus 0821 

Trips per pass
Year to 31 March
Thousands
2016 2015 2014 2013 2012 2011 Last year Since 2011
London 239.4 235.2 226.3 228.2 252.3 256.5 1.8% -6.7%
Metropolitan Areas 117.6 125.9 131.9 131.5 138.7 136.2 -7.0% -13.6%
English Shires 63.9 66.7 69.0 68.7 72.2 73.1 -4.4% -12.6%
England 97.5 101.5 104.4 104.2 109.9 110.1 -4.1% -11.5%
England o/s London 77.9 81.9 85.2 85.1 89.4 90.2 -5.1% -13.6%

Source: DfT Bus 0821

Average Fare per Paying Passenger
London £0.8324 £0.8100 £0.8001 £0.7895 £0.7552 £0.7394
Metropolitan Areas £1.2182 £1.2170 £1.2374 £1.2704 £1.2467 £1.1711
English Shires £1.4729 £1.4745 £1.4565 £1.4695 £1.4219 £1.3740
England £1.0923 £1.0766 £1.0705 £1.0768 £1.0432 £1.0105
England o/s London £1.3639 £1.3633 £1.3614 £1.3831 £1.3454 £1.2839
Reimbursement per Concession Trip as % of Average Fare
London 99.1% 100.2% 99.5% 96.9% 96.5% 94.4%
Metropolitan Areas 79.5% 75.5% 73.4% 69.9% 70.6% 76.3%
English Shires 73.4% 72.1% 72.7% 71.6% 71.5% 78.2%
England 89.1% 88.1% 87.7% 85.6% 85.7% 90.7%
England o/s London 76.0% 73.8% 73.4% 71.3% 71.5% 77.9%

Sources: PTIS calculations using DfT Bus 0103, 0105, 0501 and 0830.

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