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Concessionary Fares UK 2006 - Executive Summary

The New Free Schemes in England

• We estimate that the extension of free concessions in England will generate 46% (255m) extra bus passenger journeys by concessionary pass holders. This is the equivalent of a 17% increase in overall passenger journeys in the English PTE areas, and 6% in the Englsih Shire Counties.
• We expect the additional cost of the extension of concessions to be between £169m and £239m depending on the calculation methodology used, and the assumptions applied concerning additional take-up by qualified people.

Influences on Demand

• We estimate that the Qualified Population above the age of 60 for the UK as a whole is 12.29m, based on 2004 mid-year population estimates.
• Our estimate of disabled people has also risen, to 1.11m
• The inclusion of men between the ages of 60 and 64, and other demographic changes, has pushed the qualified elderly population up by 15.2% since 2001.
• In the short term, the qualifying population is expected to fall in the years to 2011 - by over 13% in Scotland, 7.3% in London and 6.5% in the North East However, some areas will see growth, including Wales (5.6%), Eastern England (5.4%) and the South East (3.9%).
• According to Government surveys, the number of bus journeys per person per year undertaken by elderly people has fallen by 26.1% since 1991, and by 10.5% since 2000.
• The percentage of older people (70+) holding licences has risen from a small 15% (and as low as 4% amongst women) in the mid 1970s to 47% in 2004 (including 27% of women). This will rise further as current licence holders grow older.
• The volume of trips by people over 70 falls by almost one third compared with those in their 60s
• Between 2002 and 2004, the take-up rate for concessions increased in all parts of the country except London amongst the previously qualified sections of the population. However, the inclusion of men between 60 and 64 shows a fall in take-up.
• Highest take-up is in London (85%), whilst the lowest is in rural areas (36%)
• Analysis of scheme types shows that, in 2001, free schemes enjoyed 71% take-up, flat fare schemes 76% and half-fare schemes 41%.
• Personal security fears are having an effect on travel behaviour: we estimate from Government surveys that between 10% and 12% of the Qualified Population make fewer bus trips than they otherwise would because of a fear of crime
• Evidence suggests high levels of customer satisfaction about bus service quality amongst older people, though there is clearly room for further improvement in accessibility

Spending

• Planned spending on Concessionary Fares reached £620m in 2004/05. This represented a £12m increase on the previous year’s figure – a rise of 2.0% in cash terms, but a fall of 1.3% in real terms.
• Of the total planned spending, £488m was in England, £95m in Scotland and £37m in Wales. Within England, the PTE areas saw a total of £200m, followed by London (£166m) and the shire counties (£121m).
• The introduction of free concessions in Scotland and Wales has resulted in considerable increases in spending: since 2000/01, Scottish spending has doubled in real-terms; in Wales over the same period, it has more than trebled.
• Looking at unit costs (Spend per Qualified Person, or SQP), London has the highest SQP, at £128.58; this has risen by 4.6% in real terms since 1991/92.
• Next come the PTE areas, with an SQP of £82.08 – a real term cut of 18.7% since 1991/92.
• The introduction of free schemes in Scotland (October 2002) and Wales (April 2002) has seen the SQP rise by 59% to £80.10 in Scotland and by 217% to £50.35 in Wales.
• Elderly and disabled people in the English Shires see the lowest provision, at £15.76 each – a figure that has fallen by 23.2% in real terms since 1991/92, despite the legislative changes in 2001.
• Estimates based on current spending patterns and survey responses in 2001 suggest that concessions in England cost over £31m a year to administer. Much of this could be saved through the introduction of a single national Smartcard scheme.

Disputes and Appeals

• There have been two major disputes on Concessionary Fares schemes since the publication of our 2003 report. One, in Scotland, was resolved in the authority’s favour; the other, in the West Midlands PTE area, remains ongoing.
• There have still been no formal appeals since 1991.

Scheme Provision

• There has been little change in provision between 2001 and 2006. In England outside London and the PTE areas, the overwhelming majority of schemes have continued to be the 50% statutory minimum, with 10 districts and six unitaries providing free travel, with four districts and three unitary authorities providing a flat fare scheme.
• Elsewhere, free travel schemes have been provided in London, Scotland, Wales, Merseyside and the West Midlands.

Funding and Reimbursement

• Initial estimates by TAS suggest that the overall sum allocated for the extension to concessions is adequate, but that individual districts would face real problems. Provisional cost estimates suggest increases in reimbursement levels requiring between 39% and 113% of the proposed grant allocation.
• There is therefore a risk that local authorities will reduce the scope of concessions (for example cross-boundary validity, availability on other modes or extension to other groups of people) or withdraw from existing joint or county-wide schemes. Thus the level of a concession may improve, but its utility decrease markedly.
• In Wales, the generated proportion of free travel has been established at 26.5%, equivalent to a reimbursement factor of 73.5%. An allowance of 2.6% has been made in Wales for additional operating costs, giving a total reimbursement factor of 76.1%. This compares with an average for free travel schemes in England of 28.6% based on responses to the TAS 2001 survey.
• In Scotland, the new 2006 scheme is based on a reimbursement rate of 73.6%, assuming generation of 35.6% of trips. This is markedly lower than some existing Scottish schemes.
• Estimated figures from Wales show that the introduction of the free scheme has led to an increase in total passengers between 6 and 10%.
• TAS has identified that the calculation of the equivalent average fare for concessionary journeys – currently the bedrock of many authorities’ reimbursement methodologies – will become significantly more difficult after the introduction of free travel in April 2006.
• Many authorities plan to rely on the issue of a ‘zero fare’ ticket to concession holders in order to assist in this matter. However, modelling undertaken by TAS has shown this approach to have serious flaws, and the validity of data collected will, we believe, be open to serious question.