Agenda Item No

Resources Board

10 September 2007

1 Summary

1.1 This report outlines the proposals for the 2008/09 Concessionary Travel Scheme.

2 Recommendations to the to the Board

a That the contents of the report be noted;

b That the current Countywide scheme enhancement of a 9.00 am start be continued into the new 2008 scheme; and

c That the future issue of companion passes be considered as a local enhancement to the scheme;

d That the issue of travel tokens be discontinued for 2008/09 and onwards.

e That a further report be brought before the Board to consider further community transport options if any group is disadvantaged by changes to the current scheme

3 Background

3.1 Under the Transport Act 2000, Local Authorities in England and Wales were required to arrange for elderly and disabled people living in their area to receive a half-fare concession on local bus services, subject to the person obtaining a bus permit, which had to be issued free of charge.

3.2 The Act also linked the entitlement of elderly people to travel concessions to pensionable age, as defined in the Pensions Act 1995 (that is 60 for women and 65 for men). The 2002 Act equalised the age at which men and women became entitled to travel concessions, at the age of women, from April 2003. Schedule 4 to the Pensions Act 1995 provides for pensionable age to be equalised at 65 for both men and women by 2020, with transitional arrangements from 2010. The age for entitlement will thus increase for both sexes between 2010 and 2020 with the phased increase in women's state pension age.

3.3 All Local Authorities (not just Travel Concession Authorities) also have discretion, under the 1985 Transport Act, to offer further concessions on bus and other public passenger transport services if they so wish.

3.4 The Chancellor announced on 16 March 2005 that free off peak local area bus travel would be introduced in England from April 2006 for those over 60 and the disabled. An additional £350m was allocated and distributed through the (RSG) formula grant settlement. [Subsequent statements from Ministers imply that RSG already included around £400m towards concessionary fares.]

3.5 On 22 March 2006, the Chancellor, in the Budget, and later the Transport Secretary, announced that the free off peak travel scheme would be extended to cover bus travel throughout England from April 2008 (the 2008 Scheme). A further £250m has been allocated for this extension, but currently no decisions have been made on its distribution. Together with previous funding, the government now states that over £1bn will be provided per annum for concessionary fares.

4 Current Scheme Arrangements

4.1 The current national scheme (2006 scheme) allows for persons over the age of 60, and specifically defined disabled persons, to be able to travel free of charge on off- peak local bus services within their local borough/district area (on production of a valid pass). Travel can be made between 9.30 am and 11.00 pm weekdays, and at anytime on weekends and bank holidays. The pass has to be issued free of charge by the local Travel Concession Authority (TCA) which is usually the Local Authority (District, Unitary or Passenger Transport Authority (PTA).

4.2 TCAs are able to make reciprocal arrangements with other TCAs to offer wider schemes of travel, eg County-wide schemes.

4.3 Within Warwickshire the TCAs have local enhancements of extending the period into peak time, from 9.00 am through to midnight, and also allow journeys which start or end in Warwickshire.

4.4 In addition to the above, the Council offers companion passes to those who are severely disabled and are only able to access public transport with the assistance of a travelling companion. These are currently offered free of charge.

4.5 Passes currently issued by the Council DO NOT include a photo, although two of the Councils' passes in Warwickshire do. However, as a Council we are the only Authority in Warwickshire still to offer travel tokens as an alternative to passes. In April 2006 Stratford, which was the only other Council to offer this alternative, withdrew this option.

4.6 Reimbursement to operators is based on the principle that they should be `no worse and no better off' from participating in the scheme, based on `revenue forgone' evidenced by the operators, but with adjustments for generated journeys and additional costs incurred by the operator. A company called MCL, acting on behalf of all of the TCAs in Warwickshire, undertakes the administration of the reimbursement.

5 2008 Scheme

5.1 The National Scheme

5.1.1 From April 2008, persons over 60 (but increasing from 2010) and defined disabled persons may travel on off peak local bus services in England (on production of a nationally recognisable pass, as defined by the Department for Transport (DfT)) between 9.30 am and 11.00 pm weekdays and anytime weekends and bank holidays.

5.1.2 Passes for the national scheme will need to be photo passes, preferably in `smart card' format, issued free of charge and will have a life of no more than five years.

5.1.3 Existing powers under the 1985 Act to offer free or chargeable enhancements is still available to TCAs and other Authorities.

5.2 County scheme enhancements

5.2.1 To match what is in the County scheme to which we currently belong, the operating times of the scheme will need to be extended into peak times - ie from 9.00 am (the extension from 11.00 pm to midnight is academic in that few if any buses operate locally)

5.3.1 Companion passes are currently only issued by ourselves and Nuneaton and Bedworth Borough Council. Very few are issued as they are directly linked to an eligible severely disabled pass holder.

5.3 Reimbursement of Bus Operators

5.3.1 The basis of reimbursement and funding has changed. The main change is that reimbursement to operators is based on the Borough or District in which the journey starts, not by which TCA issued the pass. Hence, for example, a current journey into Coventry and return would be charged to NWBC, whereas from 2008 only the journey to Coventry would be charged to us, the return journey would be charged to Coventry. However, anyone travelling into the Borough would be covered by their start Authority, all return journeys would be charged to NWBC. Due to the lack of journeys taken into North Warwickshire by people living outside the boundary, we feel the impact of this on the Council will be very small.

5.3.2 Unless reciprocal or other arrangements are entered into with other TCAs, all local scheme enhancements would apply to outward journeys only. All journeys solely within the Borough would automatically be covered. This would mean, for example, pass holders may not be able to travel in another area before 9.30 am, and that companion passes would not be recognised outside of the Borough, with the potential effect that a companion may be able to travel free with their `care' to, say, Walsgrave hospital, but would have to pay the standard fare to return.

6 Timescales

6.1 Preparation and collection of data

6.1.1 New photo passes have to be issued to match a national specification, so that they can be recognised by all participating bus operators throughout England. These will follow a common format, with provision for some local branding.

6.1.2 The specification will encourage, but not require the use of `smart cards' [which also offer the opportunity to be used for other services, such as library cards/leisure passes etc]. As the majority of bus services in the area currently do not have `smart-ticketing' systems which could read `smart' cards, we do not intend to issue these, but we intend to capture as much information either initially or through subsequent surveys/questionnaires, to allow us to be in a position in future to be able to roll out `smart' cards when appropriate. This is likely to be the position nationally for at least the initial few years of the scheme

6.1.3 We currently have the majority if not all of the required information to go on the passes apart from digitised photographs. This will require us for the first time to arrange for photographs to be taken. How best to achieve this in a very short timescale is going to be a major challenge so an early decision on the removal or not of travel tokens will be necessary. It will also be necessary if they are retained to make that decision a three year decision, as offering year on year choice as at present will no longer be operationally or financially feasible.

6.2 Advertising

6.2.1 There will be some national advertising by the Department for Transport (DfT) who also recommend supplementary local advertising. This will be important to publicise local enhancements and constraints.

6.2.2 As we currently work with the other TCAs in Warwickshire, subject to decisions on local reciprocity, we will need to ensure that we are all publicising details at the same time to avoid unnecessary phone calls.

6.2.3 We will also need to contact all current recipients of bus passes and travel tokens to advise of new scheme and need for new passes, and to gather additional information if we need to produce `smart card' or similar National passes.

7 Passes

7.1 Style

7.1.2 As mentioned above, photo passes will be the basis of the national scheme, with a nationally defined format and layout, but with space to add the issuing TCA or scheme logo and some other limited symbols on the face of the pass. The reverse of the pass is available for local information. It is likely that the specification will specify a `smart-card' format.

7.2 Procurement

7.2.1 DFT are developing framework agreements for a range of services through a national procurement process.

7.2.2 However, if we decide to issue `flash' cards {ie similar to now}, we may be able to issue all of the necessary cards for April 2008 with the help of our current billing partner, who assists us with the issue of Council Tax demands. This will also enable us to maintain an on-demand service for the next few years until it becomes necessary to convert to `smart' cards. This could be a “nominal” cost alternative.

8 Involvement of Centro/other operators

8.1 Warwickshire County Council is managing the current County wide scheme and exploring new reciprocal arrangements with adjacent TCAs, including Centro on behalf of the other Warwickshire Councils.

9 Decisions

9.1 Timetable that must be followed to achieve an issue by April 2008

Effectively service decisions will need to run ahead of financial decisions - we need to commit resources and make a decision by September to meet required deadlines

10 Future of Travel Tokens

10.1 The Council is now the only Authority in Warwickshire which issues travel tokens as an alternative to a bus pass, other than Rugby which does so in very limited circumstances (see 14.3). Stratford DC was the last to remove this choice in 2006, which was achieved without significant protest from residents.

10.2 Since the bus pass was introduced as part of a National scheme in 2002 we have seen the take up of travel tokens fall from 80% to its current position, just over 40%, as shown in the table below. A map of bus routes in the area also shows that in recent years bus coverage across North Warwickshire has improved which, along with scheme improvements, has led to the swing towards higher bus pass take up.

10.3 Should the remaining applications we are expecting to take us to our current take up level of 9700 all apply for their concessionary entitlement and take tokens, this will increase to 46%..

10.4 The following table shows the current take up of passes to tokens by electoral ward. What is very surprising is that the highest level of tokens is taken in what would be considered our more urban wards, as opposed to more rural and outlying areas.

10.5 As taxis are the main alternative to buses for token users, the value of tokens would need to be increased in line with taxi tariffs, to prevent the value of the concession being diminished. Current day time tariffs are:

1 mile - £2.20 2 miles - £3.70 3 miles - £5.20

4 miles - £6.70 5 miles - £8.20 6 miles - £9.70

10.6 It is difficult to predict with total accuracy the benefits or cost to the Council of removing the option of tokens but based on the known figure of removing tokens currently issued at £30 per person on payment of a £5 fee, we have used a figure provided by MCL as the likely extra cost of increased reimbursement to the bus companies.

10.7 The current cost of tokens and postage (based on 3,846 take up) is £101,919.

10.8 If all remaining people to apply do take up tokens as expected if an application is made, the cost of tokens to the Council and postage (based on 4700 take up) is £124,550.

10.9 Based on those people all taking bus passes (which is unlikely as some will use private cars and possibly not use buses at all or at the same level of existing users), it is assumed the likely additional cost to bus operators would not exceed £60,000.

10.10 This would result in a net saving on the current scheme in the region of £40,000 to £60,000 if travel tokens were removed on current estimates and assumptions.

12 Benefits to the Council from discontinuing tokens

12.1 Easier administration process - only one choice and no payments to take.

12.2 Reduced telephone calls in the contact centre.

12.3 It will enable the Council to issue a lifetime pass or pass for at least three years, significantly reducing the burden and cost of annual renewal. Costs currently run at approximately £8-9,000 per year and an unquantifiable saving on manpower will be made, providing an opportunity cost for other activity at what is the busiest time of the year when Council tax bills and rent accounts are issued.

12.4 We will maximise the Government grant, which is a one off payment in 2007/08. We should get £15,694 more on current assumptions.

12.5 Remove risk of tokens not being used or used as currency for anything other than legitimate travel.

12.6 It will remove the pressure to increase the level of travel tokens that has remained the same for the last three years. On current take up levels, a £5 increase will have little impact on the number of journeys that can be taken by an individual but will increase the cost to the Council of just over £20,000.

12.6 Possible reduction in people applying who will prefer to use their own vehicles.

13 Disadvantages to the Council from discontinuing tokens

13.4 There will be a loss of revenue for local taxi companies.

13.5 If travel tokens were retained, we would possibly have to make it clear that once a bus pass was taken, a customer couldn't revert back to travel tokens.

14.1 If members decide to discontinue travel tokens they may wish to consider adopting a similar community travel scheme to those operating in other Warwickshire councils to meet the need of the disabled and those in rural areas. These are explained below.

14.2 The Flexibus scheme currently operates throughout Warwickshire. The buses operate to a fixed destination point but can detour where practical to pick up or drop off people to and from their homes. The 2008 scheme free bus passes will be acceptable on the Flexibus. This service can be promoted as an alternative to tokens where appropriate.

14.3 Rugby Borough Council pays for a community bus scheme and issues travel tokens to qualifying residents of villages served by less than two buses per day. This provision is currently being reviewed.

14.4 Both Warwick and Stratford Councils provide a community taxi service.

15 Report Implications

15.1 Financial Implications

15.1.1 DfT/Treasury has identified an additional £250m to cover the additional cost of the 2008 scheme. This is intended to cover the additional costs of reimbursement incurred by “hot-spot” and “honey-pot” authorities. These will be mainly tourist based or major retail centres, though other hot-spots, such as regional or major hospitals, may generate additional out of district visitors. The funding is intended to cover the `return' journeys. Due to the nature of the Borough, we may not receive a comparable proportion of the new £250m as we did of the 2006 budget of £350m.

15.1.2 The DCLG are currently consulting Councils on how to best distribute these funds, whether it should be a specific grant to authorities or via the existing formula grant system. They have consulted on options for distributing the additional grant via formula grant which if chosen would give the Council between £146,000 to £261,000, based on the three different criteria being considered:

£146,000 based on day and overnight visitors

£161,000 based on a combination of commuters, visitors and people on incapacity benefit

£260,000 based on day visitors

It is likely, based on experiences of the previous schemes and forecasts provided by the consultants working with the Warwickshire Councils, that even the lowest amount of these three would be sufficient, although the final details of the scheme to be adopted are still subject to appeal and further clarification.

15.1.3 One of the assumptions being made by DfT is that take up is assumed at 11,400 people of potentially 19,960 elderly and disabled people. We will be reimbursed a contribution of £2.90 as explained in 15.1.5 below on the assumed level of bus passes to be issued. This has been assumed at 5,988, based on the fact that we issue travel tokens to approximately 45% of our current eligible people. If a decision is taken to remove tokens, then it is highly likely we will be reimbursed in pass issue of 11,400 and we have provisionally advised the Government that this is a possibility. The ultimate is that there could be an increase in total passes issued of over 40% if all disabled and elderly people took advantage of the scheme. It is impossible to predict the impact of any additional costs, even based on current journey patterns, with such an increase but our assumptions have to be that take up is unlikely to grow significantly on current levels.

15.1.4 The whole pattern of travel and chargeable journeys will change, due to the free journeys that will be possible, the new demographics of the pass holders, and particularly the change in journeys chargeable to the Council (with the change to journey starts rather than by issuing authority), thus making any intelligent prediction of the financial impact of the new scheme impossible. As a Council, the impact of the scheme is likely to be less for us than neighbouring Councils, which are busier shopping centres and main thoroughfares and we are likely to benefit if anything from only paying for the outward journeys from North Warwickshire than paying for return journeys as at present.

15.1.5 DfT have also acknowledged that there will be additional costs incurred with the need to issue new passes. We had planned that the current passes issued would be, in the main, `for life'. On the assumption that `smart' cards may be used, DfT are currently looking at making a one-off grant of around £2.90 per eligible person. This will only be possible if a decision was taken to remove travel tokens, which at present is an annual decision process. Dependent on this decision, if we retain tokens this one off grant is likely to be £17,365, whereas a decision to remove tokens in September would result in a one off grant of £33,060. This is likely to be payable in three parts, £1.20 per assumed pass by August 2008, with the balance being paid in early 2008 once consultation has been completed.

15.2 Sustainability Implications

The Contact Officer for this report is Bob Trahern (Telephone 01827 719378).

Background Papers

RRBFS658