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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 06/09/2005
Concessionary Fares - Introduction of Free Travel



Summary & Purpose
To advise Members of the potential impact of the Chancellor’s 2005 budget announcement to introduce statutory free concessionary travel on local bus services for people over 60 and for disabled people, from 1st April 2006.

Quality of Life Implications
Natural Resource Use
Pollution Prevention and Control
Biodiversity and Nature
Local Environment
Social Inclusion
Safe Communities
Local Economy
Natural
Resource Use
Pollution
Prevention and Control
Biodiversity
and Nature
Local
Environment
Social
Inclusion
Safe, Healthy
and Active
Communities
Local
Economy
N/A
Positive
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Positive
Positive
Positive


APPENDIX E
WAVERLEY BOROUGH COUNCIL

EXECUTIVE – 6TH SEPTEMBER 2005

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Title:
CONCESSIONARY FARES – INTRODUCTION OF FREE TRAVEL
[Wards Affected: All]
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Note pursuant to Section 100B(5) of the Local Government Act 1972

The Annexe to this report contains exempt information by virtue of which the public is likely to be excluded during the item to which the report relates, as specified in Paragraph 8 of Part I of Schedule 12A to the Local Government Act 1972, viz:-
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Summary and purpose:

To advise Members of the potential impact of the Chancellor’s 2005 budget announcement to introduce statutory free concessionary travel on local bus services for people over 60 and for disabled people, from 1st April 2006.

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Quality of life implications – social, environmental & economic (sustainable development):

E-Government implications:

There are currently no e-government implications arising from this report.

Resource and legal implications:

The additional cost of meeting the Council’s statutory obligations to implement free concessionary travel is likely to be considerable. The Government is allocating funding to cover the additional costs but has yet to confirm how it will distribute the funding across local authorities in England.

There is strong concern that the central Government grant will be insufficient to meet the additional costs and also that national distribution formulas tend to disadvantage Surrey and South East England authorities. There is a risk that the General Fund will have to cover some of the additional costs of the Concessionary Bus Fare Scheme from 2006/7.

This potential extra cost was referred to in the Financial Strategy Review in July 2005, presented to the Executive.

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Background

1. The Transport Act 2000 clarified that Boroughs and Districts had the statutory duty to provide the Concessionary Fares Scheme. Hitherto, in Surrey, the County had provided this service. Under the Act national minimum standards were set for the Concessionary Fares Scheme whereby people aged 60 and over and people with disabilities in possession of a bus pass must be offered, as a minimum, half fare travel on local buses. The half fare must be offered on any bus service which is entitled to the Bus Service Operators Grant (previously known as Fuel Duty Rebate).

2. Authorities have been free to offer more generous schemes or alternatives under the powers given in the Transport Act 1985. A number of areas in England have exercised this power with reimbursement costs funded by local council tax payers. Some areas have enhanced their schemes to offer free travel.

3. The Act requires local authorities to reimburse bus operators for providing the concessions. Reimbursement arrangements include the requirement that bus operators should be no better and no worse off as a result of participating in a Concessionary Fares Scheme in terms of revenue and vehicle resource.

4. Calculation of reimbursement by local authorities should take account of the number of passengers who travel at a reduced fare, the additional costs incurred carrying extra passengers generated by the scheme and the fact that concessionary fares tend to encourage more passengers and extra journeys (otherwise known as the “generation factor”).

Concessionary Fares in Waverley

5. The statutory obligation is on the district or unitary authority as the “travel concession authority”. However, the scheme can be administered by another authority or agent on their behalf. In Surrey the scheme is currently administered by the County on behalf of the Boroughs and Districts. The Boroughs and Districts maintain responsibility for issuing the bus passes to eligible local people.

6. Boroughs and Districts are only obliged to run the Concessionary Fares Scheme within their own boundaries. However, there are considerable benefits to operating as a consortium across Surrey.

7. In Waverley, an estimated number of people who qualify for concessionary fares is 31,545. Of these 26,273 are over 60 and 5,272 qualify on grounds of disability.

8. In 2004/05, the take up of permits in Waverley was 7,608, approximately 24% of the total eligible population (of these, 7,086 were people over 60 – 27% of the population over 60, and 522 were disabled people – 10% of eligible disabled people)

Introduction of Free Travel

9. In the Chancellor’s Budget speech, on 17th March 2005, the Government announced an increase in the statutory concession from half fare to free off peak local bus travel for those aged 60 and over and for people with disabilities, with effect from 1st April 2006. This will be introduced as an order made under Section 147 of the Transport Act 2000.

10. Off peak travel is travel after 9.30am, Monday to Friday, and all day at weekends.

Implications of Free Travel

11. Where free travel concessions are operated in parts of the country the take up of bus permits is shown to be around 80% of the eligible population. For Waverley this would mean a possible increase of permits issued from 7,608 to over 25,000.

12. In 2004/05, Waverley contributed 211,793 to subsidise the half fare Surrey-wide scheme. This equated to 6.71 per head of the estimated eligible population or 27.84 per permit issued.

13. The formula for calculating the effect of free travel on the usage of public transport is complicated. No decision has yet been made as to how this will be calculated in future and so expenditure on the scheme from 2006/07 is unknown. It will be important to have more efficient technologies in place to calculate usage and accurate reimbursement levels. However, this in turn has cost implications.

14. The Government will increase funding to English local authorities by 350m per year from 2006/07, to help meet the costs of providing the additional concessionary fares. The Government has not yet allocated the funding across England and so the additional income for Waverley to support this scheme from 2006/07 is unknown. It is likely that the budget will be top sliced for London and metropolitan schemes.

15. It is anticipated that funding will be distributed through the Revenue Support Grant (RSG) and funding for Concessionary Fares might be difficult to follow through, as the RSG system is not entirely transparent and quite often increases in grant never materialise.

16. Surrey County Council has estimated the possible financial impact for each Surrey Borough based on its current share of the overall budget. Using one formula for the calculation of reimbursement, the County has presented indicative figures for the likely future costs of the scheme. The figures for Waverley are presented in the (Exempt) annexe to this report.

17. The anticipated increase in the number of eligible people presenting themselves to Waverley Borough Council for a bus pass has staffing and financial implications for the local delivery of the scheme in terms of the preparatory administration and the issuing of passes at reception and in the locality offices.

Implications of Free Travel for Community Transport

18. Little consideration has yet been given nationally or county-wide to the implications of free travel on Community Transport (CT) schemes.

19. CT operators have previously chosen not to participate in the Concessionary Fares Scheme as :

a) reimbursement has been calculated on mileage; CT generally has low mileage; b) CT operators use smaller vehicles without additional capacity. There is no flexibility for concessionary travel to generate extra journeys and the “generation factor” does not therefore apply; and c) the nature of CT means that most passengers are eligible for concessionary fares and few passengers would be paying full fare.
20. It is a matter of debate whether CT is included under the definition of public transport, but in some areas, especially Waverley, CT is providing more mainstream transport to meet the needs of rural communities where public transport is limited. It is unclear whether CT schemes will participate in the Concessionary Fares Scheme in the future.

Concerns

21. In Surrey the local authorities have the following concerns: a) the Chancellor’s national budget provision of 350m is considered inadequate to cover the costs of the free scheme; b) it is not clear how the government will allocate funding across local authorities;

c) national distribution formulas tend to disadvantage Surrey and the South East; d) the impact of free travel may not have been properly estimated; e) there is no guidance as yet on how to calculate reimbursement to bus operators for free travel schemes; f) the timescales are very tight and operational decisions may have to be made without knowing the allocation of government funding; g) it is not clear if funding takes account of the cost of amending schemes and whether it is available for introducing new technology (e.g. ‘smartcard’ technology) to enable authorities to provide a more effective and efficient system in terms of monitoring, administration and prevention of fraud; h) the scheme is for local travel only and does not take account of the need to travel outside or across borough boundaries; i) there is no apparent incentive for local authorities to work together to provide countywide schemes and cross border travel concessions; and j) the implications for Community Transport schemes have not been fully considered.

Conclusion

22. Under the Transport Act 2000, Waverley Borough Council (along with other local authorities in England) has a statutory obligation to provide subsidised travel for people aged 60 and over and people with disabilities.

23. From April 2006, the Government has increased the statutory minimum requirement from half fares to free fares for older and disabled people, on local bus services in England, with no charge for the annual pass.

24. The Government will increase funding by 350m across England for the additional cost of this scheme but there is, as yet, no information on how this will be allocated between local authorities. 25. There is no guidance on the impact of free travel on the take-up of permits and on changes in travel usage. It is not clear how reimbursement to the bus operators will be calculated in future.

26. Based on Surrey County Council’s calculations, Waverley’s contribution to the scheme is likely to increase significantly.

27. There are further implications for the administration of the scheme locally.

Recommendation

The Executive is asked to note this report and to await further information on the allocation of funding.

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Background Papers (DoH)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.

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CONTACT OFFICER:

Name: Alayne May Telephone: 01483 523350

E-mail: amay@waverley.gov.uk

Comms/Executive/2005-06/093