Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report

1. Executive Summary

1.1. The purpose of this paper is to provide the basis for a response to Department for Transport consultation on possible changes to the administration of concessionary travel.

1.2. This paper seeks to:

(i) set out the background to the current administration of concessionary travel and the options proposed for consideration;

(ii) highlight the financial aspects of the different options;

(iii) identify how the issue affects the role of the County Council as Transport Authority; and

(iv) look at key issues including funding of the statutory scheme, the need for this to reflect changing demographics, the role of district councils, issue of passes and the impact on local bus service support.

2. Contextual information

2.1. Hampshire County Council has been invited to respond to the Department for Transport (DfT) consultation on two possible changes to the administration of concessionary travel on local bus services from April 2011. The first addresses where responsibility for administration of the statutory concession should lie. Currently, in shire counties, it is with district authorities. The second is that of discretionary concessions where, for example, some district authorities allow pass holders to travel earlier than the statutory scheme provides. The issue of funding will be subject to later consultation by the Department for Communities and Local Government but as a key consideration is reflected in the proposed consultation response.

2.2. The statutory minimum concessionary travel scheme, initially half fare, was introduced in 2001. In 2006 this became a free local scheme and in 2008 a free national scheme.

2.3. In areas where there are two tier authorities, the Travel Concession Authority (TCA) is the district. There are 263 TCAs nationally of which 73 are in consortia, as in Hampshire where the County Council administers the scheme for the districts, except Fareham, and also for Portsmouth.

2.4. The move to a free scheme in 2006 led to the number of passes issued in Hampshire almost doubling, with up to a third of all bus journeys in Hampshire now being made by pass holders. The significant value of this traffic to bus operators, and claims of insufficient reimbursement, resulted in the number of appeals nationally rising from three to over 70. Currently there are over 100. In Hampshire, companies within the three national groups generally submit appeals against each year's settlement arrangements.

2.5. The amount of funding available to each district for travel concessions is unknown, although Government is confident that the total funds available nationally are sufficient. The uncertainty is because the initial funding prior to 2006 was included within formula grant without any specific attribution to concessionary fares. A specific sum was added to Formula grant in 2006 but this was allocated on the basis of socio-economic factors considered relevant to a range of environmental, protective and cultural services and not specifically to the cost drivers affecting concessionary fare spending such as the size of the over 60s population or the local travel network. In 2008 a special grant was paid which more accurately reflected local conditions and the intention is for this to become formula grant from 2011.

2.6. The consultation starts from the premise that, overall, there is sufficient funding and that, with the possible exception of Devon, this will be achieved if funds are pooled on a county basis. The options are to keep administration at district level, move to a regional basis or to administer the funds centrally, but DfT makes clear that the upper tier authority is the preferred basis from 2011.

2.7. In addition, the consultation seeks views on discretionary travel concessions which each local authority can offer under the 1985 Transport Act. These relate not only to bus passes but can also include tokens or railcards. In respect of the pass scheme, some districts offer longer hours than 0930-2300 of the statutory scheme and some offer companion passes or other concessions such as use of the local ferry. In Hampshire, all but Havant offers discretionary concessions. This adds to costs, one reason that Government asserts that there is sufficient funding, and can lead to confusion for users and operators with different conditions in adjoining districts and local concessions not being offered to visitors.

2.8. The rather arbitrary funding by districts has resulted in `winners and losers', with some districts finding that increase in concession costs exceeds the value of the extra grants and others not spending all the increase. Since 2008, the cost now falls where the journey starts rather than where the pass is issued, which increases costs in visitor areas or where services interchange. Understandably the `losers' make more noise than the `winners'.

3. Finance

3.1. The issue of Central Government funding for the statutory scheme and the need to identify funding for discretionary concessions are addressed. The recommendation is subject to a guarantee from Central Government that and shortfall in funding in Hampshire should be met.

3.2. The need for Central Government funding to reflect the rising population of those aged over 60 is identified by proposing that payment reflects the number of trips made under the statutory scheme.

3.3. It is proposed that the actual issue of passes be handled by Central Government to reduce the administrative costs involved.

4. Performance

4.1. Key risks are identified and measures proposed should the response to the consultation be the approach adopted by Central Government.

5. Other key issues

5.1. The English National Concession Scheme is a popular measure which no Government is likely to withdraw, although the changes this April - withdrawal from tour buses for example - show that Government is prepared to consider adjustments. Although only a consultation on administration at this stage, with the two aspects of funding being considered separately, it is suggested that funding is intrinsic to the matter and should be addressed in the response.

5.2. The current value of the Concessionary Travel Scheme in Hampshire is around £10 million. This figure includes the Fareham scheme and excludes Portsmouth. This is higher than the current bus subsidy budget and is a key funding stream. Should the scheme not be operated by the County Council in the future, the Council would still be vulnerable to the scheme being underfunded, resulting in possible withdrawal of bus services by operators facing a revenue shortfall. This happens under the present system, leaving the Council under pressure to step in and provide funding for bus services.

5.3. The issue of funding divides into aspects: the amount of reimbursement received by operators and the amount of funding available to local authorities.

5.4. With respect to operator reimbursement, it is very difficult to be certain how much income operators would have received if the free fare scheme did not exist. What can be observed is that in the Hampshire scheme with an overall reimbursement rate of 48.4%, operators make appeals to the Secretary of State, albeit not always with success. In the Scottish and Welsh schemes in which reimbursement is at a standard national rate of circa 73%, no appeals have been lodged but the costs are starting to appear unaffordable, leading to some evidence of service reductions and consideration of possible amendments to the scheme.

5.5. The DfT has a working group looking to devise a national reimbursement rate, with weightings for local costs, rural and urban areas etc, as the Hampshire scheme currently provides. If agreed, this would remove the pressure of local legal appeals.

5.6. With regard to funding of TCAs, the Government is taking the view that what local authorities currently pay is, by definition, the cost of the scheme and it is this figure which it proposes to transfer to the upper tier authorities.

5.7. There is a debate regarding the merits of formula grant versus specific grant, and the County Council's general policy is to support general rather than specific grant funding, providing there are appropriate mechanisms to recognise the impact on floor authorities, such as Hampshire. A key issue, subject to appeals being resolved, is that funding from Central Government, as this is a national scheme, should reflect the actual number of journeys being made. Otherwise, although there seems to be evidence that the sharp rise since 2006 is beginning to taper off, the growth in that part of the population aged over 60 is likely to raise costs by more than the normal annual increase in Central Government funding.

5.8. Subject to satisfactory funding arrangements, it is preferable that responsibility for administration should rest with Hampshire as the Transport Authority. This would place another part of the funding mechanism for local transport under County Council control, otherwise the bus subsidy budget might be under pressure to make good service reductions prompted by changes to concession funding outside Council control. Flexibility to apply the concession to taxi-share schemes or other innovative transport, which is currently a district concession, will allow more effective transport provision going forward.

5.9. The consultation asks where discretionary concessions should lie. Under the 1985 Transport Act, any authority can introduce travel concessions. In Hampshire, although there is a county-wide scheme, discretions such as start time vary between districts and only one, Havant, restricts itself to the statutory scheme. MCL Consultants, which manages the Hampshire scheme, estimates the value of the discretions to be £711,000, out of the £10 million total, though this is disputed and much relates to concessions such as tokens.

5.10. In terms of the consultation, the practicability and efficiency of a county-wide scheme would be lost if local discretions regarding the pass itself remained with districts, though there is no reason why non pass-related concessions such as railcards might not remain with district councils. It is therefore proposed that discretionary elements which relate to the national pass should be determined by the upper tier authorities with the ability to introduce local variation in response to local requests and subject to necessary funding.

5.11. If a county-wide scheme were to be introduced, there will be pressure to harmonise discretions upwards and further work will be needed to calculate the cost of this, which is likely to be considerable. It is important to highlight that Central Government funding is likely to be limited to the statutory scheme so such costs would fall on the County Council.

5.12. Although not an issue for the consultation response, it is worth noting that the present discretions only apply to residents in their own district, so for example a compromise whereby all county residents could travel from 0900 in all Hampshire districts would suit those areas where the main off-peak bus of the morning runs before 0930 but avoids picking up the costs of those still in employment who travel before 0900, which is currently the case in the six districts which now offer all day travel to their pass holders. This could be a cost-effective option. Alternatively for simplicity, adopting the statutory scheme with a 0930 start would allow finite budgets to be used elsewhere, such as on innovative transport such as taxi-shares.

6. Conclusions

6.1. The introduction of a national free concession scheme has led to a substantial increase in demand whilst removing the income from fares previously paid. This, combined with muddled funding, has led to continuing disputes between operators and local authorities and arguments that insufficient funding is provided.

6.2. As a popular scheme, no national Government is likely to withdraw free fares for those over 60, although some further limitations may be introduced, such as no longer making the concession available to those in full time employment. Future demand is likely to rise due to demographic changes.

6.3. The concessionary scheme is a key element of transport funding with any shortfall likely to create pressure on the bus subsidy budget. As the Transport Authority, Hampshire County Council is the appropriate place for both these components to be managed.

6.4. All aspects of the pass scheme, including discretionary concessions, should be administered by the same authority, with the flexibility to make local variations where benefits warrant and funding is available or provided by others.

6.5. Future funding from Central Government should reflect the number of trips made and this should be a key part of the response to the DfT.

6.6. It is important to note that a number of districts currently offer schemes that better the national minimum scheme, and that consideration would need to be given to how the transition would be made to a county-wide scheme. There would be cost implications to the County Council of providing a county-wide scheme that betters the national minimum, should the districts not continue to fund the discretionary elements of their current schemes.

7. Recommendations

That the consultation response contains the following principles:

7.1. Subject to the Government fully funding the statutory minimum aspects of the scheme, as the Transport Authority, Hampshire County Council supports responsibility for the administration of concessionary travel passing to upper tier authorities as a key element of local bus service support.

7.2. Should the responsibility transfer to upper tier authorities, any future shortages in funding in Hampshire should be guaranteed by Central Government and should reflect the number of trips made by pass holders under the statutory criteria.

7.3. Both the statutory and discretionary travel concessions which relate to the national bus pass should be administered by upper tier authorities, with upper tier authorities retaining the ability to vary schemes locally in response to local requests and subject to necessary funding.

7.4. In advance of changes to the administration of concessionary travel being implemented, a thorough review of the national Concessionary Travel Scheme funding is carried out to ensure that sufficient funding is available in each upper tier authority area without the inclusion of discretionary elements.

7.5. One central national system of processing applications and issuing passes is investigated.

2064Rpt/754/PS

CORPORATE OR LEGAL INFORMATION:

Links to the Corporate Strategy

IMPACT ASSESSMENTS:

1. Equalities Impact Assessment:

1.1. The scheme is important for those over 60 who may not have access to a car or may have lower income.

2. Impact on Crime and Disorder:

2.1. Not applicable.

3. Climate Change:

a) How does what is being proposed impact on our carbon footprint / energy consumption?

The scheme favours the use of public transport by an important part of the community.

b) How does what is being proposed consider the need to adapt to climate change, and be resilient to its longer term impacts?

By encouraging use of public transport.

Appendix 1

Consultation Questions

Question 1:

Are there other problems, stemming from current administrative arrangements, that are not covered by this list?

Question 2:

Do you think the current level of administration is the most appropriate?

Question 3:

Do you think a system of `higher-tier' administration would be the most appropriate?

Question 4:

Do you think a centrally administered statutory minimum concession would be most appropriate at this time?

Question 5:

Do you think a regional tier of administration might ultimately be most appropriate?

Question 6:

Are there other options for administering the statutory minimum concession that are missing from this list?

Question 7:

Should all local authorities retain the ability to establish discretionary travel schemes using powers under the 1985 Transport Act as now?

Question 8:

Should the ability to establish discretionary travel concessions using powers under the 1985 Transport Act be limited to higher tier authorities only?

Question 9:

Should lower tier authorities' ability to establish discretionary travel concessions using powers under the 1985 Transport Act be limited to circumstances where they had to act jointly with higher tier authorities only?

Question 10:

Do you have any relevant data that could inform the cost/benefit estimates that will be used in the final Impact Assessment?

Question 11:

Bearing in mind that there would be a separate consultation on the funding implications of any change to the administration of concessionary fares, are there any other issues around funding that are not considered here?

Appendix 2

DfT Consultation Briefing Paper

Possible Changes to the Administration

of Concessionary Travel

Consultation Briefing

Announced: 28 April 2009

Deadline for Responses: 21 July 2009

Introduction

The consultation into `Possible Changes to the Administration of Concessionary Travel' was launched by the Department for Transport (DfT) on 28 April 2009. This follows ongoing development work by three DfT working groups covering: funding & administration, reimbursement and eligibility. These began at the end of August 2008.

The consultation document presents options for possible changes to two aspects of the administration of the concessionary travel scheme namely:

_ The responsibility for administering the statutory minimum scheme; and

_ The ability for local authorities to introduce their own discretionary travel concessions.

It is anticipated that any changes implemented as a result of this consultation would be expected to endure for the longer term. Furthermore the Government is keen to encourage the faster roll-out of ITSO smart ticketing infrastructure amongst operators and local authorities and any actual changes will be consistent with this aspiration.

Background

The statutory minimum concessionary travel scheme was first introduced in 2001. Following several developments the statutory scheme has provided free off-peak bus travel for eligible disabled people and those aged 60 or over throughout England since 2008/09.

Although the statutory minimum concession is funded by Central Government, it is administered by local authorities known as Travel Concession Authorities (TCAs). They have the statutory responsibility for issuing passes to those eligible and ensuring that bus operators offer, and are properly reimbursed.

The majority of TCAs are currently `lower-tier' local authorities: shire districts, unitary authorities, London boroughs and Passenger Transport Executives (PTEs). TCAs may also offer discretionary concessions over and above the statutory minimum. However, such discretionary elements must be funded from their own resources.

Taking into account the significant increase since 2001 in both the number of concessionary trips and the levels of funding at stake, the Government is considering what improvements can be made to current arrangements with this consultation facilitating the process.

Timetable

There currently exists uncertainty amongst local authorities surrounding who will be responsible for concessionary travel in the longer term, which may result in an unwillingness to invest in new systems. In order to provide some certainty, the Government are therefore consulting on the administration of the scheme now with its funding forming part of the wider local Government finance distribution consultation in 2010.

The consultation document outlines the following indicative timetable for these consultations, under the assumption that any changes will be implemented in April 2011. However, it is possible that the changes could be implemented earlier if there was sufficient support for such an approach.

Problems with the Current Scheme Arrangements

The consultation paper outlines the following non-exhaustive list of problems with the current arrangements for administering concessionary travel.

Discretionary Scheme Variations across TCA boundaries

The current scheme allows for free off peak travel for eligible persons across TCA boundaries. TCAs may also provide free peak travel as a discretionary top-up. However, confusion often occurs where a journey is made across a TCA boundary and similar discretionary schemes do not apply.

Burden of Negotiations

Outside London there are 263 TCAs. Whilst many authorities agree to work together in county-wide schemes, this is not always possible. Operators have identified the number of separate negotiation burdensome.

TCA Capacity

Smaller TCAs do not always have the capacity to dedicate the necessary resources and expertise to administer the concessionary scheme and reimbursement terms. This issue's importance increases as the scheme becomes more complex (including the future introduction of SmartCards) and involves more money.

TCA Funding

Concessionary travel reimbursements now represent a large and increasing proportion of smaller TCAs' budgets leaving them vulnerable to cost changes due gearing effect on council tax. The Government remains confident that current statutory scheme funding is sufficient, in aggregate. However, the number of TCAs exacerbates the challenge of accurately funding authorities through a formula.

Non-Alignment of TCAs and TAs

At present the responsibilities of Travel Concession Authority (TCA) and Transport Authority (TA) (currently higher-tier) are not in alignment. This can lead to complications where the county council, acting as the Transport Authority, could arrange with a bus operator to subsidise a particular route, while the operator has to negotiate with the relevant district councils, as the TCAs, for concessionary fare reimbursement on that route. In addition TAs are also better placed to conduct negotiations with operators.

Conflicts

Conflict between authorities and operators surrounding reimbursement arrangements and the wider terms of a proposed concessionary travel scheme is facilitated due to the current arrangements and has led to increases in appeals to the Secretary of State. Disagreements can also occur between authorities delivering joined up county-wide scheme. The current high number of TCAs increases the likelihood of these conflicts.

Option for Change

The options for change proposed in the consultation document, to address some of these issues, include:

Administration of the Statutory Minimum Scheme

1. Leaving things as they are now (i.e. largely with district councils);

From Section 7.8 of the consultation paper.

2. Moving responsibility to upper tier authorities only; or

From Section 7.12 of the consultation paper.

3. Centralising administration completely.

From Section 7.21 of the consultation paper.

A further option would be to administer the concession at a regional level, although this would require primary legislation and would require a longer timescale to implement making it an unrealistic option for implementation from 2011. From Section 7.33 of the consultation paper.

Government's Initial Preference - Option 2 since it could "generate significant synergies because it would harmonise concessionary travel responsibilities with wider transport authority ones for the first time....[and] is also the option most likely to....increase the roll-out of smart ticketing across England.

Ability for Authorities to introduce their own Discretionary Schemes

A. Leaving things as they are now;

From Section 8.5 of the consultation paper.

B. Removing the ability of district councils to implement discretionary concessions; or

From Section 8.9 of the consultation paper.

C. District councils only being able to implement discretionary concessions jointly with the relevant upper tier authority.

From Section 8.14 of the consultation paper.

Government's Initial Preference - Option B since this would ensure any efficiency savings generated by the preferred change to the administration of the statutory minimum concession would not be lost. This would not however preclude discretionary concessions still being implemented at the district council level.

Option Interaction

Options 1 to 4 (Section 7) cover the transfer of responsibility for the administration of the statutory minimum scheme with options A to C (section 8) covering changes to who can implement discretionary concessions. Whilst the options cover two distinct areas of activity, they must be considered in conjunction. The consultation paper includes a matrix, on page 33, outlining the implications for the various option combinations.

Transfer of Concessionary Travel Funding

The statutory minimum concession is currently funded through a combination of Formula Grant (administered by CLG) and Special Grant (administered by DfT). Discretionary concessions are funded by individual authority resources. Some of the options proposed would result in the transfer of funding outlined.

- Removing funding from lower tier authorities

FORMULA GRANT - Firstly, an amount to be removed from each lower tier authority would be calculated. This would not be a simple process since allocations for individual activities are not identified. Any change would then be subject to consultation during 2010 as part of CLG's development of the wider local Government finance system.

However, the process generally involves reducing the control total for the appropriate Relative Need Formulae (RNF) and deciding whether transferring the service should change the distribution of that RNF and therefore the formula. Baseline adjustments must also be made either according to spend (CLG's normal approach) or on some other basis.

SPECIAL GRANT - The amount payable to each TCA is easily identified and would simply be paid to upper tier rather than lower tier authorities. However, the Government has always intended to divert Special Grant funding into the wider Formula Grant settlement once the impact of the new concession was clearer. It is expected that this will happen alongside any changes following from this consultation.

DISCRETIONARY ARRANGEMENTS - If the responsibility for administering the statutory minimum and discretionary concessions is transferred from lower tier authorities then the task of estimating how much funding to transfer is simplified. However, if the two responsibilities are split then calculating how much funding to transfer is more complicated and will be done based on estimates. This is because these two categories of spending are not separately identified by local authorities in their spending returns.

- Implications for Met Districts, London Boroughs and Unitaries

Unitary authorities, London boroughs and metropolitan districts have responsibility and receive funding for both lower- and upper-tier services via the Environmental, Protective and Cultural Services (EPCS) RNF. These authorities would also have concessionary fares transferred from the district-level RNF to the county-level EPCS RNF. If the distribution for these two formulae were the same they would see little change in funding. However, in all likelihood the transfer will result in a changed distribution basis.

Impact Assessment

The consultation paper includes a draft Impact Assessment in Annex F (page 63). Consultees are requested to comment on the analysis of costs and benefits, giving supporting evidence wherever possible. In addition, alternative methods for reaching the objective, possible unintended consequences of the policy, and practical enforcement or implementation issues are also welcomed.

Consultation Questions

The consultation paper poses a series of questions throughout these have been consolidated in Annex A.

Submission Details

Stakeholders are requested to submit their views, to the consultation, using the Response Sheet provided by the deadline of 21 July 2009.