A fresh start for concessionary fares?

New reimbursement arrangements to be discussed at conference

In the four years since the government introduced free bus passes nationally for senior citizens, local authorities and operators have been caught up in acrimonious debate about reimbursement.

The principle that reimbursement rates should leave operators no better off and no worse off sounds eminently sensible. However, the need to speculate on what would have happened without the concession has been a cause of numerous rows, not helped by the lack of decent quality data to determine additional trips.

So the government's latest proposals set out in a new consultation document at the end of September, should be a step in the right direction. An early airing for them and opportunity to give feedback will be at the New Transit-organised Third National Concessionary Fares Conference next month.

The proposals are based on extensive research by respected academics and consultants and should be a step in the right direction. In essence, a new standard formula has been created for reimbursing operators which authorities are recommended to apply from April 2011. The formula has the potential to be as close as it gets to creating a situation which all parties can feel confident with. But the government has left the door ajar for a number of local factors to be taken into account. Only time will tell whether these prove to be an invitation for dispute.

Under the original formula dispute has certainly been prevalent. In some cases rates claimed by operators have varied hugely between apparently similar areas, creating suspicion that operators are attempting to rip off those local authorities without the skills to dispute the matter. In others, operators have claimed that they are being squeezed by councils attempting to save money by wriggling out of their statutory obligations. Neither 200 appeals, nor a number of Judicial Reviews have clarified the situation.

By happy coincidence, the DfT has calculated that the new formula will slash the £1bn spent each year on concessionary fare reimbursement by as much as £130m. This implies that up till now, reimbursement rates have on average overpaid operators by 13% relative to “no better off, no worse off” criteria. But whatever the rights and wrongs of the past situation, it is inevitable that a sudden reduction in the revenues received by operators will have a significant impact on many of them. The consequence could be increased fares for non-concessionary passengers, and reduced service levels. Local authorities may be saved some money on concessionary travel, but will be left with more tendered services at higher cost

This is not good news for bus passengers (whether concessionary or not), bus operators or local authorities. Indeed, despite the objective of reducing the scope for dispute, the financial pressures likely to arise could intensify conflicts between operators and bus operators, and create a host of unintended consequences.

The Third Annual Concessionary Fares Conference on November 4 will also include discussion of the impact of responsibility for concessionary fare schemes passing from district to county councils in April at the same time as the new reimbursement rules kick in. The conference will also feature expert panels debating the effects of the new procedures and how further reforms could be made.

Confirmed speakers and participants in panel discussions include:

• Adam Simmons, head of travel concessions, Department for Transport;
• Fiammetta Gordon, head of economics at the regional and local transport division, Department for Transport;
• James Aspinall, finance director, Centro;
• Andrew Last, director, Minnerva Ltd;
• Peter Shipp, chairman, EYMS Group;
• and Gordon Hanning, head of concessionary travel and integrated ticketing unit, Transport Scotland and many more.

Book your place at the Third Annual Concessionary Fares Conference online or call Abbie Sharland on 0845 270 7865

Full programme is available for download here.