04 November 2010

Cottoning on

The Department for Transport has cottoned onto how bus operators have been legitimately receiving more in reimbursement rate for individual holders of English National Concessionary Bus Passes (ENC) than the same operators charges for unlimited adult day ticket. The ENC scheme was introduced with a reimbursement rate considerably below pound-for-pound as the DfT argued that now passengers could travel for free, more journeys would be taken and operators should not be better or worse off as a result. The judicial reviews that followed showed that in many cases bus operators successfully argued that they were worse off as local councils were free to decide the reimbursement rate themselves - and rates differed wildly all over England.

However, where bus operators are gaining significantly is when multiple journeys were made by pass holders on the same operator's services. Take Grimsby, for example, where only three bus services call at the local hospital (Services 8, 9/9A & 51). For a pensioner wishing to make a return journey here by bus would necessitate at least 4 single journeys, provided they did not live on the route lengths of the calling services.

So, Mrs X lives on the Wybers Wood estate to the west of the town, and has to catch either Service 16, 45 or 250 to a point where she can intercept one of the hospital calling services (probably the town centre). That's two trips one way, and the same again to go home. Each leg is reimbursed to the operator at a percentage of the average fare for that route. Totalled, this can often see the amount operators receive being in excess of an adult day ticket for the entire operator's urban network.

But that's the product of the manner in which the DfT hurriedly forced the system on local authorities and operators. There is no alternate method to claim for these journeys other than on an individual leg-by-leg basis. Only now, after a number of years and after much silence from bus companies on the subject, DfT has finally realised the revenue many operators have benefited from. Cue the DfT's consultation on ENC reimbursement rates, which it expects between £67-133mil to be saved by not paying operators as much. The consultation, amongst other things, now wants to consider day, week and month tickets - not just singles and returns (where the latter is offered).

It is clear that if the DfT gets its way, operators' income will reduce by more than the 20% reduction in BSOG from April 2012. Combined, one LEYTR operator told us that they expect to be "about as financially stretched as if BSOG was completely withdrawn, as had been considered". A number of operators in trade magazine 'routeone' have said 10% fare increases are on the cards in addition to the annual increases to cover fuel and wages. DRM of Bromyard is quoted as having calculated its total reimbursement dropping from £267k (2009/10) to £141k (2010/11) and then £143k (2011/12).

The likely result? Reductions in commercial bus services - specifically those in rural areas, which the Tories will find less palatable owing to their traditional support from these areas. Operators will justify cuts to rural routes by pointing out that rural passengers are already subsidised considerably more than their urban counterparts and on some occasions it's urban passengers' fares that help to maintain loss-making rural routes. There's only so far you can go before something has to give. And like the rail industry now, where the Tories are having to face the fall-out of cuts to a privatised industry it instigated, equally searching questions will be asked when the party's traditional voters find their bus service is being withdrawn without replacement. Free passes are all well and good provided you have a service on which to use them.

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