THE BUS PASSENGER SURVEY AND CONCESSIONARY FARES IN THE UK MORE LIGHT IN THE DARKNESS? 1 INTRODUCTION Ian Wright Passenger Focus Andrew Meaney, Matthew Shepherd and Andrew Booth Oxera Consulting Ltd There is a considerable history in the UK of providing elderly and disabled passengers with reduced-price travel on local buses. Furthermore, the English concessionary fares scheme introduced in 2000 and expanded in 2008, means that the elderly and certain categories of disabled people are currently entitled to free bus travel anywhere in the country. 2 Similar schemes in Scotland, Wales and Northern Ireland are also popular. While the scheme enjoys considerable political support, and has proven popular with users, such popularity has come at a cost. Bus operators are reimbursed by Travel Concession Authorities for carrying concessionary passengers under guidelines set out by the UK Department for Transport (DfT). 3 Figure 1 illustrates how the cost of the scheme has increased over time. 1 The views expressed in this paper are those of the authors only and should not be taken to reflect the position of Passenger Focus. Not all authors agree with all comments made in this paper. 2 The age at which people become eligible is increasing to come into line with the state pension age of 65 for women and 66 for men. The precise details are complex, but are set out here: http://www.direct.gov.uk/en/travelandtransport/publictransport/busandcoachtravel/dg_10036264 3 Available from http://www.dft.gov.uk/publications/reimbursing-bus-operators-for-concessionary-travel/ 1
Concessionary fares support from central government ( million, 2010/11 prices) Figure 1 Cost of the concessionary fares scheme 1,200 1,000 800 600 400 200 0 Source: Department for Transport (2012), Bus statistics, Table 0502b. As can be seen, in 2010/11 the concessionary fares scheme cost more than 1 billion in England. As highlighted in previous ETC papers, 4 there has been a lack of analysis to understand who benefits from the scheme and how these benefits compare against the costs. 5 One study that has looked at this highlighted the limited data available to researchers in this area and presented the results of new research, which suggested that 50% of passholders in a particular area of the UK made no trips in the sample period, while 2.5% of them made 25% of all trips. 6 Another paper queried whether the concessionary fare policies in England, Scotland and Wales are transport, social or back to work policies. This uncertainty is important because without clearly articulated objectives, it is difficult to assess whether the policy is offering value for money. While it is outside the scope of this current paper to suggest what the objectives of the concessionary fares policy might be such a task is properly left to policymakers such uncertainty provides important context. To provide information in this area, the authors have considered the data from the 2011 Bus Passenger Survey. It is important to note that the analysis presented in this paper aims to provide information on the likely benefits of the 4 Last, A. (2010), Smartcard data on use of free concessionary travel by older and disabled bus passengers, Papers and Proceedings of the European Transport Conference, October; and Last, A. and Meaney, A. (2011), Concessionary fares policy in the UK what lessons can be learned?, Papers and Proceedings of the European Transport Conference, October. 5 See, for example, Coronini-Cronberg, S., Millett, C., Laverty, A.A. and Webb, E. (2012), The impact of free older persons bus pass on active travel and regular walking in England, American Journal of Public Health, e-view ahead of print: 10.2105/AJPH.2012.300946 6 Last (2010), op. cit. 2
concessionary fares scheme. It does not, however, attempt to quantify the extent of these benefits, or undertake a cost benefit analysis (CBA) of the scheme. INTRODUCTION TO THE BUS PASSENGER SURVEY The Bus Passenger Survey is conducted annually by Passenger Focus, the independent UK passenger watchdog, to gather information about passengers experiences of travelling by bus in order to better understand and represent passengers interests and concerns. In Autumn 2011, more than 20,000 responses were gathered from a representative sample of trips from across the UK. 7 Weightings were then applied to each respondent, calculated by comparing the demographic characteristics of passengers on the buses where the questionnaires were handed out with those of the respondents (not everyone accepted a survey and, of those who did, not everyone replied). Some of the key findings from the Autumn 2011 Survey are as follows. the proportion travelling on fare paid tickets ranged from 49% to 76% (averaging 64%); the proportion who say they have a disability ranged from 17% to 29% (averaging 21%); those who have no access to private transport ranged from 24% to 40% (averaging 33%). ASSESSING THE CONCESSIONARY FARES SCHEME Given its cost, the scheme may be expected to be subject to a CBA to establish whether it offers value for money. Such an assessment would require two parts: an assessment of the costs of the scheme, which are both easily measured and well-understood (although they are a point of contention between operators and local authorities). Moreover, they have been the subject of an extensive programme of research, 8 outlined at previous ETC meetings; an understanding of not only who benefits from the scheme, but also what benefits they derive from it. This is less well-known and there is much less evidence on which to base quantification than is the case for the costs of the scheme. This paper does not consider costs, but aims to develop an understanding of the benefits arising from the policy. Such a scheme is likely to bring many benefits, including: 7 Not all areas of the country were surveyed. More detail is available from http://www.passengerfocus.org.uk/research/bus-passenger-survey 8 The research programme was conducted by the Institute of Transport Studies, University of Leeds and the findings are available from http://www.dft.gov.uk/publications/research-into-the-reimbursement-of-concessionary-fares/ 3
economic benefits: enabling elderly and disabled people to make a greater economic contribution than they may otherwise be able to, or reducing the costs which these groups can incur for example, by encouraging greater mobility among passholders, which may in turn reduce the costs to the National Health Service; environmental benefits: by contributing to modal shift; and social benefits: by increasing the ability of passholders to socialise or contribute to society for example, through voluntary work. While it may be difficult to quantify the benefits of such a scheme (and there may be some discussion on whether benefits such as increased mobility can be quantified accurately), it seems sensible to suggest that the appropriate benefits should be considered carefully. Any discussion of the benefits of a programme of this sort requires an assessment to be made against a counterfactual ie, what would be in place in the absence of the scheme. Given a lack of economic or political debate in this regard, this is challenging, and a complete specification of the counterfactual would need to address what would happen both to demand (commercial and concessionary), and to the money that is currently spent on the concessionary fare scheme (for example, whether this would be used to subsidise a larger bus network, or reclaimed by central government to reduce taxes). In addition to the level of the benefits, the distribution of the benefits among the population has important equity implications, which will also need to be considered in any CBA of the scheme. Both the level and distribution of benefits of the concessionary fares scheme are likely to depend on the type of people who are using the scheme. The remainder of this paper outlines: the frequency with which respondents used bus services; and the journey purposes of users. These aspects are likely to be key determinants of the level and distribution of the benefits of the concessionary fares scheme and are readily derived from the Bus Passenger Survey. FREQUENCY OF USE As outlined above, previous analysis using data for four districts in Lancashire, UK, suggested that a relatively small percentage of passengers made a high percentage of the overall journeys. 9 Analysis of the Bus Passenger Survey, outlined in Figure 2, suggests that, of all the trips made by elderly people, approximately 50% were made by 25% of the population, which is broadly comparable with both disabled people and all passengers. It is not possible to tell, using this survey data, what proportion of those people within the population who were eligible to travel actually did so. The results 9 Last (2010), op. cit. 4
Journeys presented here are therefore not directly comparable to those previously presented at the ETC. It is important to note that throughout this paper, the elderly and disabled people are identified by their use of an elderly or disabled person s pass. As the statutory scheme entitles concessionary travel on buses after 09:30, it may be that elderly or disabled people who need to travel before this time are required to purchase a commercially priced ticket (although local authorities can extend the operating hours of the schemes at their expense). Figure 2 Journey distribution (of those passengers who actually travelled) 100% 80% 60% 40% Disabled Elderly All 20% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Respondents Source: Bus Passenger Survey and Oxera analysis. An understanding of how often passengers use bus services is a useful starting point in a discussion of the concessionary fare scheme. Below we add to our understanding by considering the journey purposes of respondents to the Bus Passenger Survey. JOURNEY PURPOSE An assessment of the journey purposes of those using the concessionary fare scheme is likely to be important, as these journey purposes will determine the net benefits that the scheme produces. This is because the way in which passengers respond in the counterfactual (of either no or an amended scheme) may depend on their journey purpose. For example, if the journey purpose is to travel to work, this is likely to result in an economic benefit (and may introduce an environmental benefit if the trip would otherwise be made by car) under both the actual and counterfactual, unless the trip were no longer made in the counterfactual; while a trip to visit a friend or relative is likely to 5
result in a social and/or environmental benefit, but may be less likely to still be made in the counterfactual than a trip to work. Given the difficulties in developing the relevant counterfactual, what follows is an assessment of the gross benefit of the scheme, rather than the net benefit. Figure 3 shows journey purposes for each passenger type. It was compiled using passengers responses regarding their primary journey purpose on that day not their main journey purpose facilitated by bus travel in general. However, in a large survey, it may be expected that the journey purposes of the survey respondents are representative of bus users. It can be seen that shopping is the main journey purpose for disabled and elderly passengers with concessionary passes, while travelling to work or place of education are the main journey purposes for other passengers. Figure 3 Main journey purposes by passenger type 100% 90% 80% 70% 60% 50% 40% 30% Other/not stated Work Education Medical appointment Visiting friends/relatives Leisure Shopping 20% 10% 0% Disabled Elderly Others Source: Oxera analysis, Bus Passenger Survey. It is also interesting that there are considerable differences between those passengers using a disabled person s pass and those using an elderly person s pass. In particular, disabled people are more likely to use their pass to travel to work or a place of education, while elderly people are more likely to use their pass to go shopping. This suggests that the net benefits arising from the concessionary fares scheme for these two groups may differ considerably. A noteworthy minority of both elderly and disabled passholders (approximately 10% of respondents) use buses to travel to medical appointments. Given the potentially important differences in benefits between bus users with access to a car and those without (which may arise because of the different options available to these groups of users in the counterfactual scenario of an 6
amended or curtailed scheme), Table 1 illustrates the journey purposes of survey respondents. Table 1 Trip purpose by access to car (%) Journey purpose Disabled Witho All ut car Elderly Witho All ut car All Other Witho ut car Shopping 31.6 32.8 53.0 54.2 15.3 14.9 Leisure 9.9 10.7 9.7 7.8 5.7 5.0 Visiting friends/relatives 14.7 15.9 9.4 10.3 8.5 9.3 Medical appointment 9.1 8.7 8.1 8.0 3.0 3.2 Education 8.6 8.9 0.6 0.5 17.8 20.0 Work 10.8 9.6 4.2 3.5 39.5 37.9 Other/not stated 15.3 13.4 15.1 15.9 10.1 9.8 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Oxera analysis of Bus Passenger Survey data. Table 1 suggests that, in general, there is relatively little difference between respondents who did, and did not, have access to a car. Notable differences include that elderly passholders without access to a car are less likely to use buses for leisure than is the average for the entire group of elderly passholders, but more likely to use buses for shopping or visiting friends or relatives. Again, this suggests that these groups may experience different net benefits between the current situation and the counterfactual owing to the different journey purposes. These journey purposes can be used to begin to understand the benefits of the scheme by adding to our understanding of the economic, social and environmental benefits of the scheme. For example, a recent report for Greener Journeys suggested that, on average, the amount spent on a shopping trip made by bus was 29.66, although the authors note that older people appear to spend less. 10 If similar values could be derived or refined for the other benefits arising from journeys made using concessionary passes then the value of the gross benefit of the scheme could be estimated. In order to conduct an appropriate appraisal, this value would then need to be adjusted to account for how many of the journeys would continue to be made under the counterfactual, to obtain the net benefit from the scheme. To complete the CBA, this net benefit would then need to be compared with the net cost of the scheme. If we assume that the revenue funding for the concessionary fares scheme is part of a total pot of subsidy available for bus services, there is a risk that continued funding of the scheme in its present 10 Mackie, P., Laird, J. and Johnson, D. (2012), Buses and Economic Growth: Making the Link, June, p. 15, available at www.greenerjourneys.com. 7
form could affect the ongoing provision of commercially unviable bus services, which are currently subsidised by local authorities. The impact of cuts to bus services has been investigated in recent research by Passenger Focus. 11 The withdrawal of bus services from local areas may leave the number of people eligible to use the concessionary fares scheme unchanged, but reduce the number of services that are available to travel on. 12 The data from the Bus Passenger Survey can be used to provide some insight into how passenger benefits may change in this counterfactual. Figure 4 shows the proportion of passengers who responded to the survey saying that they would not have made the journey on that day in the absence of the bus. Given that respondents could have selected would have taken the train, or other alternative modes of transport, those respondents who selected would have made the journey another day could be understood to mean that they intended to make the journey by bus another day. 13 Figure 5 illustrates the proportion of passengers who selected either would not have made the journey without the bus or would have made the trip another day, and therefore could be seen as representative of those who would not make the trip at all without the bus service. Figure 4 Proportion who would not have made the journey without the bus service on the day Work Education Medical appointment Visiting friends/relatives Disabled Elderly Others Leisure Shopping 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Source: Oxera analysis, Bus Passenger Survey. 11 Passenger Focus (2012), Bus service reductions the impact on passengers, July. 12 This may arise because of the reductions in funding available to local authorities, rather than because of the cost of the concessionary fares scheme. 13 This is a relatively crude assumption, and the following statistics should be treated with caution. 8
Figure 5 Proportion who might not have made the journey without the bus service Work Education Medical appointment Visiting friends/relatives Disabled Elderly Others Leisure Shopping 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Source: Oxera analysis, Bus Passenger Survey. Figures 4 and 5 show that, across all passenger types, there is a large group who would have either not made the trip, or would have made it another day by bus. One possible counterfactual is that the bus service is withdrawn, possibly for the reasons highlighted earlier. Whether or not removal of the bus service would prevent people from making journeys would depend on the nature of their trip. For discretionary trips, the removal of the bus service in the counterfactual may have a large effect on the continuation (or not) of these activities. For other journey purposes it seems more likely that passengers would continue to make their journey by other means, or adjust the time when they make their trip. Some passengers preference for delaying their journey over using another mode of transport suggests that their journey may not be sufficiently important to warrant a trip in the absence of the bus. From Figure 5, shopping appears to be the least important and/or urgent journey purpose, by a large margin. However, the extent to which this is the case is likely to depend on the types of good these customers were taking the bus to purchase, which it is not possible to determine using the Bus Passenger Survey. As with the earlier discussion about the journey purpose affecting passengers choices, within journey purposes this might also vary considerably. Consider the case of shopping for groceries. Small villages or other places from which customers travel to buy groceries will often have a nearby alternative, such as a convenience store. Customers may travel to urban 9
areas to access lower prices and greater choice, but cannot stop buying food altogether when prices or quality change. Therefore, in the absence of a bus service on which to use the concessionary pass, passengers may face having to pay more, accept lower-quality services or products, or have less choice, which is a loss to consumer welfare. 14 This section has considered the implications for the benefits experienced by one type of passenger (ie, those using buses to make a shopping trip) under one possible counterfactual. However, a more detailed assessment would be a valuable addition to the policy debate. Having examined journey purpose and trip frequency, the two are now combined, as it is possible that passengers use of buses varies by frequency of use. Our analysis of journey purpose by frequency is shown in Figures 6 and 7. Figure 6 Disabled passengers journey split by frequency (journeys per fortnight) 100% 90% 80% 70% 60% 50% 40% 30% Other/not stated Work Education Medical appointment Visiting friends/relatives Leisure Shopping 20% 10% 0% More than 20 11-20 6-10 2-5 One Source: Oxera analysis, Bus Passenger Survey. 14 This is also commented on in Passenger Focus (2012), op. cit, p. 6. 10
Figure 7 Elderly passengers journey split by frequency (journeys per fortnight) 100% 90% 80% 70% 60% 50% 40% 30% Other/not stated Work Education Medical appointment Visiting friends/relatives Leisure Shopping 20% 10% 0% More than 20 11-20 6-10 2-5 One Source: Oxera analysis, Bus Passenger Survey. Some trends are perhaps to be expected for example, that the proportion of trips accounted for by travel to work or place of education generally increases with journey frequency. Medical trips are also made more often by those making fewer journeys per fortnight, as expected. There was no clear difference in the proportion of trips to visit friends and relatives between frequency categories for either of the two concessionary groups, whereas there was a significant increase in this journey purpose for other passengers making between one and five trips per fortnight. The proportion of leisure trips also had a stronger (negative) relationship with journey frequency among other passengers than among passholders. The combined proportion of leisure and visiting friends and relative trips is greatest in the frequency category of one journey per fortnight for all three passenger types. There is also a marked drop in the proportion of shopping trips among those elderly passholders making one journey per week. This mixture is an important consideration because it suggests that the distribution of benefits varies between the frequencies with which passengers use bus services. Therefore, when considering the relevant counterfactual, the impacts on different users will need to be considered. Another potential way of assessing how the benefits of the concessionary fares policy are distributed is to look at how trip frequency changes with the age of the passenger, as illustrated by Figure 8. 11
Figure 8 Trip frequency by age band (journeys per fortnight) 100% 90% 80% 70% 60% 50% 40% One 2-5 6-10 11-20 More than 20 30% 20% 10% 0% 60-64 65-69 70-79 80+ Source: Oxera analysis of Bus Passenger Survey. As can be seen, the distribution of trip frequency does not change substantially with age, suggesting that age per se is not an important factor in determining how often a passenger uses a bus, given that they use them at least one a fortnight. The Bus Passenger Survey cannot be used to determine whether or how the proportion of eligible people using their bus passes varies by age. CONCLUSIONS The benefits of the concessionary fares scheme, whether they be economic, social or environmental, are multiple and complex, and there has been remarkably little evidence developed on the benefits of a scheme costing 1 billion per year in England alone. This paper has used the Bus Passenger Survey to begin to untangle some of the gross benefits and who these benefits accrue to. The research has found substantial differences in how different types of passholder use the concessionary fares scheme, and are therefore likely to derive different benefits from it. Many holders of disabled person s passes appear to use the bus service to access work or a place of education, which is likely to have significant economic and social benefits. In contrast, many holders of the elderly person s pass appear to use bus services for shopping trips, where any economic benefits may accrue through different mechanisms. There also appear to be an important minority of trips made to access medical care. 12
Nonetheless, we recognise that this study does not provide a complete understanding of the benefits and beneficiaries of this scheme. In order to assess fully this important policy, we would suggest that a further programme of research could be undertaken. Such a programme should include increasing the granularity of analysis so that different beneficiaries can be understood, including those passengers for which the concessionary scheme is a nice to have and those for which it enables them to leave the house and engage in activities that are either beneficial to themselves and/or wider society. A more important objective is perhaps to articulate clearly the objective of the policy (whether it aims to facilitate a return to the labour market, increase mobility, etc), against which the benefits of the policy can be measured. It will then be important to specify (carefully) the relevant counterfactual be this against a world in which there is not a concessionary fares scheme, a meanstested scheme, a scheme in which hours of operation are reduced, etc. This counterfactual is likely to vary depending on whether the objective is to assess whether the scheme could/should be adjusted, or to assess whether the scheme overall has provided value for money. The benefits that arise from the concessionary fares scheme should be placed in the context of the wider bus industry in Great Britain, which is currently in a state of flux, with local government funding being withdrawn in many areas and some areas considering a move from a system of competition between operators to a franchising system. In this context, an understanding of the impacts of a scheme costing a substantial sum need to be much better understood than is currently the case. 13