Travel concessions (Eligibility) Act 2002: Regulatory impact assessment
Regulatory Impact Assessment
Introduction
1. This Regulatory Impact Assessment estimates the costs and benefits of the Travel Concessions (Eligibility) Act 2002.
Purpose of the Act
2. The Act has a single purpose, that is, to equalise at 60 the age at which men and women become eligible for travel concessions.
3. Previous legislation entitled those who had reached state pension age - within the meaning of the Pensions Act 1995, ie 65 for men and 60 for women - to be eligible for travel concessions provided by their local authority. The granting of travel concessions in areas outside Greater London is covered by sections 93 to 102 of the Transport Act 1985, and within London by sections 240 to 244 of the Greater London Authority Act 1999. The Transport Act 2000 introduced a mandatory minimum level of provision requiring local authorities to offer half price fares on local bus services for those of state pension age and disabled people (defined in section 146 of the Transport Act 2000). The discretion of local authorities has been retained however and outside London they are free to offer greater concessions (eg reductions of more than half fare) or to extend concessionary travel to other groups of people or on other modes of transport, if they wish.
4. The Travel Concessions (Eligibility) Act 2002 amends these statutes so that when the Act comes into force in April 2003, local authorities will need to extend their existing schemes to men from age 60.
Options considered
5. The Pensions Act 1995 provides for state pension age to be equalised at 65 for men and women by 2020, with transitional arrangements applying from 2010. Entitlement to concessionary travel would also have begun to equalise in 2010 but the Government decided to legislate to equalise the age of entitlement earlier than provided by the Pensions Act 1995.
6. Other options, slightly wider than age entitlement, might have been to extend the mandatory concessionary travel schemes to other groups of people or on other modes of transport, or to provide free fares for certain groups. However as noted in paragraph 3 above, the Transport Act 1985 gives local authorities discretionary powers to offer concessions to those groups if they wish. These powers remain unchanged. The Transport Act 2000 also provides for the mandatory requirement to be varied, by order, should the Government wish to consider this in the future.
Benefits
7. The Travel Concessions (Eligibility) Act 2002 ends the current anomaly which means men have to wait five years longer than women to be eligible for travel concessions. This will benefit around one million men across England and Wales.
Costs to local authorities and bus operators
8. The Travel Concessions (Eligibility) Act 2002 will require local authorities to extend their existing schemes to men aged 60-64; it will not require local authorities to devise new schemes nor will it involve new bus operators entering the market.
9. The main impact of the Act will be on local authorities who will need to publicise the new entitlement and issue free passes to newly eligible men. Across the whole of England and Wales, 10 million people are already eligible for travel concessions and the Act will mean an additional 1 million men will be able to apply to their local authority for a concessionary pass. In many cases, local authority schemes have been in operation for a number of years and they already extend to women from age 60, disabled people, and in some areas, children. The issuing of passes is not therefore a new administrative burden on local authorities.
10. There will be no measurable impact on bus operators. Bus operators charge eligible persons - those carrying a valid concessionary fares bus pass - the reduced fare in accordance with the scheme operated by the local authority. Local authorities are obliged to reimburse bus operators for revenue foregone and to do so in such a way that the bus operators are no worse or better off as a result of operating the concessionary travel scheme. Increased passenger numbers may be taken into account in the reimbursement arrangements (see paragraph 11).
11. The reimbursement arrangements are for local determination. The amount to be reimbursed is based on a calculation of the number of people travelling using a concessionary fares bus pass and may take into account the fact that fare reductions may actually generate additional travel. An operator can appeal to the Secretary of State if he believes that the arrangements fail to compensate him adequately. If the scheme is discretionary, he can be relieved of his obligation to participate in it. Where the operator's grievance relates to reimbursement for offering the statutory minimum, the Secretary of State can require the arrangements to be modified and financial redress to be made. The reimbursement arrangements are well tried and tested and there is no reason to suggest that bus operators will suffer any delays in reimbursement.
12. The Department has kept in close contact with the local government associations and the Confederation of Public Transport (CPT) which represents the bus and coach industry. The change is widely anticipated and has been reported in the specialist press. The Department has received no adverse representations from local authorities or the bus industry.
13. Local authorities have discretionary powers to make arrangements with other transport operators (of trains, metros, light rail, ferries etc.) using the same principles of reimbursement. Again there will be no measurable impact on these operators.
Costs
14. The provision of concessionary travel schemes is cost-neutral on transport operators who are reimbursed by local authorities for the revenue forgone. It is estimated that increasing entitlement for men aged 60 to 64 will cost £50 million a year which would be reimbursed to local authorities through the Revenue Support Grant allocation in accordance with the agreed procedures for new burdens.
15. The vast majority of the grant support to local government, including that for concessionary fares is provided by means of unhypothecated grant. This reflects one of the key principles of the local government finance system that local authorities should be able to decide how to allocate their own, and their own taxpayers', money, taking account of statutory requirements and local circumstances. These decisions will reflect each authority's policies for which it is accountable to local people.
Declaration
16. I have read the Regulatory Impact Assessment and I am satisfied that the benefits justify the costs.
Signed
JOHN SPELLAR MP
MINISTER FOR TRANSPORT
Contact point:
Pauline Gaunt
Buses & Taxis Division
DTLR
Zone 3/13
Great Minster House
76 Marsham Street
LONDON
SW1P 4DR
Telephone: 020 7944 2157
Fax: 020 7944 2279
Email: pauline.gaunt@dft.gsi.gov.uk
DTLR
February 2002
