Travel Concessions (Eligibility) Bill - impact assessment

Policy objective

1. The purpose of the Travel Concessions (Eligibility) [H.L.] Bill is to equalise at 60 the age at which men and women become eligible for travel concessions.

2. Existing legislation entitles those who have reached pensionable 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 is governed outside Greater London 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.

3. The Transport Act 2000 introduced a statutory minimum requirement. This requires local authorities to offer half price fares on local bus services for those of pensionable age and disabled people (defined in section 146 of the Transport Act 2000). The Government is however keen to ensure that local authorities retain discretion in the concessionary fares schemes they offer. Local authorities are therefore 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.

Options considered

4. The Pensions Act 1995 provides for pensionable age to be equalised at 65 for men and women by 2020, with transitional arrangements applying between 2010 and 2020. Entitlement to concessionary travel would therefore also begin to equalise in 2010 but the Government considers this too long to wait and so has brought forward legislation to equalise the age of entitlement early.

5. Other options, slightly wider than age entitlement, might have been to extend mandatory concessionary travel to carers, or companions, of eligible people, or to young adults in full time education. However existing legislation gives local authorities discretionary powers to offer concessions to those groups if they wish. 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.

Fairness and equity

6. The purpose of the new legislation is to end the current anomaly which means men have to wait 5 years longer than women to be eligible for travel concessions.

Benefits

7. The benefits of the legislation will be felt by around one million men aged between 60 and 64 who will be eligible for cheaper bus travel.

Impact on local authorities and bus operators

8. The proposals in the Travel Concessions (Eligibility) Bill [H.L.] will extend eligibility to travel concession schemes that already exist and which in many cases have been in operation for many years. The proposals will not create new schemes nor will they involve new bus operators entering the market. Local authorities are already obliged to offer concessionary fares and extending eligibility to men aged 60 to 64 is expected to have minimal effect on local authorities and bus operators who are already offering concessions to women of that age, men and women over 65, disabled people, and in some areas to children.

9. The main impact of the proposals will therefore be on local authorities in extending their existing schemes to men aged 60 to 64. As noted above, concessionary travel is already offered to women of that age and local authorities will decide how best to publicise the extension. Across the whole of England and Wales, 10 million people are already eligible for travel concessions and extending eligibility as proposed will mean an additional 1 million men will be able to apply to their local authority for a concessionary bus pass. The administrative burden on local authorities will be minimal.

10. There will be no measurable impact on bus operators. Bus operators charge eligible persons - ie those carrying a valid concessionary fares bus pass - the reduced fare in accordance with the scheme operated by their local authority. Under the Transport Act 2000 this must include at least 50% off for pensioners and disabled people. 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.

Consultation

12. Given the limited nature of the proposals, there has been no formal consultation exercise. However the Department has discussed the proposals with the local government associations and the Confederation of Public Transport 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.

Costs

13. The provision of concessionary travel schemes is cost-neutral on bus 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.

14. 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.