Ticketing on Public Transport (HC 84-i) Transport Committee 14 Nov 2007

Q125 Mr. David Clelland: If there were no concessionary fares, is it not the case that bus operators would need to - and indeed would - themselves introduce concessionary fares in order to attract passengers onto their buses at off-peak times?

Mr Warneford: I have heard that suggestion over a lot of years but I go back a lot of years in the industry and there never were commercial concessionary fares offered. I think the answer would probably be in some cases there would be and in others there would not and it would have to be a commercial decision as to the viability, the level of service, the type of demography. You could not say a plain yes or no answer to it.

Q126 Mr. David Clelland: Certainly on the railways that is something which has been introduced over many years. Given the fact that we now have commercial bus companies as opposed to public bus companies that we used to have, I am quite sure that some sort of concession would have been introduced in order to attract more people onto the buses. Otherwise it would not have been viable to run buses in off-peak periods if there was nobody riding on them. In that case, why is it that the bus companies insist on the concessionary fares being based on the prices of single fares - I think there is some evidence that they have been increased disproportionately - and make no contribution whatsoever to the increased ridership they are getting as a result of the concessionary fare system?

Mr Warneford: To go back to the first part of what you were saying, all the conventional price elasticity formulae suggest that we would be better off if we charged the full fare for the elderly and carried fewer of them - i.e., discounting never generates more money; it generates more passengers.

Q127 Mr. David Clelland: You have evidence for that?

Mr Warneford: That is all the conventional wisdom from the academics.

Q128 Mr. David Clelland: Do you have some evidence for that?

Mr Warneford: The Department for Transport rely upon it in the concessionary fares.

Q129 Mr. David Clelland: On the conventional wisdom or the evidence?

Mr Warneford: On the evidence.

Q130 Mr. David Clelland: Can you produce this evidence for us?

Mr Warneford: It is produced by academics. There are published papers. Would we provide commercial concessions? Possibly. You asked about the single fares. We do not insist that the calculation is based on the adult single fare. We are happy for it to be on the adult single fare, the return fare where there is one and the data key. Where we do have some disagreement is about how much the elderly would otherwise use season tickets because they are casual travellers, so we do have a disagreement about that going into the melting pot. The debate is not really about the level of fare at all. I know it has devolved into that because of the way the DfT has chosen to produce what is called its toolkit, but the issue is really about what it costs to run the bus. If you cannot afford to run the bus, then the elderly cannot travel.

Chairman: Do you understand this commercial argument, Mr Clelland?

Mr. David Clelland: No.

Q131 Mr Martlew: You have both said that you would prefer a national scheme as in Wales and Scotland. Is that because you think you would make more money out of it or it would be easier to administer and you would not have the bureaucracy and the difficulties that some councils get too much and some get too little? Can we exclude London?

Mr Dean: Yes. We think from the point of view of the operators and the local authorities it would be much better if we could focus our minds on customer service and running the buses rather than negotiating on a number of schemes. Just to back up Mr Warneford's view, if you look at some companies, if they straddle a lot of administrative areas, they have to negotiate with about seven or eight concessionary fare authorities. This is very, very time consuming for the local authority and the bus company.

Q132 Chairman: They are not exactly expecting to come out of it with no benefit, are they?

Mr Dean: No.

Q133 Chairman: You are not negotiating in an abstract; you are negotiating for hard cash which belongs to rate payers.

Mr Dean: I understand that, but it would be better for everybody if we could get on with the more positive aspects of managing the business. If there was a nationally administered concessionary scheme, it means the amount of time that the local authorities and bus operators were spending on negotiating the correct level of reimbursement would be considerably reduced.

Q134 Mr. David Clelland: I agree with what you are saying on the national scheme. I wish we did have a nationally administered scheme rather than the one we have. You have suggested certain regional and county concessionary travel authority groupings. Is that happening or is it still as fragmented as ever?

Mr Dean: At the moment there are some county wide schemes so the money flows from the district council but, for example, in the Essex area there is a number of district councils but there is a lead travel concession authority which is the county council. That does make things a little easier, but it is not always the case. It depends upon the area and whether they decide to have a county administered scheme or not. If there was a move towards some sort of a regional administered scheme, that would be better than the situation than there is at the moment.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

The full transcript may be read at http://www.publications.parliament.uk/pa/cm200708/cmselect/cmtran/uc84-i/uc8402.htm