Rural Economy and Connectivity Committee

Meeting date: Wednesday, March 7, 2018

Official Report 657KB pdf

---

Subordinate Legislation

---

National Bus Travel Concession Scheme for Older and Disabled Persons (Scotland) Amendment Order 2018 [Draft]

Good morning and welcome to the seventh meeting in 2018 of the Rural Economy and Connectivity Committee. I ask everyone to ensure that their mobile phones are on silent. No apologies have been received.

Agenda item 1 is consideration of an affirmative instrument on the national bus concession scheme. One or two members would like to make voluntary declarations of interest.

My entry in the register of members’ interests states that I am the honorary president of the Scottish Association for Public Transport, and I might be thought to have an interest—I say this on a voluntary basis—in that I am a holder and user of a bus pass.

I also have a bus pass.

I am the proud owner of a bus pass as well.

I, too, own a bus pass, but I very rarely use it.

Thank you—we have identified those members who have bus passes.

We will take evidence from the Minister for Transport and the Islands on the affirmative instrument, which is detailed in the agenda. The motion that seeks our approval of it will be considered at item 2. I ask members to note that there have been no representations to the committee on the instrument.

I welcome Humza Yousaf, the Minister for Transport and the Islands; Tom Davy, the head of Transport Scotland’s bus and local transport policy unit; and Gordon Hanning, the head of the concessionary travel and integrated ticketing unit.

I invite the minister to make a short opening statement.

Thank you, convener. To all those with bus passes, I am pleased to say that we will be keeping them.

Good morning and thank you for inviting me to discuss the draft National Bus Travel Concession Scheme for Older and Disabled Persons (Scotland) Amendment Order 2018. The order sets the reimbursement rate and capped level of funding for the national concessionary travel scheme in 2018-19. In doing so, it gives effect to an agreement that we reached in January with the Confederation of Passenger Transport, which represents the bus industry.

The agreement was based on a reimbursement economic model that was developed in 2013 on the basis of independent research that was commissioned by the Scottish Government and following extensive discussion with the CPT and its advisers. With the CPT and our respective advisers, we have reviewed and updated the model and the forecasts and indices that were used in it during 2017, and we have used that as the basis for the proposed terms for 2018-19.

The proposed reimbursement rate in 2018-19 is set at 56.8 per cent of the adult single fare. We believe that that rate is consistent with the aim that is set out in the legislation that established the scheme, whereby bus operators should be no better and no worse off as a result of participating in the scheme. The fact that this year’s rate is only marginally different from last year’s rate of 56.9 per cent will provide a welcome degree stability for bus operators.

On the basis of the reimbursement rate and our expectations for future journey numbers and fares, we forecast that claims for reimbursement will come to £202.1 million over the next year. That figure is reflected in the draft order as the budgetary cap.

The order is limited to the coming year. Our work to update the model during 2017 identified a significant uncertainty around what should be the impact of changes in the relative level of the adult single fare. We agreed with the CPT that we would leave that element of the model unchanged for 2018-19, but we agreed to return to the matter during 2018 to inform next year’s negotiations.

The committee will be aware that we have recently consulted on ways to ensure the longer-term sustainability of the national concessionary travel scheme, on the implementation of our commitment to extend free bus travel to young modern apprentices and on whether to provide companion cards for disabled people under the age of five. When the consultation closed in November 2017, it had attracted almost 3,000 responses. Those have been analysed, and a summary report and individual responses will be published in the coming weeks. We will also set out our response to the consultation.

We know that older and disabled people greatly value the free bus travel that the scheme provides, which enables them to access local services, visit friends and relatives, and gain from the health benefits of a more active lifestyle. The order provides for those benefits to continue for a further year on the basis that is fair to operators and affordable to taxpayers.

I commend the order to the committee, and I am happy to answer any questions.

Thank you, minister.

The figure that is mentioned in the order is £202.1 million, but according to the budget booklet that we were all given when we voted through the budget, the budget for concessionary fares and bus services is £269.1 million. Where has the other £67 million in the budget gone?

The bus service operators grant—BSOG—which we use to subsidise the bus industry, accounts for the vast majority of that. Another element is financial transactions, which we might use for the bus emissions abatement scheme, to make buses cleaner and greener. I can provide the member with a detailed breakdown in writing if he wishes.

That would be very helpful.

It would be helpful if you could submit a breakdown of the budget figure to the clerks.

Of course.

You said that the figure of £202.1 million is not very different from the figure in previous years. That is a limit that cannot be breached, is it not? Has the limit come close to being breached in previous years?

Yes. I have the figures for the budget cap and the scheme payments from 2006 right the way through to the present day, in which there is some variation. Our forecast for this financial year—2017-18—is that we will be at the limit of the cap. In 2015-16 and 2016-17, the figure came in under the cap, but there are years when payments came in above the cap. Those figures are forecast using a model that is agreed with the CPT. If the member would find it helpful, I am sure that we can provide him with the budget cap and payment figures for the past 10 years.

That would be very helpful. The reason I ask is that I met the bus operators, who told me that because the limit cannot be breached, there is no incentive to advertise the free bus travel scheme. Moreover, it appears that bus operators are not being encouraged to advertise the use of the concessionary cards, which would stimulate greater bus use. I notice that, for the first time, the number of bus journeys has gone below 400 million.

Let us assume that the Scottish Government’s objective is to increase bus use, and the finance is capped at £202 million out of a budget of £269 million. The bus operators would like to advertise the scheme to achieve more bus travel, but they indicated to me that the Scottish Government has a policy of telling them not to encourage people to use the scheme and not to advertise it. I would like to know whether that is true.

No such policy exists. There is no direction like that from the Scottish Government.

Would you be happy if the bus operators advertised the scheme?

Yes, of course. That is why we had a consultation on the longer-term sustainability of the scheme. On the issue of card holders, I have the figures in front of me. In 2006-07, there were 900,000 card holders; there are now more than 1.3 million. There has been an increase over at least the past decade, which is positive news. I do not think that the figures bear out what Mr Rumbles said. Again, we can provide him with the figures.

You are not worried—the Government has absolutely no concern—about the bus operators advertising the scheme.

No, I have no concern about that. However, the bus operators have made a fair point to Mr Rumbles. There is concern about the longer-term sustainability of the scheme. As the committee well knows, we have an ageing demographic, as does most of western Europe, so we have to find a balance between making the scheme fair and realising its benefits, and making it sustainable in the long term. That is why we consulted on the scheme, and it is because of the vast interest in the scheme that the consultation garnered about 3,000 responses.

I said in my opening remarks that we will publish the analysis of the consultation in the coming weeks, followed by the Government’s response to that. The operators’ concerns about the sustainability of the scheme, because of the budget cap, are not unfounded. I can appreciate that they would have such concerns, but I say to Mr Rumbles that the aim of the consultation is to see how we can make the scheme sustainable in the long term.

I want to ask about reimbursement. I recently used the bus six times in one day. If that had been six single fares, in Glasgow the cost would have been about £13. If the company gets 56 per cent, that would be about £7. If I had bought an all-day ticket, the cost would have been £4.50, so the operators appear to be making a profit. Is that taken into account when the percentage reimbursement is fixed?

10:15  

It is. Again, as I said in my statement, we agreed in 2013 to review the model, and we have been looking at reviewing it ever since. You have to appreciate the dynamics at play here; the bus operators will, somewhat understandably, look to defend their position, and we will do our best to get the best value for the taxpayer. In that respect, I should point out that we have managed to get the reimbursement rate down from 73.6 per cent at the beginning of the scheme in 2006-07 to 56.8 per cent now, which of course represents a good deal for the taxpayer.

We have agreed to remain consistent on the adult single fare for the coming financial year, but I will be reviewing it throughout 2018, and we will look at the possible changes that we might make in 2019-20. I think that there are issues with regard to other fares, and it is only right that we explore them. I can give a promise that the matter will absolutely be part of our consideration in 2018, but there has to be a negotiation and a discussion—almost a compromise—with the bus operators.

Some of the companies have two levels of single fare, one for when you just turn up on the day and the other for the tickets that you buy and have on your phone. I assume that the higher rate is being used.

I will double-check that with Gordon Hanning.

This is quite a new development, and we are discussing it with the bus companies. There is a precedent in that, on Megabus and Citylink services, the fares when you turn up on the day have always been much higher than those that you get when you book in advance. In that case, we worked out a formula that recognised the validity of both positions.

Mobile-phone-based fares have been quite a recent development, and they are a bit cheaper than cash-based fares. We are in the middle of discussions with the bus companies that are in that position—I think that there are three of them—but our view is that, given the precedent that has already been set, we should use not the higher fare but some mix of the two. I expect that that is what will happen.

As no one else has indicated that they wish to ask anything, I call Colin Smyth to ask the final question.

I note that the minister said that the bus pass would be staying, but he did not give any guarantee that when, as some of my older colleagues have done, I reach the age of 60, I will be able to access a pass. I am sure that we will see the results of that work soon.

Do you agree that setting the rate at a percentage of the adult fare is actually an incentive to bus companies to keep such fares high? After all, they will, by definition, receive a higher payment. Will that issue be addressed when you reconsider such matters in future?

We have been aware of that issue since the beginning of the scheme. Before I go on, though, I should say that it will, I am sure, be many, many years before Colin Smyth reaches the age when he needs a bus pass.

We have very strict tests in place for any bus operator that wants to increase the adult fare. Bearing in mind the need for brevity, convener, I can share some information on this with the committee, but I point out that any bus operator that wants to increase the adult single fare has to undergo a standard fares test that involves providing a heck of a lot of data to Gordon Hanning and the team to analyse and pore over to find out whether any such increase is fair and justified.

No matter what fare we ended up using, Colin Smyth would still be correct: there could be an incentive for some bus operators to increase the adult fare. However, that is why we have those checks and balances in place. If it helps the member—and for the sake of brevity—I will go through the usual protocols and send the convener some detail on the standard fares test.

That would be helpful.

There is actually one more question, and it comes from Peter Chapman.

I just want to explore the cap a wee bit more. Is the £202.1 million an absolute cap? You said that the cap had been breached in previous years. What happens if demand is greater than what is allowed under the cap?

I will ask my colleague Tom Davy to answer that question, but there have been times when payments have gone above the budgetary cap. Again, I will send on some details, but Tom will be able to provide some more detail now.

Claims have exceeded the cap on five occasions. On three occasions, the cap was applied, so claims above the value of the cap towards the end of the year were not met in full. On two occasions, the claims were in effect met above the cap by means of exceptional payments under the general grant-giving powers. Those payments were equivalent to the claims being met, but they were associated with various issues to do with transitions to new reimbursement arrangements and so on, so they do not represent a precedent. The cap is there and it is a cap but, on occasion and for good reason, we have gone beyond it.

I understand that, if there have ever been exceptional circumstances that might have been outwith the bus operator’s control, we have been happy to look at that. If we looked at the winter weather that we have just had—although bad weather tends to depress patronage—and saw the opposite effect and it was outwith the bus operator’s control, we would not be closed minded to continuing to hold a conversation with that company.

It is important to stress that the concessionary scheme is about dialogue with the bus operators. We try to be fair when we can be.

It would appear that the cap is not a cap. If you get to the final three weeks of the campaign and you have reached the cap, what happens to folk who have bus passes? Are those passes still honoured?

They are still honoured. As I understand it, the bus operators would have to pick up the tab for that; they would not be reimbursed by the Government.

As I say, we have to have a level of flexibility. The cap is there and it has been applied, but we should also be reasonable, because we know that the cap is based on forecasting and we do not always get forecasting right to the penny and the pound. It is not an exact science, but the scheme is based on the data that we have available. There is some element of flexibility, which is based on the constructive dialogue that we have with the bus operators.

Can I ask another question?

You can have one final question, Mr Rumbles.

Regardless of whether there is a cap, I would like a response to my first question. If one bus company decides to advertise to encourage people to use their bus passes and it gains more revenue that way, if there is a cap, the other bus companies will not be reimbursed by the Government for that advertising process. Is that correct?

I see what the member is doing there. The principle of the reimbursement rate is that the bus operator should be no better and no worse off. If a bus company chooses to increase patronage by getting more older people to take day trips on its buses, it should be in a better position, even if the cap is breached.

I understand where the member is going with his logic, and I go back to my point that the long-term sustainability of the scheme has to be looked at because of Scotland’s population and demographics. However, if you are asking me as a minister in the Government whether we have ever given direction to bus companies, I would say that my only direction has been that it is a very popular scheme, the benefits of which I recognise, and that if the bus companies want to advertise and get more older people to use their bus routes, they should do so.

Thank you minister. Do you want to make a short closing statement or do you believe that the questions have brought out all the relevant points?

I am happy to waive my right to a closing statement.

It is not a right; you are not quite in a court yet.

We look forward to receiving the information that you have undertaken to give us.

The next item is formal consideration of the motion. I invite the minister to move motion S5M-10336.

Motion moved,

That the Rural Economy and Connectivity Committee recommends that the National Bus Travel Concession Scheme for Older and Disabled Persons (Scotland) Amendment Order 2018 [draft] be approved.—[Humza Yousaf]

Do members have any comments?

People said that the scheme would be amended or done away with, but it is nice to see that it has been retained. I compliment the minister on that and I am more than happy for us to approve the order.

I think that that was a political point. There appear to be no further comments.

Motion agreed to.

10:25 Meeting suspended.  

10:25 On resuming—  

---

Disabled Persons (Badges for Motor Vehicles) (Scotland) Amendment Regulations 2018 (SSI 2018/44)

---

Scottish Road Works Register (Prescribed Fees) Amendment Regulations 2018 (SSI 2018/50)

Agenda item 3 is the consideration of two negative instruments, which deal with disabled persons’ badges for vehicles and the Scottish road works register. No motions to annul the instruments have been received. Does the committee agree that it has no recommendations to make in relation to the instruments?

Members indicated agreement.

10:26 Meeting suspended.  

10:29 On resuming—