1. Executive Summary3
Findings & Recommendations6
Glossary of terms & abbreviations8
4. Funding Arrangements10
5. Funding from districts12
6. Evidence from bus operators13
Appendix 1: Membership and List of Meeting Dates
Appendix 2: transport budget
Appendix 3: CIPFA Data
Appendix 4: ATCO Survey (2007)
Appendix 5: CIPFA email
Appendix 6: Contracted services data
Appendix 7: Presentations from Bus Operators
Appendix 8: Visit to Surrey County Council
1 Executive Summary
1.1This is a specific report of an all-party five member topic group established by Hertfordshire County Council’s Environment Scrutiny Committee. The Group was convened to consider the County Council’s expenditure on public transport in light of the Audit Commission’s assertion that Hertfordshire County Council is a high spending authority with regard to Passenger Transport Expenditure. In so doing the group wanted to consider a number of key issues including value for money, congestion, modal shift and social inclusion.
1.2 The Group heard evidence from two of the major bus operators. They also examined data presented by Passenger Transport Unit (PTU) officers indicating the contract costs and subsidy costs of the bus services. It also undertook a day visit to Surrey County Council to develop an understanding of the issues for Surrey as a comparator authority.
1.3 Value For Money: the County Council’s approach is to measure the benefit to passengers from running a contract bus service and compare that to the costs of provision. A positive outcome would indicate value for money and currently a 25% rate of return is sought. Benefits take the form of time and cost savings for the traveller compared to a situation where the service does not run and are estimated using national values of time. The system is a management tool and does not entirely replace professional or political judgement in marginal cases. For example, the only service to a village might still be supported, even if its cost/benefit result was break even or slightly negative. The system does not reflect the network benefit from a contract bus being part of a wider network which a passenger also values and it does not take account of wider transport benefits if, say, congestion was reduced.
1.4 The Scoping document was clarified and refined at the Group’s meeting (12 December 2007) as the remit was incomplete and this was presenting problems in undertaking the scrutiny. It was decided to make explicit the Group’s remit (i.e. that the Audit Commission assertion: that HCC is a high spending authority with regard to passenger transport expenditure) and this was added to the scoping document as detailed in the text box.
1.5 In addition it was decided to add how the scrutiny addressed the authority’s 7 Challenges. Listed here with the Group response in italics
1. Helping people feel safe and secure
Safe and secure transport is vital for both young and old (including changing bus shelter designs and lighting to ensure safe and secure transport for all ages and disabilities)
2. Maximizing opportunities for all children and young people
Children and young people need bus services to enable them to get to college, work and leisure activities (including school transport, concessionary fares and Saver Card)
3. Supporting the independence of the growing number of older people
Some vulnerable elderly groups need bus services to enable them to access shops, health services and leisure activities (ACS Service Level Agreement includes transportation to day centres, Dial-a-ride)
4. Tackling the causes and impact of congestion
Public transport is an essential part of the solution to the problem
5. Dealing with worn out roads and pavements
6. Reducing the impact of new development on the environment
Ensuring that Section 106 Agreements, supporting bus services, are a key element of new developments
7. Maximizing efficiency savings
Local Government driver: have measures in place to demonstrate value for money and efficiency
1.6 The Group decided to examine evidence from district councils, Hertfordshire bus operators and Surrey county council, to enable informed recommendations about the Audit Commission assertion, value for money, congestion, modal split and social inclusion.
1.7 Whilst the provision of bus services is the purview of the County Council, custom and practice in Hertfordshire has provided a contribution from the ten district councils. 25% of the current bus service budget is supported by these contributions. In taking evidence regarding district funding, the Group were concerned to discover that a number of districts were reviewing their funding of the existing arrangement.
1.8 Free school transport is currently being assessed as part of a Home to School Review being undertaken jointly by the Environment and CSF Departments and was not part of the remit of the Group.
1.9 Taking due regard of the comparative figures provided by ATCO, together with both the discussions with operators and the visit to Surrey County Council (a very similar council to Hertfordshire), the findings of the Group are that Hertfordshire County Council is not a high spending authority when judged against comparable authorities
1.10 Having considered the evidence, the Group established a number of findings and agreed a series of recommendations on behalf of the Environment Scrutiny Committee. The Overview & Scrutiny Committee will then consider whether to refer these to one or more of the following:
- Portfolio holder
- meeting of the County Council
A summary of the Group’s findings and recommendations is listed below.
Appendix 1 contains details of the membership of the Group and its meetings.
A copy of the full scoping document for this scrutiny can be viewed on the County Council web-site at .
FINDINGS & RECOMMENDATIONSFINDINGS / RECOMMENDATIONS
CIPFA figures have been found to be less reliable than ATCO
CIPFA acknowledge the limitations of the current comparative data P10
The Audit Commission needs to reconsider its assertion in light of the CIPFA email P10
Free school transport is currently being assessed as part of a Home to School Review being undertaken jointly by the Environment and CSF Departments P11 / Recommendation 2
There is an expectation that the findings of the Review need to be reported to Highways & Transport Panel P11
The district contribution is part of current HCC bus policy and is custom and practice for each district council to contribute 25% of the 100% costs P12 / Recommendation 3
A review of the core network needs to be completed to include how contributions from district councils will be collected and distributed in the future. A SLA to include the quantity of extra service any contribution secures and the length of the contract must be agreed as a matter of priority in any new arrangements P12
Guidance regarding to S106 funding has recently been issued by PTU P13 / Recommendation 4
Environment officers proactively apply the Guidance with regard to passenger transport P13
Districts should be encouraged to be less proscriptive in setting specific transport measures e.g. earmarking funding for sustainable travel rather then specifying a cycle route P13
Districts are responsible for some negotiation with developers. The Development Control Team are supported by PTU with regard to passenger transport issues P13 / Recommendation 6
When negotiating S106 funding with districts the Development Control Team need to make clear the minimum passenger transport funding expected of the developer P13
Bus operators maintain that passenger information should be improved to generate increased ridership P13 / Recommendation 7
PTU needs to improve passenger information, particularly
- real time information
- roadside information
- improved maps P13
Operators evidence highlighted difficulties faced by drivers, especially in urban areas P13 / Recommendation 8
More bus priority schemes need to be created P13
The operators who presented evidence find HCC good to work with P13 / Recommendation 9
PTU further develop the relationship with Herts Highways with regard to road works P13
CSF needs to improve its relationship with the operators via PTU. P13
By using a cost benefit analysis model PTU is able to reflect social inclusion benefits P14 / Recommendation 11
Cost benefit analysis needs to include reference to congestion reduction P14
With regard to half fares the Group was unable to clarify how Surrey operators commercially funded the half fares for children Appendix 8
The Topic Group’s findings and recommendations need to be considered by the Highways & Transport Panel
Whilst outside its remit, following the Group’s in-depth scrutiny of this complex area of PTE it would urge OSC to consider how PTE can be further respond to the HCC Challenges 4 & 5
Glossary of terms & abbreviationsACS / Adult Care Services
ATCO / Association of Transport Coordinating Officers
CIPFA / Chartered Institute of Public Finance and Accountancy
CSF / Children Schools and Families
CTS / County Transport Services
DAR / Dial-a-ride
De minimis / Negotiated payments with an incumbent operator to extend routes
Modal shift / The method of transport used by individuals away from single car occupancy to, for example car sharing, public transport, cycling, walking
PTU / Passenger Transport Unit
SEN / Special Educational Needs
SLA / Service Level Agreement
TFL / Transport for London
Section 106 / Legal agreements between local authorities and developers. In this context they refer to the provision of bus services to new developments
2.1 Hertfordshire is a shire county bordering North London. It has no particular centre but has twenty five large settlements in which most of the population live and or work. It also has a relatively large rural population in small villages and hamlets throughout the county. It is well-served by the main arterial road network and by the railways. Bus services are provided by three main commercial operators Arriva, Centrebus and Unō, along with a number of smaller operators across the county.
2.2 The County Council makes a significant contribution to the funding of bus provision throughout the county. Although most bus services are commercially provided, the local authority subsidises the routes that are not commercially viable to address specific need (e.g. accessibility, social inclusion).
2.3 Following the comment from the Audit Commission: that it has judged the County Council as a high spending authority with regard to Passenger Transport Expenditure. It was agreed that evidence would be sought from comparator authorities to confirm or refute this statement.
The Group noted inconsistencies in how expenditure figures are put together especially with regard to CIPFA. The Group considered a report setting out in more detail the relevant budget for 2007/8 broken down into Environment bus contracts, other passenger unit costs (showing the total Environment spend), CSF and ACS. (See Appendix 2)
CIPFA statistics – 06/07 budgets: using the National CIPFA (Chartered Institute of Public Finance and Accountancy) data, the reported total cost of contracted local bus services for 2006/07 in Hertfordshire was £14,066,000 with a revenue take of £6,988,000. This revenue includes contributions from districts, other local authorities and TfL. The approximate annual cost per head is £11.30. Appendix 3
This compares with figures from neighbouring authorities particularly those of similar demography/geography, such as Surrey, which was £9.22 per head.
However, the CIPFA data is open to a number of local interpretations, and therefore, using data provided by Surrey CC, the adjusted figures indicate that their true cost per head should be in the region of £10.72.
ATCO (Association of Transport Coordinating Officers) Data (2006/7). Over the last two years ATCO has undertaken a benchmarking survey for all local Authorities in the country. This data is believed to be a more accurate comparator than the CIPFA data, it is interesting to note that the cost per head for Herts is £5.93 compared with £7.70 for Surrey. This figure excludes all staffing/support costs. The comparative data from Hertfordshire and Surrey can be found at Appendix 4.
At the Group’s final meeting (13 February 2008) an email from CIPFA was discussed. It highlighted that 37% of authorities supplied data (this contrasts with ATCO which has a 70% response). The letter concluded that: Such low response rates limit the usefulness of the data for comparative purposes and also mean that class and regional analyses are based on small samples. The full email is attached as Appendix 5.
This was consistent with the concerns expressed by the Group and Surrey County Council, i.e. that the CIPFA figures are insufficiently robust to allow meaningful comparison with other authorities. Analysis of the evidence pointed to greater confidence in the reliability of the ATCO data.
- Funding Arrangements
Hertfordshire County Council subsidises certain bus routes at approximately 75% of the cost (see Appendix 6) and the remaining 25% is contributed by the district councils. Some services are well-used and are commercially viable; however some services may not be well-used and do not give good value for money. They are not commercially viable but it is thought that they serve an essential social inclusion function whilst supporting modal shift and reduction in congestion.
There are 110 contracts across the county with a total value of £9.3m. They are split as follows:
- 84 Cost Contracts
- 13 Subsidy Contracts
- 13 De-minimis Contracts
On cost contracts the County Council receives all earned revenue from that contract. On subsidy contracts the operator keeps the revenue earned. De-minimis contracts are partly subsidised by the County Council and district councils and the operator keeps the revenue earned. Tenders are invited on both cost and subsidy basis and contracts are awarded on the lowest net cost for HCC taking into account the relative risks to the county council.
There are around 450 registered routes across the county, with approximately 170 let on a contract basis. However, this can be somewhat misleading as some are continuations of commercial services e.g. Sunday or de-minimis contracts.
De-minimis payments are through negotiation with an incumbent operator to extend hours or routes where there is only one provider. The rules were relaxed a few years ago to raise the limit from £25k to a proportion of budget spend, currently around £1m pa.
An annual rural bus grant of around £700k is received by Hertfordshire County Council who has some flexibility to choose where the grant is spent. The grant has remained static since 1998; however, this grant will be removed in its current form from April 2008/09.
Other grants received by PTU include the S106 money which varies from year to year (currently it is approximately £800k).
The Local Transport Plan capital budget, as published in the LTP 2006/7-2010/11, totalled £2,175,000 of which £1,660,000 was allocated to Passenger Transport Infrastructure, £95k to the Abbey line project and £420k to rail schemes. This budget was later reduced to £1,568,000 and, during the financial year, reduced again by £685k leaving a total capital budget of £883k.
In addition to the above, CSF fund (current 2007/8 figures)
- 151 E route contracts at a cost of £5,732k
- 187 Taxi contracts at a cost of £2,288k
- 840 SEN contracts at a cost of £13,121k
Whilst ACS funds:
- 61 contracts at a cost of £1,905k
4.11 PTU manages and administers the £9.1m Concessionary Fares Funding provided by Government to provide concessionary fares for the elderly and disabled.
4.12 Free home to school transport is currently being assessed as part of a Home to School Review undertaken jointly by the Environment and CSF departments. The Group expressed reservations at the large cost of the SEN Transport Contract. The Service Level Agreement (SLA) between CSF and the PTU covers mainstream transport at £9.3m and SEN transport provision at £12.8m (2006/7 figures). The Environment Department also supplements Home to School travel though a Child Savercard scheme of £1.5m. This provides half price fares to all school children and college students between the ages of 11 and 18.
4.13 The County Transport Service provides the specialised transport for clients to and from day care and associated institutions. This SLA with ACS amounts to around £6.3m per year.
4.14 CSF and ACS transport costs currently account for over half the total transport budget.
4.15 The draft Local Transport Bill indicates that the government is looking more at models which could only work fully in a city or PTE as control of the whole network is required. There would also be considerable costs to Hertfordshire County Council.
4.16 Annually, HCC provides grants of around £188k to help support a number of Community Transport schemes around the county as well as Dial-a-Ride Service (DAR). DAR is a door-to-door local passenger transport service for those with mobility problems, who have registered to use the service and who have difficulty in using or accessing conventional passenger transport services. NB DAR will be subject to scrutiny latter this year (2008).
5. Funding from District Councils
5.1 Whilst the provision of bus services is the purview of the County Council, custom and practice in Hertfordshire has provided a contribution from the ten district councils. 25% of the current bus service budget is supported by these contributions.
5.2 In taking evidence regarding district funding, the Group were perturbed to discover that a number of districts were wavering in their support of the existing arrangement. Recently North Herts District Council (NHDC) has withdrawn its contribution. The Group wished to explore the reasons for this and the financial implications, especially if other district councils were to follow suit
5.3 Currently there are no legal contractual arrangements drawn up with the district councils regarding their bus subsidy contributions. However this has been part of custom and practice within the HCC Bus Strategy for many years.
5.4 The key difficulties identified with District/Borough council bus subsidies were: