Is the continued provision of free travel for 60-64 year olds sustainable?

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An ageing population and increasing budgetary pressures have forced the Scottish and Welsh Governments to ask whether it is sustainable to continue providing free travel from the age of 60. This blog article looks at their proposals and asks whether a similar question could be asked in Northern Ireland (NI).

A Scottish Government consultation on proposed changes to their concessionary travel scheme closed on 17 November 2017. One of the main proposals within the consultation was to increase the age of entitlement from 60, towards the State Pension age. The Scottish Government has suggested that in light of the growing number of eligible people – with 70,000 Scots turning 60 each year, and the population living longer – the long term sustainability of the scheme in its current form, costing a little over £190 million in 2016-17, is in doubt.

The Welsh Assembly Government has also begun to consult on the future of its concessionary fare scheme. The consultation discusses the pressures being exerted on the scheme by the ageing population and reports that within 20 years one in four people in Wales will be over the age of 65. The consultation notes that approximately 880,000 people will be eligible for the 60+ pass in 2021, rising to a little more than a million people by 2030. It is therefore seeking views on whether the age of entitlement should be increased to match the state pension age.

The age of entitlement in England has already begun to rise in line with the increase to the state pension age; it currently stands at around 62.5. However, this will rise to 66 by October 2020. The age for entitlement to free travel in the Republic of Ireland is 66.

At present, state pension age depends on whether you are male/female and when you were born. However, women’s state pension age is being equalised with men’s, so that they will both reach state pension age at 65 from November 2018. In addition, both men’s and women’s state pension age is due to increase to 66 by 2020 and to 67 between 2026 and 2028. There is no proposal to remove bus passes from anyone who has held one before the changes are introduced.

It should be pointed out that Concessionary Travel is a devolved policy area, therefore legislation and assessment of eligibility are matters for the appropriate devolved administration. There is no suggestion that a change of policy, similar to that introduced in England and proposed in Scotland, is being considered by either the Department for Infrastructure (DfI), who administer the Northern Ireland scheme, or by any of the Northern Ireland political parties.

Northern Ireland Concessionary Travel Scheme

The Northern Ireland Concessionary Fare Scheme was established in 1978, under Article 5 of the Transport (Northern Ireland) Order 1977. Initially, free travel was restricted to individuals who were registered as blind while half fare concessions were available to senior citizens aged 65 and over, people in receipt of a regular war disablement pension, and children between the ages of 6 and 16. People over 65 have been entitled to free travel on scheduled buses and trains since 1 October 2001 on production of a pass, the eligibility range for free travel was then extended to include those aged 60-64 in October 2008.

The overall aim of Northern Ireland’s Concessionary Fare Scheme is:

To promote social inclusion by improving public transport accessibility through free and concessionary fares for members of the community who are most vulnerable, or liable to social exclusion.

Free travel for those aged 60-64

The extension of the scheme to those aged 60-64 followed a 2007 policy review that considered the potential costs and benefits of including/excluding a number of groups based on the perceived risk of social exclusion. The groups included children and young people, those with disabilities, those on low incomes and 60-64 year olds. It was concluded that extending the scheme to those aged 60-64 would bring a number of benefits:

  • It would closely align with the overall policy aim of increasing social inclusion;
  • It would bring the NI scheme in line with the rest of the United Kingdom (UK); and
  • It would ensure that all those in receipt of a state pension in NI would be eligible for free travel on public transport.

Scheme cost

It was originally estimated that extending the eligibility of the Concessionary Fare Scheme would cost in the region of £3.9m. However, by 2011/12, the cost of the scheme for 60-64 year olds was around £6.7m and in 2016/17 it was £8.3m. This contributed to increases in the overall cost of the concessionary fare scheme as shown in the figure below. However, there were a number of other factors that contributed to this including increased usage, as well as external factors such as fuel and ticket price inflation:

 

A line graph showing the total cost of the Northern Ireland Concessionary Fare Scheme from 2000/01 to 2016/17
Data source: Department for Infrastructure


 Changing demographics

As with Scotland, the size of the population eligible for the concessionary fare scheme in Northern Ireland is increasing all the time:

  • The number turning 60 each year is around 20,000 and this has increased from around 15,000 over the last 20 years;
  • There were around 97,000 60-64 year olds in 2016 and this number continues to rise (from around 70,000 20 years ago);
  • The number of those aged 65 and over increased by 2% in the year ending mid-2016 to reach 297,800 people (16% of the population);
  • The population aged 85 and over increased by 2.8% to reach 36,500 people (2% of the population);
  • The number of people over 65 years living in Northern Ireland is expected to increase by 4% in the next twenty years.

Are people working longer?

The number of people over the age of 60 is also increasing due to the fact that we are living longer. As we live longer it is therefore reasonable to assume we will work longer and this has been reflected in the UK Government’s decision to increase the state pension age. Over the half-century from 2014 to 2064 it is projected that remaining life expectancy at aged 65 in the UK will increase by around 5 years 6 months for men (from 21.2 years to 26.7 years) and 5 years 2 months for women (from 23.5 to 28.7 years). The rate of improvement is projected to be broadly uniform across the UK’s constituent countries.

There were around 44,000 people age 60-64 in employment in NI in 2015-16; this accounts for 43% of the 60-64 age cohort. This is an increase from census day (2011) when around 37,000 (39%) were employed. This figure will likely increase further in the coming years as the pension age increases. Research conducted by YouGov, on behalf of the Charity Age NI and Business in the Community, found that 47% of workers in Northern Ireland aged 40-64 – estimated to be more than 297,800 people – plan to work past the state pension age as many believe they will not be able to afford to retire.

The ageing labour force and the increase in state pension bring the efficacy of the 60+ SmartPass into question. The scheme is intended to tackle social exclusion; however, it could be argued that in this particular cohort it is subsidising travel, possibly to work, with money that could target mobility issues for those in greater need.

 

An infographic showing some key facts regarding how the 60+ SmartPass is used
Data source: Department for Infrastructure

The wider benefits of Concessionary Travel

While the NI Concessionary Fare scheme directly targets those who may have mobility problems it has wider benefits, not least that it acts as a de facto subsidy to public transport operators. Most of Northern Ireland’s expenditure on concessionary fares is paid to the public transport operator Translink. The company has an annual revenue of around £200 million, of which approximately 90% is derived from fares,  20% of which are concessions. The importance of concessionary fare reimbursement to Translink has only increased in recent years due to the removal of certain subsidies. While in the short term the company has been able to manage cuts by using company reserves to fund services, this is unsustainable, with further reductions in revenue likely to lead to price increases and reduced services which will impact all public transport users.

Research by Greener Journeys examining the wider benefits of concessionary travel in Great Britain found that the increased demand for services created by concessionary fare passengers resulted in increased capacity and enhanced service frequency which benefits all public transport users. It suggested that in some areas concessionary fare passengers were sustaining services that might have otherwise been deemed uneconomical due to low patronage. It suggested that the number of people using concessionary fares to access work was negligible. However, there was evidence that people were using their bus pass to access voluntary opportunities or to engage in social and childcare activities which bring important benefits. The report estimated that each £1 of government expenditure on concessionary travel for older and disabled people generates at least £2.87 in benefits.

SmartPass usage in NI

A survey of the Northern Ireland Pensioners Parliament on SmartPass usage found that the scheme was highly valued and, importantly, highly used in Northern Ireland. While no monetary value was attached it is reasonable to assume that with the types of activities engaged in by users, such as shopping and day trips, access to the card will have a positive economic impact whilst also positively impacting users’ lifestyle and well-being:

A bar graph showing the top five uses of a 60+ SmartPass
Data source: Department for Infrastructure

Summary

Almost ten years on from the review which saw the introduction of free travel for those aged 60-64, a number of things have changed:

  • The population now eligible for concessionary travel is increasing;
  • The proportion of people aged 60-64 in employment is increasing;
  • State pension age is rising to account for an ageing population;
  • The age of entitlement for concessionary travel in England has already changed to reflect the increased state pension age and Scotland and Wales are now proposing to do the same.

Do changing demographics, amendments to the state pension age and divergence of policy approaches in the UK warrant another review of the Northern Ireland Concessionary Fare Scheme? Questions may also be asked as to whether or not people in this age group are using their SmartPass for the correct reasons:

  • 43% of the 60-64 age cohort work; however, evidence does not suggest SmartPasses are being widely used for commuting purposes;
  • The majority of use occurs outside peak hours for activities such as shopping, social and recreation activities, and health appointments;
  • These are activities which clearly align with the scheme’s objectives.

And any review of the scheme would have to give full consideration of the wider benefits of the scheme, particularly its impact on those aged 60-64:

  • As well as improving the mobility of elderly people, concessionary travel has been shown to have a positive economic impact; it is a critical revenue source for public transport operators; and the demand which users generate has been shown to sustain wider public transport services.

 


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