Musgrave, Ralph S. (2006): Pensioners' travel concessions - a misallocation of resources.
Download (106Kb) | Preview
Everyone has a soft spot for pensioners. This probably explains most peoples’ unquestioning approval of pensioners’ travel concessions. However, it is argued here that concessions do not make sense because pensioners would be better off with the cash equivalent of their concessions. Concessions involve inefficiencies of which the following are the main ones.
First, there are good arguments for some subsidies (e.g. health and education). These arguments do not apply well to pensioner travel. For example in the case of health, many people in the absence of the National Health Service would face sudden large bills for medical treatment. In contrast, the bill for essential travel, like going to the shops, is a predictable and modest weekly expense of the same order as the weekly cost of food ( for which pensioners are not given concessions ).
Second, about three quarters of the money spent on concessions is wasted in that it goes on transporting those who could afford the full fare or who are on non-essential journeys. In contrast, under a no concession scenario only about a quarter of the expenditure is wasted. Also, concessions are a poor means of supplying transport facilities to pensioners since about a third are not well served by public transport. In contrast, under a no concessions scenario, virtually all less well off pensioners get “transport subsidy money” since this money is contained in an increased state pension. Under a no concessions scenario, pensioners can spend their “subsidy money” on for example home delivery of groceries, taxi trips or subsidising relatives’ car running costs where the latter do the shopping.
Fourth, social exclusion is often used to justify concessions. It is shown that abolishing concessions, far from increasing social exclusion, might even reduce it.
|Item Type:||MPRA Paper|
|Original Title:||Pensioners' travel concessions - a misallocation of resources|
|Keywords:||pensioners; travel; fares; concessions; concessionary; inefficient; waste; bureaucracy|
|Subjects:||I - Health, Education, and Welfare > I3 - Welfare and Poverty > I31 - General Welfare
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Systems > R48 - Government Pricing and Policy
|Depositing User:||Ralph Musgrave|
|Date Deposited:||17. Nov 2006|
|Last Modified:||19. Feb 2013 12:50|
1. Response to the Draft Equality Impact Assessment on the Northern Ireland Concessionary Fares Scheme, Equality Commission for Northern Ireland, 2003 www.equalityni.org/uploads/word/RespDRDEQIAConFaresScheme0903.doc
2. "Public Subsidy for the Bus Industry" Commission for Integrated Transport, para 5, http://www.cfit.gov.uk/plenaries/0307cfitp1.htm This publication suggests concessions be limited to 50% of the fare.
3. Mellor, Charlie, 2002, 'Concessionary fares policy: political gimmick or tackling social need?', Local Transport Today 348, 29.8.02, pp10-11.
4. Case C-228/94 Atkins v Wrekin District Council (1996) ECR I-3633
5. Gender and Bus Travel in Wales, Welsh Consumer Council, 2005, p.30 http://www.eoc.org.uk/pdf/Gender%20and%20Bus%20Travel%20in%20Wales.pdf
6. Focus on Personal Travel, Department of Transport, 2005, London.
7. Rural Transport, An Overview of Key Issues, D.Gray, 2001, http://www.cfit.gov.uk/docs/2001/rural/rural/key/pdf/rural.pdf
8. Future Arrangements for Provision of Travel Concessions, Leicestershire County Council, Cabinet, October 23rd, 2001, p. 4.
9. Monitoring Free Local Off-Peak Bus Travel For Older and Disabled People Technical Report 3: User Surveys, Colin Buchanan and Partners, Published by Scottish Executive Publications. http://www.scotland.gov.uk/Publications/2004/06/1940
10. Statistical Bulletin (Transport Series) , Scottish Executive, Feb 2002, ISSN 1351 3869, ISBN 0 7559 2171 2
11. Delivery Chain Analysis for Bus Services in England, Audit Commission, 2005 http://www.nao.org.uk/publications/nao_reports/05-06/0506677.pdf
12. Transport Statistics Bulletin, National Travel Survey, Department for Transport, 2005.
13. Social Trends, Ch 12, 2006
14. Concessionary Fares for Older and Disabled People: Regulatory Impact Assessment, Department for Transport, 2005 http://www.dft.gov.uk/stellent/groups/dft_localtrans/documents/page/dft_localtrans_610532.hcsp
15. Town Centres Survey, July 2004, authored by Accent Market & Research for Transport for London. http://www.tfl.gov.uk/buses/pdfdocs/town-centres-survey.pdf
16. Making the Connections: Final report on Transport and Social Exclusion, Social Exclusion Unit, Office of the Deputy Prime Minister, Feb 2003. http://www.socialexclusionunit.gov.uk/downloaddoc.asp?id=229
17. Concessionary Fares UK 2006, TAS Publications, Skipton.
18. Monitoring Poverty and Social Exclusion, New Policy Institute, 2004, see section entitled “key statistics” http://www.poverty.org.uk/intro/index.htm or http://www.poverty.org.uk/summary/key_facts.htm
19. Transport Benefit User Calculation, Department for Transport, 2004, http://www.webtag.org.uk/webdocuments/3_Expert/5_Economy_Objective/3.5.3.htm
20. Concessionary Fares, Institute for Transport Studies, Leeds University, http://www.konsult.leeds.ac.uk/private/level2/instruments/instrument031/l2_031c.htm
21. Guidance to Travel Concession Authorities, Department for Transport, http://www.dft.gov.uk/stellent/groups/dft_localtrans/documents/page/dft_localtrans_503852-14.hcsp