Bus Fares 2015: review.

STATES OF JERSEY

BUS FARES 2015: REVIEW

Lodged au Greffe on 1st April 2015 by Deputy G.P. Southern of St. Helier

STATES GREFFE

2015   Price code: B  P.35

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to request the Minister for Transport and Technical Services to –

1. review his policy on fare pricing for 2015; and
2. renegotiate  the  terms  of  the  agreement  between  the  Minister  and CT Plus Jersey; and
3. bring to the States for agreement a revised policy which conforms to the States' anti-inflation policy.

DEPUTY G.P. SOUTHERN OF ST. HELIER

REPORT

The  Minister  for  Transport  and  Technical  Services  recently  announced  a  set  of proposals for the structure of bus fares to be introduced on 1st March 2015. These structural changes, we were told, were designed to encourage passengers to swap to the Avanchi card as their preferred method of payment. With some fares increased and others reduced, it was not immediately evident what the overall effect of these changes would be on average.

On 24th February, the Minister produced the response below (see Appendix 1) to my question on the development of the ridership of our bus service. Members will note the welcome news that ridership had topped 4 million journeys in 2014.

Members will note also that the majority of users (56% to 44%) rely on cash for their method of payment rather than choosing the Avanchi card.

What the Minister has failed to do in any of his responses is to clearly state to members what the overall effect of his changes to fare levels was. The Minister, at question time on the 24th stated that it was not possible to calculate a figure for the overall change in fares. However, the figures revealed in his answer, along with more recent data, allow us to obtain an estimate of what the rise is. What this shows is a rise much  greater  than  RPI,  demonstrating  a  failure  to  stick  to  the  States'  policy  on inflation, which, back in 2000, contained, amongst other actions, the following –

1. to agree that reducing the rate of inflation in Jersey should be a very high strategic priority, requiring concerted and sustained action on many fronts, by all sections of the Island's community;
2. to adopt an inflation target of 2.5 per cent based on the RPI (X) measure of inflation; and

(d)  to agree that increases in States charges should be limited to a maximum of

2.5 per cent a year, with any exceptions, in extremely compelling cases only, to be subject to prior approval by the Finance and Economics Committee.

The annual increase in RPI stood at 1.3% in December 2014 (RPI X 1.5%) and yet the fare changes for cash passengers which came into force on 1st March 2015 reveal rises far in excess of RPI –

TABLE A

In 2014, ridership of the bus service reached 4 million trips. I assume that this figure includes all passengers, that is, all paying customers and those with concessions. The breakdown given in Appendix 2 shows a fairly even distribution of passengers, as follows –

TABLE B

*Other' includes concessions and Avanchi Unlimited (8%).

The majority (56%) of passengers paid by cash, so to put the figures in Table A into context, this increase in fares produces an additional £416,000 in revenue –

4 million x 20p = £800,000 x 56% = £448,000.

All  cash  passengers,  that  is,  over  half  of  all  passengers,  have  seen  a  substantial increase in fares, "averaging" over 17%. This increase is somewhat balanced, as the Minister suggests, by decreases in some Avanchi card rates. The Minister goes as far as to say –

"In one case (PAYG Zone B), a price reduction will be implemented this is currently the most popular ticket and good news for a large proportion of bus users."

The changes to Avanchi PAYG users overall are as follows – TABLE C

These  changes  overall  show  an  increase  in  fares,  albeit  a  relatively  small  one "averaging" +3%. However, it must be noted that these changes apply to only 36% of passengers. For the vast majority of passengers there will be a large increase in the fare paid.

Finally, we turn to the Avanchi Unlimited fares, where significant discounts are to be given to encourage passengers to transfer to this more convenient method of payment and one which reduces administration costs. Remember that this applies to only 8% of fares at present.

TABLE D

Announcing the engagement of a new provider in July 2012, the then Minister gave details of the contract as follows –

"The contract has been awarded for a 7-year period at just under £3.5m per annum. However, there has been a major change to the contract terms and the income from fares will go directly to the operator. This will give CT Plus Jersey the incentive to grow the service and make it more efficient. The States will receive 50% of any operating profit which is in excess of 3% of turnover for reinvestment in sustainable transport initiatives.".

While it may be legitimate to encourage the use of the Avanchi card, due to its lower administration costs, by offering a promotional discount on the cash fare, it is not acceptable to raise cash fares by a margin that way outstrips inflation. In effect, the Minister has agreed fare rises that amount to a stealth tax on bus users. This not only ignores the States' anti-inflation policy as mentioned earlier, it also surely breaches the duty of the Minister as outlined by Article 14(2)(a) of the Motor Traffic (Jersey) Law 1935 –

"to protect and further both the short-term and long-term interests of the users of omnibus services".

Financial and manpower implications

There are no manpower costs for the States arising from this proposition. There will be a drop in projected bus fare revenues, the extent of which will be governed by the terms of any revised agreement, but should not exceed £400,000.

Other' includes concession users and unlimited travel cards.