Description of the options and shortlisting
Option Generation
As is standard practice consideration is first given to the issue of defining the Do-Minimum or Do-Something and in this case, it is straightforward given the nature of the project to define a Do-Minimum only as:
Do-Minimum – Keep the system in place as of end June 2026
There are two broad high level options for ensuring that bus fares are capped at £2 to passengers. Either the passengers can be directly compensated or the operators can be compensated to provide £2 fares. Clearly the latter of these two options is closest to both existing the legislative concessionary fare scheme and to the pilot in the HITRANS and ZetTrans area.
Thus we have two broad high level options:
Option A
Provide support to operators to cap fares at £2 for passengers
Option B
Provide direct support to passengers to cap bus fares at £2
Shortlisting of Options
There were a number of options considered for direct support to passengers (option B) including:
Option B1
Reimbursement of passengers for fares paid in excess of £2
The administrative burden of this approach would be extensive and would require up-front payment by passengers which would not be in the spirit of the scheme or appropriate (given likely time periods of reimbursement) for low income households.
Option B2
Topped up pre-payment cards
This approach was possible and could theoretically be set up in such a way that the cards were only useable for travel within the SPT area but was rejected for a number of reasons:
- would require an estimation of the average differential and thus longer journeys would not be reduced to £2
- Issues with travel to/from the area
- Potential for abuse
Variations of Option B2 were examined but none were considered to be both viable and in line with an appropriate passenger experience.
All variants of Option B were considered to be either undesirable or not practical which resulted in a focus on variations of option A.
These options vary in terms of the way (and level) of the reimbursement to operators.
Option A1
Reimbursement of Percentage of difference between Adult/Child (where applicable in the absence of a U22 concession entitlement or card) Single Fare and £2.
Option A2
Reimbursement to operators per journey based on operator average yield.
Option A1 is broadly the approach taken with existing concessionary fare schemes and is identical to the approach currently used within HITRANS.
Option A2 was considered as it would require less information from operators once an initial yield was established for each operator.
The two options were assessed against the 4 scheme objectives, technical feasibility/delivery to the timescales required by ministers, acceptability to operators and risk. They were scored on a 7 point scale:
Results
| Option/CSF | Lower income households | Encourage additional travel | Positive stakeholder experience | Analytical basis for future scheme | Technical feasibility/deliverability | Acceptability to operators | Risk |
|---|---|---|---|---|---|---|---|
| Do-Minimum | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Option A1 - Percentage Reimbursement | 3 | 3 | 2 | 3 | 2 | 2 | -2 |
| Option A2 - Yield based model | 3 | 3 | 1 | 2 | -2 | 1 | -3 |
Both Options score equally on the impact on low income households and on encouraging additional bus travel as they present the same passenger experience. The key differences are around the more technical aspects of implementation.
Positive Stakeholder experience
Option A2 was scored marginally lower on positive experience as discussions with operators raised concerns about the additional administration of the calculation of yields per journey and how changes in yields over time could be dealt with.
Technical feasibility
Whilst both options are technically feasible, the delivery of Option A2 would take considerably more time as, for fairness, the yields for each of the multiple operators would need to be calculated and audited. Additionally, a mechanism for updating yields would need to be put in place.
Acceptability to operators
There was some variation in operator views of the use of a yield based model, mainly around the untested nature of the approach in Scotland (the administrative burden is not assessed under this criteria).
Risk
Whilst there are unknown risks over the introduction of Option A2, the key risk of both is a simple one. Neither is a long-term solution in the context of a fare cap being rolled out nationally. This is covered in further detail in a subsequent section below but simplistically, a national £2 fare cap would mean that there is no longer a price based market and, thus, an “single fare” would no longer exist. This has implications for the rollout of a national scheme but also implications for the existing concessionary fares reimbursement approach.
Given the unfavourable technical scores of Option A2, the focus of the remainder of this OBC is on the impact of Option A1 and there is a focus on the choice of reimbursement rate as it is this factor, combined with the demand impact of the scheme that drive the cost of the scheme to TS/SG and the impact of the scheme on operators.
Consideration of sub-options
A range of potential sub-options were also considered:
- Treatment of long-distance trips
- Restricting eligibility to residents
- Varying scheme where there is bus/rail competition
These options were parked for the interim scheme due to delivery time pressures and left the same as the pilot – long distance trips are included, anyone can access the capped fares and there is no variation in the scheme but will form part of the potential remit of a national scheme.