Better Bus Area Workshop DfT, Local Transport March 2013 Session - - PowerPoint PPT Presentation

Better Bus Area Workshop

DfT, Local Transport March 2013

Session delivered by Sarah Wooller, James Padden, Shafiq Pandor, Rishi Mandavia, Richards Yates, Tim Harper

Introductions

• Housekeeping
• Who we are
• Aims for today

– Focus on key areas in the guidance – Answer your questions

Introduction – Who we are

James Padden Better Bus Area Policy Rishi Mandavia Economic advice, BBAs Shafiq Pandor Economic support, BBAs Sarah Wooller Better Bus Area Policy Tim Harper Economic advice, Concessionary Travel Richard Yates BBA and BSOG payments

Aims for the day

• Value for money
• The economy
• Carbon reductions
• Partnership
• Legality

The workshop’s structure

Funding What is a BBA Value for money and evidence Partnership Monitoring, governance, risk and deliverability Types of interventions, state aid and legality The Sheffield experience

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 top-up remaining BSOG rate devolved to LA

Have set out an indicative model for stepped- approach - but this could be varied.

First payment is just top up (based on 20% of 1 yrs BSOG). Fully devolved by 2017

95 20 70 20 45 20 20 20yxwvutsrponmlkihgfedcbaWVTSRQPONMLKIHGFEDCBA

authorit BSOG at Oct 2013 commercial BSOG at Oct 2013 BSOG as % of National Rate prevailing

Dealing with the finances

350 Total Grant as % of Commercial BSOG 120 20 Apr-17 25 Apr-16 50 Apr-15 75 Apr-14 100 Oct-13

Total Grant to local y as %

• f commercial

Top up as % of Remaining commercial

Table 4.1

These years go into the next spending period. The Government is committed in principle to providing sufficient funding for BBA during this time but can’t commit to specific numbers. No commitment to BSOG in this

• period. A further review of residual

BSOG will take place in 2014/15. 2013 and 2014 are in this spending

• period. BBA budgets are fixable for

this period.

What is a BBA?

• A BBA must deliver good VfM & and encourage economic growth.

How? Likely to be through combination of: – Attracting new passengers (previously car users) – Reducing waiting time – Reducing travel time

• BBA likely to be:

– An area with higher population density – An area with a real congestion issue – An appropriate size – Built around partnership – Built around capital interventions

What a BBA probably isn’t

• A BBA less likely to be:

– Area with lower population density – Lacking a congestion issue to resolve

• Bids from rural areas unlikely to achieve the necessary VfM
• However mixed urban/rural environment might work

The timeline

Value for Money assessment of Better Bus Area schemes

Rishi Mandavia, Shafiq Pandor Local Economics, DfT 19th March, 2013

What we will cover…

• What should be your DM/DS scenarios;
• What type of information must be provided;
• Treatment of Optimism Bias;
• CO2 impact of your BBA schemes;
• What type of schemes are likely to be good vfm;
• Assessment of non-monetised benefits;
• What type of evidence you should provide

How important is value for money?

• It will be a key consideration in the assessment process of the

BBA bids;

• Better Bus Areas must offer better value for money than the

value for money offered by BSOG in the local area;

• Bids must demonstrate how schemes will contribute towards

economic growth and reduction in CO2 emissions;

What should your ‘Do Minimum’ and ‘Do Something’ be?

• DM scenario - How things would be if BSOG in its current form

continues to go to the operators;

• This does not necessarily reflect status quo – any other

funding (e.g. LSTF) being used should be captured in the DM;

• DS scenario - Reflects both the impact on operators, fares

and service levels of removing commercial BSOG and the benefits of the total proposed package of measures.

What you should be aware of…

• Analysis should only take into account devolved commercial

BSOG, top-up fund and any other 3rd party investment;

• Do

not include assessment of tendered BSOG;

• VfM assessment’s will look at a 10 year appraisal period;

What Information you should provide…

You must provide the following:

• Baseline data (DM) and changes (DS) in absolute terms;
• The number of bus passenger journeys;
• Impact on bus mileage;
• Impact on car trips and car mileage;
• Changes in average journey times/walk times/waiting times;
• Average adult cash fare;
• Average operating costs (pence/km);
• Impact on net carbon emissions (car and buses);
• The BCR of BSOG as currently administered.

Why do we need to know what the BCR of BSOG is now?

You provide this figure BCR must be BCR 2.0 DM (BSOG) DM (No BSOG) higher that existing BSOG DM (No BSOG) BCR 2.4 You work out this BCR 3.0 (BCR of BBA proposals) DS (BBA) DS (BBA) Enables DfT to assess overall vfm of BBA against counterfactual of No BSOG

Optimism Bias

• You must apply an optimism bias to your capital costs;
• Ensure the it is clear what level of optimism bias is used and

why;

• Hence, detailed breakdown of capital cost spending by type of

scheme is required;

• Explain any deviations from WebTAG guidance;
• Refer to TAG Unit 3.5.9, Chapter 3

Refer to TAG Unit 3.5.9, Chapter 3

CO2 impact of your BBA bid…

• The assessment must capture net CO2 emissions;
• Is Car CO2 emissions saved ><= Bus CO2 emissions cost??

Only 16% of the 2012 bids had a net CO2 savings

• Use the current bus network more efficiently;
• Encourage mode shift from cars;
• Improve fuel efficiency;

What type of schemes are likely to be good value for money?

BBA 2012 round…

Proportion of bids by vfm category

High 24% Medium 12% Low 16% Poor 48%

• The larger urban areas had a significantly higher proportion of

decongestion benefits than smaller urban areas;

• Where there is a congestion problem, there is greater potential

to encourage mode shift

What type of schemes generate benefits?

• Bus Priority lanes;
• Road traffic signalling;
• Real Time Information;
• Road demand management
• Congestion relief
• Time savings & reliability improvements
• Patronage growth
• Mode shift is key
• Labour market impacts
• Schemes must be cost-effective

Kick-starts

• Sustainability
• Provide a convincing argument for its viability;
• Have you analysed similar case studies?
• Is there a plan of action/strategy put in place?
• PTEG

PTEG’ ’s s ‘ ‘case for urban buses case for urban buses’ ’ report suggests tendered report suggests tendered services can have services can have BCRs BCRs > 3 > 3 if if load factors > 7. load factors > 7.

Concessions

• e.g. Youth concessions
• Unlikely to be good value for money
• One-to-one transfer from government to passengers
• Additional benefit from mode shift and long-term behavioural

changes hard to prove

Non-Monetised Benefits/Costs

• Detailed assessment of non-monetised benefits can influence

the final vfm assessment;

• BBA 2012 round – 46% of bids claimed significant non-monetised benefits;
• 35% of these bids had the vfm category changed as a result!
• Provide a robust assessment of any claimed non-monetised

costs/benefits;

• You should decide and tell us what other impacts we should

consider and why;

• If you claim large labour impact benefits – tell us why?

Evidence

• You should include evidence supporting key assumptions

made in your analysis, for example:

• Assumptions around mode shift & sources;
• Average bus occupancy;
• Assumptions underlying carbon estimates (fuel efficiencies);
• Evidence supporting your patronage forecast;
• Evidence supporting time savings benefits.
• Demonstrate relevance of the evidence to your bid!

Impacts of Better Bus Areas on Concessionary Travel Reimbursement

Tim Harper, Local Economics, DfT 19th March 2013

Impact of a BBA on Elements of CT Reimbursement

• BBA will definitely affect

– Marginal Operating Costs – Marginal Capacity Costs

• BBA could possibly affect

– Average Fare Foregone – Number of Concessionary Journeys

• No additional funding will be provided for increased CT

reimbursement, so BBA bids must reduce the amount of spending they plan to undertake to account for increased CT reimbursement

Marginal Operating Costs

Marginal Capacity Costs

Impact of BBA on CT Reimbursement

• If no changes to fares and the number of concessionary

journeys, it has been calculated that on average, reimbursement will increase by 7%.

• If average fare, concessionary journeys or both are to

increase, reimbursement would be expected to increase by more than 7%

• If average fares, concessionary journeys or both are expected

to decrease, reimbursement would be expected to increase by less than 7% or may decrease

Calculating the Likely Impact

• Authorities and Operators should work together to estimate

the likely impact to come to a figure both are content with

• Best practise would be to use the DfT reimbursement

calculator, adjusting the values in MOC and MCC to reflect the removal of BSOG

• Whatever the method undertaken to estimate the increase in

CT reimbursement, a clear explanation must be presented

• It is important that impacts on reimbursement are properly

considered an underestimation of the impact could result in some elements of the BBA failing to be delivered

Any questions so far?

Partnership

• Demonstrating partnership is crucial
• How partnership will be appraised – indicative criteria:

Has specific action been taken to bring on board SMEs? Strong Are specific actions by operators planned? Strong Are there data sharing or information sharing arrangements? Good Is a Quality Partnership in place or planned? Good Is there representation of operators in the governance arrangements? Fair Are there letters from operators? These are particularly strong if they assess the problem with losing BSOG Strong Is the BSOG breakdown agreed with all bus operators? Strong And taken action as a result……… Fair Has the LTA consulted with the bus operators? Weak Questions Strength of Evidence

Partnership

• What about small/medium operators..?

– Can’t be exempted – De minimis – No veto…but

Partnership

• What does this means for those considering

pursuing a Quality Contract Scheme – Partnership the way forward – But QCS authority not ineligible

Monitoring, governance, risk, deliverability

• Baseline data - bids to set out how a firm baseline will be

established

• Ongoing monitoring expectations against KPIs
• Evidence of appropriate governance structure
• Plans need to be robust, deliverable, risk assessed

State aid is allowable under Current European rules when:

• Subject to a transparent tendering process
• Aim towards maximum tariffs (eg like

concessionary fares)

• De Minimis
• Emergency short term measures
• Not over compensated.

BSOG is direct state aid – allowable because it pre-dates current rules.

What can you / can’t you do?

We are not giving you any more powers or taking any away. Don’t submit a local BSOG scheme! De minimis and contracting provisions Discretionary concessions Other maximum tariffs may not be allowable under UK law Think about legality, value for money, and smaller operators!

Aim to:

• Manage road demand.

What can you / can’t you do?

• Improve street infrastructure, including

parking, bus gates, stops and stations.

• Improve the management and enforcement
• f traffic to benefit buses.
• Support the analysis and evidence

gathering necessary to redesign the bus network.

• Improve passenger information and

ticketing.

Marketing and Advertising will not be funded under the BBA programme

Making the case for more smart- ticketing funding

• What is the passenger proposition?
• What is the bus operator backing for a multi-
• perator ticket?
• How will it involve smaller operators?

BSOG CALCULATION

• Key Milestones
• Calculation of BSOG
• Useful tips

Key Milestones

• Up to 21 June 2013

– LTA’s and operators draw up bid on the basis of estimated BSOG figures

• 1st October 2013

– Winners announced

• 1st October to 30 November 2013

– LTA’s and operators fine tune figures at operator / route level

• October / November 2013

– DfT pay top up on the basis of original estimate

Key Milestones

• 1st December 2013 to 14 February 2014

– BSOG team analyse data and work with LTAs to resolve anomalies

• 31st March 2014

– Final certified claim sent out to reconcile payments up to end March

• 1st April 2014

– Common claim year begins

• April 2014

– DfT pay 2014/15 top up

Calculation of BSOG

Baseline – last cert claim accepted before 1 April 2013

• TENDERED
• COMMERCIAL

– Outside BBA – Outside BBA

• Live kms
• Live kms
• Dead kms
• Dead kms

– Within BBA – Within BBA

• Live kms
• Live kms
• Dead kms
• Dead kms

The sum of both sides should equal cert claim

Calculation of BSOG

TENDERED OPERATIONS COMMERCIAL OPERATIONS

Outside BBA Within BBA Outside BBA Within BBA File Ref: 1/xxxx Service No Registration No Total KMs on last PSV311 Live KMs Dead KMs Total KMs Live KMs Dead KMs Total KMs Live KMs Dead KMs Total KMs Live KMs Dead KMs Total KMs Diff between last PSV311E and bid Comments Operator 1 Service No. (e.g.1) 2 3 4 5 6 7 8 9 10

• Operator 1 TOTALS

KM

KPL:

Litres #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Rate:

BSOG #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Calculation of BSOG

• Cert claim is a snapshot - routes continually

change

• Clearly explain variances > 5%
• Early LTA / operator engagement advised

Useful Tips

• Tendered
• Part tendered
• De-minimis
• University / NHS contracts
• Incentives
• Dead kms

Peter Elliott

.

SYPTE

.

Principal Programme Delivery Manager

Better Bus Area

• Bid Development
• Key Issues
• Lessons Learnt

Bid Development

• Involvement of Operators
• Existing Partnerships
• Early and in detail
• For PTEs
• Involvement of Districts

Bid Development

• Idea generation
• “Shortlisting”
• Inclusion in bid

Bid Development

• 4 parallel activities, development of:

i. Cost Plan / Spend Profile

• ii. Programme
• iii. Benefits Realisation
• iv. VfM

Key Issues

• Impact on network
• Lag between investment and benefits
• Compliance with legislation
• Deliverability
• Impact on concession projects
• VfM – Matching

Operators’ aspirations with PTE’s/DfT’s

Benefits Lag Investment

BSOG Revenue Benefits

Lessons Learnt

• Range of ideas rejected
• Captured in guidance
• Move from ideas to developed projects needs

to be quicker

• Operators’ concerns different to PTE’s
• Operator involvement essential
• Don’t believe your Director General

The Application form

• Quite lengthy…but designed to ensure we get all the

information and evidence required

• Note – slightly revised version uploaded on Fri..
• Take a look, if you have any queries get in touch

Wrap up

• Minutes from the workshops will be written up and put
• nline.
• Questions/discussion points will be uploaded on

knowledge hub for discussion

• Thanks very much for attending