Who's got a (free) ticket to ride? Should the government care?

14 January 2013

You wait ages for a state benefit - and then several come along at once.

The UK's pensioners are the only group to have been protected from the Government's cuts to the welfare bill. However, in recent days certain Conservative MPs have indicated that the party will not necessarily be able to keep this commitment should it be re-elected in 2015.

At the moment, those over state pension age are entitled to certain benefits, which include: free off-peak travel on local buses anywhere in England, the Winter Fuel Payment and a free TV licence (only for those aged 75 years and over).

None of these benefits are means-tested, leading to allegations that a generation of wealthy baby boomers are gleefully spending the nation's inheritance on the finer things in life. But is this a glib exaggeration?

According to the Daily Telegraph, it is. Last week it reported that:

"Any cut to pensioners' free bus passes would affect three in four elderly people across all income scales who regularly rely on the benefit, figures show." [emphasis added]

What's the Daily Telegraph's evidence?

The newspaper's source is an answer to a Parliamentary Question put by Chris Skidmore MP, who wanted to know more about the wealth of pensioners receiving concessionary travel passes.

These statistics are based on answers to the National Travel Survey (2008, 2009 and 2010), which the National Centre for Social Research (NatCen) undertakes on behalf of the Department for Transport. Every year since 2002 it has invited 15,000 households to share information about their travelling habits.

The Daily Telegraph is drawing on NTS research that shows how often older people use their free bus passes. It's certainly the case that, of those surveyed, 75% had applied for a concessionary travel pass. However, this average does not do justice to the spread of the data.

As we can see from the graph below, the take-up is broadly similar for those with incomes up to £20,000 and then drops off among those who are wealthier:

The Daily Telegraph article states: "Among wealthier pensioners with a household income of £30,000 or more, 66 per cent are still taking up the benefit." What the Daily Telegraph does not spell out is that the take-up rate is lowest among the richest pensioners - as NatCen note, this is where we find a measure of significance, namely that those earning £30,000 are "less likely to own a bus pass".

While the average quoted by the Daily Telegraph is strictly correct (if a little misleading), it's worth looking at the newspaper's choice of words: that there are three in four elderly people across all income scales "who regularly rely on the benefit". For determining 'reliance', the Daily Telegraph has used the National Travel Survey figures on the frequency of bus pass use amongst different income groups:

As we can see, on average those with the highest incomes use their bus passes the least. On the basis of the 2010 National Travel Survey, NatCen point out:

"There is some evidence to suggest that, for the middle income bands (£5000-£29,999), frequent pass use (i.e. at least weekly) decreases with increasing income."

This might simply be due to a lack of demand: those who can afford to travel by car might be less likely to board a bus. In fact, the results from the 2010 National Travel Survey and an accompanying Ipsos-Mori questionnaire bear this out:

"Access to a private vehicle was given by 69 per cent of respondents as a reason for not owning a pass and cited by 74 per cent as a reason for infrequent pass use."

While there are other variables at play (the distance to the nearest bus stop, for example), these are interesting results.

The 2010 National Travel Survey showed that 98% of bus trips made by those eligible for a pass are made by concessionary pass holders. However, just because you claim a benefit doesn't mean that you couldn't enjoy a decent quality of life without it. In other words, the take-up of a benefit is not direct proof of the need for it.

A pensioner may be using their free bus pass three times a week, but this needn't indicate a reliance. Instead it might be a result of the fact that they live close to a bus stop that enjoys a regular service.

For those surviving on a state pension, a free bus pass may be a lifeline. We also know that loneliness is a common cause of depression among the elderly and there's an argument that a concessionary travel pass might encourage people to lead more fulfilling social lives. Indeed, NatCen's research shows that bus travel becomes an "increasingly important" mode of travel as people grow older.

Source: NatCen

To an extent the Government recognised this when it determined its policy on free bus passes. Instead of restricting access to the benefit through means-testing (a policy that would run up other costs), it has chosen to increase the eligibility threshold in line with the planned rises in the state pension age.

The campaign for means-testing universal pensioners' benefits is gaining momentum. The Daily Telegraph's claim that 75% of all pensioners "rely on" the bus pass clearly overstates what the data shows. But we need straight talk if we are to have a useful debate about this controversial subject.

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