These are the biggest changes in over 10 years issued by the DfT on how to calculate concessionary reimbursements
The DfT recently issued updated guidance around the reimbursement of concessionary fares in England and published a new reimbursement calculator tool. These are the biggest changes in over 10 years and there are a number of fundamental updates that operators need to be aware of.
In addition, the DfT have removed their recommendation that LTAs continue to pay reimbursement at pre-Covid levels, therefore operators need to act fast to ensure they are not losing out following the changes.
Within the revised guidance, there are some key changes for operators to consider:
Reimbursement Factor / Demand curves
- The PTE/non-PTE demand curves are now referred to as urban and non-urban. The criteria for each is unchanged, although the list of urban (i.e. PTE) areas has been updated using the latest census data. Operators should check their scheme documents to ensure the correct demand curve is being applied in 2024/25.
- The underlying demand curves have been updated. Based upon the work we have undertaken in the vast majority of cases this has led to increases in the reimbursement factor of >10% compared to the previous version of the reimbursement calculator.
Average Fare Foregone / Lookup tables
- For those operators whose average fare is based on the ‘Discounted Fare’ method, the old Nowcard lookup table has been replaced with four new tables. These are based on the following area types – large urban, medium urban, mixed urban/rural and rural. It is imperative that operators review their scheme documents to ensure LTAs have selected the appropriate lookup table for their area.
- Although the DfT recommend that one lookup table is used by an LTA for all operators, they do acknowledge there may be circumstances where this is not a fair reflection of an operator’s particular circumstances. Operators should therefore assess their own operations to confirm this aligns with the LTA area – if it doesn’t then the lookup table may be challenged.
- Within the marginal capacity costs calculation, the elasticity and default commercial journey percentages have been updated. The basis of inflation has also been updated, which has an impact on the underlying cost per vehicle hour and mile rates. We always recommend that operators run their own marginal capacity cost calculations to ensure the rates, if any, proposed by LTAs are appropriate for their operations. Given how sensitive the DfT’s reimbursement calculator is to operators’ local inputs, over the years we have frequently found that operators are being under-reimbursed in this area.
We have helped operators of all sizes ensure they receive the correct amount of reimbursement since the inception of the free concessionary fares scheme. In the last scheme year, we improved operators’ reimbursement by an average of 17%. Read more on concessionary consultancy services.
To ensure that your concessionary fares payments are maximised, particularly given the recent changes to the scheme guidance, contact us for a free consultation.