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A New Approach to Rural Public Transport

The role of taxis in rural public transport (Mott MacDonald technical evidence)

Executive summary

Background

The number of licensed taxis in England and Wales has increased significantly (by about 40% in London since 1985, and by 100% in the rest of England and Wales). The average number of trips made by taxi and Private Hire Vehicle (PHV) made in the late 1990's was three times higher than in the mid-1970's, and three times as many of those trips were made by people living in households without access to a car, (more by women than men). For people in low-income households, taxis provide a key method by which they access food shops and taxis provide a vital means of transport for the disabled.

Taxis are therefore a public transport success story, with a long term trend of growing patronage, but the economics of taxi operation and usage are under researched, particularly in rural areas. The CfIT 'Public Subsidy for the Bus Industry' study of 2002 showed that in deep rural areas, standard and experimental bus services have higher subsidy costs than taxis, and put forward a scheme whereby taxi provision for the transport socially excluded could be trialled. The Commission for Integrated Transport (CfIT) subsequently appointed Mott MacDonald to undertake research on the role of taxis in rural public transport. This would build on CfIT's 'Buses' projects to establish whether there is a role for taxis, alongside other demand responsive and 'conventional' public transport options, in providing cost-effective solutions to meeting the transport needs of communities in rural areas.

Aims and objectives of this research

The aim of this project is to establish whether flexible taxi schemes could offer similar or better transport services in rural areas, and be at a lower cost to the taxpayer than standard, or 'conventional', bus services.

The objectives for this research were to examine:

Methodology

The research proposal for this study involved four distinct phases:

Research findings - Phase One literature review

For the purposes of the study and in selecting schemes for in-depth case study research, the study categorised 'taxi' based services under the following headings, based on the results of examining published literature on the roles taxis play in rural areas:

The literature identifies a number of critical 'success' factors for the development of taxi-based public transport services:

Research findings - case study research

The case study schemes

The ten schemes selected were:

The study also examined the operation of taxi-based services in a number of other areas as 'story' case studies focussed on services which, whilst they may not meet the 'success' criteria developed earlier in the study for the selection of services, may have interesting information to provide to this research on the issues surrounding their operation.

The economics of the case study schemes

Information was collected for each of the case study schemes on their financial profile. This included information on each scheme's income, including fares and funding, and expenditure on vehicles and management systems. Where possible, comparative information on the costs of providing 'conventional' services in the same area as the case study taxi-based service was also collected.

Table 4.4 provides summary information on the income and costs for each of the ten case study schemes. It highlights that, in general, the cost of the scheme met through subsidy or financial support from the scheme manager is generally lower for those schemes in 'mainland' Europe than it is for those schemes based in the UK. This trend is likely to be a result of the respective scale of the schemes.

Two clear trends are apparent when examining the financial information for each of the case study schemes:

  1. The cost per passenger journey and level of subsidy is lower for the larger and better established schemes in 'mainland' Europe than it is for schemes in the UK; and
  2. Larger, network based schemes in the UK cost less per passenger journey than small scale, sole operator services.

In addition to economic data, the Case Studies explored a number of other key aspects of the services offered:

Summary

In summary, it can be seen that the case study schemes have identified a number of issues which must be considered when developing taxi-based services. The case studies selected in 'mainland' Europe have highlighted the potential role taxis can play in the provision of transport in rural areas and it is clear that local authorities and the taxi industry in some areas of the UK are beginning to develop schemes which mirror those in 'mainland' Europe.

However, a number of broad themes have become apparent in examining the case study schemes. The 'scale' of a scheme is vital to its long term future. The larger schemes in 'mainland' Europe highlight their ability to enjoy a different relationship with the taxi industry compared to areas in the UK. Where local authorities in England have begun to develop their schemes to a level which mirrors schemes in 'mainland' Europe, these positive relationships are becoming apparent and members of the public are benefiting as a result.

In seeking to develop their schemes in the UK, local authorities must however overcome a number of financial and operational barriers. Chapter 7 of this report outlines a number of recommendations which could allow local authorities in the UK to develop services of a comparable scale and level of amenity to those in 'mainland' Europe.

These 'themes' are used to inform a discussion on the role of taxis in rural areas in Chapter 6.

Wider consultation with a range of stakeholders and the supporting research has confirmed the research in that:

Consultees, and the research undertaken by the study team have identified that the market shows a supply-side deficit for the take-up of such solutions with neither taxi nor bus operators showing particular enthusiasm for these options. Overall it is felt that if progress is to be made then there is a need for Government support to encourage change.

Conclusions

This section discusses the issues raised during this research as responses to key questions identified at the outset of the project.

Could taxis provide a more cost-effective form of public transport than conventional bus services?

There is a long-held perception that using taxis to provide public transport for rural communities requires greater financial support than would be necessary for 'conventional' bus based services. Stakeholders suggested that in rural areas close to urban conurbations, the provision of taxi-based services may only be justified through considering the wider 'social' benefits taxis provide for members of the public.

By comparison, it is recognised that the ability of taxi-based services to offer additional social benefits and potentially allow the operation of public transport services at an acceptable level of financial support is appropriate in 'deep' rural areas. In examining each of the case study services, it has been possible to identify areas where taxi-based services are used to provide a public transport service at a lower financial cost than a 'conventional' service. In Cumbria, the County Council are continuing to introduce Rural Wheels services in areas where the provision of 'conventional' services may be uneconomic and require a prohibitively high level of financial support. This is taking place as part of a wider evaluation of the provision of public transport services in the county. Officers at Cumbria County Council have used a figure of £5 per mile as a 'cut off' point for the provision of 'conventional' bus-based public transport services. Where the provision of services to a community is likely to entail a cost of more than £5 per mile, the County Council have begun the phased implementation of Rural Wheels services.

It is important to acknowledge that the cost differential between the £5 cost per mile threshold for 'conventional' services and the cost per passenger journey figure for the new Rural Wheels services is used to support additional marketing and publicity activity, and to support the introduction of additional measures as part of a package of options which includes the introduction of Rural Wheels services.

Officers and organisations developing public transport services are viewing taxi-based services as one of a number of possible options for their rural areas. Only once consideration has been given to the travel needs of the community can any decision be made as to whether a scheme is more 'cost' effective; in many areas officers consider 'cost' to include not only the financial requirements of the service they wish to operate, but also any 'cost' to the community through a loss of amenity as a result of having a 'conventional' service rather than a taxi-based service. Within these criteria, taxis can be seen to offer a more 'cost effective' service in some rural areas.

What types of taxi-based scheme might suit different types of rural area?

In seeking to understand the role that taxi-based public transport services can play in rural areas, this study has sought to consider which types of taxi-based services offer benefits for particular types of rural area. The case study schemes were selected as 'successful' services which offer both benefits to the area they serve, and by inference therefore, similar types of rural area. The study has sought to match the transport and access needs of differing rural areas to the scheme types used to select the case study schemes, however it is important to note in this context that in the UK, the evidence base comprises a relatively limited number of trials. Whilst some more extensive demonstrators exist in mainland Europe, they do not constitute a robust sample and in some cases lack quantitative evidence. Therefore, whilst this research serves to demonstrate the viability of certain rural transport solutions, the guidance offered on applicability of certain types of scheme remains subjective and should be treated as such.

Are particular service types more successful in some areas than others?

In answering this question it is perhaps appropriate to build on the response to the previous question in determining which forms of taxi-based service are most appropriate for particular types of rural area. Of key concern here is consideration given to defining and ensuring the 'success' of a public transport service in a rural area.

As discussed in the Phase Two report, when choosing the case study schemes for in-depth analysis, the Intermode report defines a successful scheme as one which shows;

The actual 'type' of service is not noted in the above definition of 'success; rather it focuses on those issues which can perhaps be seen to be important for all forms of public transport developed in rural areas. In examining each of the case study schemes it can be seen that selecting the type of service has not necessarily been the key factor in determining the success of the scheme; rather it is other factors such as the availability of funding and political support, engagement with the local community and an effective process of managing and operating the scheme.

What changes to current licensing rules and practices, including quantity licensing, would be necessary to enable the provision of integrated bus / shared taxi services?

From discussions with stakeholders we have concluded that there is no fundamental legal barrier to the provision of integrated bus/shared taxi services, but that there are a number of actions which would make these much more likely.

Firstly, it should be possible for operators to register once only for their proposed operation. Ideally this would be done at LTP or equivalent level, or possibly even nationally. It was felt unlikely that bus operators, in particular, would wish to register on a district by district level and that variations in local licensing rules sometimes restrict cross-boundary co-ordination issues such as branding.

Quantity licensing was an issue which was raised on some instances but was not felt to be as significant as the wider issues on service licensing.

Mechanisms to extend bus service operators grant (BSOG) and the use of concessionary fares to taxi operation would be welcomed and one possible solution would be to enable, possibly through the use of vouchers, taxi users eligible for concessionary travel, to enjoy an equivalent level of financial subsidy that they would enjoy if they travelled by bus.

Why have flexible shared-taxi services not developed on a large scale in the UK, unlike other European countries?

Flexible shared taxi services are not widespread across Europe on a large scale. Case studies are restricted to a few countries with the Netherlands as an exemplar.

Clearly, the deregulation of the UK public transport market and the need for all subsidised services to be tendered, along with the break-up of the municipal bus operators, has had a detrimental impact on collaboration of this type.

A number of innovative schemes have been trialled but it is difficult to see them maturing to the scale seen on the continent without a degree of market protection. In effect, there is little incentive for the private sector to invest in a major new service which, once the market has been created, will be subject to competition.

We see no reason why, within the structure of some form of area franchise arrangement, an integrated bus and flexible taxi service could not be piloted in the UK. We believe, however, that a period of financial support would be required to achieve service scale and maturity, and to demonstrate that this is possible.

What would be the cost of a good quality taxi-based service?

Consideration was given as to the potential financial cost of implementing taxi-based services in rural areas in England. Whilst based upon a number of assumptions, and using limited data on potential demand, it does highlight a number of interesting issues. It shows that there would need to be a significant increase in the level of funding made available for the provision of taxi-based services to provide transport for those who live in the most rural parts of England, and those who live in the those rural areas in the second 'band' used during this analysis. It also highlights the significant difference in costs for providing transport for elderly people and those accessing employment, compared to providing transport for young people, disabled people, and those without access to a car. Whilst this analysis is based on assumptions regarding the number of times these groups of individuals would use these services, it does provide an interesting indication as to the order of magnitude of financial support necessary to support the introduction of taxi-based services.

If we assume that taxi-based services operate at an operating cost of £5 per passenger journey and a per passenger journey net cost ratio of 1.5 (the 'best' scenario under the conditions outlined above) then the approximate cost of providing a 'good quality' taxi based service for selected groups of people in the most rural areas of England would be as indicated in Table 6.11 below.

If it is assumed that services developed in the UK may initially require additional financial support, it is possible to consider the likely cost of providing taxi-based services in rural areas. The above assessment suggests that the provision of taxi-based services in rural areas for those most likely to benefit from this form of services would require financial support of between approximately £308 million per annum and £1.1 billion per annum. This assumes however that these services would only be used by those members of the public considered as part of the analysis process. The case study schemes have shown that where taxi-based services are able to provide transport for the wider public, the economies of scale available can over time reduce the level of financial support required.

What are the wider social benefits of a good quality taxi-based service?

The implementation of taxi schemes in rural communities where levels of deprivation and social exclusion are high and the provision of conventional public transport is lacking have shown, from the evidence above, to have a wide range of social benefits. These benefits are most strongly felt in communities where a high proportion of elderly, disabled, mobility impaired and vulnerable users live. These benefits have been summarised for the different types of rural taxi schemes in Table 6.9.

Rural taxis schemes have the potential to tackle social inequalities, reduce social degradation and address social isolation. The case study schemes have shown that users can benefit from improvements to their lifestyle, quality of life and perceived levels of safety through the provision of an appropriate public transport services; in selected rural areas, these benefits may be best achieved through the use of taxi-based services.

What are the wider environmental benefits of a good quality taxi-based service?

Rural taxi schemes have the ability to have both a positive impact on the local environment and health and wellbeing of the local community. Improvements to the local environment can impact upon people's health by improving local air quality and encouraging the growth of the local economy by providing an attractive environment in which to work and live. Local environmental benefits can also affect wider national and global issues such as climate change.

Rural taxi schemes can have several environmental benefits. These can often translate into both social and economic benefits and it is important that the linkages between these different types of benefits are understood in order to gain a complete appreciation of the positive impact of rural taxi schemes. Table 6.18 summarises the environmental benefits of different types of rural taxi schemes.

What are the wider economic benefits of a good quality taxi-based service?

There are a variety of direct and indirect economic benefits to be garnered through implementing rural taxi schemes. Many rural communities suffer from high levels of deprivation, high levels of unemployment and low levels of educational attainment. Rural taxi services provide much needed access to employment, education and training facilities which not only meet the economic aspirations of members of rural communities but also social aspirations. Local commerce can be encouraged and supported by rural taxi services due to the use of local taxi operators in the provision of schemes.

Barriers to future development

This study has identified a wide range of potential 'barriers' to the future development and use of taxis in providing transport for rural communities. The study Literature Review generated a 'long list' of potential barriers which were then appraised against the operational and development experience of organisations involved in developing the case study schemes. Our understanding of the barriers to the development of taxi-based services was then further enhanced by discussing the role taxi-based services could play in the development of the rural public transport 'offer' with key stakeholders.

The 'barriers' identified can be summarised under a number of key headings:

To assist in the development of taxi-based services, the above 'barriers' have been used to generate a list of recommendations.

Recommendations

The taxi industry

The taxi industry needs to recognise that:

Local authorities and 'governance'

Ultimately local authorities will drive change in public transport provision in their areas. They will, however, be reluctant to innovate where there is a threat of challenge under rules surrounding procurement, competition, and potentially even State Aid.

Whilst support in this regard is needed from DfT, local authorities can:

Other actions which are more clearly within the Local Authority remit are as follows:

Central Government

DfT has provided a legislative framework which should enable the development of more imaginative taxi-based public transport schemes, but which has evolved in a way which is perceived as being cumbersome and sub-optimal. DfT needs to offset this by providing effective guidance to Local Authorities, not least through the dissemination of this study.

DfT should also consider:

In the longer term, DfT may wish to also consider the following:

Making the case - developing a 'pilot' scheme

As indicated above, it is recommended that a Pilot Scheme is needed to demonstrate that a wider investment in a taxi-based solution is justified. This would:

1: Mulley (2007): op. cit.
2: UTIP (2004): op. cit.
3: Highlands and Islands Enterprise: 'Rural Transport in the Highlands and Islands: A Good Practice Guide'.
4: Campaign for Better Transport (2007): op. cit.
5: ibid.