Contracted Bus Services

[Newbiedriver]

Hello All,

I am trying to understand more about bus service contracts that council’s provide through tenders as I am looking to study a Transport Manager CPC.

I have heard of minimum cost and minimum subsidy but I am struggling to understand about concessionary fares and BSOG.

If a bus is operated as a minimum cost does the council still pay concessions to the bus operator? Can the operator claim BSOG?

For a minimum subsidy contract, is it correct that bus operator advisors the council how much funding they need to run the service but they keep all fares and can claim concessions and BSOG?

I have also heard about demimimus arrangements but not sure how they work.

Thanking you for any help.

 

[WibbleWobble]

Minimum cost = authority keeps all revenue, they pay the full costs of running the service (also called gross cost contract).

Minimum subsidy = operator keeps all revenue, authority is effectively topping up the costs of running the service (also called net cost contract).

Deminimis subsidy = a subsidy for a small enhancement that is not tendered like an ordinary contract (often more informal) - usually this is to pay for a small deviation to a service, or the odd journey (or part of) such as at the start or end of a service.

BSOG is claimable in all cases, however the authority may decide to keep it for tenders so that amount would need to be included in the bid price (whether or not should be stated in the tender document). It shouldn't be retained on a deminimis subsidy, as it is still deemed to be commercially operated.

Concessions would be paid to the operator regardless, as that is from a separate pot of money.

 

[pjnathanail]

Minimum cost = authority keeps all revenue, they pay the full costs of running the service (also called gross cost contract).

Minimum subsidy = operator keeps all revenue, authority is effectively topping up the costs of running the service (also called net cost contract).

Deminimis subsidy = a subsidy for a small enhancement that is not tendered like an ordinary contract (often more informal) - usually this is to pay for a small deviation to a service, or the odd journey (or part of) such as at the start or end of a service.

BSOG is claimable in all cases, however the authority may decide to keep it for tenders so that amount would need to be included in the bid price (whether or not should be stated in the tender document). It shouldn't be retained on a deminimis subsidy, as it is still deemed to be commercially operated.

Concessions would be paid to the operator regardless, as that is from a separate pot of money.

This is not fully correct. Concession revenue is retained by the Local Authority for minimum cost contracts. They move it from the ENCTS budget to the local bus budget internally.

BSOG is no longer claimable for LA supported services, except for de minimis services as stated. However, incentive elements of BSOG for low carbon vehicles, ticket machine upgrades and automatic vehicle location systems are claimable for tendered services.

 

[Contains Nuts]

BSOG can’t be claimed on tendered services, but the small payment for having smartcard readers and vehicle tracking can be claimed, as can enhancements for low or zero carbon vehicles. BSOG can be claimed in full on commercial services and any service with deminimis funding, but only on services that are classed as ‘normal’ bus services - school and works services don’t count, and some long-distance limited stop services may also be exempt.

Generally one of the conditions of being paid BSOG is that fares are charged at ‘normal’ rates and concessionary passes are accepted. If it is a service to somewhere like a theme park or other attraction where a premium fare applies then the DfT may decide that BSOG is not payable, or they may not pay it for the section of the route that the premium fares apply to. With local bus services operating into school grounds the BSOG is generally not paid on the portion of the route within the school grounds as ‘normal passengers’ are not allowed to board or alight there.

In some cases with local services operating to schools, when the operator goes to claim BSOG the DfT ask for proof that the service has been used by adults or concessionary pass holders (usually by requesting ticket machine data) and if it shows that the service has not been ‘regularly used’ by non-students then they will not allow BSOG to be claimed.

Concessionary fare reimbursement is not paid to the operator on minimum cost contracts. The Council instead take the relevant amount of money from the concessionary fares budget each month and transfer it internally to the part of the budget that pays for the service to run.

 

[Newbiedriver]

BSOG can’t be claimed on tendered services, but the small payment for having smartcard readers and vehicle tracking can be claimed, as can enhancements for low or zero carbon vehicles. BSOG can be claimed in full on commercial services and any service with deminimis funding, but only on services that are classed as ‘normal’ bus services - school and works services don’t count, and some long-distance limited stop services may also be exempt.

Generally one of the conditions of being paid BSOG is that fares are charged at ‘normal’ rates and concessionary passes are accepted. If it is a service to somewhere like a theme park or other attraction where a premium fare applies then the DfT may decide that BSOG is not payable, or they may not pay it for the section of the route that the premium fares apply to. With local bus services operating into school grounds the BSOG is generally not paid on the portion of the route within the school grounds as ‘normal passengers’ are not allowed to board or alight there.

In some cases with local services operating to schools, when the operator goes to claim BSOG the DfT ask for proof that the service has been used by adults or concessionary pass holders (usually by requesting ticket machine data) and if it shows that the service has not been ‘regularly used’ by non-students then they will not allow BSOG to be claimed.

Concessionary fare reimbursement is not paid to the operator on minimum cost contracts. The Council instead take the relevant amount of money from the concessionary fares budget each month and transfer it internally to the part of the budget that pays for the service to run.

Thanks for the responses. It seems rather a tad confusing.

So who pays the council the concessionary fares? Is it funded internally or do the government pay them? If the government pay how is it calculated?

 

[Contains Nuts]

Thanks for the responses. It seems rather a tad confusing.

So who pays the council the concessionary fares? Is it funded internally or do the government pay them? If the government pay how is it calculated?

The Councils get money from central government, although usually also have to pay part of it out of their own budget. There is a very complex reimbursement calculator produced by the DfT which most councils use although some of them choose to use simpler methods.

 

[stevieinselby]

I wonder if BSOG is the answer to a question that has been puzzling me for a few months.
Go-ahead East Yorkshire recently won the tender for the York to Ripon (82) and Ripon to Knaresborough (182) routes, which are run from their depot at Pocklington, which involves a lot of dead mileage at the start and end of the day.
One diagram starts and ends in York, which is not too far, but one each starts and ends in Boroughbridge and in Knaresborough (each 36 miles from the depot).
But those diagrams also include short positioning moves in service either from York to Green Hammerton or from Green Hammerton to Boroughbridge and vice versa, often only a few minutes away from another bus and without either bus running through (even though they quite easily could), at times that don't look like they could possibly be of any use to passengers ... is it likely that they are BSOG raids to pick up a few extra quid where the bus is running along part of the registered route?

 

[WibbleWobble]

is it likely that they are BSOG raids to pick up a few extra quid where the bus is running along part of the registered route?

It would make sense, as if they ran out of service (dead trip), then the BSOG that is available would be paid to the local authority (if the authority takes the BSOG monies).

BSOG is payable on dead trips between depot and the start/end point, where the service itself is eligible (likewise on dead trips between journeys).

It gets complicated though where the journey serves a school..... if the journey starts or finishes in a school / college grounds, then the portion of service from the school / college to the next / preceding stop is classed as ineligible. This is because that stop is not available to the public. Consequently, the dead trip to the school (regardless of where it comes from) is also ineligible, as would any dead trip from the school back to depot.

If the journey serves a school, but the stop is outside the grounds (such as on the highway outside), then the whole trip would be eligible. Naturally, if the school route is closed-door or registered as "schools or works", then it doesn't matter where the kiddies are picked up and dropped off, the whole thing is ineligible!

 

[Dai Corner]

It would make sense, as if they ran out of service (dead trip), then the BSOG that is available would be paid to the local authority (if the authority takes the BSOG monies).

BSOG is payable on dead trips between depot and the start/end point, where the service itself is eligible (likewise on dead trips between journeys).

It gets complicated though where the journey serves a school..... if the journey starts or finishes in a school / college grounds, then the portion of service from the school / college to the next / preceding stop is classed as ineligible. This is because that stop is not available to the public. Consequently, the dead trip to the school (regardless of where it comes from) is also ineligible, as would any dead trip from the school back to depot.

If the journey serves a school, but the stop is outside the grounds (such as on the highway outside), then the whole trip would be eligible. Naturally, if the school route is closed-door or registered as "schools or works", then it doesn't matter where the kiddies are picked up and dropped off, the whole thing is ineligible!

Ah that might explain why Newport Transport have short workings starting/finishing close to schools. They're operated by the same vehicles as the 'school' journeys which themselves are registered as public services (but just try to board one if you look over 16 and aren't in school uniform).

 

[markymark2000]

Ah that might explain why Newport Transport have short workings starting/finishing close to schools. They're operated by the same vehicles as the 'school' journeys which themselves are registered as public services (but just try to board one if you look over 16 and aren't in school uniform).

In Wales, they only pay for operational mileage and hence Newport Bus run trips in service to cover dead mileage.

 

[Dai Corner]

In Wales, they only pay for operational mileage and hence Newport Bus run trips in service to cover dead mileage.

I wonder how much they get for two or three miles? I suppose every little helps!

 

[Roger1973]

'de minimis' arrangements don't have to be for small enhancements to existing services, they can be used for very small scale services (for example the sort of market day service that runs one day a week) or for short term arrangements - it basically means that a contract has been awarded without a formal tender exercise.

There is a financial limit on either value of a de minimis contract or a council's total spend on such contracts, although the limits vary depending on what the council's overall budget is. More here (bus centre of excellence) if you want it.

There are separate rules about 'emergency contracts' for circumstances like an operator ceasing trading abruptly and there not being time to do a proper tendering exercise. From memory, council has to go out to tender within X days, but I can't find a reference now.

 

[Newport Lad]

I wonder how much they get for two or three miles? I suppose every little helps!

I think it’s also to do with passenger frustration. There’s nothing worse than watching a bus operating out of service going exactly where you want to go

 

[Travelmonkey]

I think it’s also to do with passenger frustration. There’s nothing worse than watching a bus operating out of service going exactly where you want to go

Yep so many heading into depots, I just want a quick nosey round, honest,

 

[WibbleWobble]

There is a financial limit on either value of a de minimis contract

It used to be £30k, but was scrapped a couple of years ago.

 

[Cesarcollie]

It used to be £30k, but was scrapped a couple of years ago.

Its still £30k unless total LTA tendered service expenditure is £120k or more (ie 25%) - I think that’s the right percentage but happy to be corrected!

 

[WibbleWobble]

Its still £30k unless total LTA tendered service expenditure is £120k or more (ie 25%) - I think that’s the right percentage but happy to be corrected!

For context, it was our auditors (so have direct dealings with the DfT) who advised us about the limit being lifted.