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Research in Transportation Economics 29 (2010) 296e303

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Research in Transportation Economics

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Promoting social inclusion in a deregulated environment: Extending accessibilityusing collective taxi-based services

Corinne MulleyInstitute of Transport and Logistics Studies, The University of Sydney, Australia

Keywords:Rural transportTaxi-based public transport servicesSocial inclusionRural accessibility and public transportTransport disadvantage

E-mail address: corinne.mulley@sydney.edu.au.

0739-8859/$ e see front matter � 2010 Elsevier Ltd.doi:10.1016/j.retrec.2010.07.037

a b s t r a c t

Bus based public transport has enjoyed revitalisation in many urban areas but outside large towns andcities its provision and quality remains erratic. Many rural settlements have infrequent services givingrise to social exclusion through transport disadvantage.

The UK Government highlighted a need in Towards a Sustainable Transport System (2007) for radicalnew thinking on rural accessibility to help meet goals of quality of life and accessibility for all and to helpmeet the challenge in finding carbon friendly ways of meeting rural transport needs. This paper reportswork undertaken for the Commission for Integrated Transport, an advisory body to UK Government, onhow shared taxi-schemes could be developed within a deregulated environment to meet rural acces-sibility needs. This is based on an analysis of institutional barriers and comparison between successfulmainland European schemes and UK schemes. The paper considers economic viability and the levels ofsubsidy currently used to provide accessibility in rural areas to show the potential for making currentexpenditure on rural transport in the UK ‘work harder’ to deliver a collective taxi-based service as part ofthe public transport mix so as to increase rural accessibility.

� 2010 Elsevier Ltd. All rights reserved.

1. Introduction

This paper considers an extension to public transport that wouldbring collective taxi-based services within the public transport mixfor residents without current access to quality public transport.These services are targeted at rural areas and at areas on the urbanfringe where either population density is low or land-use config-urations do not provide sufficient demand to make conventionalpublic transport an appropriate offer. The motivation for consid-ering such extensions to public transport is to extend accessibilityand reduce social and transport disadvantage. Issues surroundingthis aspect are considered in the first section of the paper.

The context of this paper is to consider the implications of theintroduction of collective taxi-based services within a deregulatedenvironment for public transport services, such as exists in the UKfor bus operation, where operators may operate any pre-registeredservice on a commercial basis, without subsidy or where a serviceis subsidised by the local authority, following a process ofcompetitive tender. The existence of a deregulated environment isoften thought to be the reason why collective taxi-based servicesare seen more extensively in countries outside the UK e in the US,

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in Scandinavia and in mainland Europe. A discussion of theregulatory and subsidy environment in the UK for the provision ofbus and taxi services forms the first section of this paper. The aimof this section is to identify institutional barriers to the develop-ment and delivery of these services as part of the public transportmix. The prominence here of bus services is intentional: in areas oflow demand, public transport is bus transport. Of course, the railnetwork is important in providing public transport accessibilitybut the issue for areas of low demand, where rail transport ispotentially available, is how to access it. Access, if provided, will betypically by bus.

The third section of this paper considers the economics of taxi-based services based on the comparative performance of a numberof European and UK taxi-based schemes investigated as part ofrecent work undertaken for the Commission for Integrated Trans-port (CfIT) in the UK and reported in CfIT (2008). The analysisextended in the penultimate section to consider the costs andsubsidy implications of the introduction of a national taxi-basedscheme in England, as well as highlighting the barriers to potentialintroduction which emerged from the case-studies.

The final section concludes by evaluating the opportunities forthe introduction of collective taxi-based services in the deregulatedenvironment of the UK as a means of extending accessibility andpromoting social inclusion.

C. Mulley / Research in Transportation Economics 29 (2010) 296e303 297

2. The role of accessibility in social inclusion and transportdisadvantage in areas of low demand

The literature acknowledges that public transport playsa fundamental role in providing accessibility and supporting envi-ronmental objectives. Recent UK policy documents, for example‘Putting Passengers First’ (DfT, 2006), also identify the pivotal roleof public transport in the functioning of the labour market andmeeting social inclusion targets. Alongside this is the evidence ofthe role of the private car in meeting accessibility needs and theimpact of this outside London on the decline in bus patronage.The UK is not special in having falling public transport patronage asin EU countries, more generally, the share of public transport hasfallen from 24.6% to 15.9% in the thirty years from 1970 to 2000(UITP, 2004). The quandary faced by public transport is that unlesshalted, further decline in patronage will lead to rising unit costs foroperators. In a deregulated environment this can lead to an increasein fares and/or a cut-back in services making services less able toprovide for the demand that remains or a need for ever-increasingsubsidy.

In areas of low demand, the challenges described in the previousparagraph are even more apparent. Low densities of populationlead to low levels of demand and the spatial diversity of journeysdemanded frustrates the capability of conventional forms of publictransport to satisfy accessibility needs. It is often thought that lowdemand is only associated with low population densities, particu-larly rural areas, but an important contributor to low demand isreliance on the private car. Whilst dependence on private cartransport is higher in rural areas (in the UK, there is an average of1.59 cars per rural household as compared to 0.99 cars permetropolitan household1), it must be acknowledged that the use ofthe private car is both a result and a cause of poor public transportprovision, particularly in a deregulated environment where all non-commercially operated services require subsidy. The issues of poorpublic transport in areas of low demand, coupled with a higherproportion of private car journeys is of concern for more reasonsthan lack of accessibility: an array of concerns is identified in ‘Ruralbuses: an endangered species’ (The Campaign for Better Transport,2007) which emphasises the potential plight of rural areas if privatetransport journeys continue to grow and give rise to ‘urban’ typeproblems such as congestion on infrastructure ill able to provide forsuch growth.

There is no universally accepted definition of social exclusionbut it is generally accepted that it is a multi-faceted concept whichwas originally associated with income or poverty.Wider definitionsare now much more common and, for example, the UK’s CabinetOffice Social Exclusion Task Force identifies the following as sum-marising the key issues involved:

‘Social exclusion is a complex and multi-dimensional process.It involves the lack or denial of resources, rights, goods and services,and the inability to participate in the normal relationships andactivities, available to the majority of people in a society, whetherin economic, social, cultural or political arenas. It affects both thequality of life of individuals and the equity and cohesion of societyas a whole.’ (Levitas, Gordon, & Pantazis, 2006)

Much of the literature on social exclusion has ignored the spatialor mobility aspects (Cass, Shove, & Urry, 2005) but identifiesmultiple causes of social exclusion with transport and accessibilitylimitations contributing to a greater or lesser extent. Accessibility,as identified by the World Bank (2002) is:

1 Transport Statistics Great Britain, 2006. http://www.dft.gov.uk/pgr/statistics/Accessed 20 July 2009.

‘.important., not only for its role in facilitating regular and stableincome-earning employment but also for its role as part of thesocial capital that maintains the social relations forming the safetynet of poor people in many societies’

This leads to the use of the phrase ‘transport disadvantage’where accessibility to key services is not possible as a result of anabsence of appropriate transport provision. Whilst not exclusive,these can be summarised (Social Exclusion Unit, 2003) as lack ofaccessibility to work and job opportunities, education/trainingoutside the statutory school age, healthcare, food shopping andsocial activities, such as visiting friends or family or taking advan-tage of social activities such as leisure centres or cultural activitiessuch as libraries.

The impact of this lack of accessibility is first on the individual,often creating a vicious circle which is difficult to break, of aninability to find accessible jobs or education/training leading to lowincomes and social exclusion. There are further costs which accrueto the individual’s family and the community in which the indi-vidual resides (both spatially and socially). The vicious circle meansthat there is also a demand side issue that requires consideration:the transport disadvantaged will not be met simply by the provi-sion of services if these services are not affordable.

The UKGovernment highlighted a need in Towards a SustainableTransport System (2007) for radical new thinking on rural accessi-bility to help meet goals of quality of life and accessibility for all andto help meet the challenge of finding carbon friendly ways ofmeeting rural transport needs. The analysis in this paper isa contribution to the deliberations on how to mitigate transportdisadvantage in a sustainable way.

3. The institutional framework for bus and taxis in thederegulated environment of the UK

In the UK, the operation of ‘conventional’ local bus services was‘deregulated’ under the Transport Act 1985. The current require-ments for the operation of a local service (defined as a PublicService Vehicle (PSV) carrying passengers at separate fares wherethe overall route or distance between stopping places is less than15 miles (measured in a straight line) are that quality/safetyconditions need to be met by the operator, vehicle and driver.In practice, to satisfy quality and safety conditions, a PassengerService Vehicle (PSV) Operator Licence is required (the operatorneeds to fulfil a financial requirement showing the ability to haveliquid funds proportional to the number of vehicles held), holda Certificate of Professional Competence (CPC) (or nominatea suitably qualified traffic manager), be of good repute anddemonstrate adequatemaintenance facilities (or have a contract formaintenance). The vehicle must satisfy the PSV licensing require-ments in terms ofmeeting construction and use regulations and thedriver of such bus services must hold a valid Passenger CarryingVehicle (PCV) licence. The service to be run, whether commerciallyoperated or operated under subsidy, must be registered with theTraffic Commissioners, a quasi-independent body with responsi-bility for maintaining the register of services (but no rights todecide which service or how often a service should run, nor haveany influence over fares). Registered services have the benefit ofbeing eligible for BSOG (Bus Service Operators’ Grant) which givesa rebate of approximately 80% of the duty paid on the fuel used inproviding the service. Local services can be operated as ‘commer-cial’ services inwhich case the operator has complete freedom overall aspects of delivery (frequency, fares and route). In practice, UKlocal authorities identify ‘gaps’ to accessibility needs which resultfrom the registration of ‘commercial’ services within their bound-aries and choose, via competitive tender, operators to provide

Table 1Case-study sites in the UK and mainland Europe.

UK schemes Mainland European schemes

Billilinks, West Sussex Single scheme for a shared taxiservice on two specified routesaround a small town

Annuf Sammel taxi, Germany Sub-regional scheme with fixed, semi-fixed andflexible supplementary public transport providingsupplementary public transport to key services

Devon Fare Car, Devon County-wide timetabled sharedtaxis within defined rural areas

Publicar, Switzerland National scheme providing flexible on-demandminibus service to provide access to conventionalpublic transport in rural areas and small towns

Connect 2, Wiltshire County-wide scheme for bookable publictransport using bus, taxi andCommunity Transport

Regiotaxi, Netherlands Regional case-study of a nationally managednetwork shared taxi for general accessibility.

North Sutherland, Scotland Single scheme offering discounted taxi faresin sparsely populated areas to providekey transport links

Taxitub, France Sub-regional scheme providing on-demandtaxi-based services on defined corridors and stopsto provide access to conventional public transport

Rural Wheels, Cumbria Taxi management scheme for rural partsof the County using smartcard payment

Treintaxi, Neterlands National scheme of shared taxis to provide accessto train stations

Source: CfIT, 2008.

C. Mulley / Research in Transportation Economics 29 (2010) 296e303298

services supported through subsidy. Increasing pressure on localauthority budgets has meant that support to local services hasneeded to be prioritised.

Alongside the provision of ‘conventional’ services, the legisla-tion provides the opportunity for a wide range of types of publictransport service including a range of options for demand respon-sive transport provided by bus operators or taxi firms (eitherhackney carriages or private hire vehicles) and not-for-profitoperators.

An analysis of the current legislative framework for the differenttypes of public transport service that may operate shows that it iscomplex but that a framework does exist which offers the oppor-tunity for a variety of vehicle sizes to provide public passengerservices: all vehicle sizes (registered services), small or largevehicles (services operated under permit), small vehicles(restricted bus licences), a taxi used as a bus (taxibus) and taxi/PHVsharing (from designated places or by advance booking). From anoperational point of view, there does not seem to be a legalimpediment to the use of collective taxis as part of the publictransport mix.

However, whilst there is an institutional framework that catersfor different sized vehicles to provide public passenger services,this framework offers different costs and benefits of operation. Forsome services, the operator requires a Passenger Service Vehicle(PSV) Operator Licence and the drivers need to hold PCV licencesand also be paid. These impose costs on the operator in comparisonto the operation of services where these conditions are relaxed.

On the other hand, many of the services are eligible for the BusService Operators Grant (BSOG). BSOG was formerly known as FuelDuty Rebate and is a scheme which repays to the operator some ofthe duty paid on fuel used for specific kinds of passenger journeyand averages at about 80% of the duty paid by operators. Registeredlocal services automatically qualify for BSOG but this is not the casefor services registered as ‘shared taxis’ and, if an operator providesa mix of services they would need to undertake good recordkeeping to identify the fuel element of the qualifying service. Basedon data for 2000/2001, Fuel Duty Rebate2 for rural services (definedas based on settlements having less than 25,000 population)accounted for 16% of the total BSOG paid to operators (CfIT, 2008).Between 1997/1998 and 2005/2006, BSOG paid has increased 59%in real terms and is now approaching £400 million per year. Totalsubsidy over the same period has risen from £0.9 billion to £1.8billion with this increase largely driven by increases in subsidised

2 Fuel Duty Rebate (FDR) as the predecessor of BSOG was paid on a similarprinciple of refunding a proportion of the duty paid on fuel used to provide qual-ifying services.

service spending has remained relatively constant (DfT, 2006) untilchanges were introduced in 2008.

From April 1st 2008, free bus travel was extended to allow freebus travel throughout England for older and disabled people. Thisprovides a further difficulty within the institutional frameworksince, with the exception of a local bus registration (and the Section12 taxibus that is effectively a local bus service registration), there isno legal requirement to accept travellers on a concessionary faresbasis so that passengers travelling on the different services havedifferent entitlements in regard to fares.

In summary, the deregulated environment of the UK doesprovide the potential for many different sized vehicles to providepublic passenger transport services but it is an environment thatimposes different costs and benefits on different types of operator.However, to the travelling public, the output of these serviceswould not necessarily be distinguishable and would be viewedsimply as public transport and yet concessionary fares would beavailable on some services but not on others. This could, and does,create significant customer confusion particularly as bus travelremains the most used form of public transport, especially for olderpeople.

4. The economics of collective taxi-based schemes

The above section demonstrates that there is no legal impedi-ment to the provision of collective taxi-based services as part of thepublic transport mix within the deregulated environment of theUK. The motivation for the more in-depth study reported in thispaper was to understand why such taxi-based schemes appear tobe successfully operating in mainland Europe and to identify whatmight be required for successful implementation in the UK.The approach was based on a comprehensive review of relevantliterature and an in-depth case-study analysis of mainland and UKschemes. The focus was on rural taxi-based schemes specificallyalthough it recognised that these schemes form only part ofa potential suite of flexible transport services to improveaccessibility.

The case-study sites are shown below in Table 1. It can be seenthat the mainland European schemes were based in a number ofdifferent national institutional contexts, as compared to the UK. Inmainland Europe, the selected schemes included national, regionaland sub-regional schemes. In the UK, the largest schemes wereCounty-wide but the selection also included some single schemes.However, considerable differences between mainland Europeanand UK schemes emerged which could not be accounted for simplyby the regulatory aspects of the institutional frameworks.

Mainland European schemes benefit from national level fundingand regional focussed planning frameworks. In the UK, funding is

0

500000

1000000

1500000

2000000

2500000

munnarepspirtregnessaP

Schemenational scheme sub-regional schemecounty/multiple schemes single scheme

020000400006000080000

100000120000

ixatoigeR

raCilbuP

BUTixaT

TSA

2tcennoC

erihstliW

eraFnove

Dra

C

laruR

sleehW

htroN

dnalrehtuS

skniLilliB

Number of trips per annum

Fig. 1. Scale of Operation: number of passenger trips per annum, by geographical scale of operation. Source: CfIT, 2008.

C. Mulley / Research in Transportation Economics 29 (2010) 296e303 299

from a single local authority, targeted at satisfying amore restrictedset of needs which are prioritised because of limitations in theavailability of funding for services which fall outside the commer-cially provided network. A major difference between the UK andmainland Europe emerged in the ‘culture’ of the taxi-operators.

£0

£2,000,000

£4,000,000

£6,000,000

Scheme

£0

£200,000

£400,000

AST (sub-regional)

Fig. 2. Contribution of fare income and subsidy to total co

In the UK, taxi operators providing supply see collective taxi-basedservices as an add-on to their core business, which is usually thetransport of children to school, and thus the vehicles used are thosewhich are available. In contrast, mainland European schemes areoperated by taxi-operators dedicating their time and vehicles to the

Annual subsidy

Annual Fare Income

TaxiTUB (sub-

regional)

Connect2 (4

schemes)

DevonFare Car (County)

Rural Wheels (County)

N. Sutherland (1 scheme)

st: schemes ranked by gross cost. Source: CfIT, 2008.

0%10%20%30%40%50%60%70%80%90%

100%

tsoclatoT

Scheme

Annual subsidy

Annual Fare Income

Fig. 3. Proportion of total cost met by subsidy (schemes ranked by gross cost). Total cost defined as the sum of fare revenue plus subsidy. Source: CfIT, 2008.

C. Mulley / Research in Transportation Economics 29 (2010) 296e303300

service: often this provides amix of vehicles that can be allocated tothe different needs of the passengers utilising the service.

These ‘cultural’ differences impact on the service design andquality of service offered to passengers. UK taxi-based schemes areusually offered only inter peak and are rarely designed to integratewith the rest of the transport network for onward travel.The booking requirements are often significantly longer (24 h orlonger, as compared to about one hour for mainland Europeanschemes) and the permissible hours for booking much morerestricted. In many cases these differences arise from the way inwhich themainlandEuropean schemesare considered, bothby theirpromoters and by their customers, as permanent from the outsetwhereas the UK schemes have been implemented using temporaryfundingwith afinite end datewhen the local authority has to decidewhether continued funding still provides good value for money.These differences emerge strongly from the case-studies.

In the process of case-study selection, it was not difficult to findnationally or regionally co-ordinated schemes in mainland Europeyet in the UK, at the time of site selection, only one county-widescheme existed. Some important factors, discussed in the rest ofthis section, emerged as differences between the schemes. First,mainland European schemes were larger both in terms of theirspatial coverage and in terms of the passengers carried. Second, themainland European schemes generally require lower subsidy asa proportion of total costs than the UK schemes. This is of courseunusual since it is more common for public transport services inmainland Europe to receive a higher subsidy than public transportservices in the UK. A final and important finding was that the costand subsidy requirements of the larger schemes (both in mainlandEurope and the UK) were moderate.

The discussion of the economics of the schemes is based onresearch (Mott MacDonald, 2008) which collected and provided thecase-study data. Despite seeking consistency, data was only avail-able for different time periods (so that comparisons betweenabsolute figures must be undertaken with care) and there may notbe a consistent breakdown of data within given categories. In themainland European schemes which are nationally based, clearerevidence was often available at the operational, sub-regional leveland this is identified in the discussion below. In general, because

the information is used to justify specific subsidy, the UK schemesappeared to have a better overview of their economic position.

Passenger trips per annum for each of the case-studies areshown in Fig. 1. This shows Treintaxi, a national scheme, is verymuch larger than any of the other schemes. Of the UK schemes, thelargest (Connect 2 in Wiltshire) is approaching the size of thesmaller sub-regional schemes in mainland Europe. Within the UK,identifying large case-studies was one of the selection criteria andthe County schemes included are regarded as exemplary schemes.Thus the difference in scalewould appear to be a genuine differencein part explained by the greater maturity of mainland Europeanschemes (established through the earlier part of the 1990s incontrast to many UK schemes being introduced post-2002).However, it is also important to recognise that the planningframeworks for mainland European schemes are at a larger spatialscale and would appear more flexible than the deregulatedframework discussed in the previous section.

In terms of subsidy, the mainland European schemes tend to beassociated with lower levels of subsidy. Very generally, Europeanschemes have under 40% subsidy whereas the larger UK schemesrequire between 60 and 80% of gross scheme costs. This is shown inFigs. 2 and 3.

These differences could be due to a number of reasons. Main-land European schemes could be charging higher fares buta comparison of fares, adjusted by the European harmonisedconsumer index suggested this is not the case (Fig. 5.4, CfIT, 2008).Another explanation could be that the financial data from themainland European schemes may exclude some shared costs withother activities, such as the costs associated with call centres usedfor dispatching trips, but there is no evidence for this and themagnitude of the difference is too consistent for this to be thewhole reason. The most likely reasons are a combination ofachieving economies of scale on the cost side and a higherpatronage base arising from these schemes being more mature onthe demand side. On the supply side, for example, the nationalscheme in the Netherlands has a national call centre for the dis-patching of trips and this is likely to generate significant economiesper trip as compared to a number of call centres, each coveringa smaller spatial area. On the demand side, growing patronage

Table 2The assumptions on the number of journeys per week made by different categoriesof potential passengers.

Journeys per week(trips per week)

Older people (over 65) 3 (6)Households with no access to a car 5 (10)Young people under 15 1 (2)People requiring access to employment 5 (10)Disabled people 5 (10)

Source: Mott Macdonald (2008) Chapter 6.

C. Mulley / Research in Transportation Economics 29 (2010) 296e303 301

takes time and the newest of the mainland European schemes,RegioTaxi, has the highest subsidy requirement. Themostmature ofthe UK schemes, Connect 2 has been in operation in some form inparts of the County since 1998 and has the lowest subsidyrequirement of all the UK schemes considered. Whilst not conclu-sive because of lack of data that allows strict comparability betweencase-studies, this is an important finding from the case-studyevaluation.

Whilst the ability to benefit from economies of scale anddevelop patronage are of course important, a further finding fromthe case-study approach was that the absolute level of costs andsubsidy for all taxi-based services are moderate. In terms of costs,generally the gross cost per trip lies between £2 and £10 (2007prices) with subsidy ranging from between £1 and £7 per trip (2007prices)3. The smaller UK schemes had cost per trip upwards of £10and subsidies per trip of over £10. These figures compare well witha range of benchmarks used by a sample of UK local authorities forthe support of conventional services in rural areas of between £1.50and £10 (CfIT, 2008, paras 5.30e5.32).

In addition to the resource costs identified above, there arewider economic benefits that could accrue as a result of usersbenefiting from better accessibility over and above a reduction insocial exclusion. A range of non-user benefits, including theoption value of the service being available would accrue althoughthese are difficult to quantify. Moreover, a taxi-based servicecould bring environmental benefits for every single occupancyprivate car trip which is transferred to collective transportalthough this needs to be set against the way in which theprovision of collective transport may lead to generated trafficwhich would be good for social inclusion reasons but not so goodfor the environment.

The passenger perspective is of course important. There isevidence from the UK based schemes from questionnaire surveysbut the mainland European schemes evidence on passengerperceptions is more anecdotal. Overall, passengers are highlysatisfied with the services considered as case-studies and regardthem as good value for money, even if the service chargesa premium fare (this is especially the case with PubliCar). In manycases users have come to rely on the services. This does not meanthat surveys have not identified points of concern but these mostoften relate to booking issues and the time span of operation (in theUK) and the punctuality of the service integration into conventionalpublic transport (mainland Europe).

In summary therefore, it would appear that the case-studieshave identified three key factors which explain why taxi-basedschemes in mainland Europe are more prevalent and also appearmore successful than their UK counterparts. The more extensivespatial scale and larger scheme which is easier to promote undera regional (as opposed to the UKCounty) structure; the exploitationof economies of scale that a larger scheme can achieve and themoderate subsidy that follows from the maturing of a scheme andpatronage growth.

4 These costs are the costs of providing a good taxi-based public transportservice, taking into account likely revenue achieved through the fare-box. It needs

5. What would it take to have a national scheme in the UK?

This paper has demonstrated that there are no legal impedi-ments to the use of collective taxi-based schemes. The economics ofthe schemes investigated suggest that a national scheme, coveringthe whole of rural England, would be more effective than a series of

3 There was one exception to this: the sub-regional scheme in Germany exhibitedboth high costs and high subsidy requirements: there appears no apparent reasonfor this although this scheme covers a very rural area where the trip lengths weretypically much greater than the other schemes.

smaller schemes. This section looks at the costs of implementingsuch a scheme and the barriers to its introduction.

5.1. Costs of a national scheme

Mott Macdonald (2008) considered the likely cost of imple-menting a taxi-based service for rural communities in England.These figures were based on identifying potential demand for sucha service, depending on the nature of the rural area and the numberof people in certain categories that were likely to benefit froma taxi-based service. For the costs of a taxi-based service, the figureswere based on the number of trips by individuals in these cate-gories and the cost per passenger journey. A matrix approach toidentify rural areas with high potential demand for taxi-basedpublic transport was used that took into account the level ofrurality, the level of deprivation and level of access to services (asdefined by the Index of Multiple Deprivation (IMD), the populationin receipt of disability living allowance and the population inreceipt of jobseekers allowance). This gave the potential to score allareas within England (at the level of Super Output Area) witha score of between 0 and 32 with larger numbers being identifiedwith more rural areas.

This section now turns to the implications of providing a taxi-based service for those areas scoring between 30 and 32 andthose areas scoring between 28 and 32 as the rural areas mostlikely to benefit from taxi-based public transport service. Thestudy recognised that different groups in the community wouldbe likely to make different numbers of journeys each week andthe National Travel Survey together with information from keystakeholders consulted in the study were used as the basis for theassumptions on likely demand shown in Table 2 and to calculatethe number of users in each area and thereby to derive the totalnumber of trips. Clearly the analysis is contingent on theassumptions on number of journeys per week but these arebased on rural residents being unconstrained by the number ofjourneys made.

On the cost side, two different levels of cost to provide a goodlevel of service were proposed using the case-study evidence andnoting that mainland European schemes benefit from scale econ-omies. This gave a worst case scenario (£8 per passenger journeyand high net cost of operation) and best case scenario (£5 perpassenger journey and low net cost of operation)4. This allowed theorder of magnitude of cost for good, national, taxi-based publictransport scheme to be estimated as shown in Table 3.

to be emphasised that these figures are cost based and do not take into account thewide range of subsidies available to public transport today. For example, theyexclude any revenue support for conventional services, subsidy for education andspecial services for the disabled, subsidy in the form of Bus Service Operators Grant(BSOG) which is paid directly to operators in certain circumstances and conces-sionary fares reimbursement.

Table 3Annual costs of a national ‘good’ taxi-based public transport scheme (2008 prices)

Cost for Rural areasscoring 30e32 (£)

Cost for Ruralareas scoring28e32 (£)

Best case scenario 24,246,021 307,961,130Worst case scenario 87,285,684 1,103,760,437Population 245,367 3,124,735

Source: Mott Macdonald (2008) Chapter 6.

C. Mulley / Research in Transportation Economics 29 (2010) 296e303302

At first sight, these figures suggest a magnitude of cost that isbeyond the possibility of provisionwithout significant political will.However, when considering the current levels of subsidy for someof the more rural Counties in England, the possibility of imple-menting such a scheme seems more possible, from a cost andsubsidy point of view. Data from a sample of local authorities ontheir existing spending in rural areas to support accessibility wassought. This identifies the approximate level of current spending(Table 4). In Table 4, individual spending within a county council forits rural residents is grossed up by reference to the total number ofrural residents in England living in sparse and less sparse areas(using 2001 Census information) to identify what would be thenational spend if the spend per rural resident in the local authoritywas to be applied nationally.

This suggests that a national approach that took account ofexisting levels of public subsidy to more conventional services inrural areas and used these monies to fund a national scheme ofcollective taxi-based services could do so without significantadditional funding. Such collective services are likely to serve theneeds of the rural population better thanmany existing, fixed route,conventional services currently in place.

Table 4 also shows that transport spending to meet (legal)education requirements is significant for rural County councils. Inmany rural areas small vehicles, usually taxis, are used to transportchildren to points where they can access bigger buses. A taxi-basedpublic transport schememay well help to reduce this cost if vehicleoccupancy can be raised by including school aged passengers aspart of the population seeking public transport.

5.2. Barriers to implementation

Institutional and regulatory barriers may not prevent theimplementation of a national scheme but various aspects of the

Table 4Current spending from a sample of local authorities on rural public transport and grosse

Local authority Spend on public transportsupport in rural areas

Spend on educationand special needsa

Buckinghamshire £1,000,000 £4,000,000Midlothian £257,980 £242,792 (special education needsCumbria £4,292,119 £15,000,000 of which £800,000

is special needsDurham £2,400,000d £2,133,333e

Devon £5,100,000 £3,630,213

a School services in rural areas are normally registered as local services if there is any sptaken up by the general public since the scheduling to suit school opening times mitiga

b Population figures for the whole population of Buckinghamshire.c Population living in settlements of less than 300.d For settlements of populations less than 30,000.e Excluding mainstream education transport. If mainstream education transport is incf For settlements of populations less than 3000.g The best estimate of population figures for settlements of less than 30,000 means tha

rural areas.h Estimate of rural population based on Devon County Council literature which ident

ulation from Census 2001.

evidence discussed above identify issues that would need to beresolved. The existing regulatory framework is complex and theopportunities it offers may not be understood; taxi operation in theUK is a cash environment which may not lend itself to integrationwith the wider public transport mix and taxi operators may notperceive a living can be made from operating within the publictransport mix, unlike their mainland European partners. Moreover,the institutional framework provides different incentives througheligibility to subsidy and requirements for concessions. Creatinga level playing field by removing these distortions may makeproved the incentive necessary for taxi operators to take part incollective services.

6. Conclusions

Whilst no institutional barriers have been identified within thederegulated framework of the UK for the introduction of collectivetaxi-based services, the paper has demonstrated a complex regu-latory system and an environment, through subsidy policy, thatmilitates against the provision of a good quality taxi-based serviceas observed in mainland Europe.

Mainland European schemes are introduced as permanentschemes, they cover large spatial areas and have time tomature andgrow patronage. Operators give dedicated time and vehicles tothese schemes and these factors appear to generate economies ofscale. One UK scheme, Connect 2 has County wide coverage and hashad time to mature: this scheme is showing similar cost andsubsidy profiles to schemes in mainland Europe.

All rural County councils in England provide significantsubsidies to provide accessibility, as well as meeting their statutoryresponsibilities in respect of school transport. It would appear thatnationally, these combined funds could be close to that required toprovide a good quality, taxi-based service as part of the publictransport mix to effectively meet accessibility needs.

To exploit economies of scale, large schemes appear neces-sary. The County level, as demonstrated by Connect 2, may notprovide sufficient spatial area to allow costs to be reduced to thelevel observed in mainland Europe. This suggests that a nation-ally co-ordinated scheme might well be needed to exploiteconomies of scale. Such a scheme would enhance access, reducesocial exclusion as well as providing environmental benefitswithout significantly adding to the level of subsidy currentlyemployed.

d up subsidy cost for England

Rural population Annual cost perhead of ruralpopulation

Implied grossed up costfor the England as a whole(excluding education transport)

470,000b £10.64 £100,857,889only) 9207c £54.40 £517,002,735

340,311 £56.69 £131,979,874

100,000f £45.33g £430,911,979354,723h £24.61 £233,940,873

are capacity so as to allow the opportunity for general public use. This option is rarelytes against regular use for e.g. journeys to work.

luded then the cost per rural resident is £98.60.

t this figure will be an under-estimate for the spend per head of populations of deep

ifies one-third of total County population living in rural areas. County Council pop-

C. Mulley / Research in Transportation Economics 29 (2010) 296e303 303

Acknowledgement

This paper emerged from work undertaken as Strategic Advisorfor the Rural TaxisWorking Group of the Commission for IntegratedTransport who, in 2007, commissioned Mott MacDonald to providean evidence base of the role of taxis in rural public transport.The author would like to express gratitude to the members of theRural Taxis Working Group for their comments regarding theevidence presented to themwhich has helped formulate the viewsexpressed in this paper. Responsibility for the final product restssolely with the author.

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