Phone-based tickets make buses more efficient – but will the poorest passengers lose out?

mTickets in action. Image: First Group.

This article was amended 1655hrs on Friday, to reflect comments from First Bus, noting that it also accepted smart cards. 

For a short time last year, my job required me to commute on Bristol’s buses. As a result, every Monday involved searching through my wallet, my handbag and around the house, trying to gather enough change to pay for a return fare without incurring the wrath of the driver. The result: many cups of coffee purchased in order to break a tenner.

Then our local bus company introduced mTickets: tickets you can buy and hold on your mobile phone. No longer did I have to reach under the sofa to find that final pound coin, or start the day feeling wired from an extra espresso. I could buy a bus ticket using my Smartphone.

mTickets are becoming more and more popular across the UK’s bus network. First Bus, the company that runs the majority of Bristol’s buses, claims the move to mobile tickets will improve punctuality and cut journey times. As mentioned, they reduce the stress of trying to find the right bus fare in your purse or pockets.

I spoke to the company spokesperson responsible for First Bus in the South West. He told me that on one popular Bristol route, “33 per cent of the time a bus spends standing is waiting for at the stop for people to buy tickets. Using mTickets rather than cash make boarding times 400 per cent faster.”

Switching to mTickets, First Bus argues, “means we can save people in Bristol 32,000 hours a year. A more punctual bus service encourage people to use public transport, and reducing the time buses spend waiting with the engine on can have a positive impact on the environment.”

But there’s a problem: mTickets are incentivised via price. The launch in Bristol last year coincided with a 30p price rise in single cash fares – a rise you could avoid most easily if you bought your ticket using your mobile phone. (The lower fares are also still available on smart cards, which can be topped up in shops).

Considering bus fares in England have increased by 66 per cent in the last 12 years, offering people a cheaper way to buy tickets seems like a win (though the First spokesperson says they’ve been kept down in Bristol). However, incentivising mTickets risks making it more expensive for the poorer and more vulnerable people in society. 

Let’s look at the numbers. People on low incomes are more likely to use buses than the rest of the population. According to government statistics, 67 per cent of stages on local buses are made by people who earn £25,000 or less. This suggests that buses are providing a significant service to people on lower incomes.  

Secondly, those on lower incomes are less likely to have the Smartphone technology needed to purchase mTickets. The government’s report on digital exclusion stated that 37 per cent of those who are digitally excluded are social housing tenants, and 17 per cent of the digitally excluded earn less than £20,000 a year.

Similarly, Ofcom’s recent report on Adults’ Media Use and Attitudes found those in the lowest socio-economic bracket are between 10-15 per cent less likely to own a Smartphone than those in AB-C2 brackets (although the majority of people across all socio-economic backgrounds do now own a Smartphone). This means there’s correlation between the people most likely to use bus services and those least likely to have a Smartphone.


I put the point of social inclusion to First Bus, who cited the Ofcom data on Smartphone usage. “We looked into the cost of ownership of a Smartphone and found there are no statistics that demonstrate switching to mTickets would shut out significant sections of society,” First Bus told me. It also provided examples of various low cost phone contract prices.

This is reassuring. However, tiering ticket prices so people without Smartphones have to pay more risks contributing to the “poverty premium”.

This “premium” is the many ways in which being poor is day-to-day made more expensive. From metered gas and electricity leading to higher bills, to groceries being more expensive in local shops, it’s estimated that the poorest in society pay 10 per cent more for basic good and services. Tiered ticketing where it’s cheaper to travel if you can afford the technology risks entrenching that.

For First Bus, mTickets are a way to encourage more bus users. “Most of the complaints we get are around punctuality,” their spokesperson tells me. “If we reduce the time buses are waiting, we can improve punctuality and encourage bus use – something which benefits everyone.”

With congestion and air pollution causing more and more problems in cities, getting more people on the buses is a worthy goal. Moreover, it’s encouraging that the company is looking at inclusion and ways to open access to those most excluded in society. The fact that First Bus works with agencies including City of Sanctuary, St Mungos, SARSAS and Syrian Refugee Resettlement so they can provide bus tickets to their clients/service users demonstrates some level of commitment to social responsibility in this area.

But it can’t be ignored that tiering ticket prices risks ending up with some people losing out – and those most likely to lose out are the poorest in our communities. Closing the price disparity between mTickets and cash tickets would succeed in encouraging more people to get on the bus, without leaving some of the more vulnerable in society behind.

 
 
 
 

“Stop worrying about hairdressers”: The UK government has misdiagnosed its productivity problem

We’re going as fast as we can, here. Image: Getty.

Gonna level with you here, I have mixed feelings about this one. On the one hand, I’m a huge fan of schadenfreude, so learning that it the government has messed up in a previously unsuspected way gives me this sort of warm glow inside. On the other hand, the way it’s been screwing up is probably making the country poorer, and exacerbating the north south divide. So, mixed reviews really.

Here’s the story. This week the Centre for Cities (CfC) published a major report on Britain’s productivity problem. For the last 200 years, ever since the industrial revolution, this country has got steadily richer. Since the financial crash, though, that seems to have stopped.

The standard narrative on this has it that the problem lies in the ‘long tail’ of unproductive businesses – that is, those that produce less value per hour. Get those guys humming, the thinking goes, and the productivity problem is sorted.

But the CfC’s new report says that this is exactly wrong. The wrong tail: Why Britain’s ‘long tail’ is not the cause of its productivity problems (excellent pun, there) delves into the data on productivity in different types of businesses and different cities, to demonstrate two big points.

The first is that the long tail is the wrong place to look for productivity gains. Many low productivity businesses are low productivity for a reason:

The ability of manufacturing to automate certain processes, or the development of ever more sophisticated computer software in information and communications have greatly increased the output that a worker produces in these industries. But while a fitness instructor may use a smartphone today in place of a ghetto blaster in 1990, he or she can still only instruct one class at a time. And a waiter or waitress can only serve so many tables. Of course, improvements such as the introduction of handheld electronic devices allow orders to be sent to the kitchen more efficiently, will bring benefits, but this improvements won’t radically increase the output of the waiter.

I’d add to that: there is only so fast that people want to eat. There’s a physical limit on the number of diners any restaurant can actually feed.

At any rate, the result of this is that it’s stupid to expect local service businesses to make step changes in productivity. If we actually want to improve productivity we should focus on those which are exporting services to a bigger market.  There are fewer of these, but the potential gains are much bigger. Here’s a chart:

The y-axis reflects number of businesses at different productivities, shown on the x-axis. So bigger numbers on the left are bad; bigger numbers on the right are good. 

The question of which exporting businesses are struggling to expand productivity is what leads to the report’s second insight:

Specifically it is the underperformance of exporting businesses in cities outside of the Greater South East that causes not only divergences across the country in wages and standards of living, but also hampers national productivity. These cities in particular should be of greatest concern to policy makers attempting to improve UK productivity overall.

In other words, it turned out, again, to the north-south divide that did it. I’m shocked. Are you shocked? This is my shocked face.

The best way to demonstrate this shocking insight is with some more graphs. This first one shows the distribution of productivity in local services business in four different types of place: cities in the south east (GSE) in light green, cities in the rest of the country (RoGB) in dark green, non-urban areas in the south east in purple, non-urban areas everywhere else in turquoise.

The four lines are fairly consistent. The light green, representing south eastern cities has a lower peak on the left, meaning slightly fewer low productivity businesses, but is slightly higher on the right, meaning slightly more high productivity businesses. In other words, local services businesses in the south eastern cities are more productive than those elsewhere – but the gap is pretty narrow. 

Now check out the same graph for exporting businesses:

The differences are much more pronounced. Areas outside those south eastern cities have many more lower productivity businesses (the peaks on the left) and significantly fewer high productivity ones (the lower numbers on the right).

In fact, outside the south east, cities are actually less productive than non-urban areas. This is really not what you’d expect to see, and no a good sign for the health of the economy:

The report also uses a few specific examples to illustrate this point. Compare Reading, one of Britain’s richest medium sized cities, with Hull, one of its poorest:

Or, looking to bigger cities, here’s Bristol and Sheffield:

In both cases, the poorer northern cities are clearly lacking in high-value exporting businesses. This is a problem because these don’t just provide well-paying jobs now: they’re also the ones that have the potential to make productivity gains that can lead to even better jobs. The report concludes:

This is a major cause for concern for the national economy – the underperformance of these cities goes a long way to explain both why the rest of Britain lags behind the Greater South East and why it performs poorly on a

European level. To illustrate the impact, if all cities were as productive as those in the Greater South East, the British economy would be 15 per cent more productive and £225bn larger. This is equivalent to Britain being home to four extra city economies the size of Birmingham.

In other words, the lesson here is: stop worrying about the productivity of hairdressers. Start worrying about the productivity of Hull.


You can read the Centre for Cities’ full report here.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites

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