‘Bus Bonus’ would give UK economy £74.8 million a year boost

Greener Journeys
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‘Bus Bonus’ would give UK economy £74.8 million a year boost and help thousands of struggling families

  • Greener Journeys calls on the Government to adopt the ‘Bus Bonus’ to help workers commuting by bus
  • Detailed fiscal analysis demonstrates ‘Bus Bonus’ would give the UK economy a boost of £74.8 million a year and improve access to jobs
  • Initiative would also help struggling families tackle the cost of living and reduce transport poverty, which impacts millions of households in the UK

The Government should adopt a new tax allowance – the ‘Bus Bonus’ – to allow organisations to provide employees with vouchers to help pay for the cost of commuting to work by bus. The vouchers would have be exempt from income tax and national insurance, giving thousands of hard-working families much needed support with the rising cost of living and help to tackle the increasing problem of transport poverty[1].

The policy proposal from Greener Journeys – the campaign to promote sustainable travel – builds on a series of proposals in the recent Bus 2020: A Manifesto for the next Parliament, which set out how the Government can harness the potential of the bus to catalyse growth and jobs.

Buses play a crucial role in the UK job market, with 2.5 million workers regularly commuting by bus and a further million using them as a vital back up[2]. Those on low and moderate incomes are particularly reliant on the bus with the National Travel Survey revealing 48% of the lowest income group and 36% of the second lowest income group do not have access to a car[3]. With transport costs second only to housing, fuel and power in terms of their share of total household expenditure, the affordability of commuting is a real financial challenge for many households[4].

The ‘Bus Bonus’ scheme The proposed solution draws on experience of operating public transport tax incentives elsewhere as well as ‘salary sacrifice’ schemes in the UK:

  • Employers offer employees vouchers, which can be used to purchase bus travel. The employee pays for the vouchers through a salary sacrifice scheme. The employees uses the voucher to pay for stored travel rights at a travel centre or online
  • These vouchers would be exempt from income tax and National Insurance Contributions
  • There would be a cap or maximum limit to the value of vouchers that are tax exempt, depending on the employee’s tax rate. Individuals on lower incomes will have a higher cap
  • The individual can purchase more or less than the value of this cap, although would have to pay income tax and National Insurance Contributions on the value above the cap
  • If the value of the voucher is not spent in any given period, it will be carried over to the next period

Working with KPMG, Greener Journeys estimate that the initiative would cost the Treasury £75 million per year in foregone tax revenues and generate benefits to bus users, non-users and the wider economy totalling £149.8 million per year through a wide range of benefits:

  • For bus users: fare and travel time benefits amounting to £95.5 million
  • For non-users: Reduced noise pollution, improved local air quality, less greenhouse gases, fewer accidents and decongestion benefits worth £13.1 million
  • For employers: National Insurance Contribution savings amounting to £19.4 million
  • For the wider economy: Greater accessibility to employment and jobs growth will mean wider economic benefits of £20 million
  • For bus operators: £2 million of benefits from increased patronage (partially offset by increased operating costs for extra services) and enlarged grants and subsidies

Claire Haigh, Chief Executive of Greener Journeys commented:
“The beauty of the Bus Bonus is that it not only puts money directly back in hard working people’s pockets it also gives the economy a much needed boost and improves access to jobs – all with one simple package.

“With the rising cost of living a key concern for millions across the country, this support would be a huge boost for thousands of households. We urge the Government to adopt the bus bonus as soon as possible to take advantage of the manifold benefits it would bring to the economy and job market.”

-ENDS-

For further information:

Greener Journeys Press Office
press@greenerjourneys.com
+44 (0)20 3128 8555

For a copy of the manifesto please contact greenerjourneys@mhpc.com

Notes to Editors:

[1] Transport poverty affects those who cannot afford a car, who struggle to cover rising public transport fares and who lack access to public or private transport because of age, disability or where they live http://www.sustrans.org.uk/sites/default/files/images/files/migrated-pdfs/Transport%20Poverty%20England%20FINAL%20web.pdf

[2] Mackie, P., Laird, J. and Johnson, D. (2012) Buses and Economic Growth, Institute for Transport Studies, University of Leeds

[3] Department for Transport, National Travel Survey, Table NTS0703, 2012

[4] Office of National Statistics, Family Spending 2013: http://www.ons.gov.uk/ons/rel/family-spending/family-spending/2013-edition/index.html

About Greener Journeys
Greener Journeys is a campaign dedicated to encouraging people to make more sustainable travel choices.

It aims to reduce CO2 emissions from transport by encouraging people to switch some of their car journeys to bus or coach instead.  Switching from car to bus for just one journey a month would mean one billion fewer car journeys on our roads and would save 2 million tonnes of CO2 every year.

It is a coalition of Britain’s leading bus companies and other supporters including Transport for London, Campaign for Better Transport, the RAC Foundation, Confederation for Passenger Transport (CPT), and the Passenger Transport Executive Group (pteg).  Its primary funders are bus companies Arriva, FirstGroup, Go-Ahead, and Stagecoach. For more information visit www.greenerjourneys.com

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