Bus services: grants and funding

Information about the Bus Service Operators Grant, Better Bus Areas and government subsidy reforms, including guidance for bus operators.

The way that government supports bus services in England is being reformed through the Bus Service Operators Grant (BSOG) system. This page features details of the reforms and guidance for bus operators.

The BSOG reform process

The reforms are being carried out in 2 stages.

Stage 1 reforms

The outcome of stage 1 reforms was published in July 2014; under this, changes were introduced which included BSOG being paid:

  • to Transport for London (TfL) rather than bus companies operating services in London from October 2013, resulting in some £93 million being paid to TfL each year
  • to local councils (some £39.5 million) from January 2014, where bus companies operate services outside London under tender to those councils
  • to local councils (some £2.9 million) from January 2013, where community transport services are operated in-house by those local councils

Alongside this, as of October 2013, certain types of service no longer qualify for BSOG, including rail replacement services.

Stage 2 reforms

Stage 2 of the BSOG reform process was launched in July 2014. It is looking at possible changes to the way BSOG is currently paid for including:

  • commercially viable services run by bus companies outside London
  • community transport services which are not run in‐house by local councils
  • incentive payments for low carbon emission buses, Automatic Vehicle Location apparatus and smart cards apparatus

Working groups comprising of representatives from bus companies, local councils, passenger groups and others organisations have been examining options for reforming these parts of the BSOG regime.

A decision on the changes to be made on BSOG is expected later in 2018.

BSOG guidance for commercial and community bus operators

BSOG is a grant paid to operators of eligible bus services and community transport organisations to help them recover some fuel costs. The amount each bus operator receives is based on their annual fuel consumption.

BSOG aims to benefit passengers. It does this by:

  • helping operators keep fares down
  • enabling operators to run services that might otherwise be unprofitable and might otherwise be cancelled

For further information or if you think you’re entitled to claim this grant, contact the BSOG team.

Documents published on GOV.UK include:

BSOG spend

BSOG stage 1 reform documents

  1. Letter to bus operators about changes to the bus subsidy regime
  2. Bus subsidy reform
  3. Claiming bus incentive payments and running cross-border services
  4. Guide to the Bus Service Operators Grant reforms
  5. Plans to reform and improve bus services

Supporting documents on bus grants and funding

  1. Value for money assessment for major bus-related schemes
  2. Value for money of tendered bus services
  3. Local bus market study
  4. Bus reform workshops


  1. The case for the Buses Bill
  2. New Buses Bill to deliver a better deal for the public
  3. The Buses Bill
Published 8 May 2015
Last updated 29 September 2016 + show all updates
  1. Bus Service Operators Grant payments to English operators up to 31 March 2016.
  2. Value for money research reports published.
  3. Collection updated to include the 'Local bus market study' by KPMG on behalf on Department for Transport.
  4. First published.