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 currently 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 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 inhouse 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 representatives of 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 2015.

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 not otherwise be unprofitable and might otherwise be cancelled

The Department for Transport (DfT) has published a range of guidance on BSOG. This includes information packs for commercial and community bus operators and guidelines for bus operators on claiming smartcard or automatic vehicle location (AVL) incentives (PDF, 33KB).

If you require further information or think you are entitled to claim this grant contact the BSOG team.

Documents published on GOV.UK include:

  1. Bus Service Operators Grant: ineligible school services

    • Correspondence
  2. Changes to Bus Service Operators Grant (BSOG) rates

    • Correspondence
  3. Bus Service Operators Grant information packs

    • Guidance

BSOG: reform documents from 2012

  1. BSOG reform letter to local authorities

    • Correspondence
  2. Letter to all English bus operators about bus service operators grant reform

    • Correspondence
  3. BSOG reform letter: 23 August 2012

    • Correspondence
  4. Bus Service Operators Grant reform: letter to English bus operators

    • Correspondence
  5. BSOG reform letter: 23 May 2012

    • Correspondence

Better Bus Areas

Better Bus Areas (BBAs) offer local councils and bus companies the chance to work together to improve the bus market in their areas. Each BBA can cover all or part of a council’s area. BSOG funding for the BBA would now be paid to the local council instead of the bus companies.

Five BBAs are currently being operated in:

Arrangements have been put in place to monitor these BBAs.

  1. Better Bus Areas evaluation plan

    • Research and analysis
  2. Better Bus Area monitoring and evaluation framework

    • Guidance
  3. Better Bus Areas workshop materials

    • Guidance
  4. Bus Service Operators Grant reform and Better Bus Areas

    • Guidance
  5. Better Bus Areas fund: guidance and application form

    • Form

Supporting documents on bus reform

  1. Value for money assessment for major bus-related schemes

    • Research and analysis
  2. Value for money of tendered bus services

    • Research and analysis
  3. Local bus market study

    • Independent report
  4. Bus reform workshops: background information

    • Guidance
  5. Bus subsidy reform: an interactive guide for bus operators and local authorities

    • Guidance
  6. Reforming bus subsidy in England: final impact assessment

    • Impact assessment
  7. Green light for better buses

    • Policy paper


  1. The case for the Buses Bill

    • Speech
  2. New Buses Bill to deliver a better deal for the public

    • News story
  3. The Buses Bill

    • Speech