Press release

More freedom for councils on bus funding

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Bus subsidy reforms to give councils more control.

Councils are to be given greater control over the way money is spent on some bus services, providing better value for passengers and taxpayers, Transport Minister Norman Baker has announced.

The reforms to the Bus Service Operators Grant (BSOG) announced today (5 July 2013) will give more freedom to local councils while making them accountable for the decisions they take. The funding stream will be ringfenced until April 2017.

This devolution of bus subsidy for locally tendered services comes after last week’s Spending round when the Treasury confirmed that current levels of government support for buses will be maintained until at least 2015/16.

Several authorities will also be established as new Better Bus Areas this autumn, receiving increased funding to invest in bus improvement measures.

These Better Bus Areas will incentivise closer partnership between local authorities and operators and provide a test bed for how bus subsidy might be better used.

Norman Baker said:

These important reforms will give councils more freedom to determine appropriate bus provision, handing more power to local communities to take decisions based on local knowledge and priorities.

This will mean better buses for travelling public and shows our continued commitment to the localism agenda, freeing local authorities from central government control.

Today’s (5 July 2013) announcement sets out the government’s package of measures to reform aspects of the existing system of subsidy for the bus industry.

Under existing arrangements, BSOG for both commercial and non-commercial bus routes is administered centrally by the Department for Transport. From January 2014, BSOG funding for non-commercial routes – those which could not economically operate without support – will be devolved to local authorities. This funding will be ringfenced until April 2017 so that each local authority will have to spend it on bus services in their area. In designated Better Bus Areas, BSOG funding for commercial services will also be devolved. BSOG funding previously paid to bus operators in London will also be devolved to Transport for London and the Greater London Authority.

In addition, the reforms will also close a loophole which up until now allowed bus companies to claim extra subsidy to run rail replacement services and buses catering for tourists, rather than those which provide vital local services.

BSOG is designed to help bus companies keep fares down on regular local bus services, but has been claimed by some firms to run rail replacement services when engineering work is carried out on the network or for buses operating local tours for visitors.

Under the new arrangements, this will no longer be possible, which will send a clear signal to train companies that when people buy a train ticket, they want to use a train.

A further review of BSOG will be started next year, examining the commercial element of the bus subsidy.

Notes to editors

The announcement is the government’s response to the Bus subsidy reform consultation, which was conducted from September to November last year.

It sets out the government’s package of measures to reform aspects of the existing system of subsidy for the bus industry, including:

  • creation of a new local government fund – Better Bus Areas
  • devolution to Transport for London/the Greater London Authority of the BSOG paid to London bus operators who operate services under contract to TfL
  • tightening the existing rules defining which bus services can claim BSOG, so that the available funding is put to the best possible use
  • paying BSOG to local authorities, rather than operators, where funding relates to services they support

In 2012 there were 4.7 billion bus passenger boardings made in England and over 60% of all public transport trips were made on local buses.

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