Bus subsidy system given overhaul

Councils will be given greater control over the way money is spent on some bus services.

Transport minister Norman Baker has announced reforms to the Bus Service Operators Grant (BSOG). It 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 Review 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.”

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.