DfT announces BSOG reform from January

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BSOG funding for non-commercial routes will be devolved to local authorities from January 2014

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

The reforms to Bus Service Operators Grant (BSOG) announced on July 5 are designed to give more freedom to local authorities 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 the recent spending round when the Treasury confirmed 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 (BBAs) this autumn, receiving increased funding to invest in bus improvement measures. These BBAs 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 the travelling public and shows our continued commitment to the localism agenda, freeing local authorities from central government control. The 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 will be devolved to local authorities. This funding will be ringfenced until April 2017 so 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.

Norman Baker added: “In addition, the reforms 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 companies 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 operating companies that when people buy a rail 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.”

Welcoming the changes, CPT Chief Executive Simon Posner said: “This is a fair outcome to the bus subsidy review. It follows on from the latest Spending Review which saw the amount of financial support for the industry remaining broadly the same and demonstrates the Government clearly recognises the crucial role local bus services play in supporting the economy.

“The news that the devolution of BSOG outside London has been postponed until January next year is particularly welcomed and will give all parties the opportunity to prepare for the change. Striking this deal demonstrates once again the deep understanding and unswerving support Norman Baker shows to the bus industry and its passengers.

“For its part, the industry will continue to do what it does best and provide high quality, reliable bus services which meet local needs.”