New Welsh bus funding could be illegal

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The new funding model due to take effect in Wales from April could contravene European Union (EU) state aid rules – according to CPT Cymru.

The Welsh Government’s new Regional Transport Services Grant (RTSG) will replace BSOG and the Local Transport Services Grant. Because BSOG’s predecessor FDR (Fuel Duty Rebate) was created before the UK joined the EU in the 1960s, state-aid rules do not apply to the existing funding – but any new funding has no such immunity.

The European Commission (EC) told The Western Mail: “The UK authorities have not yet notified a new bus grant in Wales which replaces BSOG from April 1. The European Commission therefore has not been able to assess if such a scheme would constitute state aid.”

If the EC later deems the RTSG illegal, bus operators and local authorities – already reeling from a 25% funding cut – may have to repay funding they received and spent, leading to more service cuts.

However, the Welsh Government is confident the RTSG will be permitted, because measures will be taken to ensure the scheme fully complies with EU rules by 2019.

A Welsh Government spokeswoman said transport minister Carl Sargeant had decided to introduce the new RTSG, for buses and community transport, following advice from a review group which included council and bus-industry representatives. She also said the grant’s first financial year, 2013-14, would be a transition year. “As part of its work, the Bus Funding Review Group considered the possible implications for the new scheme of current state-aid legislation,” she said.

“The phased transition to the new RTSG scheme satisfies the requirement that such schemes should demonstrate progressive compliance with the legislation by December 2019.”

With less than a month to go, CPT Cymru’s Director of Government Relations John Pockett told CBW: “Because nothing formal was forthcoming, we have written for reassurance and look forward to receiving WAG’s formal reply. Clearly, operators do not want to accept funding and then be forced to repay it.”