2 Bus industry: structure and funding
Commercial and subsidised bus
services
7. Outside London, bus operators choose the routes
and levels of service that they wish to provide on a commercial
basis. Local authorities then determine where the gaps are and
can choose to provide support for services to fill these gaps.
Around 80% of bus services outside London are operated on a commercial
basis.[9] The remaining
20% are operated with support from local authorities, generally
secured through a system of competitive tendering. Such services
typically comprise routes at times of the day or week, or in areas,
where usage is low—often services on evenings, Sundays and
routes in rural areas.[10]
Local authority-subsidised bus services in England (outside London)
have increased mileage by 25% over the last 10 years, whilst the
mileage of commercial bus services reduced by 18% over the same
period. Norman Baker MP, Parliamentary Under-Secretary of State
for Transport, implied that this trend was caused in part by bus
companies withdrawing marginally commercial services in the expectation
that they would be re-tendered with a subsidy from the local authority.[11]
Many tendered services are not viable without local authority
support, due to insufficient usage and fares revenue.
8. The proportion of tendered services varies by
local authority, from zero (for example, Southend) to 100% (for
example, Rutland), and it is notably high in some local authority
areas—around 85% of services in Somerset, for example, received
at least some subsidy prior to the Spending Review.[12]
Funding and costs
9. In 2009-10 annual operating revenue for the bus
industry in England (outside of London) was £3.4 billion.
This includes fares revenue, Bus Service Operators Grant (BSOG),
concessionary fare reimbursement and local authority support (mainly
though tendered service contracts). It does not include streams
of bus operator revenue not directly related to the provision
of local bus services, such as advertising income and private
hire work. In 2004-05 the comparable amount was £2.8 billion
(in 2009-10 prices) and the amount has increased year-on-year
since then, mainly due to the increase in bus use by concessionary
pass holders following the introduction of the free concessionary
travel scheme.[13]
10. Table 1 shows that over half of bus operating
revenue (outside London) comes from passenger fares (£1.8
billion). Concessionary fares reimbursement accounts for almost
a quarter of revenue (£800 million), local authority support
(mainly through tendered contracts) 15% (£500 million) and
BSOG 9% (£300 million). Almost half of bus operating revenue,
therefore, comes from public funding in one form or another: although
a significant proportion of this is concessionary fares reimbursement,
which aims to replace the on-bus fares revenue that would have
been received if a government policy to provide free travel for
elderly and disabled people did not operate.
Table 1: Bus Operating Revenue in England (outside London), 2009-10
| Fares
| Concessionary travel |
Local authority subsidy |
Bus Service Operators Grant |
Total |
| 2009-10 | £1.8 billion
| £800 million | £500 million
| £300 million | £3.4 billion
|
| Proportion of total |
53% | 24%
| 15% |
9% | 100%
|
Source: Department for Transport (Ev 70)
9 Ev 64, para 54 [Department for Transport] Back
10
Ev 147, para 31[Professor Peter White] Back
11
Q 267 Back
12
Ev 105, para 1.5.4 [TAS Partnership Ltd] Back
13
Ev 64 Back
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