Councils should control bus company subsidies, says LGA

16 Sep 10
The Local Government Association has called for radical reform of the bus subsidy system, which it said costs the public sector £1.3bn a year but gives it minimal influence over services.

By Mark Smulian

17 September 2010

The Local Government Association has called for radical reform of the bus subsidy system, which it said costs the public sector £1.3bn a year but gives it minimal influence over services.

Under its proposals, all bus subsidy streams would be combined and controlled by local authorities.

They would then set routes, fares and frequency standards for operators, under powers similar to those of Transport for London.

At present, bus operators outside the capital can run whatever services they choose, with councils’ influence limited to subsidising uneconomic but socially necessary routes.

A single budget would include school and social services transport. This would allow for greater efficiencies, for example, by subsiding a route for both general public and pupil use.

The LGA’s The Future ofBus Subsidy report said councils should wield power over the bus industry because it was so dependent on taxpayer subsidy.

It said the industry had a £4.7bn turnover, of which £2.9bn came from the public purse through reimbursement for concessionary fares for elderly people, direct subsidy and a fuel rebate paid per mile travelled.

The report said: ‘It is not only extremely unusual for the taxpayer to subsidise an industry to such an extent, but also extremely unusual to subsidise an industry heavily without the taxpayer demanding a higher degree of control over the outcomes the industry achieves.’

Public money paid to bus operators had doubled in the past decade, it noted, during which bus use had still declined sharply outside London.

Peter Box, chair of the LGA transport and regeneration board, said:

‘We need to make sure that taxpayers and bus passengers start getting the best possible deal for the many billions which have been invested in bus services.

‘Reforming how subsidies are provided and overseen is the obvious way to protect the services people value the most during these times of public spending cutbacks.’

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