Source · Select Committees · Transport Committee
Recommendation 3
3
Deferred
Short-term funding for bus services hinders local authorities' improvement efforts.
Conclusion
The short-term nature of funding for bus services has hampered local authorities’ ability to improve services. Five-year settlements in other transport sectors like rail and the strategic road network have enabled greater certainty and promoted strategic planning. Bus services, the most widely used form of public transport, require a similar commitment. (Conclusion, Paragraph 30)
Government Response Summary
The government stated it is reviewing the Local Authority Bus Grant formula for 2026/27 allocations and will consider the recommendation, but it did not commit to providing five-year funding settlements for bus services to ensure long-term certainty.
Government Response
Deferred
HM Government
Deferred
As noted in the Department’s written evidence to the Committee, the Government took the first step to reform bus funding by creating the Local Authority Bus Grant, which merged two previously separate funding streams. In 2025/26, the LA Bus Grant was allocated via formula based on local need, taking into account factors such as levels of deprivation, population size, and bus mileage. This formula was an interim process and only the first step towards a reformed allocation system. We have committed to reviewing this formula for 2026/27 allocations to ensure funding is allocated as fairly as possible and officials have been engaging with stakeholders on the development of this formula. We are currently considering several metrics to help us develop a simple and fair formula that ensures funding is allocated where it is needed most. We expect the revised formula will be confirmed and individual allocations announced later this year. The Department will actively consider this recommendation in finalising the funding formula.