Source · Select Committees · Transport Committee
Recommendation 5
5
Deferred
Current Bus Service Improvement Plan funding formula neglects distinct challenges of rural areas.
Conclusion
The Department’s shift to needs-based allocation of Bus Service Improvement Plan funding is a welcome and necessary step away from competition. However, the current formula does not explicitly reflect the distinct challenges faced by rural and more isolated areas, such as lower population density, longer journey distances and higher per- passenger operating costs. Without a dedicated rural weighting, there is a risk that these specific needs will continue to be overlooked, and that historic disparities in funding and service provision will persist. (Conclusion, Paragraph 35)
Government Response Summary
The government confirms the current funding formula is interim and commits to reviewing it for 2026/27 allocations. It states that it will actively consider the recommendation for a dedicated rural weighting in finalising the new formula.
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.