A bus renaissance?

Good morning from New Economy Brief.

Here's a fun fact: buses are the most used form of public transport in England. But all is not fine for the nation's buses. Despite their long reign, bus ridership has taken a huge and sustained drop recently, down from 4.6 billion journeys in 2009 to 3.6 billion in 2024. 

So that's why it's worth paying attention to the Bus Services Act, which became law last October. The government says it heralds a "new era of better buses" by enabling councils to run their own bus services for the first time in forty years.

Liverpool will be the first city to put the new legislation to the test, with more regions set to follow. They are hoping to repeat the success of the Manchester Bee Network. However, nothing is ever simple and questions remain around funding, capacity and political will.

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A brief history of UK bus policy

Another Thatcher legacy… With the Transport Act 1985, the Conservative government privatised and deregulated buses across Britain. The theory was typical Thatcherism: competition would keep costs down, lower fares and give customers more choice. While buses in Scotland and Wales are now a devolved issue, they share England’s legacy of deregulation – now widely recognised as a failure. In 2019, the Transport Select Committee concluded it had "at best, done little more than slow the decline in bus use." 

Value-extraction. Common Wealth puts it more starkly: "Since then, communities and passengers have paid the price while shareholders have benefitted." Since the pandemic, bus companies paid out £135m to their owners despite losing £43m before tax and receiving huge public subsidies. The National Audit Office recently found that half of all bus operator income now comes from public subsidy, worth £1.8bn in 2023-24, warning that buses face a "cycle of decline" as service cuts drive people into cars, further reducing demand.

Better Buses. Labour has fulfilled its manifesto pledge by removing the ban on local authority-owned bus companies and expanding powers to franchise services. Under franchising, local and regional authorities specify routes, frequencies and fares through contracts with operators, rather than letting them set their own. This is how Transport for London runs its buses (where ridership hasn’t declined, but increased) and how Manchester's Bee Network now operates. Another £3bn of multi-year funding will help councils use their new powers.

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Why all this fuss about the bus? 

Left behind communities. Buses disproportionately serve groups whose access to public services has been cut. Women make a third more bus journeys than men, and more often make care-related trips that are badly served by bus systems designed for commuters. Meanwhile, young people (aged between 17 to 20) ride buses more regularly than anyone else – mostly because two thirds of them don't have access to a car. Meanwhile, low-income households are two and a half times more likely to use buses than wealthier counterparts, while bus provision in more deprived areas has been cut hardest. Disabled people are 20% more likely to use the bus than the general population, but face huge barriers including step-free access, space for wheelchairs and unreliable services. 

These groups bear the brunt of forty years of cuts that have closed 4,000 routes and reduced services by more than 60% since 2008 in 80 areas. Rural communities have been particularly affected, with bus companies cancelling 21% of their rural routes since 2019 alone. These cuts have a real economic cost: 19% of workers said they had turned down a job due to poor bus services, with young people particularly affected.

How much for a single?! Bus fares have risen over 500% since 1987, versus 397% for rail and just 246% for motoring. The lowest-income households, as the heaviest users, have taken the biggest hit. KCL research shows homeless mothers spend up to £300 a month on buses just to get their children to school. This is why the £2 cap on single fares that the Conservatives introduced in 2023 was so popular, and why raising it to £3 went down so badly – particularly with potential Reform voters. Even people not typically plugged into policy noticed it. It's part of the reason some Labour metro mayors have committed their own budgets to maintaining the original cap.

Green buses. Transport accounts for 26% of UK emissions, and pollution from cars and vans costs the NHS around £6bn a year. As the Campaign for Better Transport notes, more bus use would cut those emissions – especially since the Act bans new non-electric buses from 2030. Further, the new legislation sets out a framework which will ban new non-zero-emission buses from 2030.

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The future of buses

The bees’ knees. The Bee Network is the success story the new legislation rests on. Fully franchised as of January 2025, its passenger numbers have grown 14%, with punctuality up from 66% to over 80%, average fares down 15%, and the £2 cap retained. Liverpool will launch its own franchise this autumn, and West and South Yorkshire will follow in 2027. The prize is significant: KPMG analysis finds that every £1 invested in buses creates economic benefits worth £4.55 to £5.

More ambition. There are real concerns, though. Centre for Cities warns that without political support for fully integrated transport systems that connect different modes of travel, buses alone can't fix our transport problems. But this might just be on the way at last, with the English Devolution Bill and Railway Bill both currently passing through parliament (see our NEB here for more on the latter). IPPR, meanwhile, argues for national targets for modal shift (getting people out of cars and onto public transport) so we can hold ministers to account. 

Beyond franchising. Franchising isn't a silver bullet: it involves significant financial risk for local authorities that, after decades of deregulation, often lack the commercial and operational capacity to run a bus network. Nearly half rate their transport delivery capacity as either fairly or very poor. If they don’t get this right, services will remain expensive to run, fares will stay unaffordable, and people simply won't ride the bus. The government’s plans to reorganise local government are another complication, as boundary and staff changes make introducing franchising more challenging. 

Ownership. While the legislation is a good start, the RMT argues franchising still leaks profit to private operators. Common Wealth recommends rolling out municipal or regional public bus companies, which would eliminate profit extraction entirely while delivering comprehensive low-carbon coverage and affordable fares. And the Centre for Local Economic Strategies points to investing in transport hubs, as Transport for Greater Manchester has done, incorporating public art, green space and community services. This can deepen local ownership and pride, turning bus infrastructure into a form of community wealth building.

Funding. A perennial problem with this government is ambition constrained by funding. Investing £1bn a year isn't nothing, but IPPR's modelling suggests total government funding needs to reach £3.1bn a year to deliver the Act’s promised transformation. The Campaign for Better Transport argues that reallocating funds away from private cars could help plug the gap. Fuel duty freezes have cost the Treasury £133bn since 2011 – money that could have transformed the bus network, and a lot more besides.

How to keep the wheels on the bus going round and round… As NEF tells us, buses are the best opportunity for transforming public transport at speed and scale. Bringing local authorities back into the picture is a genuine first step. But to deliver true change, the government needs to go further: public ownership, a modal shift target, and fares that make buses a real alternative to cars would give them a true future on our roads.