The Spending Plan policy 26: abolish the bus service operators’ grant

Each day we are publishing a blog on one of the policies from our Spending Plan.
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The bus service operators’ grant (BSOG) – previously known as the fuel duty rebate– refunds bus operators for the bulk of their fuel duty costs. The subsidy was intended to keep bus services commercially viable, but evaluations of the programme consistently recommend bringing it to a close. In its response to a public consultation on the issue of local bus services, the Local Government Association concluded that:

BSOG is not well focused on the achievement of public policy objectives…it does not encourage efficient use of fuel or cleaner, greener vehicles, nor is it related to tackling congestion, driving up patronage, improved performance, better quality services or improved accessibility.

Oxera, an economic consultancy, reflected that abolition of BSOG was central to improving the value of taxpayer support for bus services. The Government’s own Commission for Integrated Transport has lobbied hard for reform of the subsidy.

Although fuel is a considerable cost for bus operators, other taxpayer subsidies to the industry already address many of the public’s concerns about bus services (particularly the continued provision of rural routes). BSOG should be scrapped, and efforts concentrated on reducing the cost of fuel for all road users.

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