Why (No.2)?
When the Labour government came to power in July 2024, one of the measures announced in the King's Speech was a Better Buses Bill. This has now been introduced to Parliament as the Bus Services (No.2) Bill. Why No.2? Because the Liberal Democrat MP for North Shropshire, Helen Morgan, put forward a Private Member's Bill called the Bus Services Bill in November 2024 that would place a duty on the Government to ensure that every town with a population of more than 10,000 people has a regular bus service operating seven days a week and serving local health services. So when the Government introduced its own Bill in the House of Lords a month later, it had to be known as the Bus Services (No.2) Bill.
What the Bus Services (No.2) Bill does
Makes franchising bus services easier
The Bus Services Act 2017 first introduced bus franchising powers for Mayoral Combined Authorities. See our Insight The Bus Services Act for an overview of that Act. Since then the Greater Manchester Combined Authority have brought their buses into the Bee Network, with the final round of franchised services commencing operations earlier this year. Liverpool City Region, Cambridgeshire and Peterborough Combined Authority and West Yorkshire Combined Authority have all taken the decision to franchise their services, as has South Yorkshire which was announced on 18 March 2025. The West Midlands Combined Authority is consulting on doing so, with a final decision to be taken later this year. The North East Combined Authority is preparing an assessment of franchising, the first step in the process of taking a decision on franchising.
Given that it's been eight years since the Bus Services Act 2017 was passed and only one authority has made it through the full franchising process, you can see it currently takes a long time. The new Bill aims to simplify and streamline the process. There are too many changes to detail here, but the key ones are:
- allowing all local transport authorities (LTAs) to franchise without needing to obtain consent from the Secretary of State first (so putting them on the same footing as Mayoral Combined Authorities) and making it easier and faster for LTAs to franchise bus services in their area. The Franchising Schemes (Franchising Authorities) (England) Regulations 2024 (SI 2024/1224) made all LTAs "franchising authorities" so removed the first of two extra steps (consent being the second step). There is also new franchising guidance
- permitting the direct award of the first franchising contracts to incumbent operators. This should make it quicker to implement a bus franchising scheme and help to mitigate the risks associated with transitioning to franchising. But directly awarded contracts can only last for a maximum of five years and must be concession contracts. This means the operator needs to retain risk, which is usually interpreted as the operator retaining the fare revenue and the associated operating risk
- allowing for a broader description of local services within the franchising scheme document. This flexibility enables authorities to be more agile in responding to changing passenger demands. The Bill also introduces a two-year transition period during which authorities can vary the way services are described without following the formal variation procedure
- removing the minimum period of six months between the making of a franchise contract and the commencement of services under that contract, allowing authorities to implement franchising schemes more quickly and reducing the "dead time" in the programme.
Protects socially necessary local services
The Conservative government’s 2021 national bus strategy for England stated that all local transport authorities that had not already started the process of franchising their bus services should have established enhanced partnerships by the end of June 2021. See our briefing, Helping you navigate the bus strategy. In reality, many authorities are likely to choose not to go down the franchising route, so the Bill's provisions on enhanced partnerships (EPs) are of significant importance.
Clause 12 of the Bill states that LTAs must specify in their EP plan which services are "socially necessary" and review and update from time to time. A “socially necessary” service would be defined as one that both:
- enables passengers to access essential goods and services, economic opportunities (including employment) or social activities; and
- if cancelled, is likely to have a material adverse effect on the ability of passengers to access the above.
LTAs will have to specify what bus operators must do if they want to cancel or change a socially necessary service. The Bill also shortens the time for operators to object, to a maximum of 28 days instead of at least 28 days.
Repeals the ban on new municipal bus companies
Following the deregulation of bus services outside London and the privatisation of the National Bus Company, the number of municipal bus companies operating in the UK has drastically declined. Five authorities still operate their own companies: Blackpool, Ipswich, Nottingham City, Reading and Warrington.
The Bill removes the prohibition on English LTAs setting up municipal bus companies introduced in the Bus Services Act 2017. This change allows local authorities to establish their own bus companies, providing greater flexibility and control over local bus services. However, these companies must operate at arm's length from the local authority's central financial and operational processes to ensure fair competition. There is the potential for the municipal bus company to benefit from the Teckal exemption, enabling it to run bus services on behalf of an LTA without a competitive procurement. However, careful consideration of the make-up of the company and its scope would be required to ensure this exemption would apply.
Allows local authorities to design and pay grants to bus operators
The Bill gives more flexibility to LTAs to design and pay grants to bus operators, instead of the grant coming from the Secretary of State, although the LTA must have regard to any guidance from the Secretary of State. Whether the new grant making powers will result in more freedom for LTAs will depend on how prescriptive that guidance is.
Boosts bus data
There is currently no central source that contains all the information about all local bus services. The Bill paves the way for regulations that would require prescribed details about a bus service to be given to the traffic commissioners and the Secretary of State. The idea is for all information to be held on a central database eventually, improving transparency around bus services and operators' performance, and being more efficient for operators who would no longer have to provide similar information to multiple locations.
Greater enforcement powers…but more standards to stick to
The Bill gives authorities greater enforcement powers to tackle fare evasion and anti-social behaviour by making byelaws, which should help to improve safety on the transport network. But LTAs will need to make sure they use their new powers carefully and have safeguards in place to try and prevent wrongful prosecutions (such as where the apparent fare dodging is caused by a glitch in the operator's own systems).
Also in the Bill is a duty on LTAs to have regard to guidance issued by the Secretary of State on bus stations and bus stops and their associated facilities, to improve safety and accessibility to disabled people. It would only apply to new or upgraded facilities and would not in and of itself require existing facilities to be replaced, but it could still result in extra costs for LTAs.
There are also provisions in the Bill to mandate enhanced criminal records checks for drivers on school services and to mandate regular (every 5 years) training for bus drivers and other staff on disability and tackling crime and anti-social behaviour.
Zero emission buses
The Bill will restrict the use of new non-zero emission buses on registered local bus services at some point after 1 January 2030 (the date will be specified in regulations). So after this date, any new bus run on a local service registered under section 6 of the Transport Act 1985 will have to be zero emission.
This will not apply to franchised services, so there is more flexibility under a franchising scheme to continue to run the existing bus fleet. LTAs will be able to set emissions expectations taking into account local needs and franchising costs.
Comment
The Bill does not end the deregulation of bus services; it just makes the bus franchising process more streamlined for authorities that want to franchise. They don't have to. The franchising process isn't, and still won't be, cheap - so in reality most authorities are probably not going to be able to afford it without additional funding. But for those that do, the ability to directly award the first franchise contracts will be welcome and should make it easier to transition to regulated services.
The ability to set up a municipal bus company potentially gives local authorities greater flexibility and control over local bus services, but will need to be carefully thought through to avoid issues with procurement and subsidy control.
There are also potential hidden costs in the Bill around the safety and accessibility of bus stops. Who will pay for these: the authority or the bus operator? It's not yet clear but there will be guidance.
