24 March 2008

BSOG reform planned

The government plans to reform the Bus Service Operators Grant (BSOG) later in the year, something widely welcomed – with reservations – from bus operators. Transport Secretary, Ruth Kelly, is thought to want the BSOG replacement to focus more on the current climate, specifically congestion and accessibility as well as benefit those operators who offer smartcard infrastructure and offer GPS data informing passengers when their next bus will arrive.

Payments in BSOG will total £413 million this year, forming part of the government’s £2.485 billion support given to the bus industry.

The rate at which operators are paid the BSOG is 41.21p per litre and hasn’t altered since September last year, when fuel duty was around the 50p per litre mark. With fuel prices increasing steadily since then, operators were keen to see the BSOG increase, but while the government hasn’t ruled this out for England, operators in Scotland and Wales have been told by their devolved parliament/assembly that they will not see a rise.

There are six proposals contained within the government’s reform package:

1. Cap BSOG at a minimum fuel efficiency level, on a litre-per-km basis.

2. Move to a new distance-based payment with 100% rebate for low carbon buses (offering 30% lower CO2 emissions than standard diesel buses of the same passenger capacity).

3. Devolve BSOG payments to areas undertaking Quality Contract, for example South Yorkshire and London.

4. Tiered rates of BSOG based on service quality and performance, linking this with smartcard ticketing and GPS ‘next bus’ schemes.

5. To pay BSOG in arrears.

6. To offer additional BSOG to operators demonstrating SAFED – safe and fuel-efficient driving, giving a 12% fuel saving on average.

In the long-term we understand the government wants to tie-in concessionary fare reimbursement with the BSOG and to move towards a per-passenger payment as well as devolving all subsidies to local authorities.

Bus operators have until 5 June to make their views known. The full consultation document can be downloaded here.