Policy instruments (4) - Transport Policy and Planning in Great Britain - page 247

Box 15.1 Proposed simplified national rail fare structure

Name Validity

(Day Anytime) Any train

(Day) Off-peak Any train outside peak period

(Day) Super off-peak Any train at least-busy time of the day

Advance One specific train (pre-booked up to 1800 the day before)

(with higher fares) for the 'shoulders' either side of the conventional peak periods.
Stagecoach recently pioneered this on SouthWest trains by introducing a separate
category for trains arriving at London Waterloo between 10am and noon - amounting
to a 20% increase in fares for journeys at that time.

15.6 Bus service subsidies
As with rail services, public subsidy of bus services has existed since the 1960s.
Currently it takes three main forms:

• national government rebate to operators for fuel duty paid
• local government support for socially necessary services
• grants from national government for particular categories of service.

In addition local authorities pay rebates to operators from the income forgone in
running concessionary fare schemes (15.7). Public expenditure on these four items is
estimated at £2.2bn in 2007/08 (Table 15.1).
Fuel duty rebate was introduced in 1965 but since 2002 has been retitled 'bus service
operators grant' (BSOG). The original title still reflects what the subsidy consists of;
with 82% of the duty being rebated, currently worth 41p per litre.
What the grant is 'for' exactly - other than a generalised means of supporting the
bus industry - is a moot point. For several years the Government has recognised that
the basis of BSOG is unsatisfactory since it does nothing to incentivise operators to run
services in a way which contributes to its policy objectives and actually rewards fuel

Table 15.1 Sources of bus service support in England 2007/08 (source: estimates as published in DfT
2008c Local Bus Services Support: Options for Reform )
Bus service operators' grant (fuel duty rebate) £413m

Services contracted by local authorities
outside London (tendered socially necessary services)
within London (services franchised by TfL)

£330m
£650m

Grants from Central Government
rural bus subsidy grant
Challenge and Kickstart awards (remaining commitments)

£56m
£11m

Reimbursement for concessionary fares £725m

TOTAL £2,185m*

* An additional £300m is spent by local authorities on capital items supporting bus services.