£3bn Funding Settlement Unveiled For Local Bus Services

The government has announced a £3 billion funding package to support bus services and infrastructure across England, aiming to deliver more frequent, reliable and affordable services for passengers.

The announcement confirms that councils will receive multi-year settlements through the new Local Authority Bus Grant (LABG), giving local transport authorities long-term certainty to plan and invest in local networks.

According to the Department for Transport, the funding is intended to give councils flexibility to respond to local needs – for example by reducing fares, adding routes, investing in zero-emission buses, or improving stops and stations. The LABG will sit alongside support for bus operators and continued funding for the £3 fare cap, now extended until March 2027.

The package forms part of the government’s wider approach to making public transport cheaper and more reliable, following the Bus Services Act which became law in October 2025. The Act gives local authorities greater control over how their local bus networks are run, including powers to protect socially necessary routes.

Under the funding package:

• £481m per year in LABG revenue funding will be allocated to local transport authorities up to 2028/29
• Around £200m per year in capital funding will be allocated up to 2029/30
• Over £240m per year in revenue funding will go to bus operators
• More than £150m per year will maintain the £3 bus fare cap

The government says that the allocations for individual areas have been published and are based on a revised formula taking into account population, deprivation, existing bus provision and rurality. A cap and collar have been applied to limit changes year-to-year and provide stability.

As a condition of the funding, local authorities will also be required to participate in Transport Focus’s expanded Your Bus Journey annual passenger survey.

The government has described the package as an important step in reversing long-term decline in bus use and supporting access to work, healthcare and local services.