On this page, you can find the answers to these questions and more, including the options available for bus reform, the current state of franchising around the country, and the potential risks of the model.
Improving the UK’s bus services has been top of the political agenda in recent years. In September, the new Labour government announced a package of reforms and a new Buses Bill expected before the end of the year. Locally, metro mayors such as Mayor Andy Burnham and Mayor Steve Rotheram have made improving bus services a policy priority. Central to the discussion both nationally and locally is the expansion of the ‘bus franchising’ model around the country.
So, why are buses making headlines, what exactly is bus franchising, and why is it being discussed as a route to improving bus provision? On this page, you can find the answers to these questions and more, including the options available for bus reform, the current state of franchising around the country, and the potential risks of the model.
If you have a question on bus franchising that has not been answered below, please email c.rollison@centreforcities.org.
Bus services in the UK have been largely deregulated since the Transport Act 1985. This means services are run on a for-profit basis by private bus operators who set the routes, fares and timetables, with little oversight from either national or local government.
From a passenger perspective, this deregulation and the patchwork of different private operators in many areas has resulted in poor quality bus networks. Problems include uncoordinated timetables and routes, fragmented, single-operator ticketing, and a lack of accountability. In areas with profitable bus routes, competing operators often ‘over-serve’ the route to capture more passengers. Although this may increase service frequency in some areas, it results in many other areas being under-served.
From a local government perspective, deregulation broke the connection between local transport authorities and bus services. Local transport authorities have limited ability to influence how the system operates in terms of fares, frequency and routes. They are not able to use revenue from profitable routes to subsidise non-profitable services and instead directly subsidise non-profitable services.
With little control or accountability over how public money is used in the bus network, many local authorities have chosen not to protect public transport funding when needing to make spending cuts. There is also little incentive for investment in infrastructure improvements like bus priority schemes or new vehicles because they are unable to capture the potential benefits of any increased fare revenue.
For more on the impacts of the Transport Act 1985 and current issues, see: Delivering change — improving urban bus transport
Buses are the most used form of form of public transport across Great Britain, accounting for 53 per cent of passenger journeys in England and 79 per cent in Scotland, but both ridership and bus mileage are in long-term decline. In England, bus passenger journeys fell from 4.6 billion in 2009 to 3.4 billion in 2023 and have still not recovered to pre-covid levels, and bus mileage in the year ending March 2023 was more than a quarter (28 per cent) lower than in 2005. In Wales, the number of journeys undertaken by local bus in Wales declined by 22% between 2008/9 and 2018/19.
This decline is a cause for concern because bus services connect people to employment, education and amenities which means they are also central to local economies. Buses are particularly important for lower income households to access employment and education opportunities. On average, people in the lowest household income quintile make the greatest number of trips by bus.
Centre for Cities research on public transport in urban areas finds that poor public transport connectivity costs the UK economy more than £23 billion per year. This includes productivity gaps of approx. £8.9 billion in Manchester and £3.6 billion in Birmingham.
Increasing the number of people who use public transport instead of private cars is also an important part of the UK meeting its net zero targets, and for improving local air quality. Here too, there is cause for concern, with low levels of public transport usage in UK cities outside of London compared to European counterparts. For example, just 16 per cent of people in Birmingham and Manchester use public transport to commute to work compared to 40 per cent in Hamburg and 33 per cent in Lyon.
For more detail on why bus ridership matters for the economy and how the UK compares internationally, see Measuring up: Comparing public transport in the UK and Europe’s biggest cities and Gear shift: International lessons for increasing public transport ridership in UK cities.
Under a franchised system, the local authority or public transport authority awards exclusive contracts to a private operator to operate bus services in a specific area or on specific routes, with operators bidding for these contracts. There are various types of franchising contract, with some including incentives for performance such as punctuality.
In this system, the franchising authority, for example Transport for London or Liverpool City Region Combined Authority, retains control of key aspects of the service including the setting of routes, fares and timetables.
The franchising system is used overseas in countries including Denmark, New Zealand, Norway, Singapore and Sweden.
There are several potential benefits to re-regulating bus services via bus franchising.
Firstly, it allows the transport authority to better integrate buses with the rest of the transport network. For example, by aligning bus and tram timetables or by implementing a daily fare cap covering multiple modes. For passengers, franchising can also mean a single ‘brand’ and point of contact for information about the bus network, and any other modes in the network.
Secondly, franchising increases the efficiency of public spending on transport by giving the public transport authority greater control over how public funding is used across the network. Under the current deregulated system, private operators retain revenue from profitable bus routes while local transport authorities subsidise operators to run routes they would otherwise forego due to viability.
Under a franchised system, the public transport authority can use profitable routes to cross-subsidise non-profitable routes. The same goes for cross-subsidising buses with revenue from other modes in the local transport network (e.g. trams, rail and underground). For example, Transport for London uses the tube network to subsidise the bus network.
Finally, greater control over the transport network enables local government to better align transport and spatial planning, for example by ensuring new housing developments have public transport connections. This approach has the added benefit of generating additional revenues from related property development which can be reinvested in the transport system, as is the case in Japan and Hong Kong.
Evidence from London, cities overseas and early indications from Greater Manchester suggest that franchised systems deliver better results than the current deregulated system.
London is the only place in the UK to have used a franchising-style system for decades. While both bus ridership and mileage have declined across the UK, London has largely bucked the trend. Bus mileage has remained stable and bus ridership grew by 70 per cent between 2000/01 and 2014/15. Although ridership has yet to recover to pre-pandemic levels, it remains higher than in 2001 and higher than elsewhere in in the UK.
Overseas, franchising has delivered similar results in Scandinavia, where almost all bus services are franchised. Across Denmark, Norway and Sweden the introduction of franchising has resulted in service improvements alongside reduced costs over the last 20-25 years. For example, the transport authority for Oslo and the more suburban Akershus municipality uses an incentive-based franchising system similar to London. At least 93 per cent of customers must be satisfied with their journey for the operator to receive a bonus, with the network reaching 97 per cent satisfaction in 2014. More recently, Singapore’s Land Transit Authority introduced a similar contracting model with incentives for frequency and reliability. Since the introduction of the new operating model in 2016, ridership has increased from 3.94 million to 4.1 million daily trips in 2019 and while waiting time has reduced by 25 per cent on key routes.
Greater Manchester has not yet completed the switch to a fully franchised network, but results from the initial tranche of routes (covering Wigan, Bolton and parts of Bury and Salford) are promising. Ridership increased by 5 per cent in the six months to May 2024, with passenger revenues exceeding targets for both 2023/24 and 2024/25. Franchised routes are also performing well in comparison to both the same routes the previous year and continuing non-franchised routes in other parts of the city-region. Overall punctuality has increased to an average of 82.9 per cent during April-June 2024, 14 per cent higher than the same period in 2023. The second tranche of franchised routes began in March 2024, with the third and final tranche commencing in January 2025.
Positive evidence from other cities does not mean bus franchising is a silver bullet. Franchising does not guarantee improvements to service frequency or quality, and other measures like bus prioritisation and measures to reduce congestion are important additional interventions required to improve the bus network. Franchising also needs to be done at the scale that best matches travel patterns in an area to deliver the biggest improvements – see Who should be in charge of bus franchising?
As of November 2024, mayoral combined authorities in England and all local transport authorities in Scotland can franchise their bus services. In England, this was enabled via the Bus Services Act 2017, which amended the Transport Act 2000. In Scotland, secondary legislation to enable bus franchising came into force in 2023, following initial provision in the Transport (Scotland) Act 2019. In Wales, Transport for Wales plans to rollout bus franchising starting in 2026. Legislation to enable this is currently planned for 2025.
There are three main exceptions to the above.
Firstly, in England, local authorities other than combined authorities currently need to go through a two-step process if they wish to franchise. The box below shows the different processes under current regulations.
| Mayoral combined authorities and mayoral combined county authorities – single step | Other types of local transport authority – two-step process | |
| Combined Authorities have automatic access to franchising powers and can proceed straight to preparing an assessment of the proposed franchising scheme. | Regulations must be made which ‘turn on’ access to the franchising powers in the Transport Act 2000 for a particular category or categories of LTA. The Secretary of State for Transport must give consent to an individual authority within that category to prepare an assessment of their proposed franchising scheme. Decisions are made on a case-by-case basis. |
Note: For full details of this process see: Department for Transport Bus Franchising Guidance, September 2024
This process is due to change under the forthcoming Buses Bill which will extend franchising powers to all local authorities. This is already underway, with parliament revising the existing legal framework for franchising to make it easier for local authorities to intervene on bus routes. At this stage, local authorities will still need to obtain the Secretary of State’s consent to prepare a franchising scheme assessment, but they will no longer need to wait for regulations to enable them to access the franchising powers set out in the Transport Act 2000.
Secondly, the provisions don’t apply to London because it was exempt from the deregulation introduced in the Transport Act 1985.
Thirdly, nearly all buses in Northern Ireland are operated by Translink, a government-owned company.
There are three main risks associated with a franchised system.
The first is financial. This includes the upfront cost of moving to a franchising system including acquiring bus depots and other infrastructure, as well as ongoing operation costs (see How much does bus franchising cost). Franchising also means the local transport authority becomes responsible for the financial risks associated with running the network, including covering costs if passenger numbers and revenue do not meet expectations.
An additional financial risk falls on central government, as increased use of franchising powers will bring increased demand for public transport funding. The expansion of franchising powers to all local authorities risks creating a situation where national funding is spread thinly between many places, rather than prioritising those places with the greatest capacity to deliver effective bus services.
The second risk is operational. The long history of deregulated bus services means many local transport authorities will lack the skills and capacity to run the network. Poorly run networks could result in failing to realise the benefits of franchising and loss of public support for the move.
Finally, there is a reputational risk. In a franchised system, local government becomes the accountable, public face of bus services. Greater accountability can be positive as it gives passengers a single point of contact, but it also makes it clearer who is responsible if there is public dissatisfaction with the franchised services.
Aside from bus franchising and de-regulated, privately run buses, there are two main models for operating bus services in the UK.
The first is Enhanced Partnerships (EP), which were introduced at the same time as bus franchising in the Bus Services Act 2017. Under an Enhanced Partnership, local or combined authorities agree to fund measures such as bus lanes, parking restrictions or other infrastructure which makes bus services more convenient for passengers and more profitable for operators. In return, operators agree to certain service and vehicle standards. The Conservative government’s 2021 National Bus Strategy required local authorities to opt for either franchising or an EP or lose future discretionary bus funding. North East Combined Authority, Transport for the West Midlands and Brighton & Hove City Council are some of the places that currently use the EP model.
The second is municipally owned bus companies. As local transport authorities are not currently allowed to set up new municipal operators, the number of these are limited to pre-existing operators. Examples include Edinburgh’s Lothian Buses, owned by City of Edinburgh Council and surrounding local authorities, Reading Borough Council’s Reading Buses and Nottingham City Council’s Nottingham City Transport.
The table below provides an outline comparison of different models.
| Options available to the local transport authority | Deregulated system, private operators | Enhanced Partnerships | Municipal bus operators | Bus franchising |
| Set routes, fares and timetables | No | No | Yes | Yes |
| Set service levels such as frequency and punctuality | No | Yes | Yes | Yes |
| Sell and accept a multi-operator or multi-modal ticket (including smart cards) | Yes | Yes | Yes | Yes |
| Promote multi-operator tickets | No | Yes | No | Yes |
| Set common ticket rules such as age for concessions or standard period of validity | No | No | Yes | Yes |
| Set a maximum fare for a given route or daily fare cap | No* | No | Yes | Yes |
*The current national bus fare cap means that a £2 cap for single tickets (rising to £3 in 2025) is available, but operators are not required to join the fare cap programme, and the cap is set nationally rather than by the local transport authority.
Note: Parts of this table are adapted from Three stages to better bus services using the Bus Services Act, Campaign for Better Transport, 2018.
Figure 3 below shows which combined authority areas have introduced or plan to introduce bus franchising.
Figure 3: Combined authorities, bus operating model and franchising status
| Combined Authority | Current model | Franchising status |
| Cambridgeshire & Peterborough | Deregulated | Considering franchising, public consultation stage |
| East Midlands | No information available | No public announcements |
| Greater Manchester | Partly franchised, partly deregulated | Franchising roll out scheduled for completion in 2025 |
| Liverpool City Region | Deregulated | Commitment to franchising, public consultation stage |
| Greater London | Fully franchised | Fully franchised |
| North East | Enhanced Partnership | Commitment to franchising |
| South Yorkshire | Enhanced Partnership | Commitment to franchising, public consultation stage |
| Tees Valley | Enhanced Partnership | No plans to franchise |
| West of England | Enhanced Partnership | No plans to franchise |
| West Midlands | Enhanced Partnership | Commitment to franchising |
| West Yorkshire | Enhanced Partnership | Commitment to franchising |
| York and North Yorkshire | No information available | No public announcements |
In addition to the above, Glasgow’s transport authority, Strathclyde Partnership for Transport has also recommended franchising in its regional bus strategy. Under the Transport (Scotland) Act 2019, an independent panel now needs to make the final decision on whether it can proceed with franchising.
To be most effective, a bus network needs to match both the economic geography and administrative boundaries of an area. For example, Transport for London is the franchising authority for services covering the entire Greater London Authority area, City of London and some additional areas further out. This means it can plan services which align with how people travel across the urban area, including across multiple local authority boundaries, and passengers do not need to navigate different systems or ticket types. Administratively, the Mayor of London is responsible for both Transport for London and the Greater London Authority area which makes it easier to coordinate transport and housing provision.
For larger urban areas, a mayoral combined authority or local transport authority covering the entire urban area is best placed to manage a franchised bus network. Franchising at lower levels of local government, as will become possible under the Buses Bill, risks fragmenting transport systems between different local authorities within a city and with its hinterlands, making things more complex for passengers, and missing out on the efficiencies gained from planning transport at the city-level.
This depends on many factors including the size of the bus network, nature of the switch (e.g. from a single public operator or from multiple private operators), and any legal challenges or complications during the process.
Greater Manchester, the first place in the UK to switch from a deregulated system to a franchised system, began the process in early 2018 following the introduction of the Bus Services Act 2017. The city-region officially ran its first franchised services in 2023 and will finish franchising all routes in 2025.
With Greater Manchester’s precedent in place, early indications suggest the process may be faster for other city-regions, and speeding up the process is a key aim of the Buses Bill. Liverpool City Region committed to franchising in October 2023 and is expecting to complete the process by the end of 2027 and West Yorkshire recommended franchising as its preferred method of bus reform in 2024, with all routes expected to have switched by July 2029.
The cost of moving to and running a franchised bus system depend on many factors including the size of bus network, scale of infrastructure investment required, the costs of initial assessment and consultation phases, and the nature of the contracts agreed with operators.
How franchising is funded also varies between places making comparison difficult, but funding sources typically include passenger fare revenues, devolved government funding and government grants such as the City Region Sustainable Transport Settlements.
There are two main costs associated with franchising. The first is direct ‘startup’ costs associated with moving from a deregulated model to franchising. This includes buying infrastructure like depots, buses themselves, and operating systems. In Greater Manchester, these direct costs are estimated at £15 – 22 million annually.
The second type is the ongoing cost of running the franchised bus network. As an illustration, the proposed 2024/25 local funding for bus franchising in Greater Manchester is £42 million, funded from a combination of Mayoral precept, Earnback reserve and Local Transport reserve. This cost will be partially offset by fare revenues.
It is important to note that operating a comprehensive bus network will always involve public subsidy, if the network includes operating routes that are not commercially viable but important for connectivity and accessibility reasons. Bus fare income will not be enough to cover the full cost of the entire network. The current deregulated model already relies on public subsidy, which accounts for 44 per cent of all bus industry income.
The difference is that under franchising the local transport authority has greater control over how public funding is used across the network and has more incentives to invest in the network to increase ridership.
In the medium to long-term, the financial benefits of franchising for the combined authority are three-fold. Firstly, franchising is expected to produce cost savings compared to the current system. For example, on concessionary travel, the £15 million of ‘concessionary reimbursement’ fares paid to bus operators to cover free travel for 16-18 year olds is expected to be lower. This is because the ‘lost revenue’ from carrying concessionary passengers is included in the net contract costs for operating franchised services. Secondly, the expected increase in passenger numbers will generate more revenue from fares.
Third, the public transport authority can choose to use revenue from other transport modes on the network, or other revenue sources such as council tax, congestion charge or a Low Emission Zones. For example, London’s bus system has at an annual deficit of £641 million which Transport for London subsidises from other revenue sources, particularly the underground.
As of late November 2024, the government is expected to introduce the Buses Bill in England before Christmas. The Bill will enable all local transport authorities to introduce bus franchising and lift the ban on new municipal bus operators. Under-Secretary of State for Transport Simon Lightwood has also hinted that the Bill will include multiple franchising models.
The government has also announced FY2025/26 funding for bus services. £955 million has been allocated with £243 million for the Bus Service Operators Grant paid to operators and £712 million for local transport authorities. This is separate to funding for the bus fare cap and to the City Region Sustainable Transport Settlements.
The government has extended the national single fare cap scheme till the end of 2025, rising from £2 to £3 from 1st January 2025. Bus franchising and the fare cap are not directly related. Under a de-regulated system it is up to individual operators to opt in to the fare cap scheme and under a franchised system the local transport authority is responsible for setting fares, including opting in to the fare cap scheme.
Some places with a bus franchising system already operate their own, separate, single or daily fare cap schemes such as Greater Manchester’s £2 single fare cap and Transport for London’s £5.25 daily cap.
A full list of bus operators offering the fare cap can be found here.
