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£2 bus fare cap operator payments to be fixed

Peter Stonham
29 November 2022

More details have been revealed on how operators will be reimbursed for offering a maximum £2 bus fare for three months starting in January. The Government's Bus Fare Cap Grant (BFCG) will distribute the £60m allocated to the £2 flat fare scheme planned in England outside London for January to March. 

Participating operators look set to be offered a fixed funding allocation in early December, before they need to confirm whether they will take part. 

Consultancy firm EY UK has been engaged by DfT to collect the data necessary to calculate allocations, which will be capped at £20m for each of the three months in question. Key questions being addressed in draft BFCG guidance relate to the treatment of losses or profits of those involved in the scheme, what services they agree to include – probably all their network – and the competitive consequences between those operators taking part and those not doing so 

DfT issued the draft guidance in early November and made clear that terms within it are subject to change. Among other provisions are acceptance of concessionary passes and the impacts of established fare capping arrangements. On services that cross borders to Scotland or Wales, only journeys beginning in England will be eligible for the grant. 

Calculation of the sum to be offered to each operator will be carried out via a four-stage process that first uses a baselining exercise to calculate average revenue loss per ticket, followed by forecasting of BFCG take-up and a generation factor to reflect expected growth in demand, including adjustment for passengers switching from other tickets to the £2 fare. 

When it announced the cap in September Ministers said offering people support during the cost-of-living crisis was a key reason for its creation, though encouragement of post-Pandemic patronage return was another.

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