£3 billion bus boost in multi-year settlements

Multi-year settlements will finally give the much-needed certainty to develop and drive forward plans that cater to the needs of their communities, says Government

The government has announced a £3 billion boost for bus services and infrastructure and, for the first time in decades, is enabling transport authorities to take long-term investment decisions about buses in their own regions thanks to multi-year settlements.

For years, local authorities have been held back from making long-term investments, but multi-year settlements will finally give the much-needed certainty to develop and drive forward plans that cater to the needs of their communities.

The funding follows the Bus Services Act becoming law in October 2025, which for the first time gave local authorities the power to run local services how they see fit and provides greater protection to socially necessary routes. 

Multi-year funding will give councils the freedom to spend their allocations in whatever way they see fit, whether it is lowering the prices of fares, introducing new routes and zero emission buses or creating safer bus stops.

The funding, in the format of Local Authority Bus Grant (LABG) is a consolidated grant for local transport authorities to maintain and improve bus services, comprising both capital and revenue funding.

From 2026 to 2027, the allocation of LABG will continue the approach introduced in 2025 to 2026, bringing together funding for Bus Service Improvement Plans (BSIP) and the Local Authority Bus Service Operators’ Grant (LA BSOG) into a single consolidated grant.

Revenue funding is allocated to all local transport authorities in England outside London.

Capital funding is allocated to all local transport authorities in England outside London, except those that receive the City Region Sustainable Transport Settlement (CRSTS) or Transport for City Regions (TCR) funding.

Transport Secretary, Heidi Alexander, said: "After years of decline, better buses are finally on the way. Our £3 billion investment will give local authorities the long-term funding they need to deliver lower fares, more frequent services and the reliable transport that communities depend on.

"We’ve already extended the £3 bus fare cap to help people with their everyday journeys and now we’re backing this with the funding councils need to transform their local services.

"This is part of our wider plan to make public transport cheaper across the country – we’ve frozen rail fares for the first time in 30 years and we’re building Great British Railways to deliver better value for passengers.

"Whether it’s the bus to work, the train to see family, or getting to a hospital appointment, affordable transport is essential to bearing down on the cost of living and growing our economy."

Hugh Malyan, Cabinet Member for Highways and Transport at North Somerset Council, said: “As the Bus Service Improvement Plan funding winds down, the Bus Grant will help us sustain support for bus services across North Somerset.  

“I welcome the three-year funding which helps us to plan and spend resources with certainty. We will still face some difficult decisions, however, as costs to provide bus services have risen with some services still needing significant support from the council. This funding broadly matches what we have had before so doesn’t represent any additional spending power."