Question to the Department for Transport:

To ask the Secretary of State for Transport, whether local authorities have any flexibility to use capital funding allocated either through the Local Authority Bus Grant or the Transport for City Regions fund as revenue funding for related bus operations.

The Government recognises the importance of local authorities having funding to support bus operations. However, improving the infrastructure that underpins these services is essential to delivering better and more affordable services. This can only be achieved through the effective use of capital grants. Investment in infrastructure is intended to improve the attractiveness, affordability, and reliability of bus travel, helping to reduce long-term reliance on Government support.

For this reason, capital funding is intended for long-term investment and is not designed to meet ongoing operational costs, which should be covered through revenue funding. Capital and revenue funding may be used alongside one another to support delivery, but the Government expects both to be used as allocated and in line with the terms and conditions agreed with each Local Authority.

However, there is an exception for Established Mayoral Strategic Authorities that receive an Integrated Settlements from Government. For these authorities, transport funding is no longer provided directly by the Department for Transport but is instead managed by MHCLG as part of the wider settlement. In agreement with HM Treasury, MHCLG has converted 10% of this funding from capital to resource, as revenue funding can be spent either on revenue or on capital. This gives these areas greater flexibility to meet local priorities. This applies to Liverpool City Region, Greater Manchester, North East, South Yorkshire, West Midlands, and West Yorkshire.