Rural bus services at risk as industry warns of impact from tax increases

Britain’s largest bus and coach companies have issued a warning that rural transport services could come under threat if the government decides to raise national insurance or fuel duty in the upcoming budget. Operators including Stagecoach, First, Go Ahead, National Express, Arriva, and Flixbus have written to the Chancellor, emphasising that recent increases in employer national insurance contributions have placed enormous strain on the sector.

In their letter to Rachel Reeves, the operators note that the combined effect of tax rises and persistent inflation has driven up the average cost per kilometre of operating a bus from £2.70 in 2018-19 to £3.17 by the start of this year, a rise of 16.7 per cent. The leaders of these firms stress that this pressure, intensified by the £100 million cost of last year’s tax changes, is becoming increasingly unsustainable.

Local buses and coaches play a vital role in the UK economy, providing 11 million daily passenger journeys and enabling 450 million coach journeys each year. The industry also transports 600,000 children to school every day, with associated passenger spending generating £8.3 billion annually in local economies. Operators highlight that every pound invested in local buses delivers £4.55 in benefits to the environment, public health, and communities.

Bus company executives argue that a stable fiscal framework is essential if operators are to continue investing in networks and supporting local jobs. The letter asks the government to avoid any further tax rises in the autumn budget, urging ministers to safeguard the sector’s long-term stability and ensure continued access to public transport, particularly in rural communities dependent on these services.

The letter acknowledges the support that initiatives such as the £3 fare cap and local transport funding have offered in recent years. These measures have been crucial in keeping fares affordable and ensuring that essential routes continue to operate, especially in less populated areas. However, progress in passenger numbers, which rose after the pandemic between 2021 and 2024, has slowed and even reversed in some areas this year. The operators caution that any fiscal tightening could jeopardise both the viability of services and the government’s stated ambitions for growth and connectivity.

Industry leaders maintain that sustained investment in public transport is not only necessary for linking people with jobs, education, and healthcare but is also a strategic pillar in supporting local economies and national environmental objectives.