TfL wants to create a publicly owned bus company for London
Transport for London (TfL) is working on plans to create a publicly owned bus company to compete against private operators in the capital.
In its draft business plan, detailing investment priorities for the rest of the decade, TfL said “we will develop detailed proposals for a new publicly owned bus company”.
“We will assess how this could further support innovation, efficiencies and accountability, and support the needs of customers and the workforce,” it added.
If established, it would be the first major publicly owned bus company to operate in the capital for thirty years.
Under the current model, which has been in operation since 1995, private firms submit bids to TfL to run services on a franchise basis. The contracts generally run for seven years, providing operators with a set income dependent on performance.
TfL retains the ability to set routes and control fares, unlike most of the rest of the country, where the entire network has been deregulated.
Bus companies under pressure
There are 16 privately-owned operators on the capital’s 675 bus routes, including Arriva, Go-Ahead London, First Bus London, and Stage Coach London.
But many have come under increasing pressure in recent years, as slower travel speeds put Londoners off using the services. Operators have also struggled with higher costs, as a result of inflation and the increase in national insurance.
Last week Go-Ahead Group announced it would withdraw from a number of routes, arguing they were no longer financially sustainable due to tax hikes.
“These routes are under-performing financially and cannot be maintained at a loss without putting pressure on the wider business,” said Andrew Edwards, managing director of Go-Ahead London, in a letter reported by The Times.
Before his re-election as London Mayor in 2024, Sadiq Khan pledged to create a London bus company that would bring routes back into public ownership once contracts had expired, although it would consider each route on a case-by-case basis.
In August 2024, he said that there were “lots of upsides” to taking buses back into public ownership.
“If a private company is making profit, would it not be nice if it was run by us, and we made the profit and reinvested it in public transport rather than in our shareholders getting dividends? Secondly, it provides a good benchmark when it comes to bids coming in,” he said.
Until the passage of the Bus Services Act last October, legislation made it impossible for local authorities to establish new public bus companies.
Wider transport plans
The draft plan also reiterated TfL’s plans to push forward a wide range of investments across the capital’s transport infrastructure.
This includes extending the DLR to Beckton Riverside and Thamesmead, for which new funding was announced in the Budget; expanding Superloop bus services; and investing in new fleets for the Bakerloo and Central lines.
It also said it wanted to develop the West London Orbital, a new London Overground route between Hounslow and Hendon using “under-used freight lines”.
“We know that investing in our transport network not only supports jobs and economic growth in London but also benefits the whole UK, which is why I’ll continue to make the positive case for longer-term projects that could transform the future of transport in the capital,” Khan said.
The draft plan will be considered by the TfL Board on 4 February.