Network Support Grant to see Scotland bus funding overhauled

Network Support Grant coming to Scotland on 1 April

The Scottish Government has overhauled funding towards bus services with development of the Network Support Grant (NSG) mechanism for the 2022/23 financial year. From 1 April, it will supplant the existing COVID Support Grant, COVID Support Grant – Restart and Bus Service Operator Grant streams. NSG will include a further £40m to support the sector’s recovery during 2022/23 out of a draft budget for the scheme of up to £93.5m. 

NSG will subsidise both commercial and community bus routes. Transport Scotland (TS) says it will also help to “secure services as part of wider improvements to attract passengers back over the longer term.” Minister for Transport Jenny Gilruth adds that NSG will provide more flexibility than predecessor emergency COVID-19 funding schemes.

The discretionary grant will initially take two forms: NSG and NSG Plus. TS says that the demarcation will “ensure that operators receive the support [that is] appropriate to them.” Recipients can only sign up to one of the two sub-schemes at a time, but they may switch between them if they meet the relevant terms and conditions.

NSG will be paid at 14.4p per km. Participants are required to commit to consulting with relevant local transport authorities (LTAs) on timetables and to respond “positively and quickly” to reasonable LTA requests to amend services; to deliver mitigations in line with applicable public health guidance, rules and regulations; and to commit to communicate service changes to all parties concerned in a timely fashion. 

NSG Plus will be paid at 79.4p per km. It is intended to offset lost revenue while patronage continues to recover. That rate will be subject to review and adjustment as recovery proceeds. In addition to conditions applicable to baseline NSG, NSG Plus will, among other things, also require participating operators to: 

  • Notify TS of reductions to service kms causing them to drop below 10% of the level estimated, or of certain service frequency reductions of 10% or more compared to when the operator signed up to NSG Plus 
  • Provide TS with regular data on farebox revenue, costs, patronage and other relevant measures 
  • Cap permissible fare rises to the Consumer Price Index from an agreed pre-COVID-19 date 
  • Undertake a regular financial reconciliation and ‘margin sharing’ agreement. Under the latter arrangement, the operator may keep up to 7% earnings before interest and tax (EBIT). Between 7-20% EBIT will be shared equally between the operator and TS. Over 20% EBIT will be entirely retained by TS. 

Payments via the Network Support Grant scheme will be made every four weeks. Operators may be eligible to receive the money in advance based on their best estimates of the live service km that are intended to run. 

Existing Low Carbon Vehicle or Low Emission Vehicle incentives will be paid in addition to the above per km rates and will count towards NSG Plus terms relating to profit.