Buses and Taxis FAQs
Frequently Asked Questions about buses and taxis, including funding, regulation, complaints, greener vehicles, cross-border taxis, and concessionary bus travel.
As is acknowledged in 2023 Government statistics on taxi/PHVs, Wolverhampton City Council has seen a notable rise in licences issued in recent years.
The council told the Express and Star in October 2023 that their popularity as a licensing authority can be traced to their early investment in their digital application process, which has made the process more efficient and cheaper than other authorities’. Due to ‘cross-border’ working being legal, drivers can be licenced by Wolverhampton and live and work elsewhere. The council maintain that they still adhere to high driver and vehicle standards:
The council has never actively encouraged applications from drivers outside the city, existing legislation requires that if an application is submitted and requirements are met, the application must be granted. The council may not refuse an applicant simply because they live in a different area.
Our early adoption of digital technology has allowed us to offer a simple and efficient online application procedure, with the requirement that drivers attend in person for training and strict assessment before an application can be processed.
Applicants are usually local to the area they drive in, but many have chosen to be licensed in Wolverhampton due to our efficient, yet rigorous, licensing process.
Public safety is of paramount importance to us. Partnership working with our Licensing colleagues and other agencies shows our commitment to upholding our responsibilities; we expect drivers and vehicles licensed by us to always maintain the highest standards.
In March 2023 Wolverhampton Council’s taxi licensing team noted a “huge increase in the number of drivers applying for licences during 2021/22”. They also said that, because of legal restraints preventing them using ‘profit’ from taxi applications for non-licensing purposes, they are reinvesting ‘profits’ into lowering their application fees. This may make Wolverhampton an even more attractive place for drivers to get their taxi/PHV licence.
The GMB Union has noted [PDF] that so many drivers being licenced by Wolverhampton City Council can be a problem because it can “starve” other licensing authorities of potential licensing funding, and make enforcement of Wolverhampton-licenced vehicles and drivers working in their areas difficult.
What control do local authorities in England have over local buses?The Bus Services Act 2025, which received Royal Assent on 27 October 2025, intends to give local authorities greater control over their bus services, by streamlining the process for local authority bus franchising and permitting the creation of municipal bus companies.
Previously, Section 4 of the Bus Services Act 2017 gave MCAs the autonomy to franchise, with local authorities instead having to gain the Secretary of States consent.
The Conservative Government’s 2021 National Bus Strategy required all local authorities to either begin the process for franchising or create “enhanced partnerships” with local bus operators. Almost every authority opted for the Enhanced Partnership model.
So far, Greater Manchester Combined Authority is the only authority in England to have introduced franchising outside of London.
Municipal BusesIn England, the creation of municipal bus companies by local authorities is permitted under the Section 22 of the Bus Services Act 2025, having previously been prohibited. However, these companies must operate at arm's length from the local authority's central financial and operational processes to ensure fair competition.
In 2025 there were five municipal bus companies operating in England [PDF]: Blackpool Transport Services Ltd., Ipswich Buses Ltd., Nottingham City Transport Ltd., Reading Buses, and Network Warrington. All other municipal bus companies were sold or merged in the 30 years following the Transport Act 1985, which allowed deregulation and privatisation of the sector.
FranchisingFranchising allows local authorities more control over bus services than in a fully deregulated system. The authority specifies the services it wants – routes, fares and vehicle standards – with operators competing through a tendering process for the right to provide a service, in return for a set fee. The main example of bus franchising in the UK is Greater London, which was exempt from the deregulated model introduced under the Transport Act 1985.
The Bus Services Act 2025, among other changes, intends to streamline the process for local authority bus franchising.
Section 1 of the Bus Services Act 2025 allows all local transport authorities (LTAs) to franchise without needing to obtain consent from the Secretary of State first, putting them on the same footing as MCAs. The Act intends to streamline the franchising process by:
- Section 13 permits the direct award of the first franchising contracts to incumbent operators. Directly awarded contracts can only last for a maximum of five years and must be concession contracts. This means the operator needs to retain risk, which is usually interpreted as the operator retaining the fare revenue and the associated operating risk.
- Section 3 allows for a broader description of local services within the franchising scheme document. This flexibility enables authorities to be more agile in responding to changing passenger demands. The Act also introduces a two-year transition period during which authorities can vary the way services are described without following the formal variation procedure.
- Section 4 removes the minimum period of six months between the making of a franchise contract and the commencement of services under that contract, allowing authorities to implement franchising schemes more quickly.
In 2025 the government announced it would run Bus Franchising Pilots in York and North Yorkshire, Cornwall, Cumbria, Hertfordshire, Cheshire West and Chester. These pilots specifically aim to explore how local authorities could take control of bus networks in rural areas.
Prior to the Bus Services Act 2025, the Conservative Government legislated under the Bus Services Act 2017 to allow Mayoral Combined Authorities (MCAs, see Question 1.1) to ‘franchise’ their bus services and take back control of routes, timetables and fares, in a similar way to TfL.
Greater Manchester Combined Authority (GMCA) used these powers to start its own ‘Bee Network’ bus franchising system in September 2023, in January 2025 GMCA completed its franchising of the entire Manchester city-region. Four other MCAs have announced plans for franchising including, West Yorkshire, West Midlands, South Yorkshire and Liverpool.
Enhanced PartnershipsLocal authorities were required under the 2021 National Bus Strategy to set up either a franchising scheme, or an “Enhanced Partnership” (EP) with local bus operators. If they did neither then they would not receive discretionary bus funding from the DfT. Apart from Greater Manchester, all local authorities chose the EP option.
An EP scheme entails an exchange: local authorities, for example, may agree to fund bus lanes, parking restrictions or other facilities which make bus services more attractive and profitable. Operators, in return, agree to a set of standards, such as on the time and frequency of services and vehicle standards. Operators still function on a commercial basis, collect fare revenue and generate a profit from it.
In its inquiry into the Implementation of the National Bus Strategy, the Transport Committee said EPs were “a largely untested” idea and the “Government has made a big bet on them being the right model. It must carefully monitor how well they are working and ensure appropriate contingencies are in place.”
How can local authorities in Scotland and Wales have more control over buses? ScotlandPart 3 of the Transport (Scotland) Act 2019 provided powers for local transport authorities to run their own bus services; franchise bus services in their areas; or enter into a Bus Service Improvement Partnerships (BSIPs) with bus operators within their areas. These powers were brought into force on 4 December 2023 by regulations.
The Scottish Government has created a Community Bus Fund (CBF). Local authorities can apply for CBF funding to help them prepare for potential franchising or partnership schemes.
Section 34 of the Transport (Scotland) Act 2019 gives local transport authorities the power to run local bus services that they were previously prohibited from doing under the Transport Act 1985. The Scottish Government has issued guidance on this.
WalesThe Bus Services (Wales) Bill was introduced to the Senedd on 31 March 2025.
The Bill follows the publication of a White Paper on bus reform in March 2022, titled One network, one timetable, one ticket: planning buses as a public service for Wales.
The Bus Services (Wales) Bill 2025-26 requires Welsh Ministers to consult on, and publish, a Welsh Bus Network Plan. Welsh Ministers must also seek the views of local authorities and have regard to the Wales Transport Strategy and Regional Transport Plans in developing the plan.
The Bill also places a duty on Welsh Ministers to provide bus services using franchising, among other options specified in the Bills text. The Welsh Government and Transport for Wales (TfW) have outlined their approach to franchising in Bus reform for Wales: our roadmap to franchising.
Similar to the Bus Services Act 2025, the Welsh legislation removes restrictions on local authorities’ ability to create new municipal bus companies and makes provision for improved data collection.
The Bus Services (Wales) Bill - Bill Summary [PDF], by Senedd Research, provides an overview of each of the Bill’s provisions and signposts to further detail.
How are taxis and PHV services regulated?In Great Britain, taxi and PHV licenses are issued by local licensing authorities, which are usually local councils, with the exception of TfL in London.
In Northern Ireland taxi licences are issued centrally via the Department for Infrastructure and the Driver and Vehicle Agency. In all parts of the UK, and for both taxis and PHVs, three licences are required: driver licences, operator licences, and vehicle licences.
According to the Local Government Association’s Councillor Handbook for Taxi and PHV Licensing, councils typically:
- set a local framework for the licensing of taxis and PHVs. This can cover fares, standards for drivers and vehicles and limits on the number of taxis that are allowed to operate;
- consider licence applications;
- issue, review and revoke licences;
- carry out inspections and take enforcement action.
Taxi licensing authorities in England and Wales are required to abide by Statutory Taxi and Private Hire Vehicle Standards, which are primarily aimed at safeguarding children and vulnerable adult passengers.
In England, the DfT has published non-statutory best practice guidance for licensing authorities, which was updated in November 2023.
In Wales, licensing authorities and drivers should abide by the conditions set out by the Welsh Government.
In Scotland, central responsibility for taxis and PHV licensing lies with the Justice Directorate of the Scottish Government (having moved from Transport Scotland, who were previously responsible) who have their own best practice guidance for licensing authorities.
Under section 70 of the Local Government (Miscellaneous Provisions) Act 1976 councils in England and Wales may charge fees to cover the costs of their regulatory activities. However, councils are not allowed to use these fees to subsidise other forms of council activity, and are required to consult upon the fees they intend to levy through a public notice procedure.
The Government said in 2019 that there should be national minimum standards for taxi and PHV licensing in England, and that it will take forward legislation to introduce such standard when parliamentary time allows, a commitment it repeated in October 2022.
Other topics addressed in this paperThis paper also answers FAQs on the following topics:
Bus services: GeneralDefinitions of local bus services; municipal bus services; the role of Traffic Commissioners; changes to bus routes; bus passenger behaviour; accessibility
Bus funding, fares and concessionsBus funding; green bus funding; bus fares; contactless ticketing; bus passes, community transport
Taxis and Private Hire VehiclesRegulation of taxis and Private Hire Vehicles; limits on taxi numbers; ‘cross-border’ taxis; minibuses; complaints
Further information on related topics can be found in Commons Library briefings on: