Context and introduction

Introduction

Our public transport system is a key enabler for growth and opportunity – providing the vital link between where people live, learn, earn and socialise. Access to affordable and reliable public transport services helps people and communities unlock opportunities to connect to jobs, education, retail, public services, leisure, recreation and social and family networks.

A sustainable and viable public transport system is also vital in achieving our ambitious targets on climate change mitigation. Scotland`s National Transport Strategy (NTS2) sets out a vision that:

We will have a sustainable, inclusive, safe and accessible transport system, helping deliver a healthier, fairer and more prosperous Scotland for communities, businesses and visitors.

The Scottish Government published the “Fair Fares Review” on 22 March 2024. The Review sets out our aim to ensure the public transport system is more accessible, available, and affordable, with the costs of transport more fairly shared across government, business, and society. It also highlights the challenges facing public transport and presents options on the immediate to short and medium to long-term actions that are available to reform our current transport offering, to support delivery of a quality, accessible, available and affordable integrated public transport system.

The First Minister is committed to expanding the £2 bus fare cap pilot to the SPT region (Glasgow, Ayrshire, Dunbartonshire, Renfrewshire, Lanarkshire and Inverclyde) within the first 100 days of the new government, by 2 September 2026. This is a cost-of-living measure, the primary objective of which is to reduce the cost of bus travel. It is the second stage of a proposed nationwide roll out, with a Manifesto commitment to take forward legislation by the end of this Parliament to put in place a £2 bus fare cap across Scotland and follows the introduction of the £2 bus fare cap pilot in the Highlands and Islands in early 2026.

This interim scheme in SPT allows the scheme to be tested in an area sufficiently different from the Highlands and Islands and enables Transport Scotland to test the effectiveness of the policy intervention in supporting costs of living pressures, to test the administration of the scheme and to gather data and evidence about impact and cost of a bus fare cap in urban, suburban, rural and island areas to inform development of a nationwide scheme. As well as providing support to passengers with the affordability of bus fares, the interim scheme in SPT will strengthen the evidence base for the development of a nationwide scheme and inform design choices, including eligibility and the reimbursement methodology for bus operators.

This OBC considers the rationale for intervention, options analysis and choice of detailed option including detailed reimbursement parameters if necessary and the cost, value for money and feasibility of the expansion of the £2 bus fare cap to the SPT region as an interim scheme prior to National rollout. Ministers’ intention is that passengers will not see a break in provision of the £2 bus fare cap once introduced, but the interim period allows Transport Scotland to test the administration of the scheme and gather data about impact and cost of a bus fare cap in island, rural and urban areas. This will provide the evidence base for the development of a nationwide scheme and inform design choices, including the reimbursement methodology for bus operators.

The parameters of the scheme at its launch are:

  • Passengers will pay no more than £2 per journey for an adult or child (in the absence of a concessionary card) fare within the SPT area. Journeys under £2 will be unaffected.
  • Bus operators will be reimbursed for the revenue forgone, should there not be an identified method of directly handling with passengers.
  • The underlying adult single fare must be in line with existing concessionary fares.
  • The scheme will be open on a voluntary basis to bus operators operating both commercial and subsidised services.
  • Long-distance journeys are included in the scheme, and the £2 bus fare cap will apply to the SPT boundary. There is an interaction with the HITRANS scheme so for those services that enter both areas, the commercial rate will apply beyond the SPT boundary and up to the Highlands and Islands region boundary, where the £2 bus fare cap again comes into effect. If a service goes directly between the two areas, the fare will be £4.

The Nature Of This Document

This document forms an Outline Business Case for the extension of the £2 bus fare cap in the HITRANS and ZeTrans area (Highlands and Islands) to the Strathclyde Passenger Transport region. It includes an initial evaluation of the Highlands and Islands Pilot. This document also covers the areas of impact specified within the suite of Impact Assessments required by Scottish Government.

These consist of:

Required

  • EQIA – Equalities Impact Assessment
  • FSD – Fairer Scotland Duty
  • CD - Consumer Duty
  • BRIA - Business and Regulatory Impact Assessment
  • Strategic Environmental Impact Assessment
  • Island Communities IA

The required material and impacts are considered within the Socio-Economic case.

Not required

  • Children's Rights and wellbeing IA - this is not legislation nor strategic decision relating to the rights and wellbeing of children
  • Data Protection IA – no personal data will be collected as part of the scheme. The commercial case covers impact on bus operators in terms of data.

The 5 Cases Model And The Preferred Option And Options Appraisal

The normal form of the 5 case/dimension model and its links to Scottish Transport Appraisal Guidance and Transport Scotland’s Investment Decision Making (IDM) processes are shown in the diagram below.

The diagram shows the 5-case model – as described below
The diagram shows the 5-case model

For projects, the 3 decision points are:

  • Strategic Business Case (SBC) – Strategic Decision – to develop further. This provides the strategic and socio-economic case in line with STAG guidance required for IDM to agree to further development.
  • Outline Business Case (OBC) – Procurement Decision – to go to Procurement. This provides the detailed appraisal in line with STAG guidance for the socio-economic case and some financial information. This is linked to the procurement decision stage of the IDM process.
  • Final Business Case (FBC) – Contract decision – to contract. This focuses on the commercial and managerial cases along with the financial, and is linked to the contract decision stage of the IDM process.

The five dimensions considered in the model are:

  • Strategic
  • Socio-Economic
  • Commercial
  • Financial
  • Management

There is no Strategic Business case for the proposal as the scheme and subsequent wider implementation are building on the Fair Fares Review which is considered to be what established the “decision to develop further” stage that led to the announcement.

This OBC forms the basis for the decision to implement and fund (rather than go to formal procurement) as the policy will be enacted by Transport Scotland rather than procured in the usual sense.

The 5 dimensions considered in this OBC are, as standard – the Strategic, Socio-Economic, Financial, Managerial and Commercial dimensions. In more detail:

  • The Strategic case – this section gives the wider context of the policy and covers the results of the evaluation of the trial as well as establishing updates outcomes for the intervention.
  • The Socio-Economic Case – this section updates the evidence from the evaluation of the trial to present an updated view of the value for money of the project.
  • The Financial case – this section examines the costs (feeding into the Socio-Economic Dimension) and crucially, the affordability of the project.
  • The Managerial case – examines how the project will be delivered
  • Commercial case – this examines who will deliver the project

Given that the project will be delivered by Transport Scotland in conjunction with bus operators and the impact on operators is covered by the (Partial) Business and Regulatory Impact Assessment (BRIA) within this OBC, the commercial and managerial cases for the project are relatively simple.

Link Between The Outline Business Case And Options Appraisal

This OBC contains an assessment of various options for the implementation of a £2 bus fare cap to the SPT area. It compares these options against a Do-Minimum that represents the current position of SPT bus fares (as at End June 2026). The starting point is the Manifesto commitment and subsequent 100 days announcement, with the First Minister saying:

Within the first one hundred days, we will extend the £2 bus fare cap to Glasgow, Ayrshire, Dunbartonshire, Renfrewshire, Lanarkshire and Inverclyde.