Proposal

In 1984 a proposal to deregulate local bus services was published in the white paper Buses and in more detailed consultation papers. Part I of the Act brought these proposals into effect.^[1]

Deregulation, elimination of barriers, and the transfer to the private sector were some of the major changes the Act established.^[3] Privatisation and bus deregulation came into effect on 26 October 1986.^[1] Local authorities were required to transfer their municipally-owned bus services to separate companies. Although most of these companies have since been privatised, with the exception of Lothian Buses in Edinburgh; a few other municipal bus companies remain today. The Act also mandated that local governments publish statements of their own policies for bus services deemed socially vital that were not operated by commercial companies.^[2]

London

London faced a different type of deregulation. The standard deregulation that applied to other cities in the United Kingdom was not applied to bus services in Greater London; instead, the Act brought about a system of franchised routes operated by private companies but managed by London Buses Ltd. This meant that, although the bus companies in London were privatised, London's government still retained the ability to regulate the companies.^[4] At the time the Act was put into place, the London bus companies were governed by the London Regional Transport Act 1984.^[1]

Transport Act 1985: Deregulation (Part I)

Part I of the Act eradicated, excluding London, the need for the required road service licence throughout the United Kingdom. Part I replaced service licensing with a system of registration.^[1] This caused licensing authorities losing many of their powers and made it possible for operators to register new routes. For an operator to register a new route the licensed operator had to supply the traffic commissioner with information of the proposed route, the timeline for the trip, stopping arrangements, the vehicles to be used, and the terminal points. In accordance with the Act the traffic commissioner had to receive the registration at least 42 days prior to when the route is to be run. It was mandatory for the notice to go through the traffic commissioner for a licensed bus operator to operate. After approval, the operator was required to run the route according to the specifications provided in the registration.^[1]

Deregulation also led to firms being able to charge any fares they wish, run routes, and freely enter and leave the market.^[4] This was accomplished by reducing the amount of subsidies local governments could provide for services.^[4]

Transport Act 1985: Privatisation (Part II)

Privatisation proposals were put forth to change the structure of the bus industry.^[1] The bus industry was managed mainly by public sector companies in the years prior to 1985. Privatisation was introduced by the Conservative government as a way to achieve better access to private capital and more committed management.^[1] In order to achieve this goal, the Conservative government made it so local governments could only provide subsidies for services and prohibited subsidies that would promote low fares.^[4]