Bus operators in England are said to be disappointed after transport minister Norman Baker revived the thorny issue of reform to BSOG, the Bus Service Operators Grant.

Reform of the grant, formerly known as Fuel Duty Rebate, has been considered by successive governments. The current coalition government is no exception, but the issue appeared to have been put on the back burner, until recently.

Behind the scenes, Baker is said to be talking to bus companies and local authorities about how BSOG is paid. England’s cash-strapped local authorities want to take responsibility for allocating the £393m-a-year grant. Bus operators strongly oppose this.

It is understood that Baker wants to reform by consensus. However, one senior bus industry figure told Passenger Transport that a consensus would not be reached. And by reopening old wounds, he warned that Baker risked dividing bus operators and local authorities during a very difficult period.

Meanwhile, a growing number of operators are questioning whether the industry should turn its back on BSOG, described by one operator as “the King’s Shilling”, and instead focus on delivering a properly priced commercial service. During a recent meeting of bus operators, it emerged that this view is gaining in popularity, and it is likely to become even more popular if the government requires operators to jump through more hoops in order to receive BSOG funding.