The proposals would promote social inclusion and encourage people out of their cars. In all, the plans would see an extra 850 million bus journeys a year or 2.3 million per day.
Commission chair David Begg said: 'The bus can deliver change fast, cheaply and with enormous impact. It must be at the heart of the delivery of integrated transport.'
The report - 'Public Subsidy for the Bus Industry' - puts the bus firmly in the front line of the battle against traffic congestion, transport social exclusion and pollution. It concludes that the bus can compete with the car in certain circumstances if subsidy is increased and re-focussed.
In the past 20 years, bus fares have risen much faster than inflation, outstripping both motoring costs and rail fares. Rail and bus receive similar levels of subsidy, while the bus carries about five times the number of passengers and delivers far greater social inclusion benefits.
The proposals would see extra support for people in education, extra benefits for socially disadvantaged groups, more support for services in smaller communities and rural areas.
For bus operators, the CfIT report calls for a change to the way they get funding from government. Instead of a fuel duty rebate based on the bus mileage run, the commission wants to see an incentive based on the number of passengers carried, with more money as passenger numbers increase.
FDR has been effective in keeping fares down at a time of rising industry costs. Rebates on fuel duty paid reduce the incentive for operators to run more fuel efficient vehicles. Passenger based incentives target the subsidy at one of the key industry objectives - passenger growth. However, we can not recommend this change unless the government increases funding to local authorities to allow them to support socially necessary services that would otherwise suffer as operators switch resources to routes with higher growth potential.
The report also highlights a major role for local authorities to play. Greater political will is needed locally coupled with an incentive regime. More money will go to local authorities to support bus priority schemes, park and ride initiatives and for rural and interurban services.
Professor Begg said: 'Unless we bring better incentives and more public funding to the bus sector we will miss the best, most obvious and cheapest opportunities at our disposal for providing alternatives to the car.
'If implemented in full, our proposals will offer the government a real chance to reverse the historical decline in bus use and improve social inclusion.
'The force for growth is a powerful one. New technology, greater understanding of the market, investment in new bus fleets, innovative fares initiatives, bus priority and service reliability are already providing the raw materials for change.
'GPS technology is helping to deliver route reliability and provide real time information, smartcard ticketing offers both discounts and faster journeys, operators are wakening up to the need to provide comfortable, reliable services at turn up and go timetables.
'At last the bus has the opportunity to come into its own, put its Cinderella past behind it and to make the car less of an inevitable choice for most journeys.'
* Refers to England outside London, which is the area covered by the report.
1. The commission's three-year study was led by Trevor Chinn, vice-chair of CfIT.
2. The report focussed on four key areas:
* Encouraging passenger growth - by switching operator support from fuel duty rebate to an incentive per passenger carried
* Boosting modal shift - through quality bus partnerships and park and ride schemes; extra benefits for those in education and operator led initiatives introduced because of incentivised support
* Supporting social inclusion - by extending concessionary fares to people on benefit and more support for rural areas
* Contribute to reduced pollution - by removing dis-incentives to more fuel-efficiency and alternative fuel vehicles
3. The proposals include:
* Extra£87m per annum revenue funding for operators in return for increased patronage
* Extra£94m for local authorities to support bus priority measures, 'park and ride' facilities and rural and inter-urban services
* Extra£192m in half fare concessions for people on means tested benefits
* Extra£73m in half fare concessions to those in education
* Local authority incentives to introduce bus priority measures
* Comprehensive introduction of smart cards
* More pilots for home to school transport to reduce the need for the school run - for both entitled and non-entitled children
* An appraisal framework for subsidised services
* Encouragement of demand responsive services in rural areas
4. Public Subsidy for the Bus Industry can be found here.