Abstract
Many of the cost benefits to local authorities of post-deregulation competitive tendering have recently been reversed. This has been attributed to increases in wage costs resulting from driver shortage. This article argues that the situation is more complex and that factors such as the level of competition, operator motivation and tendering strategies also have a part to play. It also argues that responses such as the Rural Bus Subsidy Grant involve a high-risk premium and could merely represent a subsidy to operators. (A)