13 August 2025: Parliament’s Transport Select Committee has published its latest report today, titled Buses Connecting Communities, outlining a number of recommendations, including for greater regulatory support for Demand Responsive Transport (DRT) services.

The report calls for the Government, within 18 months, to develop “a dedicated policy and regulatory framework” for DRT, “growing and expanding their role in service poorly connected places”.  The report recommends a review of funding streams and guidance on DRT, as well as suggesting access to “nationally procured digital tools” to support DRT schemes. Critically, the report also calls on the Department for Transport to “consider, with the Treasury, reform to the current VAT rules applicable to DRT services”.

Max Sugarman, Chief Executive of ITS UK, who provided oral evidence to the Committee, responded: “It’s fantastic to see the Transport Select Committee highlight the vital role demand responsive transport plays in supporting communities around the UK. DRT is a critical part of the transport network, offering flexible, on-demand services that act as a vital lifeline for those with often limited public transport options, such as in rural areas.

“Yet, as ITS UK and our members set out in our oral and written evidence, current regulations can be a key barrier to the roll out of DRT, clearly demonstrated by the fact that DRT schemes that use smaller vehicles are subject to VAT, whilst schemes using larger vehicles aren’t.

“So, it’s brilliant to see the Transport Committee stating clearly the need for greater guidance, support and regulatory changes for these services. We strongly urge the Government to consider these recommendations, and work with the sector to make DRT a key part of its bus reforms and plans for integrating the transport network. By doing so, we can ensure DRT continues supporting a greener, safer and seamless transport network for all.”

Notes to editors:

1. The report, Buses Connecting Communities, will be available on the Committee’s website here.

2. Key recommendations in the report covering Demand Responsive Transport include:

Recommendation 29: The Department should within 18 months develop a dedicated policy and regulatory framework for alternative and complementary public transport models, including Demand-Responsive Transport (DRT) and community transport. This framework should include growing and expanding their role in serving poorly connected places and in connecting passengers to fixed-route public transport networks. The framework should include:

• Clear guidance on DRT governance and a framework for integration with local transport plans;
• Guidance on providing socially necessary services through a DRT model;
• A review of existing funding streams across departments (such as. home-to-school, health, and social care transport) to identify opportunities for coordination and shared use of DRT services;
• Optional access to nationally procured digital tools (such as routing software or booking platforms) to support local authorities in designing and managing DRT schemes;
• Guidance on how both community transport and demand-responsive transport providers should be included in Enhanced Partnerships, to support greater collaboration and ensure inclusive planning; and
• The exploration of rural mobility models that prioritise improving access to services, rather than simply replicating traditional public transport, including the role of shared or private car use and lift-sharing schemes as part of a flexible, place-based approach.

Recommendation 30: The Department should consider, with the Treasury, reform to the current VAT rules applicable to DRT services. This should aim to recognise the character of DRT as a public transport service, even when vehicles smaller than a Public Service Vehicle are used.

3. Find out more about ITS UK’s appearance before the Transport Select Committee.
4. About ITS UK: Intelligent Transport Systems UK (ITS UK) is the voice of the transport technology industry. ITS UK provides a national platform to support the roll out of technology for a cleaner, safer and more effective transport network, both at home and abroad. We support our 190+ members – from both the private and public sector, and covering all sizes and disciplines – through advocacy to policy makers, connecting people and organisations, promoting the industry overseas and supporting innovation across the intelligent transport ecosystem. www.its-uk.org