Kent’s £78.2m bus funding: where the money comes from — and where it goes next (Stagecoach, Arriva, Luxembourg, Delaware)

Kent’s buses are in line for £78.2 million of new funding. On paper, it is money to improve routes, cut fares and upgrade vehicles. In practice, a good part of it will be spent via two private groups – Stagecoach and Arriva – whose ownership structures run through Luxembourg and Delaware, two jurisdictions widely recognised by tax-justice campaigners and investigative journalists as core nodes in the global tax-haven system.

This is a story about Kent’s buses, but it is also a story about where money goes after passengers have paid the fare and Whitehall has written the cheque.

Where the £78.2m comes from

The £78.2m figure is not a guess. It drops straight out of the Department for Transport’s Local Authority Bus Grant (LABG) tables, published on 5 December 2025.

For revenue (the money for day-to-day running costs of bus services — keeping routes operating week to week, supporting services, and helping with measures like fare support), the LABG revenue allocations: 2026 to 2029 table shows Kent County Council receiving £14,163,699 a year in 2026–27, 2027–28 and 2028–29, giving a three-year total of £42,491,097.
GOV.UK

For capital (the money for long-term investment in lasting assets — infrastructure and equipment that should benefit services for years, such as upgraded stops, bus priority, charging/depot kit and other improvements), the LABG capital allocations: 2026 to 2030 table shows Kent on £11,691,366 in 2026–27, £11,926,369 in 2027–28 and £12,161,371 in 2028–29, with a further £12,396,373 in 2029–30. The first three years add up to £35,779,106; across all four years the capital total is £48,175,479. 

Put the three-year revenue and capital together and you get £78,270,203, usually rounded down in council discussions to £78.2m. 

The DfT says this new grant is meant to end the short-term scramble for bus pots by giving councils multi-year certainty. It also stresses that LABG is additional to, not a replacement for, what councils already spend on buses from their own budgets. 

Councils are told they can use the money flexibly – lowering fares, adding routes, investing in zero-emission buses, or improving stops and stations – but there is one explicit condition: they must help fund participation in Transport Focus’s “Your Bus Journey” passenger survey so performance can be tracked consistently. 

So far, so reasonable. But once Kent starts to pass that money on to its main operators, the story becomes less local – and more offshore.

How Kent can use the LABG money — and where it goes in practice

Before it reaches passengers: the Department for Transport pays LABG directly to Kent County Council (as the local transport authority). LABG is a single consolidated grant combining what used to come through separate pots (including BSIP and, from 2026–27, what was previously LA BSOG outside London).

What Kent is allowed to spend it on:

• Revenue (day-to-day running money): supporting services, boosting frequencies, keeping routes going, fare initiatives, and other operational improvements.

• Capital (long-term investment money): physical and technical assets like bus stops/stations upgrades, bus priority measures, real-time info/ticketing systems, depot/charging kit and similar infrastructure.

The strings attached (briefly):

• Revenue is meant to be “additional to baseline” (not a swap-out for Kent’s existing bus budget).

• Kent is expected to fund participation in Transport Focus’s annual “Your Bus Journey” survey.

• Revenue is for all LTAs outside London; capital is for most outside London, with exceptions where other big capital settlements apply (CRSTS/TCR).

Where it goes after County Hall

After Kent receives the grant, it flows out in two main directions:

1. To bus operators (e.g., Stagecoach, Arriva and others) via supported service contracts, service enhancement agreements and related payments that pay for services on the road (and sometimes targeted fare support).

2. To suppliers and contractors via procurement and project delivery for capital schemes (stops, priority works, technology, depot/charging upgrades), plus a small portion toward the passenger survey requirement.

Luxembourg and Delaware: not just dots on a map

To understand why it matters that Stagecoach’s ultimate fund vehicle is in Luxembourg and Arriva’s new owner is anchored in Delaware and Luxembourg, you have to step back from buses for a moment.

The Tax Justice Network’s work on Luxembourg describes a country that has repeatedly courted multinational tax planning through bespoke tax rulings and opaque structures. In a 2021 briefing on the “LuxLetters” scandal – informal tax rulings revealed after the original LuxLeaks affair – the network bluntly called Luxembourg “without a doubt one of Europe’s most antisocial corporate tax havens”. 

In its Financial Secrecy Index 2025, Tax Justice Network notes that Luxembourg sits among the world’s top secrecy jurisdictions. It highlights that many multinationals deliberately headquarter in high-ranking places like Luxembourg to shift profits and underpay tax in the countries where they actually do business.

The European Commission has already found that Luxembourg granted Amazon roughly €250 million in illegal tax benefits through a selective tax ruling – a decision summarised both in Commission documents and Tax Justice Network’s own reaction.

Delaware, meanwhile, is not a palm-fringed island but a small US state wedged between New Jersey and Maryland. Yet, as the International Consortium of Investigative Journalists (ICIJ) puts it, “one of the world’s biggest tax havens actually sits within the bounds of mainland USA: the tiny, tax-free state of Delaware.” 

ICIJ’s Q&A with author Hal Weitzman explains how Delaware’s lax rules have allowed more than a million companies to register there, exploiting what is known as the “Delaware loophole” to avoid state corporate income taxes and benefiting from a “don’t ask, don’t tell” approach to who really owns the companies. 

None of this is exotic theory. These are the exact jurisdictions sitting above two of Kent’s biggest bus operators.

Stagecoach: Kent buses anchored in a Luxembourg fund

Stagecoach, one of the largest bus operators in Kent, is now controlled via a private infrastructure fund structure.

The 2022 recommended cash offer for Stagecoach Group was made by Inframobility UK Bidco Limited, described in regulatory announcements and law-firm briefings as a company “indirectly wholly owned by Pan-European Infrastructure III, SCSp”, an infrastructure fund managed and advised by DWS Infrastructure. 

That fund – Pan-European Infrastructure III, SCSp – is a Luxembourg limited partnership vehicle. SCSp structures are a standard tool of the cross-border funds industry, but they also plug directly into the tax and secrecy landscape described by the Tax Justice Network: Luxembourg as a global magnet for multinationals seeking generous tax rulings, low effective rates and flexible corporate law.

Stagecoach itself is now a private group. Public filings and investor updates show that, after the takeover, the company became a wholly-owned subsidiary of Inframobility UK Bidco, and its shares were delisted from the London Stock Exchange. Even from the limited material that is still public, you can see the outline of internal financial plumbing:

• Stagecoach’s 2023 interim results disclose that the group made a £50m loan to its immediate parent, Inframobility UK Bidco, at an interest rate of 7.4%, repayable in May 2024. 

That is just one example, but it illustrates the point: cash generated by UK passengers and UK subsidies can be lent up the chain to the holding company, which then pays significant interest back down to the operating group or on to lenders and investors.

Layered on top of that are the usual features of a modern infrastructure buy-out: intercompany management fees, advisory fees and further financing at the fund level. Those details sit behind private fund documents, not public council papers. But the broad direction of travel is clear: Stagecoach is now part of a Luxembourg-anchored investment structure designed to generate returns for international investors, not just run buses in Kent.

Arriva: Kent routes under a Delaware–Luxembourg fund umbrella

Arriva, which also runs significant services in Kent, has undergone an equally important change of control.

Until recently, Arriva sat within the German state-owned rail group Deutsche Bahn. That changed when infrastructure investor I Squared Capital agreed to buy Arriva, a deal completed in May 2024. 

The Arriva UK Bus Investments Limited annual report – in a note most passengers will never see – spells out what that means. From 31 May 2024, it says, the ultimate parent is ISQ Global Fund III GP, LLC (“Fund III GP”), which serves as the main general partner of ISQ Global Infrastructure Fund III (“Fund III”), the private equity fund that is the ultimate economic owner of the company. 

Fund III GP, the report continues, is a limited liability company incorporated and registered with the Delaware Secretary of State, with a Wilmington address. Alongside it sits ISQ Global Fund III Lux GP S.à r.l., a Luxembourg company that acts as managing general partner for the fund’s Luxembourg limited partnerships.

In other words: Kent’s Arriva buses are now ultimately controlled via a Delaware LLC and a Luxembourg general partner.

The same Arriva report describes how the UK bus arm has been moved out of the old Deutsche Bahn cash-pool and into a group cash-pool run by Arriva Treasury Company Limited, backed by a letter of support from Arriva International Group Limited. The company acknowledges it expects to remain in a negative pooled cash position and is dependent on that intra-group funding to meet its obligations. 

That is exactly how a private equity-owned transport group usually looks: centralised treasury, internal lending, and profits and losses shaped as much by financial engineering as by how many people are on the 10.15 to Dartford.

Why this matters for Kent’s £78.2m

The DfT’s LABG guidance talks about the money being used to reduce fares, add services, buy zero-emission buses and improve stops and stations. But the financial structures sitting above Kent’s main bus operators are designed to do something else as well: make returns for global investors who have chosen to route their ownership through jurisdictions like Luxembourg and Delaware, precisely because those systems are friendly to complex, tax-efficient corporate planning. 

This does not mean every pound of public bus funding is being siphoned into a tax haven. It does mean:

• significant parts of the profit and cash generated by Kent’s bus network can move around the group via interest payments, intra-group loans and management fees before anyone talks about dividends;

• the ultimate owners are based in jurisdictions identified by tax-justice researchers as major enablers of corporate tax avoidance and financial secrecy; and

• the public has only a partial view, because the most important documents – fund prospectuses, partnership agreements, internal pricing policies – are private.

When KCC celebrates its £78.2m bus funding, it is therefore reasonable for residents to ask three straightforward questions.

First, what concrete outcomes does the council expect to buy with this money – in terms of routes restored, frequencies increased, reliability improved and emissions reduced?

Second, what safeguards are in place in contracts with Stagecoach, Arriva and others to ensure that improved public funding is not quietly offset by higher fees, internal recharges or altered risk-sharing, leaving passengers no better off?

Third, what transparency will be provided about the profits, interest flows and management charges inside the companies delivery is being outsourced to – especially when those companies are ultimately controlled from places the Tax Justice Network and the ICIJ recognise as key parts of the global tax-haven infrastructure? 

Until those questions are answered plainly, “£78.2m for Kent’s buses” remains only half the story. The other half is written not in council minutes, but in the fine print of Luxembourg partnerships and Delaware LLCs – far from the bus stops where Kent’s passengers are still waiting.

There are legitimate uses for offshore companies and trusts. The inclusion of an entity in this blogpost is not intended to suggest or imply that they have engaged in illegal or improper conduct. 

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