The Scottish Government's Transport Bill was today amended to allow local authorities to run bus services directly or through an arms-length company.
Currently the only municipal bus company in Scotland is Lothian Buses in Edinburgh, whose establishment pre-dates 1980s de-regulation and is owned by Edinburgh City Council, Midlothian Council, East Lothian Council and West Lothian Council.
Holyrood's rural economy and connectivity backed the amendment lodged by Scottish Labour's transport spokesperson Colin Smyth by six votes to five, with only SNP MSPs voting against.
Mr Smyth's amendment would allow councils to run bus services directly, as well as set up arms-length companies to do so. The Scottish Government has only supported the latter approach.
However the Bill will return to the Scottish Parliament at Stage 3, and the amendment could yet be overturned at that point.
Colin Smyth said: “Under the SNP government, Scotland’s bus network is being dismantled route by route, fares are rising and passenger numbers are plummeting. Scottish Labour wants to change this, and our amendments to the Transport Bill will allow communities to wrestle control of their bus network away from big business."
Mr Smyth said the change was "historic" and added: “These changes will allow councils to run services directly or through an arms-length company to the benefit of the communities which they serve."
Scottish Greens transport spokesperson John Finnie also hailed the move to "transform public transport provision" across Scotland.
He said: “I’m delighted we’ve finally ditched Thatcher’s ridiculous bus laws. Empowering councils to run their own services is a significant step which I believe will lead to better services for bus users across the country.
“Three quarters of public transport journeys are made by bus, yet the number of journeys has been falling year on year as services were reduced and routes slashed. Bus users across the country who are crying out for cleaner, affordable and more reliable services. Today I believe we’ve taken a step toward delivering that.”
A Scottish Government spokesperson said: “The Scottish Government’s amendment will allow local transport authorities to set up a companies which would operate in a similar manner to Lothian buses, providing local services within a commercial market.
“Transparency will be key with local transport authority companies operating in the same way as any other commercial bus operators and subject to all the usual registration and licensing requirements.”