~Ken Livingstone~'s pro-bus strategy may be costly, but the capital’s bus contracts – the envy of met councils – are effective and delivering value-for-money, according to an independent investigation. ~Transport for London~'s annual subsidy to bus operators has gone from zero in 1998 to more than £500M last year, as the total cost of bus contracts rose to £1.4bn. After a fare freeze, the mayor increased prices in the last two years and the growth in demand seemed to be slowing, according to the assembly’s transport committee. But it acknowledged TfL’s achievements in improving reliability, overhauling the fleet, increasing the network by one-quarter, and adding half-a-billion extra passenger trips a year compared with 2001. A stern critic of some aspects of mayoral policy, the committee has endorsed TfL’s quality incentive contracts as a model for other world cities. They ‘represent the most innovative and efficient way of ensuring delivery of the ambitious and, some might argue, extravagant, targets the mayor set himself for the bus network,’ it concluded. The five-year contracts provide for bonuses of up to 15%, and penalties of up to 10%, depending on reliability. Two-year extensions are granted subject to performance and ‘mystery traveller’ surveys. The investigation found that operator profits were lower – 8% against 12.3% in metropolitan areas – and costs had been flat at £4.20-4.30 per kilometre over the last four years, as gross cost contracts were replaced. The committee wants the incentive payments extended. TfL is considering introducing an incentive linked to performance league tables for graffiti and driving standards.