Local government leaders are planning to launch an inquiry into school transport following an alarming rise in costs, especially in rural areas.

It is believed that a commission, chaired by former Conservative transport minister Stephen Norris, will begin work this summer, although the Local Government Association has not yet formally approved the plans.

Graham Lane, chair of the LGA’s education executive, claims that central government has for years “run away” from the issue of home-to-school transport costs. “School transport is an enormous cost to rural areas and that’s not reflected in the grant to local government,” he said, adding that a new system is needed to determine who has the right to free travel.

At present, local authorities have a statutory duty to provide free transport for children up to the age of eight who live more than two miles away from their nearest school and for eight to 16-year-olds living more than three miles away.

One proposal the LGA’s education executive would like the commission to consider is a system where everybody pays for the first three miles of a journey to school or college, but beyond that, all travel is free. “That would release huge amounts of money and make the system fairer,” said Mr Lane.

According to the County Council Network, a group within the LGA, home-to-school transport costs in the English counties have increased by 53 per cent over the past four financial years. During the same period, the basic education budget of shire county councils has risen by just 17.6 per cent.

“This means that home-to-school transport costs have grown from 2.9 per cent to 3.7 per cent of counties’ education funding. When the Government is seeking 87 per cent delegation (of the education budget to schools) this is a major constraint for counties,” said a spokesman for the network.

Peter Chalke, deputy leader of the Conservative group in the LGA, and leader of Wiltshire County Council, said: “It’s the rural counties, which are poorly funded anyway, that are most disadvantaged. In London or some of the metropolitan areas, everything is so easily reached, whereas in Wiltshire you are talking about vast distances between homes and schools.”

In authorities other than county councils, home-school transport costs make up only 1.9 per cent of the education budget. But urban authorities have still seen costs rise.

Local authorities blame the increases on factors including new safety regulations, a shortage of drivers, which has pushed wages up, and reduced capacity as fewer double-deckers become available.

Keith Howcroft, of the Greater Manchester Passenger Transport Authority, also highlights the problem of anti-social behaviour on some school buses, which has led to higher insurance costs. “It’s also led to some operators not wanting to run school services. That’s resulted in reduced competition in some areas, so we end up having to pay higher tender prices,” he said.

Open enrolment has had an indirect effect on costs. Although local authorities do not have to subsidise the travel of children whose parents choose to send them to schools a long way from home, they do have to provide transport for those who cannot get into local schools.

This is increasingly common. In Norfolk, for example, the number of children needing free travel because schools near their homes are full has risen from around 200 to 700 in the past couple of years.

Norfolk transports around 25,000 pupils a day - and expects to spend more than pound;15 million on this service this financial year. But the council has contained costs by running its own small fleet of American-style yellow school buses in competition with private operators.

Other authorities are using yellow buses to cut the number of cars on the road and improve road safety around schools. Surrey Council plans to offer 4,000 primary children travel to school in specially-built, high-tech buses with satellite-tracking systems. The scheme will be funded by the Government’s private finance initiative and the council, but will not hit Surrey’s education budget.

On a slightly less ambitious level, Calderdale recently began piloting a scheme that aims to encourage parents in Hebden Bridge Valley to send younger children to school by bus. Two yellow buses are provided by private operator First, paid for by the council, the Countryside Agency and Metro, the West Yorkshire Passenger Transport Executive.

Children not entitled to free transport pay some 30p a day for the service. The council’s contribution of pound;10,000 for the pilot’s first year comes out of its road safety, rather than education, budget.

“This has increased transportation costs for the local authority, but if there are fewer cars on the road that potentially saves a lot of money,” said school road safety officer Mary Farrar.