The scheme will support voluntary organisations as they provide vital services for people in rural communities with limited transport choices.
The new fund means that organisations who already provide a service to the local community can bid for a minibus. Smaller operators and those who help out in rural areas will be favoured in the scheme.
Announcing the scheme Patrick McLoughlin said: ‘As a rural MP I know how important community bus providers are and how much they matter. These groups help keep rural communities alive and independent.
We want to do all we can to support local voluntary operators who help out in these areas. This large amount of money is to help those who already do so much to support their community.’
Bill Freeman, chief executive of the Community Transport Association, added: ‘This is good news for community transport. Our own research shows that many organisations, particularly smaller ones serving their immediate neighbourhoods, struggle to put aside money to replace vehicles.
This will come as welcome news to them, and will enable them to continue to improve the lives of many vulnerable and isolated people by offering them accessible and affordable transport.’
The fund is focused on existing voluntary and third sector organisations that already have a permit to run not-for-profit services of benefit to the local community.
Each bidder can apply for one vehicle and will need to undertake that the vehicle will be used only for voluntary services and will not be used to compete for bus service contracts.