McGill’s electric bus grant rejection has escalated into a formal legal challenge over the Scottish Government’s £45 million ScotZEB3 funding round. McGill’s Bus Service Limited was unsuccessful in its bid for support to expand its electric fleet and has now asked the Competition Appeal Tribunal to review the Scottish Ministers’ decision.
The dispute does not mean that McGill’s has proved the funding process was unlawful. As of 13 July 2026, the Tribunal has registered the case and published a summary of the operator’s appeal, but no final judgment has determined whether the Scottish Ministers breached subsidy control law.
Key highlights:
| Key point | Current position |
| McGill’s funding request | About £4.3 million |
| Proposed fleet investment | 33 battery-electric buses and 13 chargers |
| ScotZEB3 funding pot | £45 million |
| Successful applicants | Five |
| Vehicles supported | 334 zero-emission vehicles |
| Legal status | Appeal registered |
| Final Tribunal ruling | None as of 13 July 2026 |
The central issue is therefore no longer simply why McGill’s missed out on funding. It is whether the legal structure and treatment of ScotZEB3 complied with the UK subsidy control regime.
What Happened in McGill’s Electric Bus Grant Rejection?
McGill’s applied to the third and final phase of the Scottish Zero Emission Bus Challenge Fund, known as ScotZEB3. The operator wanted public support for further investment in zero-emission vehicles but was not among the five applicants selected when the £45 million funding awards were announced on 25 March 2026.
McGill’s subsequently moved from publicly questioning the decision to filing a formal appeal. The Competition Appeal Tribunal received the case on 10 June 2026 and published its summary on 9 July 2026. The appeal challenges the Scottish Ministers’ decision to make the ScotZEB3 funding scheme and sets out several alleged errors of fact and law.
This distinction is important: McGill’s rejection is a confirmed event, while its claims about the legality of the scheme remain allegations for the Tribunal to consider.
How Much Funding Did McGill’s Seek and What Was the Wider Proposal Worth?
McGill’s publicly described its unsuccessful funding request as approximately £4.3 million. Specialist industry reporting later put the figure at £4.36 million towards 33 Alexander Dennis battery-electric buses and 13 chargers.
The grant amount should not be confused with the wider commercial value of the proposed investment. McGill’s said its bid would have been worth around £16 million to Alexander Dennis, the Scottish bus manufacturer linked to the proposed vehicle order.
That figure represented the broader value associated with the procurement, not £16 million of government funding.
This difference matters for accurate reporting. The approximately £4.3 million figure refers to the public support sought, while the larger figure relates to the value McGill’s associated with the proposed vehicle investment.
Why Was McGill’s Application Unsuccessful in the ScotZEB3 Funding Round?
The public record confirms that McGill’s bid was unsuccessful, but it does not provide a simple, definitive public explanation showing precisely why its individual application failed to score highly enough for an award.
What Is Known About the ScotZEB3 Assessment Process?
The official ScotZEB3 scheme details state that applications closed on 26 February 2026 and that scoring was completed by an independent assessment panel before ministers approved the funding awards. The scheme was designed to support zero-emission vehicles, charging infrastructure and wider public transport objectives.
That establishes the published process, but it does not by itself resolve McGill’s concerns about how the scheme was legally constituted or how its bid was treated.
McGill’s Concerns About the Funding Decision
Issues raised by the operator
- McGill’s disputes the legal treatment of ScotZEB3 as a modification of an earlier subsidy scheme.
- It argues that ScotZEB3 should instead have been treated as a new subsidy scheme.
- It raises questions about subsidy control assessments and transparency requirements.
- It also challenges aspects of how zero-emission funding was allocated.
These are positions advanced by McGill’s, not findings that the assessment panel or Scottish Ministers acted unlawfully.
The precise reason for McGill’s unsuccessful score should therefore not be invented or reduced to a single claim unless further official scoring records establish it.
Who Received the £45 Million ScotZEB3 Funding Instead?
Five applicants were announced as successful under ScotZEB3: Ember, Rock Road, Lothian, First Bus and Stagecoach. The awards were intended to support 334 zero-emission vehicles, comprising 227 buses and 107 coaches, together with associated charging infrastructure.
ScotZEB3 awards at a glance
| Applicant | Public funding announced | Vehicles |
| Ember | £13,174,147 | 100 |
| Rock Road | £11,500,317.08 | 93 |
| Lothian | £9,567,260 | 60 |
| First Bus | £5,989,966 | 37 |
| Stagecoach | £4,568,280.40 | 44 |
The awards covered a mixture of new buses, coaches and repowered vehicles. McGill’s has criticised aspects of that allocation, particularly where funding supports new electric coach capacity rather than directly replacing diesel buses in its own proposed fleet plan.
That criticism is part of the wider dispute and should be attributed to the operator rather than treated as an official finding.
The funding decision therefore involved competing policy objectives, vehicle types and applications rather than a direct transfer of McGill’s requested grant to one rival operator.
Why Has McGill’s Taken the Scottish Ministers to the Competition Appeal Tribunal?
McGill’s says the dispute goes beyond the scoring of one unsuccessful application. Its formal appeal challenges how ScotZEB3 was treated under the Subsidy Control Act 2022.
The case was brought under section 70 of the Act, which provides a route for an interested party aggrieved by a subsidy decision to seek Tribunal review. McGill’s alleges that the Scottish Ministers made errors of fact and/or law when establishing and operating ScotZEB3.
Bringing an appeal does not mean the allegations have been proved. The Tribunal must consider the arguments, the Scottish Ministers’ response and the applicable law before making any judgment or order.
What Are McGill’s Main Legal Arguments Over the ScotZEB3 Decision?
The case centres on the legal status of ScotZEB3. The published summary of appeal records McGill’s allegations and the remedies it is seeking. It is a summary of the appellant’s case, not a Tribunal judgment accepting those claims.
The Dispute Over ScotZEB3 as a “Permitted Modification”
The Scottish Ministers’ position, as described in the appeal summary, was that no separate or additional subsidy control assessment was required for later phases because ScotZEB3 operated within the scope of the overarching ScotZEB assessment. They also described ScotZEB3 as a permitted modification of a legacy scheme.
McGill’s disputes that interpretation.
Did ScotZEB3 Need to Be Treated as a New Subsidy Scheme?
McGill’s argues that ScotZEB3 should have been treated as a new subsidy scheme subject to the requirements of the UK subsidy control legislation.
The principal allegations include
- wrongly treating ScotZEB3 as a permitted modification;
- failing to treat it as a new subsidy scheme;
- failing to consider relevant subsidy control and environmental principles;
- failing to seek Competition and Markets Authority scrutiny that McGill’s says was required;
- failing to make an appropriate entry on the UK Subsidy Database.
These points are allegations advanced by the appellant. The Tribunal has not yet ruled that any of these alleged failures occurred.
CMA Scrutiny and Subsidy Database Concerns
McGill’s also argues that ScotZEB3 should have been treated as a subsidy scheme of particular interest and that a report should have been requested from the Competition and Markets Authority before the scheme was established. It further alleges that the required subsidy database entry was not made.
Whether those duties applied in the way McGill’s argues is one of the legal questions now raised by the proceedings, not a settled fact.
What Is McGill’s Asking the Competition Appeal Tribunal to Do?
McGill’s is seeking a series of declarations about the legal status of ScotZEB3 and the Scottish Ministers’ obligations under subsidy control law. The published appeal summary also lists “reduction of the decision to make ScotZEB3”, any further appropriate order and the appellant’s expenses among the requested remedies.
Some media reporting has said McGill’s is understood to be seeking about £5 million in damages. However, the publicly available Tribunal summary does not list a specific £5 million damages award among the ten forms of relief set out in that document. The official case record and media characterisation should therefore not be treated as identical.
The Tribunal’s eventual powers and any remedy will depend on the legal issues it determines. No outcome should be assumed while the case remains unresolved.
What Has the Scottish Government Said About the ScotZEB3 Funding Programme?
The Scottish Government has presented ScotZEB3 as the final major funding phase supporting large operators in the transition to zero-emission vehicles. It said the £45 million investment would support 334 zero-emission vehicles and leverage substantial private investment alongside public funding.
When the awards were announced, Cabinet Secretary for Transport Fiona Hyslop said:
“This final investment of £45 million from the Scottish Government through ScotZEB3 signals our commitment to a zero emission future for Scotland’s bus sector.”
Following reporting of McGill’s legal action, the transport agency said it was aware of the Tribunal claim and indicated that it would not comment further on ongoing legal proceedings.
That means the policy case for ScotZEB3 is publicly stated, while a detailed substantive response to McGill’s legal grounds may emerge through the Tribunal process.
What Could McGill’s Electric Bus Funding Case Mean for Scotland’s Transport Sector?
The immediate case concerns one operator’s challenge to one funding decision, but its wider significance may lie in how public bodies structure and document future subsidy schemes.
Why the Case Matters Beyond One Bus Operator?
A future judgment could be closely examined by bus operators, manufacturers and public authorities for what it says about subsidy scheme modifications, assessment duties and transparency. That is a potential implication rather than a confirmed outcome.
The case also sits within a wider transition towards zero-emission buses, where operators often combine public support with significant private capital. Any prolonged uncertainty around funding rules could therefore attract attention from businesses planning fleet replacement and infrastructure investment.
What Should Businesses and Passengers Watch Next?
Key developments to monitor:
- any formal response filed by the Scottish Ministers;
- procedural directions from the Tribunal;
- applications by interested parties to intervene;
- any hearing scheduled in the case;
- a final judgment, order or change to the status of the funding decision.
The official appeal notice states that parties with sufficient interest may seek permission to intervene. Until further orders or a judgment are published, the existing legal dispute should be described as ongoing.
For passengers, operators and the wider supply chain, the most important development will be what the Tribunal actually decides rather than predictions about who is likely to win.
Conclusion
McGill’s electric bus grant rejection has developed from an unsuccessful funding application into a significant legal challenge over the structure and treatment of ScotZEB3.
The confirmed facts are that McGill’s did not receive funding, five other applicants were selected for £45 million of awards, and an appeal has been registered with the Competition Appeal Tribunal.
What remains undecided is whether the Scottish Ministers made the legal errors alleged by McGill’s and whether any part of the ScotZEB3 decision should be reduced or otherwise affected.
Until the Tribunal rules, the most accurate position is that McGill’s has raised substantial legal arguments, but those arguments remain unproven.
Frequently Asked Questions
How many buses and chargers were included in McGill’s proposal?
Industry reporting described the bid as seeking £4.36 million towards 33 Alexander Dennis battery-electric buses and 13 chargers. McGill’s itself publicly described the grant request as approximately £4.3 million.
Was McGill’s successful in earlier ScotZEB funding rounds?
Yes. Official scheme information records a first-phase award of about £9.09 million for 41 buses, with approximately £8.66 million ultimately claimed. The Tribunal appeal summary also records McGill’s involvement in a successful ScotZEB2 consortium.
What is the Scottish Zero Emission Bus Challenge Fund?
ScotZEB is a public funding programme designed to support zero-emission buses and related charging or refuelling infrastructure while encouraging private investment in cleaner transport.
Has McGill’s already won the legal case?
No. The case has been registered and a summary of the appeal published, but there is no final Tribunal judgment as of 13 July 2026.
Does filing the appeal automatically suspend the ScotZEB3 awards?
The published appeal summary does not state that merely filing the case automatically cancels or suspends all awards. Any change to the funding decision would depend on legal developments and orders made in the proceedings.
Can other parties become involved in the Tribunal case?
Potentially. The published notice says a person with sufficient interest in the outcome may request permission to intervene under the Tribunal’s rules.
Where can readers check for the next official case update?
The safest approach is to monitor the official case record for new orders, procedural directions, hearing information or a judgment and to compare any media reports with the underlying published documents.
Editorial Note
This article separates confirmed facts from allegations, opinions and unresolved legal issues. McGill’s claims about the legality, fairness and transparency of ScotZEB3 are presented as arguments unless confirmed by an official judgment.
How We Checked?
The article was prepared using official ScotZEB3 funding information and the published Tribunal record. Funding figures, vehicle numbers, legal grounds and requested remedies were reviewed against the available public documents. Different financial figures and legal allegations were kept in context and were not presented as established findings.