One in 10 buses could be taken off the road and 10 per cent fare rises imposed in the West Midlands if a £25 million grant is axed, it was feared today.

The chief executive of National Express, which runs eight out of 10 services in the Black Country and Birmingham, said its entire profit margin would be wiped out if the coalition government scraps the bus services operator grant.

It would mean about 160 services going. Dean Finch admitted they had to cut services as the firm was near going out of business last year.

He told the region’s transport authority Centro that the firm’s six per cent profit margin would be lost “overnight” if the £467m a year grant to bus operators in England and Wales is removed next month as the government tries to tackle Britain’s deficit.

Mr Finch, who joined the Birmingham-based bus and coach operator in February, said: “The grant is the equivalent to the profits of the bus industry nationally and locally.

“If the grant is removed the impact will be severe and the Passenger Transport Executive Group has forecast that it could lead to a 10 per cent reduction in services and a 10 per cent rise in fares outside London.”

He said he was unable to predict job losses among drivers and other staff.

Centro chief executive Geoff Inskip said that the loss of the grant posed a “big risk” to the organisation’s hope of getting more people on buses.

National Express employs 5,000 people in the West Midlands. Bus drivers at the firm have already been asked to take pay cuts of up to 11 per cent.

The company operates more than 1,600 buses on 450 routes and employs 5,800 people in the West Midlands and Dundee, where services are controlled by the head office in Birmingham.

In June adult regional daysaver tickets went up from £3.30 to £3.50, while evening saver tickets will now cost passengers £3, rather than £2.20.

By Daniel Wainwright