(10 Sep 2016, 2:10 pm)G-CPTN wrote By 'provide supported services' do you mean that services such as those provided by Spirit Buses should be run by the local authority?

To me, these services should be 'encouraged' - with interacting services by operators such as Arriva being scheduled to correspond to the Spirit  Buses services to allow Spirit Buses to operate profitably within their sphere.
This is presents difficulties, of course, with Arriva (and others) being competitors (and Spirit having limited ability to alter their timings to follow whatever 'Arriva' decide to provide - with Arriva choosing to operate commercially).

And if Spirit succeeded in establishing a profitable operation, wouldn't the bigger operators muscle-in and take over the routes?

The extension of the suggestion would be prohibitively expensive with many buses operating way below capacity.

In some areas, there have been moves to provide dial-a-ride, but I don't know of any such services that are successful.

Of course, if services were cheap enough, then demand would increase - though in sparsely-populated areas this is an impossibility.

I have seen figures for rural services that were previously subsidised by local authority that showed that the cost per ride was way excessive (by anyone's reasoning).

I can remember when several small operators ran rural services (in the 1950s) with many passengers travelling into town on market day.
Today, many of those passengers have cars and choose to travel at their own convenience rather than be restricted to infrequent buses - which deteriorates the bus service until it collapses economically.