Ministers must set out a national strategy for buses and extend franchising powers to all local authorities to halt an alarming decline in usage, MPs have said.

A lack of clear policy and a funding squeeze have contributed to the loss of thousands of local buses, worsening congestion, air quality and access to jobs, according to the transport select committee.

The committee has called on the government to draw up a long-term plan by the end of 2020 to support a sector that provides the majority of public transport. It said it should set out clear funding commitments and targets for a “modal shift” to bring car drivers and passengers back on to buses.

Public subsidy accounts for more than 40% of income for buses. Despite the scale of investment, the committee said a “fairer deal for the bus user” was needed that would demonstrate value for money for taxpayers and farepayers and reflect passengers’ needs.

More than 3,000 bus routes in England have been axed or reduced since 2010, according to the Campaign for Better Transport, while Department for Transport figures have shown a recent decline in passenger numbers after years of growth.

The committee chair, Lilian Greenwood, said the decline in services had “direct consequences”, affecting journeys to work, education and social events. “It narrows our transport options and pushes us towards less environmentally friendly choices. And yet our inquiry found no real evidence that the government was determined to take action to stop this.”

Passengers’ groups told the committee that simple, accurate information on ticketing and fares and service timings would increase take-up. The committee called for more concessionary fares to encourage younger people to use buses.

The report questioned why reforms that opened the way for some cities to control bus services had not been extended universally. London was exempt from deregulation of buses in the 1980s, and now metro mayors have been given powers to re-establish regulation. The report said the government should make all operating models, including franchising and the ability to create new municipal bus companies, available to every local authority.

Campaigners welcomed the report. Pascale Robinson, of Better Buses for Greater Manchester, said: “Everywhere should be able to have a franchised system. One place where the policy is in place to get a London-style bus network is in Greater Manchester, and we’re urging Andy Burnham to take up this opportunity now to get buses that work for our communities, not bus company shareholders.”

The Campaign to Protect Rural England said it strongly supported the committee’s call for a national bus strategy to help reduce carbon emissions and tackle rural isolation.

A DfT spokeswoman said the government recognised “the importance of the bus industry in connecting local communities, reducing congestion and improving air quality”. She said funding for councils had increased by £1bn and passengers would have better access to real-time information on fares, routes and services.

Labour said the Conservatives had neglected buses, damaging communities. The shadow transport secretary, Andy McDonald, said: “Labour would end austerity for bus services, delivering the funding to reverse over 3,000 route cuts and invest in new services … and give all local authorities the power to bring services under public control.”