England Bus Fare Cap to Revert to £2 in January Under PM Burnham

The bus fare cap in England will revert to £2 from January, new prime minister Andy Burnham has announced.

The government says the policy, which is expected to cost more than £500m, will "help with the cost of living and give people the breathing space they need".

In January 2025, the England-wide bus fare cap rose to £3 under Sir Keir Starmer's Labour government, although Liverpool and Manchester are examples of city regions where fares have been held at £2.

Burnham said affordable transport links were an essential, adding: "Lower fares will help people get to where they need to."

Transport secretary Heidi Alexander told the BBC's Today programme the measure gives people "a little bit of hope" in a time when many are grappling with higher living costs - especially after fuel costs spiked as a result of the US-Iran war.

However, she admitted the measure was "not the whole solution".

The new cap will take effect from 1 January 2027 for fares on participating buses outside of London.

The Burnham government said going back to a £2 cap should particularly help passengers in rural and coastal areas, where single fares can be higher.

The previous Conservative government capped single bus fares in England at £2 in January 2023. The scheme was initially only due to last three months but was extended.

As mayor of Greater Manchester, Burnham brought in a £2 cap in September 2022, at that point funded by money from central government.

The original fare subsidy applied in England, outside of London, with bus operators taking part on a voluntary basis. The £2 cap was initially meant both as a cost of living measure and to encourage people back on buses in the wake of the pandemic.

The Office for National Statistics said it played a role in reducing inflation in 2023, and it appeared popular.

An evaluation of the first ten months - not published until 2025 - found that the scheme did contribute 5% of the 13% rise in bus usage during that period. Lower-income passengers felt the most financial benefit.

However it did not score highly when it comes to value for money. How much money people saved varied depending how much fares in their local area cost before the cap.

In those first ten months, £210m was spent on the scheme, less than the £245m budget.

Even if fare-capping measures had increased demand for bus travel, numbers are still recovering from the huge drop in usage during Covid.

By March 2025, 1.9 billion journeys were made on local buses in England outside of London - around 93% of pre-pandemic levels.

Shadow Chancellor Mel Stride said the government has not actually specified where the money will come from to fund the bus fare cap extension.

"That is a worrying sign, we need to have a government which is on top of the public finances, not one that is making lots of spending commitments without explaining where the money is going to come from," Stride told BBC Breakfast.

In its announcement, the government said £454 million will be reallocated from the Department for Energy Security and Net Zero (DESN).

DESN says this will be used in addition to funds already earmarked by the Department for Transport for buses.

Alexander told the BBC it was money that had been allocated in DESN's budget to spend on international climate projects.

"And so instead of putting that money out as grants we are going to be issuing loans and so that money comes back in," she said.

It is the second day in a row that the new prime minister has announced cost saving measures, following Tuesday's VAT cut on household electricity bills later this year.

But his plan to pay for the policy by scrapping Sir Keir's digital ID scheme led to an early row over whether the plan was properly funded.

In his first cabinet meeting on Tuesday, Burnham promised to lead a "cost of living government", telling ministers that he wanted to give people a "sense that help is coming" on costs.