England's new government will cap most bus fares at £2 from January 1, 2027. This policy, announced by Prime Minister Andy Burnham, aims to provide financial relief to citizens facing high living costs. The measure is expected to cost more than £500 million.
The fare cap reverses a previous increase that saw the England-wide bus fare cap rise to £3 in January 2025 under the Labour government. While some cities like Liverpool and Manchester maintained a £2 cap, the new nationwide policy extends this benefit more broadly. Transport Secretary Heidi Alexander stated the measure offers "a little bit of hope" amid rising expenses, particularly after fuel costs spiked due to the US-Iran war.
This initiative fits into a broader effort by the new administration to address the cost of living crisis. It follows Tuesday's announcement of a VAT cut on household electricity bills. The government aims to demonstrate its commitment to easing financial burdens for households across England, particularly in rural and coastal areas where single fares can be higher.
Shadow Chancellor Mel Stride expressed concerns about the funding for this policy. He questioned the government's ability to manage public finances while making significant spending commitments. Stride told BBC Breakfast that the government needs to specify the source of funding for such initiatives.
The government has clarified that £454 million will be reallocated from the Department for Energy Security and Net Zero (DESN). This sum will supplement existing funds from the Department for Transport for bus services. Heidi Alexander explained that this money, originally for international climate projects, will now be issued as loans, ensuring its return.
The previous Conservative government first capped single bus fares at £2 in January 2023. This scheme was initially temporary but saw extensions. An evaluation of its first ten months, published in 2025, found it contributed 5% to a 13% rise in bus usage. Lower-income passengers experienced the most significant financial benefits.
Despite the positive impact on ridership, bus usage is still recovering from the pandemic's effects. By March 2025, local bus journeys in England outside London reached 1.9 billion, about 93% of pre-pandemic levels. The Campaign for Better Transport welcomed the lower cap but highlighted ongoing issues with bus route availability in rural areas.
Michael Solomon Williams from the Campaign for Better Transport noted that rural areas have suffered more from council cutbacks over the last decade than urban zones. Bus services in county areas, measured by vehicle miles, decreased by 18% between 2019 and 2024. This represents the biggest decline in England, according to the County Councils Network.
Williams emphasized the need to restore lost services, especially in rural and coastal areas like Kent, Blackpool, and Northumberland. These regions, often deprived, require better transport to improve access to employment and health services. The new fare cap is a step towards making public transport more accessible and affordable for many.