Most bus fares in England to be capped at £2 from January

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".

At the start of last year, the England-wide bus fare cap rose to £3 under Sir Keir Starmer's Labour government, although in Liverpool and Manchester fares were held at £2.

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

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, transport secretary Heidi Alexander told the BBC's Today programme.

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

The new cap will take effect from January next year for fares on participating buses outside of London. The cost of a non-discounted single bus journey in London is £1.75.

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 Campaign for Better Transport said rural areas were still suffering from fewer bus routes and services, adding that such areas had been more affected by council cut backs in the last decade than urban zones.

Services in those areas - as measured by vehicle miles - decreased by 18% between 2019 and 2024, according to the County Councils Network, which represents 39 unitary and county councils across England.

"What we need to see is the replacing of those lost services which have particularly affected those in rural areas," Campaign for Better Transport's Michael Solomon Williams said.

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 £454m 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.

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.