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The cap on bus fares in most of England will rise by 50 per cent to £3 in the Budget on Wednesday, Sir Keir Starmer has said.
The UK prime minister on Monday said the current, nationally subsidised £2 cap, would end this year because the previous Conservative government had “only funded that until the end of 2024”.
Ministers will fund the new £3 cap until the end of 2025.
Starmer’s announcement in a speech in Birmingham came after regional mayors, industry and passenger groups had voiced concerns that the popular cap would be scrapped by the government on Wednesday.
But Starmer said his Labour administration had decided to continue some state funding for capping bus fares below market value because it understood “how much this matters in rural communities”.
The existing fare cap dates back to late 2022, when the last Tory government replicated a policy already introduced by mayors in Greater Manchester and West Yorkshire in a bid to ease cost of living pressures.
Those city regions had already chosen to fund their caps from separate locally held funding pots. London also has its own locally funded cap.
People familiar with the matter said Treasury threats to scrap the wider government subsidy, which had funded the £2 cap across the rest of England, had been met with concerted lobbying by transport secretary Louise Haigh.
Ultimately, the Treasury agreed to retain a limit on fares but to raise it by £1, the people said.
The Urban Transport Group, which represents city region transport authorities across England, had warned that bus fares could rise by as much as 40 per cent if the cap was axed altogether.
UTG director Jason Prince said that while the group would have preferred to see Starmer retain the £2 cap, “the decision to keep a national fare cap . . . signals a commitment to the role of the bus in our local communities”.
The Confederation of Public Transport welcomed the decision not to create a “cliff edge” by axing the cap at the end of this year. But the industry lobby group said the rise would “still present challenges for many passengers, particularly those who rely on buses as their primary means of affordable travel”.
It is unclear what savings the rise in the cap will deliver.
Local leaders remain unsure about the future of wider bus subsidy packages in Wednesday’s Budget, with the Department for Transport asked to make considerable savings in the fiscal event.
One policy being watched closely is the Bus Service Improvement Programme, which the UTG has called on ministers to extend beyond March 2026.
Launched in 2021 by then prime minister Boris Johnson, the funding stream is used by local areas to support networks that have been steadily shrinking since services outside London were deregulated in 1986.
“The continuation of BSIP funding is crucial to safeguard bus networks, and without it, potential reductions in bus service mileage could be in excess of 24 per cent in some areas,” the UTG said.