Single bus fares across England will be capped at £2 from January 2027, Prime Minister Andy Burnham announced, as part of a broader effort to alleviate the cost of living pressures on households. The fare cap is set to last for 12 months and aims to reduce prices by up to a third for millions of passengers outside London, where fares are already capped at £1.75.

Burnham emphasized that affordable public transport is essential for social inclusion, stating that no one should be priced out of access to vital connections and opportunities. He framed the policy as part of his administration’s commitment to building more connected communities and easing financial burdens on families.

The funding for the new bus fare cap, estimated to be over £500 million, has sparked some debate regarding its source. Approximately £400 million will be redirected from the Department for Energy Security and Net Zero’s budget by converting grants for international climate finance projects into loans. The remainder will come from savings within existing transport budgets dedicated to bus services, as well as funds to support devolved governments in implementing similar measures.

This policy follows a previous £2 cap that was introduced by the Conservative government from January 2023 to December 2024. The Labour government, however, had ultimately viewed maintaining the cap beyond that period as financially unsustainable. Burnham, during his previous role as Mayor of Greater Manchester, had sustained a £2 cap in that region despite broader government policy changes.

Chancellor John Healey supported the initiative, stating that millions will benefit from lower fares and affirmed that the scheme’s costs could be met within the current budget framework. The fare cap does not apply in London, where single bus tickets are already capped at £1.75.

The announcement follows other recent government measures aimed at easing cost-of-living challenges, including a plan to reduce VAT on household energy bills, though the distribution of funding has raised concerns over trade-offs within government departments.

The fare cap is seen as a significant step to make local transport more affordable, with the government hoping it will provide households with some financial breathing room over the coming year.