Bus fares will be capped at £2 across England from start of next year, Andy Burnham announces

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Andy Burnham has announced a new £2 cap on bus fares as part of a range of measures to tackle the cost of living.

Most single bus fares will be capped from January next year, the new PM said, resurrecting an old popular policy from his tenure as Manchester Mayor.

It comes as Mr Burnham stepped back from the idea that he would unfreeze the income tax-free allowance - stuck at £12,570 for the last five years - despite his apparent drive to tackle the cost of living.

The scheme is set to cost more than £500million, but while the government has said they have so far allocated £454million through the reallocation of funds, critics have said it was 'worryingly' unclear where the money was going to come from.

Shadow Chancellor of the Exchequer Mel Stride has accused the government of 'not actually specifying where the money is going to come from' for Mr Burnham's fare cap.

He told BBC Breakfast this morning: '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.'

The nationwide cap is currently set at £3 until the end of March 2027 although some areas - including London and Greater Manchester, where Mr Burnham set a £2 limit as mayor - have lower top rates for single tickets.

Mr Burnham's new cap will not apply to bus fares in London, but London Mayor Sadiq Khan is now introducing a 'Weekend Hopper' ticket from Saturday, which means you can travel on as many buses as you want on a weekend day during the summer holidays for an all-day flat rate of £1.75. 

The Office for National Statistics (ONS) revealed that while Mr Burnham's Manchester bus cap did contribute to a rise in bus usage, it did not score highly for value for money as many fares were already below £2 anyway.

Mr Burnham said: 'Good, affordable transport links are an essential. No one should be priced out of those and left behind.

'But for too long people have said that cheaper transport isn't an option. I don't accept that. I've done it before and I will do it again now: a £2 cap on bus fares for millions across the country.

'Lower fares will help people get to where they need to – giving them breathing space to help with the cost of living.'

Mr Burnham has said that his government will make war on the cost of living and yesterday he removed the 5 per cent VAT rate on household electricity bills towards this aim, alongside today's bus fare cap.

But the limits of his generosity here appear to have already been revealed as he has distanced himself from the idea of increasing the income tax free allowance.

The allowance - which is the amount you can earn before paying income tax - has been frozen for the last five years at £12,570.

Mr Burnham himself raised it as a major issue earlier this week, saying it had been mentioned more than anything else by voters in his Makerfield constituency when campaigning for the by-election to oust Keir Starmer.

But now, it is understood those close to the Prime Minister have dissuaded him from the idea, which would cost the exchequer billions of pounds a year. 

Instead, he has opted for the bus fare cap. He claimed £454million of the funding for the over £500million project will be coming from switching investment in international climate finance to loans, with the rest from savings in the Department for Energy Security and Net Zero budget.

The £50million shortfall will be coming from Department for Transport funding already allocated to buses and will include money for devolved governments to implement the cap.

Funding expensive cost of living relief policies has already been a central area of criticism surrounding Mr Burnham, who experienced his first mutiny on day one of his premiership because of it.

Yesterday, Mr Burnham revealed it would cost £850million to pay for the removal of household electricity VAT, which he said would be paid for by scrapping Starmer's flagship £1.8billion digital ID.

But Labour's own Darren Jones took to X to warn the public that no funding had yet been earmarked for that policy, so new Chancellor John Healey would have to find the cash at the Budget, and heap more pressure on public finances.

Mr Jones posted on X yesterday: 'Good news that VAT will be cut on electricity bills. It's a simple way for families to save a few quid, and to mechanically help to keep inflation that little bit lower.

'But the Digital ID program was unfunded. The Government will have to set out how it will pay for its new policies at the Budget.'

Having already vowed to end homelessness in his maiden speech in Downing Street for £340million, Tory leader Kemi Badenoch asked: 'Where's the money coming from?

'I am very concerned the Prime Minister is making a lot of promises without giving the country an explanation about how we can afford them.'

An England-wide bus fare cap was previously set at £2 under the Conservatives to encourage people to use public transport after traveller numbers dropped dramatically during the Covid pandemic.

But Labour increased the cap to £3 from January 2025, in a decision taken at the autumn Budget in 2024.

Some city and regional mayors have powers to keep local bus fares lower than the national cap - which Mr Burnham did in January 2025.

Bus fares were also a feature of his by-election campaign and, in June, he said: 'In an ideal world, I would like to cut the cost of public transport as low as possible.

'I have made it free for 16 to 18-year-olds and recently removed the 9.30am restriction on older and disabled people's bus passes. I will try to keep the £2 capped bus fare for as long as I possibly can.

'Low-cost or free public transport is a brilliant way to get people back to work and connect communities.'

It is understood the cap will be introduced from January next year.

It came after the Prime Minister announced that VAT is to be removed from electricity bills to help households struggling with the cost of living.

Mr Burnham said he wants to tackle soaring costs to help give Britons some 'breathing space' and said the £850million cost of removing VAT from bills would be paid for by his decision to scrap Sir Keir's digital ID scheme.

But this was thrown into doubt when Darren Jones, the architect of the scheme who was sacked by Mr Burnham on Monday, warned no funding had been earmarked for digital ID.