Bus fares to rise above £3 when cap expires, Transport Secretary suggests
The £3 cap on bus fares is set to be scrapped at the end of next year, the Transport Secretary has signalled.
A universal cap on fares was first introduced by the Conservatives at £2 to encourage the use of public transport after the pandemic.
Labour announced in the Budget that the cap would be raised to £3 next year, sparking concern that the ceiling may be removed altogether. It has emerged that more targeted relief schemes are being considered from 2026 onwards.
Louise Haigh, the Transport Secretary, said that her department had found that the “best approach” was to provide targeted support for young people.
Asked whether the £3 cap would be kept beyond next year, she told Sunday Morning with Trevor Phillips on Sky News: “The plans that we inherited would have ended the cap completely on Dec 31.
“We’ve stepped in with funding to protect it at £3 until Dec 31 next year. And in that period, we’ll look to establish more targeted approaches. We’ve, through evaluation of the £2 cap, found that the best approach is to target it at young people.”
She added: “Just like we do with the concessionary fare for older people, we think we can develop more targeted ways that will better encourage people on to buses.”
Pressed on whether this meant that passengers should expect targeted subsidies on bus fares rather than a single cap, she said: “That’s what we’re considering at the moment.”
Ms Haigh added that the previous cap introduced by the Tories “had not represented good value for money” and that her department’s priority was to improve the “reliability of buses”.
Labour will provide more than £1bn in funding for the bus network in an attempt to calm concerns about a hike in fares and the future of vital routes.
The Government will hand £712m to councils for investment in local services in an extension of the bus service improvement plan (BSIP), which was due to expire in April.
Ms Haigh said bus operators would receive £243m in subsidies to keep fares down and boost frequency.
While every part of England would benefit, the funds would be focused on historically underserved communities, such as small towns and villages, the Department for Transport (DfT) said.
Retaining the BSIP grant, which was introduced under Boris Johnson to encourage people back onto public transport after Covid, will soften the blow of fare hikes.
The BSIP, which to date has provided £1.08bn of funding, has become integral to the survival of many services, according to the Urban Transport Group, which previously warned that without it one in four services could be at risk in areas such as South Yorkshire.
The BSIP is integral to the survival of many services, especially early morning, late night and Sunday buses – Lee Thomas
Early morning, late night and Sunday buses are highly dependent on the grants, while two thirds of “socially necessary” routes are fully funded through them.
Campaigners fear that without a cap, local people and tourists will be priced off longer, rural routes, leading services to be axed altogether.
Ms Haigh said the new investment would protect rural buses and increase their use for shopping and commuting, while preventing service reductions on at-risk routes. She said urban areas would be able to maintain high service levels outside the busiest hours. Areas receiving record bus funding include the Isle of Wight, Torbay in Devon, Leicester in the East Midlands and Peterborough in Cambridgeshire.
In addition to the £955m in new funding, the Government has committed £150m to support the £3 cap. Fare increases would be limited to the level of inflation to ensure that not all of them immediately climb to the maximum, the DfT said.
Ms Haigh on Sunday also told the BBC she regretted an outburst last month in which she labelled P&O Ferries a “rogue” operator and called for a boycott of its vessels over the sacking of workers in 2022.
Her remarks led DP World, P&O’s parent company, to threaten to halt a £1bn investment and quit a landmark investment summit, before Sir Keir Starmer distanced himself from them.
She said: “I accept that my language was an unhelpful distraction, particularly at that moment.”
Ms Haigh said that if the firm went ahead with the introduction of a new seafarers’ charter and minimum wage for maritime workers she would be “very happy to get on a P&O ferry”.
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