The £2 bus fare cap is coming back to England from 1 January 2027, Prime Minister Andy Burnham announced on Wednesday, in a policy his government says will cost more than £500m and will apply to single fares on participating buses outside London.
It is a direct reversal of one of the Starmer government’s more unpopular decisions. The Independent reports that Sir Keir Starmer’s administration had raised the cap to £3 in January 2025, arguing it was no longer affordable to hold it at £2. Burnham, who as Mayor of Greater Manchester introduced his own £2 cap back in September 2022, has now made restoring the lower fare a centrepiece of his opening days in Downing Street.
What the £2 Bus Fare Cap Actually Delivered Last Time
The original scheme ran from January 2023 and was evaluated across its first ten months, with the full findings published in January 2025 by the GOV.UK evaluation. The picture it painted was useful but imperfect.
Bus usage rose 13% over that period. The cap contributed 5% of that increase, a real effect but not a transformative one. Lower-income passengers felt the most financial benefit, and the Department for Transport estimated the scheme could save passengers roughly a third off their ticket cost on average, according to MoneySavingExpert.
The scheme spent £210m in those first ten months against a budget of £245m. It also played a role in reducing inflation in 2023, the Office for National Statistics noted. The value-for-money score, though, was modest. Savings varied sharply depending on what local fares had been before the cap, meaning the benefit was not spread evenly across England.
Burnham’s team argues the cap will be of particular value in rural and coastal areas, where single fares have tended to run higher than urban routes and where the jump to £3 hit hardest.
How the Government Plans to Fund It
Reuters reports the policy will be funded largely by reallocating money from the energy department, a detail that matters because the Burnham government has already faced questions about whether its broader spending plans add up. The proposal to fund the policy partly by scrapping Sir Keir’s digital ID scheme generated an early row within hours of the announcement.
Sir Keir’s government allocated £150m to fund the £3 cap for 2025. Returning to £2 at a projected cost of over £500m represents a substantially higher commitment, and the funding mechanism will face scrutiny in the weeks ahead.
Transport Secretary Heidi Alexander framed the change as a matter of everyday economics. The Guardian quotes her describing it as ‘about giving people a little bit of breathing space and help with the cost of living.’ Money has also been allocated to allow devolved governments outside England to take similar action, according to The Guardian.
As with the original scheme, bus operators will participate on a voluntary basis and the cap will not apply in London, which has its own fare structure. Liverpool and Manchester have held fares at £2 throughout, so the practical change for those city regions will be limited. The gain lands elsewhere.
Burnham told his first cabinet meeting on Tuesday that he wanted to lead a ‘cost of living government’, giving people a ‘sense that help is coming’ on costs. The bus cap, alongside Tuesday’s VAT cut on household electricity bills, establishes the pattern he is trying to set early. Whether the funding holds together under parliamentary scrutiny is the question that will define whether the pattern sticks.
