How will the government pay for the £2 bus fare cap?published at 13:10 BST

13:10 BST

By Tom Edgington

The government says its £2 bus fare cap policy will cost more than £500m which ministers insist will be paid for by re-prioritising existing budgets rather than increasing overall spending or borrowing.

The funding breaks down as follows:

• £400m from replacing grants for international climate projects with loans
• £54m from underspends in the Department for Energy Security and Net Zero
• The remaining funding from money already set aside in the Department for Transport for buses

Most of the money will come from replacing international climate grants with loans and because the Treasury expects the loans to be repaid, replacing the grants reduces the cost to the public finances.

However, Max Warner from think tank the Institute for Fiscal Studies says there are still uncertainties.

“It's not clear how much we would expect to be paid back nor what the interest rates will be. Both matter for how much the government will ultimately save from this switch to loans,” he says.

He adds it is also unclear whether reducing spending on overseas climate projects could require the government to increase spending elsewhere to still meet its overseas aid target, potentially reducing the overall savings.

Transport Secretary Heidi Alexander told Sky News earlier that the details for replacing overseas climate grants with loans “needs to be worked through”.

Image source, Reuters

During Prime Minister Andy Burnham's visit to Bath today, he was photographed with a certain TikTok star you might recognise.

Bemi Orojuogun has amassed almost half a million followers with her quirky adoration of London's bus network.

Nicknamed 'bus aunty', her videos show Orojuogun staring into the camera as busses whizz close by, set to a catchy song.

"It was just a normal day," she told the BBC last year. "I took a quick video, posted it on TikTok, didn't think much about it, until my daughter called and said, "Mummy, you're going viral!" I was like, what?"

One of her videos has more than 50 million views, winning Video of the Year at the TikTok UK & Ireland Awards in 2025.

She's also collaborated with the Mayor of London, TfL, Ikea, and Burberry.

Bemi, who works as a mental health nurse, says she hopes her videos also spotlight the hard work of bus drivers.

Image source, Reuters

As we've been reporting, Prime Minister Andy Burnham's government began his second full day in power by announcing a £2 bus fare cap for everyone in England from January.

Here's how opposition leaders and other political parties have reacted:

• Shadow chancellor Mel Stride accused the government of not specifying where the money to fund the initiative is coming from, which he calls "a worrying sign"
• While welcoming the measure as a "relief", Liberal Democrat transport spokesman Olly Glover accused the government of leaving millions of people behind, particularly those in rural areas who struggle with few or no bus services
• Reform UK says any help with the cost of living is welcome but the party's chairman, Lee Anderson, accuses Burnham of having "walked into No 10 with absolutely no plan"
• And the Greens say lower fares are of no use if "buses aren't there", adding temporary cuts to fares are "welcome but we need a new direction of travel", calling for permanent free travel for under-22's

Kaleigh Watterson
BBC Cheshire political reporter

Steve Rotheram, the mayor of the Liverpool City Region, says the bus fare cap will mean the city can keep its current cap for longer.

Bus fares are currently capped at £2 in the Liverpool City Region, and last week the area’s combined authority said the £2 fare would “remain in place for now”.

“We will continue that much longer now than we were able to do, because I was wrestling on having to put them up at one stage myself, because we haven’t got an infinite pot,” he told BBC Radio Merseyside's Hot Seat.

Rotheram - who is friends with Burnham - said that the change would help with the cost of living.

He also said he knew Andy Burnham was going to introduce a £2 fare cap before this morning’s announcement.

When asked if he knew beforehand, he said he did as he had spoken to Burnham about his plans when he became PM.

Did bus journeys rise under the previous £2 fare cap?published at 12:25 BST

12:25 BST

By Phil Leake

Local bus use in England increased the last time a £2 fare cap was in place, but remained below pre-pandemic levels, according to data from the Department for Transport.

The £2 cap was first introduced by the Conservative government in January 2023 and applied to single fares in England outside London. Keir Starmer's Labour government increased the cap to £3 in January 2025.

Passengers made just under 1.9 billion local bus journeys in England outside London in the year to March 2025 - up from 1.6 billion in the year to March 2023.

However, that was lower than the two billion journeys recorded in the year to March 2020, before the Covid pandemic.

A government-commissioned evaluation of the scheme's first 10 months found the £2 cap increased bus use by around 5% compared with the previous year.

Overall bus use rose by 13% over the same period, which the report attributed to a wider post-pandemic recovery and the impact of other local transport investments.

Over on BBC Radio 5 Live, our colleagues have been speaking to some of you about your experiences with buses and what effect Andy Burnham's £2 price cap could have:

Maisie in Coventry welcomes the price cap. She says when she was at college, she would sometimes have to get three buses in the mornings which would cost up to £9. The cap would reduce this to £6 but that "adds up", she says.

Now she uses the buses to see friends, and volunteers as a first aider, and thinks the cap will "encourage more people and young people to go outside and make friends and just have fun".

For Emma, a performer in Brighton, who needs buses "at all times of the day", her daily journey one way is £6. "It's just ridiculous... so a £2 cap I think is going to be really good."

Susannah in Glastonbury is similarly "delighted" to hear Andy Burnham is going to "apply himself to buses", though she says she wants him to be "more ambitious" and build "reliable, frequent, swift" bus services.

One of the reasons some buses often cannot stick to their schedules is because of busy roads and parked cars, says Lyndon, who has been a bus driver in Swindon for five years.

He tells 5 Live it is "very expensive" to run a bus but adds that in rural areas it creates community: "Everybody knows each other on the bus, they have their conversations, they chat about things... they appreciate it."

Most of the money needed to enact the single bus fare - projected to cost over £500m - will be reallocated from the Department for Energy Security and Net Zero, the government says.

This cost is a small drop in the ocean of the government's overall spending - it's forecast to spend £1,416bn in 2026/27.

Alex Chapman of the New Economics Foundation told BBC Radio 4 earlier that the money being spent on the policy is "very small in government terms".

Image source, PA Media

More from Andy Burnham's comments from Bath now.

Burnham, asked about the possibility of changing the £12,570 tax-free personal allowance threshold he says there is "no commitment at this point to change".

Earlier, those close to Burnham told the BBC will not be part of his initial plan to tackle the cost of living, after suggestions that he could change the tax.

The PM says "we will have to look at it in the Budget", adding that no "unfunded promise" has been made.

On council housing, he says the government is putting a "greater priority" into this area.

He says this will not mean tax rises in the next budget, adding "this is about re-prioritising in this phase" and addressing issues such as the housing crisis and cost of living crisis.

"How much longer are we going to talk about these things without actually doing something to help people?" he adds.

The prime minister has insisted that the £2 bus fare cap was his policy idea originally, when asked by reporters about "bringing back Boris Johnson's policy" on a £2 cap that was introduced in 2023.

Speaking to journalists in Bath, Andy Burnham says it was "actually my policy originally" and that he'd "worked with Boris to take it national".

He says he believes the cap on bus fares will "really help" people and "put money in people's pockets".

Moving onto the policies he has revealed since Monday, he says they are being fully funded by "re-prioritising" the government's budget.

Burnham says the policies he has announced so far - the cut to VAT on electricity bills for six months from October, the £2 cap on bus fares, and his pledge to end rough sleeping - are all "fully funded".

"The public's priority is reducing the cost of living pressures" he says, adding that he's taking "a difficult look" at previous government commitments and re-prioritising.

Rozina Sini
BBC Your Voice

Image source, Mark Tait

Mark Tait, who lives near Durham, tells the BBC the bus fare cap will make little difference to him.

"This is great if you use the bus, but no good for those who drive. Yet again, the working class person is left out," Tait says.

"I work 13 miles away and for me to use public transport it would take three buses. They keep talking about using public transport, saying it's better for the environment but that's not always possible."

Tait says the announcement was fine for older people or students, "but for the majority of people who work the £2 cap means nothing to us".

"But a further cut on fuel duty would help," he says.

Image source, Getty Images

The government's £2 bus fare cap will cut fares by a third for millions of people, Chancellor John Healey says.

The chancellor says everyone's bus fares will be capped at £2 "throughout 2027".

The Lib Dems have called on the government to cut bus fares further, while Shadow Chancellor Mel Stride has accused the government of not properly specifying where the funding is coming from - here's what the government has said.

Alongside VAT cuts to household electricity bills, Healey says the latest measure shows how Andy Burnham's government will "build a new economy, create new hope, and advance working people across the country".

As a reminder, the £2 bus fare cap applies for England, but in their announcement the government says funding has also been allocated for devolved governments.

Rozina Sini
BBC Your Voice

Peter Hogg from Newcastle welcomes the £2 price cap, telling the BBC he currently spends £5 a day on his return journey to work.

"I currently spend £2.50 for a single ticket, there is not a discount for a return ticket," he says.

"The next step up is a day-rider ticket at £6 that allows you to jump on multiple buses in the day but I don’t do that.

"If it does go down that will be fantastic. It would save me about £20 a month."

As a reminder, you can get in touch with us in the following ways.

Image source, PA Media

As Andy Burnham's third day in office picks up, here are some of the other stories on the political agenda:

Burnham pulls back on income tax: As we've reported, the prime minister told the Times over the weekend that "frustration" about the £12,570 tax-free personal allowance threshold was "lodged in my mind". Those close to Burnham have since told BBC News that any changes to the personal allowance are not part of his initial plan to tackle the cost of living.

Scottish Labour leader to join Burnham team: Anas Sarwar is set to stand down from his role as leader of Scottish Labour, to take up a seat in the House of Lords and become a minister in Burnham's government. It is thought he will become a business minister. Read more about that here.

Streeting apologises for prisoner comments: Defence Secretary Wes Streeting says there was "no ill intent" behind comments he appeared to have made about the early prisoner release scheme, which were caught on camera. He can be heard telling Home Secretary Shabana Mahmood that Justice Secretary Alex Norris is "the enemy now" as the latter walks towards them. Our full story is here.

Image source, Welsh Government/PA

Welsh First Minister Rhun ap Iorwerth says Andy Burnham is “open to listening perhaps in a way that Keir Starmer wasn’t” regarding the devolution of powers in Wales.

He tells the Today programme that he had a conversation with the new prime minister on Tuesday and both made clear they wanted to have a positive and "constructive" relationship, adding that powers over policing, rail and funding are included in the list of things he wants devolved.

Scotland's first minister John Swinney says Burnham also reassured him he was interested in a "collaborative" relationship, saying he felt relations between the UK and Scottish governments "soured significantly" when Douglas Alexander was appointed as Secretary of State for Scotland in September 2025.

Alexander remains in his role after Burnham unveiled his cabinet this week.

Swinney tells Radio Scotland Breakfast he is taking the words of Burnham at "face value" and hopes that his assurances are reflected in the approach taken by Alexander.

John Campbell
BBC News NI economics and business editor

Public services in Northern Ireland will get a small amount of additional money as a result of the PM's decision to freeze bus fares in England.

The exact amount will not be known until the autumn budget but is likely to be about £10m to £15m.

Ministers will not be obliged to spend the money on public transport. The rules of devolution funding mean local ministers set their own policies and priorities.

The government said this morning the funds allocated for the bus fare cap included money for devolved governments.

Earlier this month Translink, Northern Ireland's public transport company, said it would have to make cuts to services due to budget pressures.

Image source, Reuters

Since arriving at Downing Street as the newly appointed prime minister on Monday, Andy Burnham has made two specific policy announcements.

Bus fares cap: He announced this morning that most single bus fares in England would be capped at £2 from 1 January 2027.

This policy is expected to cost over £500m. The government has said £454m will be reallocated from the Department for Energy Security and Net Zero.

VAT on electricity: Yesterday morning, Burnham said he would cut VAT from household electricity bills from October for six months, which is projected to save households an average of £45.

The government expects the cost to be £850m, which it will finance through reallocation of funds from the cancellation of the Digital ID programme. It has insisted the change is "fully funded".

What else Burnham has promised: In his first speech as PM, Burnham pledged to end rough sleeping, with the government later saying it would allocate £340m over the next five years.

Burnham also promised to build more council homes, and vowed to help more young people into work by changing the education system and giving them more mental health support. He has so far not offered further detail on these promises, including how they would be funded.

The Liberal Democrats say it is "a relief to see the cap back down to £2" but the policy change is "an easy win for Burnham".

Liberal Democrat transport spokesman Olly Glover accuses the government of still leaving millions of people behind as rural communities struggle with few or no bus services.

"Now the work of transforming transport for the whole country must begin," Glover adds.

He urges Andy Burnham to turn to "emergency measures" to ease costs exacerbated by the US-Iran war, including "capping national bus fares at £1, slashing rail prices by 10%, and cutting fuel duty by 10p per litre".

Quick wins for now on living costs, but what next?published at 09:46 BST

09:46 BST

Kevin Peachey
Cost of living correspondent

A quid a week off electricity bills won’t count for much if global energy costs keep rising.

Young workers paying a £2 bus fare will want a decent job at the end of the journey.

The Burnham-led government is unashamedly going for the quick wins on living costs in its early days. Hence the Conservatives’ “people pleaser” attack line.

But the bigger stuff is harder to pull off. Like changes to taxation (see the retreat from raising the personal allowance), like turbocharging the economy, raising living standards, overhauling how we pay essential bills and to whom.

Some of that will be within the government’s control. Some will be dictated by uncontrollable events elsewhere.

All of it will be a challenge for a new PM and chancellor, just as it was for their many, recent predecessors.

Joe Coughlan
Live reporter

Image source, Getty Images

Andy Burnham has announced that most bus fares in England will be capped at £2 from the start of next year, with the prime minister saying no one should be "priced out" or "left behind" when it comes to affordable transport links.

The pledge is expected to cost over £500m, of which £454m will be reallocated from the Department for Energy Security and Net Zero, including by switching investment set aside for international climate finance to loans.

Chancellor John Healey says the action being funded by savings made elsewhere will allow there to be "no burden to British taxpayers", while Transport Secretary Heidi Alexander tells the BBC she is "100% sure" the money is there to pay for the cap.

Even so, the announcement prompted Shadow Chancellor Mel Stride to accuse the government of "not actually specifying where the money is going to come from".

The scheme comes after the government pledged on Tuesday to cut VAT from 5% to zero in household electricity bills from October. Burnham told his cabinet on Tuesday he would lead a "cost of living government".

But the prime minister has pulled back from suggestions he will increase the tax-free personal allowance.

Image source, Getty Images

Transport Secretary Heidi Alexander is doing the media round this morning - she's just spoken to BBC Radio 4's Today programme.

Speaking about the bus fare cap, she says this government is "not making any unfunded spending commitments" and has been "very clear about where the money is coming from for this proposal".

Earlier on BBC Breakfast, the transport secretary said she was "100% sure" the money was there to pay for this single bus fare cap.

"There is £454m of re-prioritising money. It's switch spending, we're not going to be giving those grants for international climate projects in other countries. We're going to be making those loans instead so that money comes back," she said.

Following the announcement to remove VAT from electricity bills, Alexander calls the fare cap pledge a "signal of intent" which "shows you the direction of travel of the government under Andy Burnham".

She admits it's "not the whole solution" but says "giving people a little bit of hope that help is on the way" is the right thing to do.