Bus Fares Capped at £2 Across England, Energy Bill VAT Cut Confirmed
New Prime Minister Andy Burnham implements key cost-of-living measures and establishes No 10 North.
Carla Rooney
Single bus fares across England will be capped at £2 starting in January, backed by £454 million in funding, as Prime Minister Andy Burnham confirms a VAT cut on electricity bills.
The Prime Minister conceded his administration must make "difficult decisions" to fund these critical financial commitments, signaling a strategic shift in resource allocation.
Funding for the fare cap will be primarily sourced by reclassifying international climate donations as repayable loans; the remainder comes from savings within the Department for Energy Security and Net Zero budget.
Chancellor John Healey confirmed the policy would be funded through savings made elsewhere in government, explicitly avoiding higher income tax, national insurance, or VAT.
Healey argued that the fare cap was designed to put money back into people's pockets while maintaining a responsible approach to public finances, a delicate balancing act.
The fare cap was designed to put money back into people's pockets while maintaining a responsible approach to public finances.
The Prime Minister's spokesman confirmed Andy Burnham's separate plan to cut VAT from electricity bills is fully funded and will come into effect from October 1st, providing additional relief.
This measure is expected to provide direct financial relief to households, offering a crucial intervention as inflation dipped to 2.6 per cent in June, a significant economic indicator.
The income tax-free allowance has remained frozen at £12,570 for the last five years, a policy Burnham had previously indicated he might challenge, highlighting a point of contention.
This historical context underscores the government's current focus on direct cost-of-living support rather than broader tax adjustments, prioritizing immediate relief.
The government aims to improve bus services significantly, focusing on enhancing reliability, expanding routes, and strengthening transport links across the country, a comprehensive overhaul.
An evaluation of the first ten months of a previous scheme found the cap contributed 5% of the 13% rise in bus usage during that period, demonstrating its immediate, measurable impact.
However, Labour's decision to increase the cap to £3 from January 2025 has drawn criticism, with campaigners arguing it makes bus travel less affordable, particularly for commuters making two daily journeys.
This move highlights the ongoing tension between fiscal responsibility and public accessibility within the transport sector, a persistent policy challenge.
Beyond economic policy, Andy Burnham has also made several key cabinet appointments, solidifying his government's structure and strategic direction.
Dan Jarvis has been appointed security minister, while James Murray has been made Financial Secretary to the Treasury and Paymaster General, reinforcing key departments.
Anna Turley has been made a Home Office minister, Florence Eshalomi has become a housing minister, and Andy Slaughter has become Solicitor General, diversifying ministerial roles.
Sarah Sackman remains justice minister, and Luke Pollard remains defence minister, ensuring continuity in their respective departments during this transition.
Charities claim the decision to use the aid budget to pay for cheaper bus fares in England will put the world’s most vulnerable people at risk, raising ethical concerns.
Changing donations to loans means money is more likely to go to countries that can repay them, typically middle-income nations like India or Brazil, rather than the world’s poorest.
Experts state that changing donations to loans means money is more likely to go to countries that can repay them, typically middle-income nations like India or Brazil, rather than the world’s poorest, altering aid distribution.
The government hopes cheaper travel will encourage more people to use public transport, aiming to reduce congestion and make it easier for workers, students, and families to access jobs, education, and essential services, a multifaceted societal benefit.