Burnham cuts England bus fare cap to £2 nationwide

British Prime Minister Andy Burnham has unveiled a series of measures aimed at easing household costs, including a plan to cap single bus fares across England at £2 and remove VAT from household electricity bills.

Burnham, who entered Downing Street after winning the Labour leadership following Keir Starmer’s resignation, has made tackling the cost-of-living crisis the central focus of his new government. Speaking to his cabinet, he said the administration would be a “cost of living government” dedicated to helping households facing financial pressure.

The government announced that the current £3 cap on single bus fares in England outside London, which was due to remain in place until March 2027, will be reduced to £2 from 1 January and continue until the end of next year. Officials said the previous £2 cap encouraged around 30 million additional bus journeys in its first ten months and helped keep fares affordable on routes where prices could otherwise exceed £10.

Burnham said affordable public transport is essential and argued that no one should be priced out of travelling to work, school or other daily activities. The policy mirrors Greater Manchester’s Bee Network, where £2 fares have been maintained during his time as mayor.

The government also confirmed it will remove the 5% VAT on household electricity bills from October until the end of the current financial year, a move expected to save the average household around £45 annually. Ministers said the measure will be funded by cancelling the digital ID programme and redirecting existing resources.

The bus fare initiative, estimated to cost £454 million, will be financed by converting funding previously allocated for international climate finance projects into loans.

Despite the new spending commitments, questions remain over the government’s fiscal plans. Chancellor John Healey takes office as the UK continues to face high public debt, elevated borrowing costs and slow economic growth. Analysts say Burnham’s broader agenda—including boosting regional growth, addressing housing shortages and supporting small businesses—will need to be balanced against existing commitments such as higher defence spending and protecting pensions while avoiding tax increases for most households.