Sarah Bodger spends four hours a day on buses, commuting from Bedworth in Warwickshire to Leamington Spa and back, six days a week. The wool shop owner says the cost of travelling to work is “crippling” – £58 a week, more than £3,000 a year. But from January, a newly-announced cap on most single bus fares in England will cut that by £500 a year. “It’s going to make a huge difference to me,” she says.
The bus fare cap, which will limit most single fares to £2, was announced by Prime Minister Andy Burnham, who said no-one should be “priced out” or “left behind” when it comes to affordable transport. For Charlie, a 24-year-old living on the outskirts of Bristol, the cap means he’d be more likely to travel into the city centre on weekends. “It’s not going to completely revolutionise life for anyone,” he says, “but it might be the difference between me deciding against going to do something in town.”
“PM Burnham caps bus fares at £2 and cuts electricity VAT, but funding questions remain.”
Not everyone will benefit. Holly Haines, who lives in a rural part of Hereford near the England-Wales border, says her bus service is provided by a Welsh company, so the £2 cap does not apply. A single on her bus costs at least £4.20, despite the journey being “entirely in England”. “Whilst I would love for other people to benefit,” she says, “I find it hard that I will not be able to benefit from it.” Diane Wordsworth, in a semi-rural part of Doncaster, argues that bus services need improving first: “The buses in town stop at 9pm, so you can’t get back from anywhere.”
On his first full day as prime minister, Burnham also announced a cut in VAT on household electricity bills, from 5% to zero, effective 1 October. The government says it will save a typical household about £45 a year. Business secretary Jonathan Reynolds said the cut would give people “breathing space”. The reduction will apply in England, Scotland and Wales, with equivalent funding for Northern Ireland, though it cannot be automatically applied there due to EU rules.
The VAT cut will be funded by cancelling the digital ID programme, which was due to cost £1.8bn over three years. The government estimates it will cost £850m this financial year. But Labour’s Darren Jones, sacked as chief secretary to the prime minister on Monday, accused the government of announcing an unfunded tax cut, writing on X that the digital ID programme “was unfunded”. Conservative shadow chancellor Mel Stride said: “The cuts to the Digital ID card budget are not real because the money was never provided in the first place. We are only one day in and already it is smoke and mirrors on the public finances.”
Reynolds told the BBC’s Today programme the VAT cut would be funded through a “straightforward switch spend”. The government has told suppliers to pass on the reduction to all household customers, including those on fixed tariffs. But the funding only lasts until the end of the financial year in March 2027; any extension must wait for the next Budget. For Sarah Bodger, the bus fare cap is already a certainty – but for millions of households relying on the electricity VAT cut, the long-term picture remains unclear.