Raising the fare cap disappoints many, but there was much more in this budget for buses

With 3.4 billion journeys taken on buses annually – buses matter to many. It’s no surprise then the £2 fare cap – first pioneered by Mayors then rolled out by the last government – has been popular.

Capping fares is a success. For instance, Transport for Greater Manchester estimated that the fare cap boosted ridership by 12 per cent in its first 3 months, and attracted new bus users. While the public feel it helps them live larger lives with the ability to travel more.

But, with both the cap and crucial bus funding due to expire in December, and no funding set aside by the last government, all eyes were on the Chancellor to offer the certainty to avoid a steep decline. That wider bus funding includes cash for local places to spend on supporting services and better buses. If it expired, some places could have cut bus miles by over 24 per cent according to estimates, ripping buses out of communities that connect them, whether to hospital, work, family, leisure or job centre.

Thankfully, she gave clarity, extending both for another year and so avoiding a cliff edge for passengers and places. Renewing the cap also signalled ongoing support for simple fares which make buses more attractive. In doing so, she raised the cap from £2 to £3.

Raising the cap has understandably, amid a cost-of-living crisis, driven vocal disappointment. Higher costs are challenging for those who rely on buses, even if lower than historic fares. Buses are disproportionately used by lower income groups and jobseekers who are less likely to have access to a car, and the cap has broad public support, particularly from economically insecure groups.

Beyond the cap, however, there is more to what this Budget did for buses. Rachel Reeves opened by pledging to ‘invest, invest, invest’ – and she did – including over £1 billion investment in buses, £850 million for local transport spending like advancing trams in West Yorkshire, and specific transport investments like rail upgrades. Together, this will boost regional growth and living standards.

This unlocks significant locally controlled spending for improving buses in cities, towns, and rural areas. Thatcher’s failed privatisation experiment drove 40 years of decline in bus services outside London. This funding helps stabilise services and undo the damage. On the ground, it looks like more frequent and reliable buses, new routes, upgraded fleets, and integrated local transport.

These funding streams are also helping reduce fares in some places. In Greater Manchester, Andy Burnham – a Mayor who pioneered the fare cap – has announced £2 fares will continue, part funded by their allocation of wider investment and part funded with income now available in Greater Manchester because they chose to bring buses back into local control through franchising. That local places started, and some will retain, the £2 fare cap – less in London’s case – demonstrates the value of devolved transport powers to their people.

The other side of the coin to Thatcher’s privatisation failure is using these powers to re-regulate and improve transport, because good governance is a foundation to better buses. By stabilising transport funding due to have the brakes slammed on, there is now breathing space for government to build more strategic foundations.

The Transport Secretary Louise Haigh’s forthcoming Better Buses Bill will set out reforms that could progress the Government’s missions to grow our economy, connect people to opportunity, and build a greener, healthier, safer Britain. Buses can play a key role in these.

To do so, the bill should turbocharge local transport authorities—devolving, investing, and decarbonising. At IPPR North, we have been investigating what this should look like. Making franchising easier, a fair and sensible devolved funding environment, and greener buses are all part of genuinely better buses for communities. Align this with Angela Rayner’s upcoming English Devolution Bill, and it could transform how local transport is run and experienced every day.

This budget saw a billion for buses, much of which will be controlled locally. Long-term reforms that could rebuild England’s bus networks are due. So, while raising the fare cap disappoints many, this Budget could mark the beginning of the road to better buses; to change that people can get on board.

Marcus Johns is a senior research fellow at IPPR North

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