Prime Minister Andy Burnham announced on July 22, 2026 that single bus fares across England will be capped at £2 from January 2027. The cap is backed by £454 million in government funding and will stay in place for the whole year. It applies across England except London, which runs its own bus system under Transport for London. Chancellor John Healey said the measure would "slash fares by a third for millions of people" and said the money would come from savings found elsewhere in government spending.

The £2 cap reverses an increase imposed by Keir Starmer and Rachel Reeves in 2024. Back then, the new Labour government raised the national cap from £2 to £3, saying the lower price was not affordable. The £2 cap had run from January 2023 to December 2024. The rise to £3 took effect in 2025 and was meant to last until the end of March 2027. Now the fare goes back down to £2 for all of 2027.

How the government is paying for this is more complicated. Think of the government's budget like a household budget: if you want to spend more on one thing, you have to find the money by cutting back somewhere else. Of the £454 million, about £400 million comes from changing international climate finance — money the UK gives to help other countries deal with climate change — from grants (free money) into loans (money that has to be paid back). The rest comes from savings in the Department for Energy Security and Net Zero budget. The total cost is expected to top £500 million when you add in bus funding the Department for Transport had already set aside. The package also includes money for devolved governments (Scotland, Wales, and Northern Ireland, which run some of their own services) to lower fares in their areas too.

Burnham has a personal history with bus fares. As mayor of Greater Manchester, he was the first to bring in a £2 single bus fare in September 2022. When the national £2 cap ended in 2024 and rose to £3, Burnham and other local mayors chose to keep the lower fare in their own regions using their own money. London and Greater Manchester already had lower bus fares than the national £3 cap before this announcement. North East Mayor Kim McGuinness went further, bringing in a £2.50 adult bus fare cap in January 2025 and extending it until at least March 2027.

The patchwork of different fares across the country also led to special schemes for certain groups. Mayor Paul Bristow urged Burnham in June 2026 to keep the bus fare cap, saying it would protect the Tiger Pass scheme, which lets under-25s travel by bus for £1 per trip. Transport Secretary Heidi Alexander said the restored £2 cap would "make everyday journeys easier and cheaper."

The broader context here is a tug-of-war between keeping government spending under control and making public transport affordable. The original £2 cap was started under Prime Minister Rishi Sunak. Starmer's government inherited it in 2024 and chose to raise the price, saying the country could not afford the lower rate. Now Burnham has reversed that decision and found the money by shifting climate finance and departmental savings rather than borrowing new money or tapping the Treasury directly. The decision to turn international climate aid from grants into loans to pay for cheaper bus rides at home is a big shift in how the UK spends its overseas development money, and it will likely draw questions from climate groups and from lawmakers who watch government spending.

The timing matters too. The cap starts in January 2027, giving the government a clear cost-of-living win ahead of any local elections that year. The funding comes from existing budgets rather than requiring a new round of spending decisions. Whether the £2 fare can last beyond 2027 depends on whether more people riding buses brings in enough extra money to cover the difference between what passengers pay and what it actually costs to run the service — or whether it becomes a permanent cost that future budgets have to keep paying.