Labour decision to scrap £2 bus fare cap equals income tax rise

Labour's ‘flawed’ decision to scrap the £2 bus fare cap will put the equivalent of a penny on income tax for commuters, new analysis has shown.

Employees who take the bus to and from work every day of the week will fork out an extra £448 because of the ‘unfair’ change, critics have said.

This would mean a median earner’s tax bill would rise from £4,972 to £5,420 due to the ‘bus tax’ - equivalent to a 1.2p rise in income duty.

Last month the Prime Minister announced he would end the Tory-era policy at the end of this year despite admitting the ‘heavy reliance’ on bus travel in rural communities.

Rishi Sunak first introduced the cap last January with the aim of ‘making sure bus travel remains accessible and affordable for everyone, while helping to ease cost of living pressures.’

It was originally only meant to run for three months, but was subsequently funded till the end of 2024 by the previous government.

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Cap on bus fares in England will rise 50% from £2 to £3 despite fears over impact on poorest

Labour’s decision to increase the cap to £3 drew criticism from across the political spectrum - as well as accusations that that government was penalising working people.

Liberal Democrat Environment spokesperson Tim Farron said: ‘The government’s bus tax will clobber people across the country, especially those in rural areas and on low incomes. It is the last thing these people need after years of the Conservatives’ economic vandalism.

‘Keir Starmer’s decision is totally flawed. It makes travelling more expensive for working people and will make congestion worse across the country.

‘While the new government faces tough decisions, it is unfair to place the burden on bus users and commuters.’

Delivering the Budget last week, Rachel Reeves said: ‘While the previous government’s policy was for the bus fare cap to end this December, we understand how important bus services are for our communities.

‘So we will extend the cap for a further year, setting it at £3 until December 2025.’

The move is likely to save the government around £350million.

A Department for Transport spokesperson said: ‘We do not recognise these statistics. The previous fare cap was due to expire at the end of 2024, with fares set to soar by as much as £13 on the most expensive routes, unless we intervened to keep fares down.

‘Fares will only be allowed to increase with inflation in the normal way, and the £3 bus fare cap will lead to savings of up to 80% on some routes, keeping bus tickets affordable across the country.’