The bus fare cap in England will revert to £2 from January, new prime minister Andy Burnham has announced.

The government says the policy, which is expected to cost more than £500m, will "help with the cost of living and give people the breathing space they need".

At the start of last year, the England-wide bus fare cap rose to £3 under Sir Keir Starmer's Labour government, although in Liverpool and Manchester fares were held at £2.

Burnham said affordable transport links were an essential, adding: "Lower fares will help people get to where they need to."

The measure gives people "a little bit of hope" in a time when many are grappling with higher living costs - especially after fuel costs spiked as a result of the US-Iran war, transport secretary Heidi Alexander told the BBC's Today programme.

However, she admitted the measure was "not the whole solution".

The new cap will take effect from January next year for fares on participating buses outside of London. The cost of a non-discounted single bus journey in London is £1.75.

The Burnham government said going back to a £2 cap should particularly help passengers in rural and coastal areas, where single fares can be higher.

The Campaign for Better Transport said rural areas were still suffering from fewer bus routes and services, adding that such areas had been more affected by council cut backs in the last decade than urban zones.

Services in those areas - as measured by vehicle miles - decreased by 18% between 2019 and 2024, according to the County Councils Network, which represents 39 unitary and county councils across England.

"What we need to see is the replacing of those lost services which have particularly affected those in rural areas," Campaign for Better Transport's Michael Solomon Williams said.

What about N Ireland, Scotland and Wales?

In other nations, public services in Northern Ireland will also get a small amount of additional money, though ministers will not be obliged to spend the money on public transport. The exact amount will not be known until the autumn budget.

Scotland and Wales will get equivalent funding to England for the bus fare cap scheme.

The Scottish government, which piloted a £2 bus fare cap across the Highlands and Islands for a year, said it was looking at bringing forward legislation for a £2 bus fare cap across the whole of Scotland by the end of this parliament.

Single fares are already limited to £1 for under 21s in Wales.

Bus use still lower post Covid

When first introduced in 2023, the £2 cap was initially meant both as a cost of living measure and to encourage people back onto buses in the wake of the pandemic.

It played a role in reducing inflation that year, the Office for National Statistics said.

An evaluation of the first ten months found that the scheme contributed 5% of the 13% rise in bus usage during that period. Lower-income passengers felt the most financial benefit.

However it did not score highly when it came to value for money. How much money people saved varied depending how much fares in their local area cost before the cap.

In those first ten months, £210m was spent on the scheme, less than the £245m budget.

Even if fare-capping measures had increased demand for bus travel, numbers are still recovering from the huge drop in usage during Covid.

By March 2025, 1.9 billion journeys were made on local buses in England outside of London - around 93% of pre-pandemic levels.