The bus fare cap in England is set to rise to £3, following an announcement by Prime Minister Sir Keir Starmer.

The new limit, which will be introduced in the upcoming Budget, marks an increase from the current £2 cap that was implemented by the previous Conservative government as a cost-of-living measure.

The £2 cap was originally due to expire at the end of December, sparking speculation that passengers could face a sharp rise in fares if the limit was not renewed. Sir Keir confirmed that the £3 cap would cover most bus journeys across England and remain in place until the end of 2025. He highlighted the importance of affordable bus travel, particularly in rural communities where many people depend on buses for their daily commutes.

Approximately 3.4 million people across England use buses regularly. Concerns had been raised that scrapping the existing cap could lead to a significant jump in fares, reversing the assistance provided over the past two years.

Despite the national increase, bus fares in London and Greater Manchester will remain unchanged, with fares capped at £1.75 and £2 respectively, as these areas have separate funding arrangements through Transport for London and local authorities.

The Confederation of Passenger Transport welcomed the decision to extend the cap, stating that the increase from £2 to £3 prevents a “cliff edge” scenario for passengers who might have faced steep fare hikes at the end of the year. However, they acknowledged that the new cap would still pose challenges for those who rely heavily on buses as their main mode of affordable travel.

Before the announcement, Bill Hiron, chair of Eastern Transport Holdings, which operates bus services in Essex, warned that removing the £2 cap would have led to problems. Reverting to previous fare levels of £5 or £7 could have caused hardship for many and might have deterred people from using buses altogether, he said in an interview on the BBC’s Today Programme.

Environmental group Greenpeace criticised the decision to raise the cap, describing it as a “tough decision” that the government did not need to make. Paul Morozzo, senior transport campaigner at Greenpeace UK, argued that raising the fare cap was counterproductive from political, economic, and environmental standpoints.

“Buses are a critical lifeline to millions of people, particularly those on lower incomes,” Morozzo said. “A government truly prioritising the needs of the poorest in society would rethink this decision at the first opportunity.”

The new bus fare cap will come into effect early next year, with the aim of maintaining affordability while addressing concerns from operators about the sustainability of the £2 limit. However, campaigners and passengers will be watching closely to see how the new pricing affects public transport use across England.