As buses minister Simon Lightwood suggests new government is looking at fare cap’s future, thoughts are turning to how the scheme could evolve
England’s £2 fare cap outside London was launched in January 2023
Industry figures are speculating about the future of England’s £2 bus fare cap, which was introduced in January 2023 as a temporary measure to alleviate the cost of living crisis and encourage bus usage. Initially set to increase to £2.50 in October 2023, the fare cap was extended to November 30, 2024, with the planned increase subsequently cancelled.
As the scheme’s end approaches, concerns are increasing about a sudden reversion to previous fares and the potential impact on patronagage on an industry still recovering from the pandemic.
Bill Hiron, chairman and chief executive of Eastern Transport Holdings, the parent company of Stephensons and NIBS Buses, and chair of the ALBUM group of municipal and SME-owned bus operators, described the £2 cap as “a bit of a blunt instrument, undoubtedly introduced for political reasons”.
“Passenger growth seems to have been variable,” he told Passenger Transport. “If it is to continue, we need to ensure reimbursement is matched to increases in industry costs – or it’ll become like concessionary fares all over again but worse.
“The £2 cap was introduced without any thought to its exit, but the industry – both the Confederation of Passenger Transport (CPT) and ALBUM – have repeatedly highlighted that there needs to be an exit strategy.
I can’t envisage the new government just dropping the scheme at the end of November – the fallout for such a ‘relatively’ small sum would be vast
“I can’t envisage the new government just dropping the scheme at the end of November – the fallout for such a ‘relatively’ small sum would be vast,” he said. “But we certainly need to continue engagement over what might follow.”
Earlier this year, CPT released a KPMG report outlining transition options. While recognising the fare cap’s benefits in easing cost-of-living pressures, KPMG highlighted its limited advantages for day or season ticket holders and the disproportionate discount for long-distance travellers. The report warned that a prolonged fare cap would complicate the transition to standard fares.
KPMG stated: “When the current £2 fare cap policy ends in 2024, policymakers will have three options: retain or reform the existing single fare cap, gradually transition away from the single fare cap, or fully transition away from the single fare cap instantly… The gradual transition is likely the only feasible option.”
During a visit to Nottingham City Transport last week, buses minister Simon Lightwood confirmed the fare cap will be reviewed by the government.
He said: “We’ll be looking at the £2 bus fare… looking at the data that we’ve received from that to look at what the future of that is – whether a national scheme is the right way forward or whether a more targeted approach would be necessary.
We’re absolutely certainly not going to have a cliff edge
“We’re absolutely certainly not going to have a cliff edge. What we will look at, is that the best use of funding to achieve support for bus companies and make it affordable for people? Affordability is really important for us.”
Some in the industry have already begun to speculate about that future support and proposed some form of fare support for young people.
Hiron warned this could be a challenging proposition.
“There have been several suggestions for its replacement,” he said. “I think all these stem from the idea that we don’t want to lose the monies involved coming into the industry for the benefit of our customers (and hopefully therefore long term ridership).
Discounted travel for young people is one idea.
“Discounted travel for young people is one idea. Depending how it’s applied that could be very challenging where there are networks of dedicated peak time services aimed mainly at scholars. Inevitably there would be a requirement for extra buses and drivers for duplication – and even if these could be sourced, the costs for extra peak vehicles would be considerable.”
Hiron added that increasing the cap for everyone would allow the government to ‘save’ some of the funding allocated to the scheme.
Robert Williams, chief executive of council-owned operator Reading Buses, said if the fare cap’s goal was modal shift, then the adult population needed to be considered too.
“A young persons’ scheme would create a larger increase in fare at exactly the age getting a car becomes an option,” he told Passenger Transport. “This could actually encourage car use.
“I think I would favour something like a £2.50 cap or other schemes to help make services more affordable to operate, supporting higher frequencies and higher quality services that would undoubtedly generate passenger growth.”
This article appears in the latest issue of Passenger Transport.
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