Reeves set to extend £3 bus fare cap until 2027 in relief for commuters, LBC understands

10 June 2025, 18:04 | Updated: 10 June 2025, 22:51

By Natasha Clark

@NatashaC

LBC understands Rachel Reeves will extend the £3 bus fare cap for another year and a half in Wednesday's Spending Review.

The Chancellor is expected to lay out plans to fund the scheme in full on all bus routes in England until March 2027.

Ministers had only committed to continue it until the end of the year, and Transport Secretary Heidi Alexander had been unable to confirm it would carry on in its current form.

The £2 bus fare cap was introduced under the Tories – but was scaled back by Sir Keir Starmer last year when it became £3.

It can save thousands of passengers up to 80% of their fare on some routes.

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There were suggestions it could be only continued in some areas, or the powers given to local Mayors to decide.

Other options included targeting the £150 million pot at younger people or rural areas.

But LBC understands the Chancellor will use her Commons statement tomorrow to continue the funding for it in a bid to help show that the government is trying to help with the cost of living.

A Treasury source said: “We understand the cost of living is a priority for the British people. That is why we are investing in Britain’s renewal to make working people better off.

Reeves says spending review will be about ‘making working people better off’

“That’s why we’re keeping bus fares down by extending the £3 cap to put more money in people’s pockets.”

She’ll also lay out more plans to improve and maintain bus services in other areas – including taking forward franchising pilots in areas including York and North Yorkshire, and West Cheshire and Chester.

The Chancellor’s also expected to prioritise the NHS and defence in tomorrow’s Spending Review.

And there will be £100 billion for other transport infrastructure across the country.

She will tweak Treasury rules to prioritise projects outside of London, targeting the North and Midlands instead.

Responding to LBC's report, Liberal Democrat transport spokesperson Paul Kohler MP said: "Household budgets are still really feeling the squeeze, so many will be really disappointed to see that the government is moving to make the bus fare hike permanent.

"This will hit those who rely on public transport to get around to their local high street or to work and school in the pocket. People have been telling them they got this wrong, but Labour clearly isn’t listening.

"Meanwhile vital local bus services are in a death spiral, with rural communities particularly badly hit as routes are slashed. The government should be heeding Liberal Democrat calls to scrap the bus tax and bring the cap back to its previous level.”