Labour’s ‘flawed’ decision to scrap £2 bus fare cap is the same as a 1p income tax increase on working people commuting, analysis claims

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

Workers who take the bus to and from work every day of the week will have to pay an extra £448 because of the ‘unfair’ change, critics say.

This would mean an average earner’s tax bill would rise from £4,972 to £5,420 as a result of the ‘bus tax’ – equating to a 1.2p increase in income tax.

Last month the Prime Minister announced he would end the Tory-era policy at the end of this year, despite admitting there is a ‘heavy dependency’ on bus transport in rural communities.

Rishi Sunak first introduced the limit last January with the aim of ‘ensuring that bus travel remains accessible and affordable for everyone, while helping to alleviate pressure on the cost of living.’

It was originally intended to last only three months, but was subsequently funded by the previous government until the end of 2024.

Labour’s decision to increase the limit to £3 sparked criticism from across the political spectrum, as well as accusations that the government was punishing working people.

Liberal Democrat environment spokesman Tim Farron said: ‘The Government’s bus tax will beat up people across the country, especially those in rural areas and on low incomes. It’s the last thing these people need after years of economic vandalism by the Conservatives.

‘Keir Starmer’s decision is completely flawed. It will make travel more expensive for working people and will worsen traffic congestion across the country.

“While the new government faces difficult decisions, it is unfair to place the burden on bus users and commuters.”

Delivering the Budget last week, Rachel Reeves said: ‘Although the previous government’s policy was that the cap on bus fares would end in December, we understand how important bus services are to our communities.

‘So we are extending the limit for another year and setting it at £3 until December 2025.’

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

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

‘Fares will only rise in the normal way if inflation rises, and the £3 cap on bus fares will lead to savings of up to 80% on some routes, keeping bus tickets affordable across the country.’