On 30 October, the bus industry in England will scrutinise Chancellor Rachel Reeves’s budget and its collateral material for expected detail of what happens to the £2 bus fare cap in 2025.
The sector will then have two months to align with whatever Ms Reeves’s department decides. A poorly executed exit from the cap will be a problem for all concerned, not least a government that is at pains to tell all and sundry that it wants better buses across England.
Smoke signals around what to expect are not easy to decipher. Much clearer is that the £2 cap cannot go on forever. There is recognition that if the cap survives, it will move away from that figure sooner rather than later. Modelling of £2.50 and £3 as alternatives has already been done with an idea that ministers may use both as a pathway out of the current cap.
A worry to some in the sector is that such an approach may be meeting resistance from the Treasury via a belief that funding put to bus fare subsidy is poor value for money. A risk now appears to exist that a hard stop will come after 31 December.
While for urban services where passenger journeys are short that may not have much more impact than a graduated exit via £2.50 and £3 steps, the knock-on would be much more severe on rural and interurban services.
Extensive rural bus cuts over the past two decades illustrate that those routes are rarely a holy grail from a commercial point of view. A hard stop to the cap could push more into the not-worth-bothering-with pile, opening the door to further demand responsive transport as replacements – often the dictionary definition of a subsidy consumer.
It is right for politicians to point out that the £2 bus fare cap was introduced as a crutch during the cost-of-living crisis. But it has now been in force for such a length of time that ending it in one go will do damage. Memories are short, and recollections of paying in some cases several times the cap for a bus journey have faded.
A report prepared by KPMG on behalf of the Confederation of Passenger Transport to consider alternatives to the fare cap, published earlier this year, notes that there is a correlation between duration of a cap and difficulty in transitioning away from it.
In a key message to ministers, that document adds how when a cap is removed and cost to the end user increases, challenges to government policy on modal shift will inevitably follow. The choice now facing Rachel Reeves is not an enviable one.
Clearly, a stepped transition back to commercial fare levels is ultimately required. The risk in the short-term is that the Treasury wins any argument with the Department for Transport and that such a shift comes with varying degrees of blunt force trauma for all concerned.
If Ms Reeves is not to concurrently compromise government aspirations for bus services, place a further burden on local authority bus budgets and hit the industry’s work on patronage return, that cliff-face end must be avoided at all costs.
