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Bus fare cap increase necessary to ‘balance spending’, says minister as she concedes rise will affect 'working people'
28 October 2024, 19:36 | Updated: 28 October 2024, 19:43
An increase in the cap on bus fares is necessary to 'balance day-to-day spending' and make the Budget 'sustainable', a cabinet minister has told LBC amid anger over Labour's trailed Budget plans.
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Sir Keir Starmer today confirmed the £2 cap on bus fares would come to an end in 2025 and would increase by 50 per cent to a new £3 limit.
Responding to the planned hike that will affect millions of Britons, Work and Pensions Secretary Liz Kendall told LBC's Andrew Marr that the Government has "got to make sure that each budget is sustainable" and that the policy was needed to "balance" spending.
She also admitted that the policy change would affect "working people" who need to use the bus to travel to and from work. Labour has faced scrutiny in recent weeks for repeatedly using the phrase and committing to “not increase taxes on working people”. Ministers have struggled, however, to provide a unified definition ahead of the Budget.
Is a bus user a 'working person'?
Ms Kendall told LBC's Andrew Marr on Monday evening: "I really understand this from my own city in Leicester, where many people are utterly reliant on the busses to get to work, get to college, get to the local hospital.
"But we've got a situation where the money was coming to an end at the end of 2024 [and] when we looked at the budget, we'd had to try and make a change to make it sustainable."
She defended the rise and said she was instead focused to "actually make work pay with our new employment rights".
The minister added that Labour was also focused on putting "local busses into local hands" so service providers can "make better decisions about those bus routes".
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The Prime Minister said the raise was needed to combat the "unprecedented" economic challenges the UK faces ahead of Wednesday's Budget announcement.
He said: "On the £2 bus fare, first thing to say is the Tories only funded that until the end of 2024 and therefore that is the end of the funding in relation to a £2 capped fare.
"I do know how much this matters, particularly in rural communities where there's heavy reliance on buses. "And that's why I'm able to say to you this morning that in the Budget we will announce there will be a £3 cap on bus fares to the end of 2025 because I know how important it is."
It will come as part of the government's bid to fill a £22 billion "black hole" in public finances at this week's Budget.
Sir Keir also said that the Chancellor will announce £240 million in funding for local services to help get people back to work when she delivers her fiscal statement in two days.
It will mark a "moment of pride" as Ms Reeves becomes the first woman to deliver a Budget, he said.
Sir Keir has hailed the Budget as one for "working people", sparking growing questions over the definition.
Labour pledged in their manifesto not to increase taxes on working people - ruling out a rise in VAT, national insurance and income tax.
"Trust in my project to return Britain to the service of working people can only be earned through actions, not words," the PM said.
"Change must be felt. But every decision that we have made, every decision that we will make in the future, will be made with working people in our mind's eye, people who have been working harder and harder for years just to stand still.
"People doing the right thing, maybe still finding a little bit of money to put away, paying their way, even in the cost-of-living crisis.
"But who feel that this country no longer gives them or all their children a fair chance.
"People stuck on an NHS waiting list, whose town centre is blighted by antisocial behaviour, who can't afford to buy a place that they can call home, or can't afford the home they have because of the mortgage bombshell."
Sir Keir said the UK must face the "harsh light of fiscal reality" as he warned of "unprecedented" economic challenges.
He pledged to "ignore the populist chorus of easy answers" - seeming to pave the way for tax hikes including a rumoured increase to employer national insurance contributions.
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"We have to be realistic about where we are as a country. This is not 1997, when the economy was decent but public services were on their knees," he said.
"And it's not 2010, where public services were strong, but the public finances were weak. These are unprecedented circumstances.
"And that's before we even get to the long-term challenges ignored for 14 years: an economy riddled with weakness on productivity and investment, a state that needs urgent modernisation to face down the challenge of a volatile world."
The Labour leader said that he won't offer UK economic woes "as an excuse" - adding that he expects "to be judged on [his] ability to deal with this".
He went on: "Politics is always a choice. It's time to choose a clear path, and embrace the harsh light of fiscal reality so we can come together behind a credible, long-term plan."
Despite the tight financial picture, Chancellor Rachel Reeves pledged £1.4 billion in next week's Budget to fix crumbling schools and triple breakfast clubs.
But education unions have said that more money is needed.
The Chancellor said that children should not suffer because of the parlous state of Britain's finances, including a widely trailed multi-billion-pound 'black hole' of overspend.
Some economists cautioned that most of the funding announced on Sunday would be enough only to keep existing initiatives going.
The Treasury said the £1.4 billion would "ensure the delivery" of the school rebuilding programme, which was announced in 2020 and aims to rebuild or refurbish about 500 schools in a decade.
The scheme seeks to carry out construction projects at a rate of about 50 a year but the government last year forecast that it would complete fewer projects than initially planned, according to the National Audit Office.
