Burnham's announcements a stark shift from Starmer's first weeks at helmpublished at 07:07 BST

07:07 BST

Henry Zeffman
Chief political correspondent

This is the second announcement in two days designed to give people what the new prime minister describes as “breathing space” against the cost of living.

Combined with the tax cut on household electricity bills, it is clear that Andy Burnham is prioritising tangible measures which can be implemented quickly.

There is a stark tonal shift, too, from Keir Starmer’s first weeks in office in which he emphasised how difficult things would continue to be (something which he later acknowledged was a mistake).

The decision to reimpose the bus fare cap of £2 contrasts with Burnham backing away this morning from suggestions which he made as recently as Monday about the possibility of increasing the personal allowance – the amount people earn before paying income tax, which has been frozen since 2021.

Backing away from that reflects that this is a new prime minister who has both made quite a lot of commitments and displayed a range of instincts on major policy questions.

He talks of the biggest council house building programme since the postwar period, fixing social care on an NHS model, taking public control of utilities – and that is before you get to the level of defence spending implied by John Healey’s appointment as chancellor.

This week we are learning the order of Burnham’s priorities. And perhaps now he has access to the civil service and to more granular advice about the state of the public finances, Burnham himself is learning which of his commitments are viable in the near-term.

Image source, PA Media

During his time as Greater Manchester mayor, Andy Burnham launched the Bee Network - a London-style network where all local bus and tram services are joined up and under local control.

Public control of the region’s buses was rolled out in stages since the launch of the Bee Network in September 2023 - named after Manchester's worker bee.

Manchester became the first area outside of London to have a locally regulated bus system since the 1980s, which Burnham called "a coming-of-age moment for English devolution".

Single fares have been capped at £2 in Manchester for the last four years.

Katy Austin
Transport correspondent

As Mayor of Greater Manchester, Andy Burnham brought in a £2 cap in September 2022, at that point funded by money from central government.

The £2 cap was initially meant both as a cost of living measure and to encourage people back on buses in the wake of the pandemic.

The ONS said it played a role in reducing inflation in 2023, and it appeared popular. An evaluation of the first ten months - not published until 2025 - found that the scheme did contribute 5% of the 13% rise in bus usage during that period.

Lower-income passengers felt the most financial benefit.

However it didn’t score highly when it comes to value for money. How much money people saved varied depending how much fares in their local area cost before the cap.

The Burnham government says a £2 cap should particularly help passengers in rural and coastal areas, where single fares can be higher.

Shadow Chancellor of the Exchequer Mel Stride accuses the government of "not actually specifying where the money is going to come from" for the bus fare cap extension.

"That is a worrying sign, we need to have a government which is on top of the public finances, not one that is making lots of spending commitments without explaining where the money is going to come from," Stride tells BBC Breakfast.

In the government's announcement this morning, it says the cap extension is expected to cost over £500m, and that £454 million will be reallocated from the Department for Energy Security and Net Zero.

It says this will be used in addition to funds already earmarked by the Department for Transport for buses.

This morning's announcement follows Burnham's government yesterday promising to cut VAT from household electricity bills from October through to the end of the financial year.

That measure is projected to save people an average of £45 from their annual bill - and would be funded by reallocating funds through the cancellation of the digital ID programme.

Questions were raised over whether those funds had yet been found for the digital ID programme - but Downing Street insisted the electricity bills change was "fully funded".

"Departments were going to have to fund the Digital ID programme through their existing budget reprioritisation," a spokesperson said.

"Departments will now direct these savings towards this."

Business Secretary Jonathan Reynolds said the move would give people some "breathing space".

As with yesterday's announcement on cutting VAT from domestic electricity bills, the government has similarly said this measure will be paid for through a reallocation of funds.

In this case, the government has said £454 million will be reallocated from the Department for Energy Security and Net Zero - £400m of which will come from switching investment set aside for international climate finance to loans and the remaining £54m from savings in the department's budget.

This will be used in addition to funds already earmarked by the Department for Transport for buses.

The total cost of the scheme is expected to be over £500m.

Chancellor John Healey says: "This action to ease the cost of living is funded by savings made elsewhere, so there's no burden to British taxpayers, just pounds going back into their pockets."

A £2 cap was introduced by the Conservative government in 2023.

Initially due to last only three months, it was extended until Keir Starmer increased the cap to £3 at the start of 2025.

That cap had been due to expire in March 2027.

This new cap will lower fares to £2 from 1 January.

In Manchester, where Prime Minister Andy Burnham was mayor from 2017 until he became the MP for Makerfield last month, single fares have been capped at £2 for the last four years.

Image source, EPA

Prime Minister Andy Burnham says no one should be "priced out" or "left behind" when it comes to affordable transport links after announcing bus fares in England will be capped at £2.

"For too long people have said that cheaper transport isn't an option. I don't accept that. I've done it before and I will do it again now: a £2 cap on bus fares for millions across the country," he says in a statement.

"Lower fares will help people get to where they need to - giving them breathing space to help with the cost of living."

Most bus fares in England will be capped at £2 from 1 January in 2027, the government has announced.

The reduction would see the cap on fares go down by a third from the current £3 cap.

This is breaking news. We will bring you more detail as it comes.