The government led by Labour Party Prime Minister Andy Burnham has confirmed two significant financial measures aimed at easing the cost of travel for drivers and bus passengers. From January 2027, a new lower bus fare cap will be introduced, while a reduction in VAT on energy bills will take effect from October 2026.
According to Carwow, car drivers are expected to save approximately £65 annually due to the VAT cut on energy bills. While this figure may appear modest, it can accumulate significantly over time. For example, charging a 100kWh electric vehicle (EV) from empty to full once a week could result in savings of around £65 per year. Households with multiple electric vehicles or drivers covering high mileages could benefit even more.
In addition to these savings for drivers, bus users will also see a reduction in costs. The new bus fare cap will lower the maximum fare from £3 to £2. With the average bus passenger journey count in England outside London estimated at 37 per person in the year ending March 2025-a 3% increase from the previous year-this fare reduction could save passengers an average of £37 annually.
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Maryam Eslamdoust, General Secretary of the TSSA union, welcomed the measures, stating: “This is a step in the right direction from Andy Burnham because travel on public transport must be affordable for the public. Our union hopes and expects that this is simply the beginning of measures to tackle the cost-of-living crisis which is a blight to so many people in our country.
“What we want to see from the government is an overall strategic approach which concentrates on transport being run for people not profit. Doing so will signal that Andy Burnham is serious about moving Britain away from the agenda of the 1980s.
“Not only that, it will help grow local, regional and national economies, deliver for passengers, and help build a fairer and more prosperous country.”