Transport secretary Louise Haigh is being hailed for winning a personal victory in negotiations with the Treasury in preventing eyewatering bus fare hikes by as much as 650 per cent, it is understood.
The embattled minister has had a difficult month after being briefed against by Downing Street in the P&O workers’ rights row which saw the ferry company’s owner DP World initially withdraw £1 billion of investment from the UK.
But despite speculation that she could be an early ministerial casualty in Sir Keir Starmer’s government, Ms Haigh is thought to have emerged victorious in a fight with the Treasury over continuing with a cap on bus fares.
Sir Keir Starmer announced on Monday the maximum bus fare will be £3 until the end of 2025 but only after fierce negotiating with chancellor Rachel Reeves and Ms Haigh’s Department for Transport (DfT).
The prime minister noted funding for the previous cap of £2 had only been in place until the end of this year, and there had been a threat of no fare cap at all.
A Whitehall source said this would have hit less profitable routes in rural areas and many towns with massive increases of up to £13, bringing some fares from £2 to £15.
However, one leading bus company owner warned even a 50 per cent increase to £3 might not be enough to save some routes.
Sandy Easdale, who along with his brother James owns McGills buses in Scotland, told The Independent: “There is definitely a cliff edge, particularly when the uplift with the £2 cap has been as much as 30% for travel on some rural routes.
“Next year’s decline will possibly see service reduced or maybe removed altogether, then the negative effects take place. This will be especially so in rural areas because you have low population and no growth because of the lack of available housing.”
While there are conflicting questions over the level of the 50 per cent rise in the cap on the cost of living and whether it is enough to keep some routes running, sources close to Ms Haigh warned it could have been much worse.
“Ensuring bus fares will be kept down at £3 at the Budget for an additional year will save up to 80% on some routes,” it was reportedly briefed.
“Under the inherited plans, funding for the current cap on bus fares had been due to expire at the end of 2024, with fares set to soar by as much as £13 for the Leeds to Scarborough route, unless the government intervened to keep fares down.”
Allies of Ms Haigh claimed securing a new fare cap was “hard fought” between the DfT and the Treasury.
“We face a real cliff edge and potentially massive fare increases,” The Independent was told.
While the new cap is only in place for a year, it is hoped reforms to allow bus routes to be brought back into public ownership and give greater control to local authorities will help in future years.
However, it is also understood the DfT commissioned expert analysis which showed the £2 bus fare cap was not financially sustainable for the taxpayer and bus operators in its current form and offered poor value for money.
A source close to Ms Haigh said: “We are committed to delivering reliable and affordable bus services in a sustainable way for taxpayers.”
The Department for Transport said maintaining the £3 cap until the end of 2025 would cost £151 million, while the government was also providing £925 million for local authorities and bus service operators to improve routes.
Ms Haigh said following the announcement: “Our bus revolution will give every community the power to take back control of their services, end the postcode lottery of services and turn the page on four decades of failed deregulation.”
