The bus fare cap in England will be raised to £3 in the Budget, Sir Keir Starmer has announced.

It is an increase on the current £2 cap, introduced by the Conservatives to encourage people to use public transport after the Covid pandemic.

In a speech today the Prime Minister said: “On the £2 bus fare, the 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 had been widely reported that the £2 cap was set to be scrapped in the Chancellor’s first Budget on Wednesday, sparking fears people may be unable to afford to get to work, college or hospital.

Bus operators were understood to be largely resigned to the £2 cap being abandoned, but had pressed for it to be raised to no more than £2.50.

‘I will defend our tough decisions all day long’

Setting the tone ahead of Rachel Reeves’ address on Wednesday, the Prime Minister said he will defend the Government’s Budget tax rises “all day long”.

Sir Keir said that “nobody wants higher taxes, just like nobody wants public spending cuts” but he had to be “realistic about where we are as a country”.

He added: “This is not 1997 when the economy was decent but public services were on their knees. And it is not 2010 where public services were strong but the public finances were weak.

“We have to deal with both sides of that coin.”

“I will defend our tough decisions all day long. It is the right thing for our country and it is the only way to get the investment that we need.”

In the same speech, 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’ time.

The Prime Minister said the UK is “the only G7 country for whom economic inactivity is still higher than it was before Covid”.

“That’s not just bad for our economy,” he said.

“It’s also bad for all those who are locked out of opportunity.

“So the Chancellor will announce £240 million in funding to provide local services that can help people back into work.”