Grant Shapps Wants a Bus Fare Cap

Transport Minister Grant Shapps has written an article published in the Daily Telegraph which argues that the Government should impose a cap of £2 on all bus fares in England outside London. This would be paid for by a taxpayers’ subsidy of £260 million for 12 months.

It is suggested this cap would help those most affected by the cost-of-living crisis. Needless to say, this idea has apparently been opposed by HM Treasury.

Comment: This is economic lunacy. For example the typical bus far from London to Newcastle is £10 so £2 clearly nowhere near covers the cost of providing the service. In reality those who can currently afford the £10 would be massively subsidised so it would be a subsidy for both the wealthy and the poor, i.e. it’s not a targeted subsidy for those who can least afford to travel as claimed.

It would also undermine the economics of the rail network as people would choose to travel by bus rather than trains. So the true cost would be even higher as the Government already subsidises rail travel and those subsidies would need to increase if usage was reduced.

Once you start interfering in the economics of transport, you distort demand. Free or low cost travel increases demand which is then supplied at an uneconomic rate.

Where’s the £260 million coming from? From taxes that we all pay so raising the tax burden and reducing the income of everyone else.

This is yet another hare-brained scheme from Grant Shapps to follow on from his support of LTNs, active travel , HS2 and bail-outs of TfL.

Telegraph article: https://www.telegraph.co.uk/politics/2022/08/14/grant-shapps-introduce-2-bus-fare-cap-ease-cost-living-burden/

Roger Lawson

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