Drivers and bus users across England are set to benefit from a combined £102 annual saving, thanks to two new measures confirmed by Prime Minister Andy Burnham. The Labour leader, who represents Makerfield, has announced a reduction in the bus fare cap and a VAT cut on energy bills, with the changes taking effect from January 2027 and October 2026 respectively.
VAT Reduction: A £65 Annual Saving for EV Drivers
The VAT reduction on energy bills is expected to save electric vehicle (EV) drivers approximately £65 per year. Carwow, a leading car marketplace, highlighted the potential savings for EV owners who charge their vehicles at home. According to Carwow, charging a 100kWh EV from empty to full once a week could save around £65 annually. Households with multiple electric cars or those covering high mileages could see even greater savings.
This VAT cut, which applies to domestic energy bills, is part of a broader government strategy to alleviate the cost-of-living pressures facing households. The reduction from the current rate will provide a modest but meaningful financial reprieve for many families.
Bus Fare Cap Reduced: £37 in Passenger Savings
In addition to the VAT cut, the government has confirmed a reduction in the bus fare cap from £3 to £2. This change is set to benefit passengers, with the average person making 37 bus journeys per year in England outside London. Based on this average, passengers could save up to £37 annually under the new cap.
Data from the Department for Transport shows that the average number of bus passenger journeys per head in England outside London was 37 in the year ending March 2025, an increase of 3% compared with the previous year. This indicates a growing reliance on bus services, making the fare reduction particularly timely.
Union Welcomes Move but Calls for More Action
The Transport Salaried Staffs' Association (TSSA) has welcomed the bus fare cap reduction, describing it as a step in the right direction. General Secretary Maryam Eslamdoust said: “This is a step in the right direction from Andy Burnham because travel on public transport must be affordable for the public.”
However, Eslamdoust emphasised that more needs to be done to tackle the cost-of-living crisis, which she described as “a blight to so many people in our country.” She called for an overall strategic approach that focuses on transport being run for people, not profit, and urged the government to move 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,” she added.
Impact on Households and the Economy
Combined, these two measures provide a total saving of £102 for the average driver and bus user. For families with multiple vehicles or those who rely heavily on public transport, the savings could be even more substantial. The changes are expected to have a positive impact on household budgets, while also encouraging greater use of public transport and supporting the transition to electric vehicles.
The government has indicated that these measures are part of a wider effort to address the cost-of-living crisis and promote sustainable transport options. Further announcements are anticipated in the coming months, with a focus on making transport more affordable and accessible for all.
