The £3 cap on bus fares is set to be removed at the end of next year, the Transport Secretary has signaled.

A universal cap on fares was first introduced by the Conservatives at £2 to encourage the use of public transport after the pandemic.

Labor announced in the budget that the cap would be increased to £3 next year, sparking fears the cap could be removed altogether. It appeared that more targeted aid programs would be considered from 2026.

Louise Haigh, the transport secretary, said her department felt the “best approach” was to provide targeted support to young people.

Asked if the £3 cap would be maintained beyond next year, she said on Sunday morning with Trevor Phillips on Sky News: “The plans we inherited would have ended the cap completely on the 31st December.

“We have stepped in with funding to protect it at £3 until December 31 next year. And during this time, we will seek to establish more targeted approaches. We have, in evaluating the £2 cap, found that the best approach is to target it at young people.

She added: “Just as we are doing with the reduced fare for older people, we believe we can develop more targeted ways that will encourage more people to take the buses. »

Asked whether this meant passengers should expect targeted subsidies on bus fares rather than a single cap, she said: “That’s what we’re looking at at the moment. »

Ms Haigh added that the previous cap introduced by the Conservatives “had not represented good value for money” and that her department’s priority was to improve “bus reliability”.

Labor will provide more than £1 billion of funding for the bus network in an attempt to allay concerns over rising fares and the future of vital routes.

The Government will pay £712m to councils to invest in local services as part of an extension to the Bus Service Improvement Plan (BSIP), which was due to expire in April.

Ms Haigh said bus operators would receive £243 million in grants to keep fares low and increase frequency.

Although every region of England would benefit, the funds would be focused on historically underserved communities, such as small towns and villages, the Department for Transport (DfT) said.

Continuing the BSIP grant, which was introduced under Boris Johnson to encourage people to return to public transport after Covid, will soften the blow of fare rises.

The BSIP, which has provided £1.08 billion of funding to date, has become integral to the survival of many services, according to the Urban Transport Group, which previously warned that without it, one in four services could be at risk in areas such as South Yorkshire.

Early morning, late evening and Sunday buses rely heavily on these subsidies, while two thirds of “socially necessary” routes are fully funded through them.

Campaigners fear that without a cap, local people and tourists would be charged reduced fares on longer rural routes, leading to services being cut altogether.

Ms Haigh said the new investment would protect rural buses and increase their use for shopping and travel, while preventing a reduction in service on risky routes. She said urban areas would be able to maintain high service levels outside of the busiest times. Areas benefiting from record bus funding include the Isle of Wight, Torbay in Devon, Leicester in the East Midlands and Peterborough in Cambridgeshire.

In addition to the £955m of new funding, the Government has committed £150m to support the £3 cap. Fare increases would be limited to the level of inflation to ensure they do not all immediately reach the maximum, the DfT said.

Ms Haigh also told the BBC on Sunday that she regretted an outburst last month in which she called P&O Ferries a “rogue” operator and called for a boycott of its ships following the layoffs of workers in 2022.

His remarks led DP World, P&O’s parent company, to threaten to halt a £1 billion investment and walk out of a historic investment summit, before Sir Keir Starmer distanced himself from them.

She said: “I accept that my language was an unnecessary distraction, especially at that time. »

Ms Haigh said if the company moved ahead with the introduction of a new seafarers’ charter and a minimum wage for maritime workers, she would be “very happy to come on board a P&O ferry.

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