UK bus price cap scheme is extended

The government are introducing and funding a price cap - limiting the cost of bus journeys in certain locations to £2 per single journey. The cap will run from January 1 to March 31. This means that whereas previously the trip between Middlesbrough and Newcastle would cost £8, it's now £6 cheaper.

This is part of a package of measures to reduce the cost of living, although critics suggest that it is only a partial solution to the problem. Indeed, in some urban areas, notably Manchester, Liverpool and West Yorkshire, the £2 price cap is part of a longer-term scheme.

Graham's insights

The Guardian in this editorial sees the introduction of subsidies to lower single bus fares to a maximum of £2 as money well spent. It will offset the cost of living crisis, encourage increased us of public transport, and, in theory reduce emissions.

However, how would you go about evaluating this? Aside from the equity implications, how many people will switch from their cars to public transport? What will determine this? And will they stay with public transport when fares subsequently rise? And how much will carbon emissions fall? And then you have to consider the opportunity cost of all of this?

So is this good economics? Only time will tell...