Research and analysis

£2 bus fare cap evaluation: interim report January 2023

Updated 28 September 2023

Applies to England

Early observations from the first month, 1 March 2023

The £2 bus fare cap was launched by the Department for Transport (DfT) on 1 January 2023 and will remain in place until the end of December 2024. During this period, bus operators can voluntarily implement a £2 cap on eligible single tickets for adults.

The aims of the fare cap are to save passengers money and encourage more people back on the bus.

Monitoring and evaluation

DfT has commissioned an independent evaluation by Frontier Economics and SYSTRA of the £2 bus fare cap. This evaluation will gather evidence on the extent to which the fare cap achieves its aims of saving passengers money and encouraging greater bus usage.

The evaluation will also aim to understand:

• how the fare cap is experienced across the country by bus users and non-users
• the reductions in fares the fare cap leads to
• the impacts on travel choices

Importantly, by bringing together a range of different data and evidence, the evaluation will generate evidence on how the impacts of the fare cap vary across different groups of people and locations. The evaluation will also look at the value for money of the scheme.

As the scheme was launched in January 2023, this short summary highlights the early observations from the first month of the scheme. At this stage, these observations can only be considered tentative early indications of the potential effects of the scheme. The evaluation will continue over the coming months, and therefore provide richer conclusions on its effects.

Data used

Four data sources were used to inform this early analysis and will continue to be used throughout the evaluation.

Ticketer data

This includes data reported by operators of the percentage change in bus patronage and service levels, relative to a baseline week in January 2020. Data is collected by on-board ticketing software and for this early analysis, patronage by day of the week and region has been used.

Operator data

This includes data directly reported by bus operators on their ticket sales and ticket yields. At this stage, data from 2019 and 2022 has been used to provide a baseline.

Panel survey data (2 waves of the 4 planned waves)

Two waves of a national panel survey with a sample of 4,000 comprising bus users and non-users have been carried out. The first wave was in December 2022 before the scheme started and the second wave was in the first 2 weeks of February 2023 to gather month 1 insights. A further 2 waves will be undertaken over the coming months.

Secondary data

Publicly available data has been used, including the DfT quarterly bus statistics and rurality data.

At this early stage of the £2 bus fare cap scheme, the data is not sufficient to be able to draw conclusions on the key drivers of outcomes, nor to address all evaluation questions. The data is instead intended to provide the baseline against which the impacts of the scheme can be considered and to provide early insights into important factors such as awareness of the scheme, early signs of patronage change, and how the scheme has been experienced so far by different groups and in different locations. A more detailed assessment will be carried out for the final evaluation.

Early observations from the first month of the scheme are described below.

Operator participation

148 operators have voluntarily joined the scheme, representing around 90% of the total market in England (by patronage). This includes the ‘big 5’ operators (Arriva, Go Ahead, National Express, Stagecoach and First), along with 21 large small- and medium-sized enterprises (SMEs) and 72 SMEs. The majority of operators who have not signed up to the scheme are those which do not meet the eligibility criteria.

Baseline trends

The pre-intervention trends help to provide context to what is observed when the £2 bus fare cap scheme is in place. The key baseline trends are summarised.

Patronage

During the coronavirus (COVID-19) pandemic, bus usage dropped as low as 10% of pre-pandemic levels. Although bus patronage numbers are recovering, they remain at around 85-90% of pre-pandemic levels. Prior to the introduction of the £2 bus fare cap, bus usage was also seen to vary across different income groups.

Cost of travel

While the real cost of bus travel has fallen since Autumn 2020, inflationary pressures have pushed up nominal prices.

Fares above £2

Looking at average bus fares for tickets with a yield above £2 prior to the introduction of the £2 bus fare cap, average yields were highest in the East of England at £3.12 and lowest in West Midlands at £2.51.

Awareness

Awareness of the £2 bus fare cap scheme in December 2022 was greatest in the West Midlands and lowest in Yorkshire and the Humber.

Observations from the first month of the £2 bus fare cap scheme

Take-up of the scheme by respondents under the age of 65 varied significantly by region, rurality, household income and car ownership:

• respondents in the North West were most likely to report paying a £2 fare and those in the South East were least likely
• respondents in urban areas were more likely to report paying a £2 fare than rural areas
• respondents with a household income of up to £50,000 were more likely to report paying a £2 fare than those with a higher household income
• respondents without access to car/van as a driver were more likely to report paying a £2 fare than those with

Overall awareness was good with national news acting as the main channel for raising awareness of the initiative

Following the launch of the scheme on 1 January 2023, around 7 in 10 respondents reported an awareness of the scheme (69%). In early February, survey respondents who were somewhat or fully aware of the scheme were asked how they found out about the £2 bus bus fare cap. National news was the most common (28%), followed by local news (24%), from friends and relatives (24%) and from social media (15%).

Early evidence suggests a potentially positive impact on patronage

When looking at the entire sample (4,000 people), the proportion of respondents who made more journeys by bus since the introduction of the £2 bus fare cap was 10%. Of the respondents to the survey who had purchased at least one capped £2 bus fare (around 1,200), 35% reported that they had taken more bus journeys since the introduction of the initiative.

Some of this change in bus travel may be due to factors other than the £2 bus fare cap intervention. However, of the survey respondents who had undertaken more journeys with a £2 fare in place, a third said the £2 bus fare cap was the only reason they made additional journeys and almost half said it was the main reason.

Patronage may have increased more on weekends compared to weekdays and could be greater for younger people

Comparing the 4-week period from week 2 January 2023 with the same 4-week period in 2022 suggests a year-on-year patronage increase of 23% at the weekends, compared to 18% on weekdays. The weekend effect is supported by the findings of the survey which found a greater impact of the fare cap on participation in leisure activities and visiting friends and family than on employment and education. The survey also reports a greater patronage increase among people aged 16 to 24 than in older age groups.

The emerging evidence is unclear about whether changes in patronage are associated with the relative magnitude of change in fares

For weekend journeys, Ticketer patronage data suggests there may be a provisional relationship between the average fare reduction by region and the % increase in patronage. However, this has not been borne out in the survey results which did not find significant differences in patronage across regions.

The panel survey data suggests there may be a degree of modal shift from both private and active transport

Among survey respondents who had increased their bus use since the £2 bus fare cap scheme launched, just under 50% said that the additional journeys they were now undertaking by bus would have otherwise been made using a different type of transport. An additional 17% of respondents reported that the additional journeys were a mix of journeys that they wouldn’t have made at all and journeys that they would have made using a different type of transport.

The most common modal switch was from car or van as a driver (21%), followed by car or van as a passenger (15%). Additionally, 26% of this subgroup said that they would have travelled by active transport modes (foot, bicycle, or scooter/e-scooter).

Around a third of survey respondents perceive the £2 bus fare cap to have made a positive impact on their cost of living

Around 30% of survey respondents said that the £2 bus fare cap has had a positive impact on their disposable income and income for other expenses.

Initial evidence from the survey suggests that cost of living impacts are greater for younger age groups and people living in urban areas. Specifically, 49% of people aged 16 to 24 reported that the £2 bus fare cap had a positive or very positive impact on how much income they have for other expenses, compared to 23% of people aged 50 to 64.

Reported barriers to increasing bus travel were varied

For survey respondents who had purchased at least one capped £2 bus fare, but had not reported an increase in their bus use the main barriers to increasing bus patronage were:

• modal preference (21%)
• an overall decrease in journeys due to cost of living (21%)
• the fare cap reportedly led to no savings (18%) or insufficient savings (17%)

For respondents who self-reported as somewhat or fully aware of the £2 bus fare cap, but had not purchased any capped £2 bus fares, despite being aware of the scheme, the main barriers were:

• service eligibility (28%)
• ease of purchasing their usual ticket (26%) – especially if they own a bus pass
• lack of any bus travel at all (24%)

Observations from interviews with operators

A series of 9 interviews were carried out with a mix of large and small operators and one organisation who represented the wider bus industry to understand their initial experiences of the scheme. The interviews took place in February 2023. This was before an announcement was made by the Department for Transport on 17 February to extend the scheme for an additional 3 months until the end of June 2023.

What worked well

• most operators are supportive of the scheme, its objectives and the guidance provided by DfT during the application and reimbursement process
• the marketing Toolkit received positive feedback
• all stakeholders are positive about timely reimbursement from DfT
• financially, operators find the scheme to be low risk

Lessons learned

So far, the main concerns raised in relation to the process are:

• timescales for initial launch
• responses to clarifications
• data requirements
• concerns around the end of the scheme

Earlier communications from DfT, including on promotion and marketing, and more timely responses to clarifications, would have been helpful to operators.

Expectations around scheme close

• stakeholders have concerns about a ‘sudden end’ of the policy and the impact this might have on patronage, passenger perceptions and fare inflation
• there is general support for an extension to the scheme

Next steps

This short summary sets out early observations from the first month of the scheme. The evaluation will continue over the coming months, and provide richer conclusions on its effects along with a value for money evaluation of the scheme.