Rachel Reeves is set to extend the £3 cap on bus fares until 2027 when she unveils her spending review on Wednesday.
As first reported by the Mirror, the Chancellor is understood to be preparing to announce an extension to the cap beyond the end of 2025.
Instead, it will continue across England until March 2027 as the Government seeks to ease cost-of-living pressures on the public.
The Government has previously said that, without the cap, fares could rise by as much as £12 for a journey between Leeds and Scarborough, or £5.50 for a ticket between Hull and York.
A Treasury source said: “We understand the cost of living is a priority for the British people. That is why we are investing in Britain’s renewal to make working people better off.”
But the Liberal Democrats criticised the decision not to return to the £2 cap that had been in place between January 2023 and December 2024.
The increase in the cap was announced at the budget in October, with the Government arguing the lower rate was not financially sustainable, although some metro mayors decided to fund an extension of the £2 cap in their areas.
Lib Dem transport spokesman Paul Kohler said: “Household budgets are still really feeling the squeeze, so many will be really disappointed to see that the Government is moving to make the bus fare hike permanent.
“This will hit those who rely on public transport to get around to their local high street or to work and school in the pocket. People have been telling them they got this wrong, but Labour clearly isn’t listening.”
