The House Opinion Article | A new social contract starts with free buses

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British politicians have long complained that the levers of government are jammed. They pull the lever, but nothing happens. If Andy Burnham’s new government is going to prove that the state can still deliver, he must stop tinkering around the edges and introduce a bold sweep of policies to rebuild the public’s trust in the social contract between government and citizens.

Looking at the broad themes he has chosen to act on, he has certainly identified the pressure points correctly. Transport fares, especially buses, which are used by half the country, are a real driver of the cost of living.

At the same time, big, unsolved problems hanging over society and left over from previous failures, like youth unemployment, a stagnant housing market, rough sleeping, and social care, are brave and worthy targets for action. 

However, Burnham needs to spark a new conversation in every living room across the country, and unfortunately his announcements so far have lacked ambition.

The £2 bus fare cap is a prime example of this. Instead, he should have started with free buses for all, nationwide, paid for by increasing Air Passenger Duty (APD). According to the modelling we conducted for the Prosperity 2030 report, a fully costed reform programme by the UCL Institute for Global Prosperity, adding an average of £26 to European flights would generate £8bn a year. That is enough to make buses free for everyone.

The mechanics are already in place. APD can be increased without primary legislation, and August’s nationwide discounted bus fares scheme proves the government can coordinate to compensate bus providers instantly. The benefits would fall squarely on lower-income households most reliant on buses, while 69 per cent of the costs are borne by upper-income households taking frequent overseas flights.

Furthermore, if the slight increase in flight costs encourages just one in ten travellers to holiday in the UK instead, it could generate £1.3bn in VAT, a win for domestic tourism. More importantly, it establishes a powerful principle that bold reform is achievable and can happen immediately, rebuilding the social contract between government and citizens. You get free everyday transport to work, hospital or the high street in exchange for a slightly more expensive holiday abroad. It is a trade most people can understand, and it clearly signals this government’s priorities for both people and the planet.

But free buses are only the vanguard of what must be a broader, more profound transformation of the British state. Once the public sees that the government can deliver tangible benefits in exchange for fair contributions, Burnham will have the political capital to sequence sweeping reforms across his premiership with one eye on the next general election.

Beyond the immediate introduction of free buses, the Prosperity 2030 framework also contains 30 other policies designed to be fiscally neutral over a parliament to lower the cost of living, while creating 547,000 net new jobs. It shows that carefully sequenced policies can achieve widespread structural change for the UK. 

Inspired by the NHS principles of unconditional access, we propose creating ten new Universal Services across transport, energy, water and local services. The underlying logic is that the state can leverage collective provision to deliver more value, particularly for things everyone needs to drive down the cost of living.

The PM could also generate widespread support for introducing a 1 per cent annual tax on property value, replacing Council Tax (frozen since 1991) and abolishing Stamp Duty, which suppresses housing mobility. It could be phased over three years and includes deferral provisions so no one is forced to move.

Burnham has rightly called this the “last chance” to demonstrate that government can work. He has identified the right pressure points, but sequence is everything. He must earn credibility, permission, and efficacy in rapid succession.

If the new administration wants to turn its promises into reality in the short time it has available, it must be brave enough to ask something of us. Start with the buses. Let the country see that when we chip in together, the levers of government still work.

Andrew Percy is co-chair of the Social Prosperity Network at UCL’s Institute for Global Prosperity