Transport secretary ‘100% sure’ new cap on bus fares in England is fully funded – UK politics live | Politics

My colleagues Kiran Stacey and Peter Walker take a closer look at the questions on how the government will finance its spending pledges:

On his first full day in power, the prime minister faced questions about how he would fund the removal of VAT from electricity bills and an expected uplift in defence spending – an issue that led his new chancellor, John Healey, to resign as Keir Starmer’s defence secretary last month.

Downing Street said on Tuesday that the tax cut was funded for the next financial year, but money would have to be found in future years from existing departmental budgets, suggesting spending cuts to come. No 10 has also ruled out using defence bonds to pay for higher military spending.

The Guardian has also learned Burnham plans to accelerate the timetable for implementing his promise to roll out a national care service, a move that could cost further money before the election.

Read the full report here:

We have more comments from transport secretary Heidi Alexander who was on the media round this morning answering questions on the new £2 bus fare cap.

The government said this morning that the cap would be funded by reprioritising the energy budget, essentially money that was going to be given to third countries for climate projects as a grant will be now be given as a loan which has to be paid back.

When pressed for more details by Sky News, Alexander said they will “need to be worked out”.

She also said she was not sure whether developing countries will have to pay the UK interest on the loans.

Good morning and welcome to our live coverage of UK politics.

Andy Burnham’s new government is facing fresh questions on how it will fund its new policies aimed at easing the cost of living, after the prime minister announced a £2 cap on single bus fares this morning.

The cap on single bus fares in England will be in place from January, reducing the current cap of £3. The government said the measure is backed by £454m of funding, including money to allow devolved governments to take similar action. About £400m of that funding will come from switching investment in international climate finance to loans, with the rest from savings in the Department for Energy Security and Net Zero budget.

It follows yesterday’s announcement of a cut to VAT on household electricity bills from 1 October, which the government said will be funded by cancelling the digital ID scheme. But former cabinet minister Darren Jones suggested the scheme was “unfunded” and said the government “will have to set out how it will pay for its new policies at the budget”.

When posed this question on the bus fare cap, transport secretary Heidi Alexander said she was “100% sure” the new policy was fully funded, saying the government was “reprioritising spending”.

“The prime minister has been absolutely clear that we’re going to observe the fiscal rules and that you won’t get any unfunded spending commitments from this government,” she told BBC Radio 4’s Today programme.

She also insisted the cut to VAT on domestic electricity bills was properly financed, telling BBC Breakfast that it was “not true to say the money isn’t there to implement the changes on electricity bills”.

She criticised Jones, who was sacked as the Duchy of Lancaster, for questioning how new government policies will be funded on social media, telling Sky News she was “not sure it was either the most timely or wise tweet that Darren has ever put out”.

Conservative shadow chancellor Mel Stride said the government could not answer the question: “Where is the money coming from?” Speaking to BBC Breakfast, he said there was not any money to be saved from scrapping the digital ID scheme because “it was never funded in the first place”.