Under 25s would have free bus travel under a Labour government, the party said, proposing a scheme that would be paid for by ring-fenced cash arising from road tax.

The party said local authorities who moved to introduce public ownership of bus services or franchising would be given the funds to provide free travel. The scheme would incentivise councils to create municipally owned bus companies.

Young people deserve free bus passes | Polly Toynbee Read more

The party said its research could help up to 13 million young people save £1,000 a year, based on the average price of a bus ticket in England. The policy would cost £1.4bn a year by the end of a five-year parliament, with franchising or municipalisation of services likely to be staggered.

Labour said the funds would use about a fifth of the income from vehicle excise duty revenues, forecast to be £6.7bn in 2021, which is currently allocated to road building.

The party said it would widen the hypothecation and use the pledge of the shadow chancellor, John McDonnell, for a £250bn National Transformation Fund to pay for road building, to be paid for by government borrowing.

Jeremy Corbyn will launch the policy at a visit to a sixth form in Derby on Thursday, and is expected to say: “Young people deserve a break. Nearly eight years of Tory austerity have hit their incomes, their chance to buy a house and their career opportunities. On average, children, young people and households with children each have less disposable income than working-age households without children. Young people also tend to be in lower paid, more insecure work, and they spend a higher proportion of their income on travel. Giving them free bus travel will make a huge difference to their lives.”

It’s not just trains – buses outside London should be nationalised too | Kathleen Kerridge Read more

The shadow transport secretary, Andy McDonald, said the funding would provide an incentive for councils to bring services back into public ownership; companies often chose to operate only the most profitable routes, leaving councils to fund the less popular rural routes that were still a key lifeline for communities.

“Buses are vital for easing road congestion and air pollution, but for too long private bus companies have run our services for profit not people,” he said.

Passenger bus journeys are at their lowest level for a decade, with the average number of bus trips made by young people under 21 down by almost 40%.

But the transport minister, Nusrat Ghani, said Labour had “no real ability to deliver” the promise of free travel, suggesting it could cost up to £13bn, which Labour has denied.

Ghani said Labour were “bribing young people again with yet another empty promise”, after first promising to abolish tuition fees. “Our balanced approach to the economy means that we are able to help people with the cost of travel by extending railcards to everyone under the age of 30, while councils also have the power to offer cheaper travel for young people.”

The Conservatives also criticised the pledge to fund road building from the National Transformation Fund, saying it would mean funding a day-to-day spending commitment with borrowed money.

A Labour source said it was nonsense that the policy would cost £13bn, a sum it said was based on the assumption that every person under 25 in the UK would use a bus 10 times a week. Labour’s costs were based on a lower price with services taken in-house and modelled on the free bus passes for elderly people.