In a budget where the big focus was on raising £40 billion to put the public finances on a more sustainable footing and provide some headroom for future growth and investment, it was perhaps unsurprising that there was little in the way of headline grabbing transport announcements. Whilst there were some welcome announcements, it feels the bigger decisions that will reveal the direction of travel will come in the Spring Spending Review.
Perhaps the most significant move was the Chancellor, Rachel Reeves, confirming funding for the HS2 Euston station tunnels, but not for the station itself after previously warning that private funding will be required to move the station redevelopment forward. She also announced that East West Rail services to Bedford will now be accelerated to run from 2030 although it appears that the Cambridge section of the route is still in limbo pending the recently announced route consultation. Elsewhere in rail the chancellor promised to secure delivery of the Transpennine Route Upgrade between Leeds and Manchester, a previously announced scheme, but with an additional commitment to further electrification of services between Church Fenton and York by 2026. There was also a short mention for Northern Powerhouse Rail, with further detail likely to be provided in the Spending Review.
In local transport, the flat fare bus cap was extended, but at an increased rate of £3 (previously £2) - except in Manchester, where the mayor announced that he will be utilising his controls over the bus network (and his own funding) to keep the £2 flat fare. Through the City Region Sustainable Transport Settlements (CRSTS), the chancellor pledged an additional £200m of funding for 2025/26 increasing the total to £1.3bn to improve transport connections, including for funding elements of the West Midlands Metro and West Yorkshire Mass Transit.
Greater Manchester Combined Authority and West Midlands Combined Authority are to receive integrated settlements (across local growth and place, local transport and housing and regeneration) for next year, with the details of these due to be announced in the coming weeks. A selection of other local authorities will be eligible to receive their own integrated settlements from 2026/27 onwards although it will be interesting to see the speed at which these happen. TfL received £485m for its capital renewals program, and £650m was committed to local transport funding (beyond CRSTS settlements) alongside an additional £100m for cycling and walking improvements.
One area that seems to have garnered significant attention is the governments approach to the transition to electric vehicles (EVs). On one hand, Rachel Reeves announced £200m in funding to accelerate the rollout of EV charging infrastructure (alongside an extension of low company car tax for EVs), whilst simultaneously committing to maintain the fuel duty freeze and the 5p tax cut which was introduced in 2022. This sends a potentially confusing message to the market and means that fuel duty will now have been frozen since 2011. The budget gave no indication as to whether the government is considering reinstating the 2030 ban on new ICE car sales. Hidden in amongst all of this were reforms to the Vehicle Excise Duty (VED), which will quietly raise an expected £1.5bn over the next 4 years.
Now that the long-awaited budget has been delivered, attention will turn to next year's spending review and a number of upcoming white papers that are in the pipeline - most critically the English Devolution White Paper. How the government utilises these opportunities will give a strong indication of the direction of travel for transport and its relative priority. The budget documents noted that the government are "working closely with local leaders on the upcoming English Devolution White Paper" to set out their approach to devolution. This is due to be published shortly. There are a number of critical issues that this paper and others will hopefully cover, including:
- The extent of devolution of funding powers to local transport bodies - it will be critical that they are given a greater ability to generate income to cover both new capital investment and operating expenditures to run expanded urban transport networks.
- The use of private finance to deliver transport projects, where Euston station has the potential to be a good test case for the use of private finance
- The detail of what a committed Northern Powerhouse Rail project includes - the last Network North announcement focused on the Manchester – Liverpool leg
- How transport funding is prioritised between urban and intercity transport services.
Encouraging for future transport investment the Budget confirmed the changes to HMG's fiscal rules; by tweaking the definition of debt used in calculating them it provided potential future headroom for investment. When taken alongside the chancellors "golden rule" of only borrowing to invest (rather than day to day spending) Transport will look to directly benefit from this change as (hopefully) a key investment priority.
