All was quiet on the transport front in last month's Spring Statement as the Chancellor focused on clawing back nearly £10bn in fiscal headroom. Wiped out by rising borrowing costs and the OBR's rather sobering downgrade of growth forecasts from 2% to 1%, this cushion had turned from a surplus into a £4bn deficit. This left the Chancellor £14bn short under her own fiscal rules. Her pledge to invest a further £13bn in capital infrastructure this Parliament was, however, welcomed by the sector, bolstered by recent nods to major projects such as Heathrow's long-awaited third runway and the granting of development consent for the £9-10bn Lower Thames Crossing. Beyond these announcements, however, the mood remained very much 'wait and see'.
Not much has changed since. Later this year we expect the publication of the Integrated National Transport Strategy and, before that, the hope is that long-needed guidance for the sector will arrive with the Industrial Strategy and 10-year Infrastructure Strategy.
These are expected to be published in June, when keen eyes will turn to watch the Spending Review. Set to take place on June 11th, this is where the Chancellor will set out plans for day-to-day spending for four years to 2028–29, and for capital spending for five years to 2029–30.As Reeves navigates the choppy waters of Trump's unpredictable tariff negotiations and ever-present pressure to bolster defence spending, what can the transport industry expect?
More certainty and stability over spending decisions
What we do know is that Labour are rejigging the process of making spending decisions. These include establishing a regular cycle of two-yearly spending reviews (setting resource budgets for three years), a 10-year infrastructure strategy and five-year capital budgets to provide greater certainty and stability. One of the more pointed critiques of previous reviews is that they've tended to foster competition rather than coordination - pitting departments against each other and reinforcing silos. To change that, Chief Secretary to the Treasury Darren Jones is promising a more open-book approach. The Treasury's "cards will be on the table," he says, with shared dashboards giving greater visibility about spending plans and the overall envelope to avoid spending time "arguing about what the truth is". Technology will help to sweep away outdated analogue processes, while 'mission groups' aim to foster cross-departmental cooperation, with multilateral talks replacing the usual closed-door, Treasury-led bilaterals.
Greater departmental collaboration
But for all the structural tweaks, the real test is whether this feeds into actual spending allocations. If departments are to engage meaningfully with the Treasury, they'll need to believe collaboration boosts their chances of getting programmes funded. The Treasury could do this by setting cross-departmental budgets for cross-cutting priorities. The risk is that departments which are reportedly on the chopping block, the DfT included, view these procedural adjustments as political fluff and focus solely on their bottom line.
What could this look like for the Department for Transport? Well, one example might be collaborating with the Ministry of Housing, Communities & Local Government (MHCLG) to ensure that transport investments contribute to local economic growth. It's clear, for example, that the Planning and Infrastructure Bill is a flagship policy for the Government, with significant economic backing and crucial implications for transport. If the DfT works closely and considerately with MHCLG on the Bill, it could use the partnership as a strategic lever to strengthen the case for delivering its major infrastructure priorities.
We can also look to previous announcements to see how further collaboration might work in practice - as nodded to in the Spring Statement, the Government has committed £625m to a construction skills package expected to provide up to 60,000 more workers this Parliament. This brings together elements of the Departments for Education, Work and Pensions, and Transport, and will require close collaboration between the three.
The need for longer term spending commitments
Welcome though this spirit of collaboration is, the Department for Transport faces its own pressing sectoral priorities. High on the rail industry's wish-list, for one, is a commitment to a long-term strategy to bridge the uncertain gap between now and 2027, when Great British Railways is expected to be established. As Railway Industry Association (RIA) chief executive Darren Caplan puts it, "delays in decisions on major projects, enhancements, as well as train-building and refurbishments make it more difficult for businesses to plan ahead or for SMEs to survive, and it also makes it harder to attract business investment."
There are also high expectations in the capital - namely, a long-term funding deal for Transport for London (TfL). While the body was awarded £485m in the October Budget for capital spending in the 2025-26 financial year, no clarity has been provided on funding beyond that point. Andy Lord, the Commissioner for TfL, has confirmed that he's written to the Chancellor to request a financial settlement of up to five years to support capital investment. He argues that a multi-year deal is essential for renewing ageing infrastructure - from replacing crumbling Bakerloo line trains and outdated signalling to supporting new services on the Elizabeth line and potential upgrades to the Piccadilly line, to meet increased passenger demand if Heathrow's proposed third runway materialises. As he notes, TfL "does not have [the] funding available" to cover such investments on its own.
Similar concerns are being raised across the bus industry. The Confederation of Passenger Transport, in a submission to the Transport Committee's 'Buses connecting communities' inquiry this year, criticised the inadequacy of current funding models and governance structures for bus services outside major metropolitan areas. The message was clear: a long-term funding commitment is essential to delivering reforms that can improve sustainability, accessibility, and affordability across the country
Cautious optimism for the transport industry?
As June approaches, the transport industry watches with cautious optimism. While structural reforms to the Spending Review process and cross-departmental collaboration sound promising, the true test will be in the actual funding allocations. Whether the Treasury's new approach will translate into the stable, long-term investment the transport industry desperately needs to deliver its priorities remains to be seen. Until then, the waiting game continues...
