UK: Chancellor Rachel Reeves presented the 2025 Spending Review on June 11, setting departmental budgets for day‑to‑day spending until 2028‑29 and capital investment until 2029‑30.
The Department for Transport settlement provides £31·5bn in 2028‑29. Capital investment, excluding spending on High Speed 2, increases at an annual average real terms growth rate of 3·9% per year between 2025-26 and 2029-30. Resource funding falls in real terms over the period, primarily driven by declining rail passenger services subsidy as ridership and revenue continue to recover post Covid-19 and other efficiencies and savings are made.
This sum includes £15·6bn by 2031-32 via Transport for City Regions settlements announced on June 4.
There is ‘the largest multi-year settlement for London in over a decade’, with £2bn of funding between 2026‑27 and 2029-30 for Transport for London’s capital renewals programme. The government ‘recognises the potential growth and housing benefits’ of the Docklands Light Railway Thamesmead extension and is committed to working with TfL to explore options for delivery.
The settlement will provide £10·2bn for rail enhancements (excluding HS2), including:
- £3·5bn for the Transpennine Route Upgrade;
- £2·5bn for delivery of East-West Rail;
- £300m for rail investment in Wales, including for the stations proposed under the Burns Review and the North Wales Level Crossings, Padeswood Sidings and Cardiff West Junction projects. Along with the upcoming 10-year Infrastructure Strategy this will ’recognise Wales’ long-term infrastructure needs and will deliver at least £445m of rail enhancements to realise them’;
- £240m to enhance Leeds station, improving capacity and relieving congestion;
- funding to progress the government’s long-term strategic rail ambitions in the north of England, with further detail of plans to take forward work on Northern Powerhouse Rail to be set out through the 10-year Infrastructure Strategy;
- funding to progress the next stage of the Midlands Rail Hub West.
There is also £25·3bn to progress delivery of HS2 from Birmingham Curzon Street to London Euston. This ‘will support the full reset of the HS2 programme under the leadership of the new Chief Executive, addressing longstanding delivery challenges.’
DfT has committed to delivering at least 5% savings and efficiencies, including becoming a ‘smaller, more skilled and more agile department’, with changes to spans of control and layers of leadership, refining the department’s approach to sponsorship of delivery bodies, increasing resource flexibility, and greater use of AI and digital tools. Saving are expected from the transfer of rail services into public ownership which will enable the removal of duplication of functions and create economies of scale. DfT also aims to ‘consolidate rail websites and ticketing, enabling efficiencies in operational running costs.’ It will also rationalise its London estate and expand its presence in Leeds and Birmingham.
Responses
Commenting on the Spending Review, Railway Industry Association Chief Executive Darren Caplan welcomed ‘the recognition that the railways are key to delivering economic growth’ and said ‘rail businesses from every part of the UK will want to be involved with delivering those schemes, as the government and devolved bodies take them forward.’
The High Speed Rail Group welcomed the four-year funding settlement for HS2, saying it ‘creates the platform from which HS2 and its suppliers can carry out the much needed “reset” of the project and bring clarity on both anticipated costs and programme. With this certainty in place the supply chain will now work with HS2 Ltd to drive the productivity improvements the project needs and the government reasonably demands.’
It said ‘we must now work to define what is needed between Birmingham and Crewe to avoid creating Britain’s biggest bottleneck in this section of the national railway.’
Transport for the North Chief Executive Martin Tugwell said ‘we look forward to seeing the 10-year Infrastructure Strategy, including how Northern Powerhouse Rail will be progressed, later this month. The economy of the North is constrained by its creaking Victorian rail infrastructure; investment in new rail capacity is long overdue to unlock the region’s growth potential.’
London’s Transport Commissioner, Andy Lord, said ‘we are grateful that the government has agreed a much-needed multi-year capital funding agreement similar to those in place with Network Rail and National Highways. This settlement will ensure that London’s transport network can continue to support new homes, jobs and economic growth in the capital. And it will boost jobs, skills, growth and opportunities across the UK.’ Plans included procuring a new tram fleet, and progressing discussions on new Bakerloo Line trains. Lord said ‘we can move on from the short-term and stop-start nature of funding over recent years and get on with the vital work of making our city and our country work for everyone.’
London TravelWatch said ‘the lack of extra funding for key projects such as the DLR and Bakerloo Line extensions and the West London Orbital rail link is disappointing – and it is unclear whether the £2·2bn allocated will be enough to enable TfL to make good past under-investment in maintaining and renewing the existing network.’
Urban Transport Group director Jason Prince said ‘we now have funding clarity over the coming years that will help deliver vital local transport schemes and services, spurring economic growth and investment in public transport.’
Richard Whitehead, Chief Executive (Europe & India) at AECOM, said ‘this review provides greater long-term visibility on spending priorities than we have had for years. If realised, these commitments will deliver transformative change for the UK. We now await the 10-year infrastructure strategy next week to drive investment and provide further clarity.’
Amish Patel, transport leader at PwC, said ‘investment alone isn’t delivery. If we treat each region as an island — tasked with building full delivery and service capacity from scratch — we risk delay, duplication and fragmentation.’ He said organisations like Network Rail are ‘capability-led machines that now know how to marshal scarce skills — commercial, planning, digital — and deploy them flexibly across regions. That learning has been bought at a cost; it would be a false economy to ignore it and start again 10 times over in each Combined Authority.’
