Rail Sector Reacts to Budget Allocations

According to a recent report from the UK government, Chancellor Rachel Reeves unveiled the 2025 Spending Review on June 11, which outlines departmental budgets for operational expenses through to 2028-29 and capital investments extending until 2029-30.

The Department for Transport (DfT) is set to receive £31.5 billion by the year 2028-29. Notably, capital investment—excluding High Speed 2 (HS2)—is projected to grow at an average annual rate of about 3.9% from fiscal years 2025-26 through to 2029-30. However, resource funding is expected to decline in real terms during this period due mainly to reduced subsidies for rail passenger services as ridership rebounds post-pandemic and various efficiencies are implemented.

This budget also includes £15.6 billion earmarked by Transport for City Regions as announced on June 4.

A significant highlight is that London will see its largest multi-year funding package in over ten years, with £2 billion allocated between the years of 2026‑27 and 2029‑30 specifically for Transport for London’s capital renewal initiatives. The government acknowledges the growth potential tied to extending the Docklands Light Railway into Thamesmead and has committed to collaborating with TfL on delivery options.

The settlement allocates £10.2 billion towards rail enhancements (excluding HS2), which encompasses:

• £3.5 billion dedicated to upgrading the Transpennine Route;
• £2.5 billion aimed at advancing East-West Rail;
• £300 million targeted at rail improvements in Wales, including projects identified under the Burns Review such as station upgrades and level crossings; this aligns with a forthcoming Infrastructure Strategy that aims at addressing Wales’ long-term infrastructure needs;
• £240 million focused on enhancing Leeds station’s capacity;
• Funding intended for advancing strategic rail ambitions across northern England; further details regarding Northern Powerhouse Rail will be outlined in upcoming infrastructure plans;
• resources allocated towards progressing developments related to Midlands Rail hub West.

An additional £25.3 billion has been designated for continuing HS2 construction from Birmingham Curzon Street all the way down to London Euston, aiming at resetting project challenges under new leadership.

The DfT has pledged a minimum of five percent savings through becoming more streamlined and skilled while leveraging AI technologies alongside digital tools—this includes consolidating operations like ticketing systems across regions which could lead not only toward cost efficiency but also improved service delivery overall.

Responses

Darren Caplan, Chief Executive of Railway Industry Association expressed his approval regarding this Spending Review stating it highlights how crucial railways are in driving economic growth throughout various UK regions eager participation from local businesses is anticipated as these projects unfold.”

The High-Speed Rail Group echoed similar sentiments welcoming four-year funding stability saying it lays groundwork necessary “to reset” HS2 effectively while clarifying costs involved moving forward.”

“We must now focus our efforts defining requirements between Birmingham-Crewe,” thay added emphasizing avoiding potential bottlenecks within national railway networks.”

“Martin Tugwell Chief Executive of Transport For The North remarked he looks forward seeing detailed plans surrounding Northern Powerhouse Rail soon noting current Victorian infrastructures hinder regional economic progress.”

“London’s Transport commissioner andy Lord expressed gratitude over securing multi-year agreements akin those established previously with Network Rail ensuring continued support vital urban transport networks fostering job creation skills development across UK.” He mentioned ongoing discussions around procuring new tram fleets along Bakerloo Line train advancements too.”

Critics like London TravelWatch voiced concerns about insufficient funds directed towards essential projects such as DLR extensions questioning whether allocated resources woudl adequately address past maintenance deficits within existing frameworks.”