What’s next for the transport sector under a Labour Government

Funding and backing for rail infrastructure projects took up the most transport related airtime in the Autumn Budget announcement, although there were significant announcements too for aviation, roads, and a quick brushing over of a 50% increase in current bus fare caps (from £2 to £3 per journey).

In all, capital investment, which includes but is not limited to transport, will increase by £13bn next year, with £650m to be spent on improving transport in villages, towns and rural areas. The willingness of the Labour Government to continue the financial support provided to bus operators across the country (albeit with an increased cost to the travelling public) is an important decision that will ensure continuing stability around bus services across the country. The Department for transport (DfT) is set to receive £30bn for 2025-26. The decision is a timely one with the existing scheme due to end on 31 December. Bus operators were being pushed to the limit of their decision-making time frame as any decisions around non-viability of routes that could arise from a complete cancellation of the scheme would have to be made now and not in December for regulatory reasons.

But equally important is the allocation of £925m to protect existing routes and services with emphasis in particular on services in rural areas. It’s not entirely clear that this is new money – the previous government announced a reallocation of funds earmarked for HS2 towards local transport funding. Much of that funding will already have been committed in funding arrangements with operators and therefor if this is additional funding that will be welcome.

Whilst the transport industry will welcome the support, the statements made in the Budget arguably do nothing to support the national transport system, and the fragmented support on offer does not level the playing field between different modes of transport. For example, the continued freeze on fuel duty (essentially remaining flat since 2010), continues to make it more difficult for rail freight to compete with road haulage on pricing, which sits uneasily alongside initiatives related to sustainability.

It is also essential reading to consider the Budget announcements on clean energy, as a decarbonised and electrified transport system needs more clean energy. Of particular interest to those not backing a 100% electric future will be the announcements for backing to support 11 commercial-scale green hydrogen projects and the impact this may have on the availability of hydrogen as a transport fuel.

On roads, Reeve announced £2bn for the automotive sector which primarily includes EVs; maintaining company car tax incentives on EVs; the freeze on fuel duty (including the existing 5p cut) for another year; and £500m increase in road maintenance budget (claimed to be enough to fix 1m potholes).

In aviation, we can expect £1bn for aerospace to fund “vital” R&D; and air passenger duty on private jets will increase by 50%.

The longest set of announcements related to rail, although we haven’t seen anything new in way of capital projects, but Government backing and confirmation of funding is significant, and a clear acknowledgement of the value that rail manufacturing brings to the UK. Some commentators have branded the rail announcements as “underwhelming” with nothing to support SMEs in the supply chain. We also need further clarity on the leveraging of private investment in public infrastructure projects.

The main rail takeaways are:

• Whilst not mentioned by Reeve during her announcement, the full Autumn Budget confirms regulated rail fares will raise to 4.6% (RPI + 1%) on 2 March 2025 with railcards generally increasing by £5 (except the disabled person’s rail card)
• Backing of TransPennine upgrade to connect York, Leeds, Huddersfield and Manchester
• Pledge to bring forward East-West rail to “drive growth between Oxford, Milton Keynes and Cambridge” - first services due to run next year between Oxford, Bletchley and Milton Keynes, and between Oxford and Bedford by 2030
• Upgrades to Bradford Forster Square Station
• Improving capacity at Manchester Victoria
• “[G]etting a grip” on HS2, including funding to begin tunnelling work to London Euston, rather than ending at Old Oak Common. This section was previously paused by the Conservative Government for two years.  It remains unclear whether the Labour Government will support the original 11-platform layout or slimmed down 6-platform terminus. And questions remain over the capacity gap left by the cancellation of the northern section of HS2 for passengers and also rail freight
• Electrification:
  • Fully electric local and regional services to be available between Manchester and Stalybridge by the end of 2024
  • Route between Church Fenton and York to be electrified by 2026
  • Electrifying the Wigan to Bolton line.