Let’s take a look through the document on the official UK Government website.
Highlights from the document 'Budget 2026'
4. Breathing space
In that context, this is a Budget to steer Britain through a period of global pressures, to grow the economy and to provide breathing space for families and businesses.
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Third, this Budget takes the pressure off families and businesses now. The government has already removed VAT from domestic electricity for this winter and will cap bus fares at £2 and reduce business rates on pubs in 2027. This Budget goes further, with policies that support around 29 million households across the UK with an extended cut to VAT on electricity, 35 million individual motorists – and businesses across the UK – through extending the freeze to fuel duty, and up to 20 million households in England through the Household Energy Payment. And for high street businesses, the decisions in this Budget mean that from April 2027, RHL businesses in England will see their business rates either frozen in real terms, reduced, or cut to zero
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5.5 Growth in more places
Northern Growth Strategy – Across the North of England, our major city regions continue to demonstrate what ambitious investment, strong local leadership and long-term direction can build. Central government will help sustain that momentum, through:
• Progressing development and delivery of Northern Powerhouse Rail, including a new station in Bradford, which will be built at the Interchange site. The government is also confirming a total of over £300 million for the Leeds Existing Station Programme, set to be delivered by 2030. This will deliver a major package of upgrades to increase capacity and improve accessibility at Yorkshire’s busiest railway station.
• Giving the green light for main construction works to begin on the A66 next month, delivering a continuous 50-mile dual carriageway between the M6 and A1(M), strengthening connectivity between the North-East and Cumbria. The project will be delivered through a revised nine-year programme, with phased construction commencing in November 2026.
• Funding £7 million to conduct a feasibility study for a potential future bid to host the Olympics and Paralympics in the North of England during the 2040s. The study will report in 2029 and will also consider how this could best deliver transformational regeneration.
• Delivering on the government’s commitment to develop the Northern 500, bringing together ambitious mid-sized Northern businesses through a single growth community led by The Great North partnership of Mayors, with up to £800,000 funding for a new Council and Steering Group overseeing its development. Working alongside private sector partners including NatWest and Sage, the programme will support ambitious Northern businesses to scale and grow.
• Providing £20 million from the Growth Mission Fund to support the restoration and redevelopment of the long-derelict Littlewoods site in Liverpool into a 260,000 square foot creative campus for film, TV, gaming, immersive technology, and digital screen industries.
• Providing £10 million from the Growth Mission Fund to support local regeneration in Bury focused on the restoration and reactivation of the Indoor Market building.
Oxford to Cambridge Growth Corridor – This world-leading innovation hub across Milton Keynes, Bedford and beyond needs more residential, commercial, and lab space to reach its potential and to realise the growth benefits from East West Rail. The government will pilot a new financing model for the Greater Cambridge Development Corporation, giving it direct access to government finance for land assembly and to invest alongside private partners. This pilot is a first step that will help the government consider wider reforms to enable development corporations to access long-term, flexible government financing. The government will also launch a consultation on a development corporation in Oxford by the end of the year, and look to extend the financing pilot there.
London – The capital remains the driving force of the UK economy and one of the world’s most important cities. Its world-leading transport infrastructure is critical to its growth and productivity, and provides connectivity to the nations and regions and internationally. This Budget will build on this success through:
• Subject to a full business case developed by the Greater London Authority (GLA) and the London Borough of Camden, a Tax Increment Financing mechanism at Euston, based on a business rates retention zone, will be implemented. This will primarily fund London Underground upgrades, while the government continues to work with the Mayor of London to maximise the wider growth and development opportunity.
• Addressing capacity constraints at Stratford station and supporting the development of the surrounding area through a Business Rates Retention zone, subject to business case approval, and committing to work with the Greater London Authority to aim to enable international rail services to stop at Stratford International station.
• Welcoming the work of the bus procurement task and finish group, where a robust approach to procurement will be able to support all authorities, as well as provide certainty to manufacturers. The government will work with Strategic Authorities, including the GLA, on approaches which ensure value for money and a reliable pipeline of bus orders, and which back British manufacturing.
• Legislating to enable the Mayor of London to establish a successor to the Elizabeth Line Business Rates Supplement (BRS), which is scheduled to end by 2041. The successor BRS will have ballot requirements no more restrictive than those enacted in 2009, and, alongside the wider fiscal devolution package, will help the GLA to finance future transport infrastructure projects such as West London Orbital and the Bakerloo Line Extension.
• Exploring the extension of the legislative framework that permits Mayoral Community Infrastructure Levy revenues to support borrowing and debt repayment for strategic infrastructure projects.
• Developing, as a joint programme between the government and the GLA, a global city productivity plan to support London’s continued success as a world‑leading destination for talent, investment and tourism.
Box 4.D: Partnerships with places
Region spotlight: the Midlands
The government is working with Mayor Claire Ward to support growth and reindustrialisation in the East Midlands. The Team Derby partnership will drive regeneration and jobs in rail, aerospace and advanced manufacturing, alongside the Business Rates Retention zone at Infinity Park Derby. Alstom’s Litchurch Lane Works will build the new TransPennine Express fleet, directly supporting over 350 jobs through a £1 billion investment. Rolls-Royce has also committed £140 million to new engineering and manufacturing facilities in Derby.
In the West Midlands, Mayor Richard Parker is driving regeneration through the Birmingham East Mayoral Development Corporation, which aims to deliver 50,000 jobs and 20,000 homes. The West Midlands Investment Zone is supporting advanced manufacturing through sites like Green Power Park in Coventry, while making the most of the new Black Country Metro extension into Dudley and transforming Wolverhampton city centre. The Midlands Rail Hub will improve regional rail connections. Outside the metropolitan area, £10 million from the Growth Mission Fund will support the refurbishment of Stafford Market Hall and an SME business incubation hub, subject to final business case.
City region spotlight: West of England
The Mayor Helen Godwin and the Combined Authority are developing plans for 18 transport projects across the region through Transport for City Regions funding from central government. This will include developing mass transit options for Bath, Bristol, South Gloucestershire, and North Somerset.
New homes and a new train station are already being delivered in the West Innovation Arc, centred on Brabazon to the North of Bristol in its Mayoral Development Zone, alongside £45 million of funding to unlock new high-quality homes. The West Country’s world-leading AI cluster has been backed by the Sovereign AI Unit, with £500 million of funding to back new start-ups and provide access to up to 1 million GPU hours on Isambard-AI. The government is providing £10 million to unlock significant private investment in Bristol Temple Quarter, a regeneration zone which offers tens of thousands of new homes and jobs.
Growth corridor spotlight: Scottish Central Belt
73% of Scotland’s population live in the urban area spanning the Edinburgh‑Glasgow Central Belt. It is one of Europe’s most dynamic and innovative clusters for science and technology.
UK Research and Innovation (UKRI) has backed the national supercomputer located in Edinburgh with up to £750 million, and worked with Glasgow City Council to deliver £50 million of Local Innovation Partnership Funding. The £50 million Scotland Defence Growth Deal will support additional defence jobs in places like Rosyth and Helensburgh. The Lanarkshire AI Growth Zone is supporting more than 3,400 high‑quality jobs and has attracted £8.2 billion in private investment.
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Public Transport & Fares: Key Bus Policy Decisions
As part of the government’s measures under its wider financial support agenda, two key initiatives directly target bus passengers across England:
Restoring the £2 Bus Fare Cap
Under the key policy decisions announced for public transport, single bus fares across England (outside London) will be capped at £2 for a one-year period starting on 1 January 2027. Aimed at reducing daily travel costs, this £230 million policy (£50m in 2026–27 and £180m in 2027–28) is being funded by reprioritising existing Department for Energy Security and Net Zero (DESNZ) budgets. Spending adjustments of +£65m in 2028–29 and +£170m in 2029–30 will follow as funding balances out over subsequent years.
Summer Holiday Free Travel for Children
To help ease household expenses during the school holidays, the government allocated funding to provide free bus travel for children aged 5 to 15 across England. Covering the full month of August 2026 (1 August to 31 August), this targeted initiative represented a one-off expenditure of £145 million in the 2026–27 financial year, with no additional funding committed for future years.
In comparison to last year, it is disappointing to see that the document makes no mention of extending the freeze on railway fares. This leaves open the possibility that rail fares, including London Travelcards, could rise next year. However, fares affecting Transport for London (TfL) services are devolved and decided directly by the Mayor of London in accordance with the Greater London Authority Act 1999.
This highlights why it is so crucial for railway services to be devolved, especially those serving London. Transferring these national rail routes to TfL would allow for integrated fares and ticketing, making public transport far more affordable and seamless. My proposal, which I published in 2023, suggests subsuming TfL and the railway services of the former Network SouthEast into a new South East Regional Transport Authority (SERTA). Delivering structural changes like this will require primary legislation in Parliament.
Funding Models: Moving Away from Treasury Centralisation
Followers on my social media channels may have noticed how the financing of local transport projects in the UK has long been heavily centralised by HM Treasury. This top-down control is precisely why TfL was forced to cancel various major schemes from the late 2000s onwards, including the Cross River Tram, West London Tram, Tramlink extensions, and the Thames Gateway Bridge.
What the UK needs instead is a ground-up approach to infrastructure finance.
In contrast to Europe's traditional reliance on state subsidies and standard public grants, recent continental passenger transport initiatives demonstrate how ground-up financial structuring can unlock complex infrastructure projects. By designing bespoke commercial frameworks, tailored risk allocations, and new revenue models from scratch, transport authorities across Europe are overcoming tight budgets to modernise public transport:
• Grand Paris Express (France): A massive project adding over 200 kilometres of automated metro lines. To fund the expansion without inflating central government debt, a dedicated authority created a financing model backed directly by local beneficiaries. This framework uses specialised regional levies on office space, business activity, and tourism to support long-dated green bonds issued on international markets.
• Sotra Connection (Norway): A greenfield public-private partnership built from the ground up to deliver high-capacity express bus lanes and improved road infrastructure near Bergen. The transport authority created a framework to attract international private capital by blending state payments during construction with availability-based revenues, insulating private investors from fare and traffic risks.
• Rail Baltica: Connecting Estonia, Latvia, and Lithuania to the European rail network, this cross-border project required a custom financial structure across multiple sovereign states. The three nations established a joint central entity to act as a single procurement vehicle, blending direct national funding with up to 85% co-financing from European Union grants and multilateral loans.
To enable similar, innovative ground-up financing for transport improvements in the UK, Parliament must pass new legislation to grant local and regional authorities greater fiscal flexibility.
A Look Across the Irish Sea: Republic of Ireland Budget 2027
For comparison, the Government of the Republic of Ireland delivered its budget earlier this month (October). Let's take a look at their transport allocation.
From the Irish Government website on Budget 2027:
Total allocation of €5.551 billion for the Department of Transport for 2027, an increase of €840 million over 2026
• Total allocation of €5.551 billion for the Department of Transport for 2027, an increase of €840 million over 2026
• More than €1 billion secured for State-subsidised public transport (PSO) services nationwide, an 11% increase over 2026
• Funding will enable ongoing expansion of public transport services, with approximately 140 new and enhanced services in the pipeline for 2027
• Progression of key infrastructure programmes, including MetroLink, DART+, and BusConnects
• Strengthening and consolidation of the road network to build connectivity and resilience, as well as further improve road safety for all road users
• €6.5 million allocation for the new Vehicle Adaptation Scheme, supporting people to enhance their personal mobility options
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To wrap it up, here is the statement by the Mayor of London, Sadiq Khan:
“Today’s Budget is a really positive and significant day for London. At its heart is a new devolution revolution.
“After lobbying on the issue for many years, I’m delighted that the Government will help us to bring cross-channel rail services to Stratford International – making this station truly international for the first time. It will open up huge opportunities for jobs, investment and tourism.
“The Government have also taken significant steps to devolve transformational new powers and funding to the capital, alongside other communities around the country.
“Working with Number 10 North we’re delivering the largest devolution of powers to London seen in a generation.
"By giving London the ability to keep more of the money we raise, we can invest billions of pounds more in our future, helping to finally unlock transformational infrastructure projects such as the West London Orbital, the Bakerloo Line Extension and the Euston knowledge quarter project, supporting tens of thousands of new homes, jobs and economic growth."
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Conclusion
In summary, Budget 2026 presents a mix of immediate relief measures and forward-looking regional infrastructure plans. However, the contrast between short-term central funding adjustments and long-term capital goals highlights the ongoing need for structural reform. True progress for regional transport relies on transitioning from centralised Treasury oversight to sustainable, ground-up financing and meaningful local devolution. By enacting the required parliamentary legislation and adopting flexible funding models, regional authorities across the UK can gain the fiscal autonomy needed to build fully integrated, world-class transport networks.
I would like to extend an invite for you to follow me on X (formerly Twitter) for transport-related updates. You can find me by searching for @CLondoner92 or by clicking on the direct link to my X page here. I am also present on BlueSky and Mastodon. I look forward to connecting with you on these platforms. Thank you for your support.
