The much-anticipated and historic Budget (the first be delivered by a woman Chancellor) has finally happened. Ahead of it, our call was for the Chancellor to answer immediate funding pressures which threatened to undermine local transport provision across the country. Has the Chancellor responded to our calls and put in place a critical fiscal bridge ahead of the multi-year Spending Review? We explore below what yesterday’s announcements mean for local transport and city regions.  

Lifeline boost for bus 

Our core and most immediate ask ahead of the Budget was to protect bus funding ahead of major upcoming cliff edges. Without the extension of BSIP funds, potential reductions in bus service mileage could have been in excess of 24% in in some areas. 

We are delighted that despite major economic pressures, the Chancellor recognised the role that bus and local transport will play in her economic growth mission and set out a £1billion funding package for bus:  

• Over £130m to fund a £3 national fare cap till the end of 2025  

• £640m for BSIP for 2025/26 

• £285m for BSOG for 2025/26 

We are yet to find out the allocations of the BSIP extension, but taken together, this funding package will ensure that our members can continue to support crucial services, averting the scale of challenges feared.  

The long-term outlook of our networks still rests on the multi-year Spending Review, which must answer the question of how the government plans to set in place a sustainable long-term funding settlement for bus. 

CRSTS and capital city uplifts ahead of long-term decisions  

Our second headline ask ahead of the Budget – protection and enhancement of long-term capital and revenue budgets – was also answered by the Chancellor. The Budget saw two crucial and welcome boosts:  

• additional £200m for City Region Sustainable Transport Settlements, with particular highlight of Liverpool’s Baltic Railway Station, the renewal of Sheffield’s Supertram system and the continued development of West Yorkshire Mass Transit.  

• £485m for Transport for London (TFL)’s capital renewals programme in 2025-26, which includes funding for rolling stock on the Piccadilly and Elizabeth Lines. 

Whilst the future of CRSTS2 and the long-term capital settlements for the capital has been left to answer in next Spring’s Spending Review, this immediate support rightly recognises the scale of opportunity of CRSTS to support economic growth. Our members have ambitious plans to transform their networks through infrastructure investment afforded by CRSTS, driving growth, supporting net zero ambitions and creating great places for people to live, work and invest in. 

Local transport support – from potholes to cycling  

Beyond a specific support package for bus and a boost for CRSTS, the Budget also saw further welcome support extended for local transport both within city regions as well as beyond. This includes:  

• £500m increase on 2024-25 local roads maintenance baseline funding. 

• Additional £100m investment in cycling and walking infrastructure in 2025-26, to support Local Authorities to install cycling infrastructure and upgrade pavements and paths.  

• Over £650m of funding for local transport, expected to be provided to non-MCA Local Transport Authorities through Local Transport Funds. 

This package, alongside a boost to local government finances over the coming years, is reassuring. Financial challenges for local government are detrimental to all tiers of government. A sustainable financial future for local government is key for the delivery of our members’ ambitions. 

Devolution revolution kickstarted  

In answer to our third priority ask ahead of the Budget, the Chancellor set the scene for the upcoming English Devolution paper by outlining the path to its most prized possession – the integrated funding settlements. 

Integrated settlements for Greater Manchester and West Midlands Combined Authorities were confirmed to begin from the start of the 2025-26 financial year, whilst Liverpool City Region Combined Authority and the North East, South Yorkshire and West Yorkshire Mayoral Combined Authorities will be able to access these from the start of the 2026-27 financial year.  

To make the most of the available funding, our members need to be given more discretion and autonomy on how funding is spent, with long term certainty and trust to deliver. Therefore, the confirmation and clear timelines for this next step in their devolution journey is welcome.  

However, it’s crucial that longer-term reform strives for a funding system that delivers certainty, simplicity and enables local decision making and revenue raising. There needs to be increased use and reform of local investment levers, including opportunities to raise revenues from those who would benefit from better transport services or seek to provide those services.  

Future of major projects decided  

This Budget strived to provide more certainty, including on the future of various major rail projects. The Chancellor confirmed that: 

• The Transpennine Route Upgrade between York and Manchester, via Leeds and Huddersfield, will go ahead, laying the ground for Northern Powerhouse Rail.  

• East West Rail will connect Oxford, Milton Keynes, and Cambridge, with the first services to begin operations next year.   

• Progressing HS2 Phase One, with HS2 confirmed to run to Euston, with funding provided for tunnelling to the central London terminus, catalysing private investment into the station and local area.  

• After a review, the Transport Secretary has decided not to progress with the following road schemes on the strategic road network: A5036 Princess Way, A358 Taunton to Southfields, M27 J8 Southampton, the A47 Great Yarmouth Vauxhall Roundabout and A1 Morpeth to Ellingham. 

The Budget was set in a context of a major fiscal challenge. The audit of public spending in July, identified £3.5 billion of unfunded pressures related to transport in 2024-25, and over £800m unfunded capital commitments in 2025-26.  

Despite this, we are grateful to the Transport Secretary for her continued commitment to local transport and are pleased that the Chancellor has recognised the importance of funding sustainable and integrated local transport networks across our city regions. 

Work continues on securing long-term certainty and a sustainable funding future through the multi-year Spending Review. We and our member transport authorities stand ready to play a key role in enabling the new government to fulfil its missions and to set us on a pathway to a brighter transport future. 

Monta Drozdova is Policy and Research Advisor at the Urban Transport Group 

(Image: HM Treasury)