What does the Budget mean for the future of Transport and Infrastructure? Georgia Harris, Political Consultant at Dods, considers the key announcements, remaining uncertainties and what they could mean for the sector.
What are the key takeaways for your sector?
Georgia Harris: For transport, the Autumn Budget was incremental rather than transformative. It brings short-term relief for drivers, some new infrastructure projects and a further push for devolution. Yet, many of the bigger policy decisions are still to be made.
For drivers, the most immediate change is at the pump. The Government will extend the temporary 5p per litre fuel duty cut to 1 July 2027 and defer the planned RPI increase until then, while the separate 3.7p cut for red diesel users is extended to the same date. Those who drive for work will also benefit, as the higher tax-free mileage rates announced on 27 October are made permanent at 55p per mile for the first 10,000 miles and 35p after that.
That relief sits alongside rises elsewhere. Vehicle Excise Duty for cars, vans and motorcycles will go up with RPI from April 2027, and Air Passenger Duty will do the same a year later.
On infrastructure, works will start in November on a continuous 50-mile dual carriageway between the M6 at Penrith and the A1(M) at Scotch Corner, on a revised nine-year schedule. Over £300m has been confirmed for the Leeds Existing Station Programme, due by 2030, while in Wales the Budget provides £30m for Cardiff Parkway and £11m to replace the Aberavon bridge in Port Talbot. Across the sector, apprentices will need to make up at least three percent of the workforce on all large government construction and infrastructure projects.
In addition, the Government has already signalled its support for the findings of the Mass Transit Taskforce, due at the end of 2026, and stated that it will explore ways to unlock mass transit schemes, including new powers to help mayors.
What has the Government not sufficiently addressed in the Budget for your sector?
Georgia Harris: The A38 Derby Junctions and A46 Newark Bypass were left out of the Budget altogether. Both schemes are in development but could be cancelled under July’s cuts to the third Road Investment Strategy. The East Midlands Mayor, Claire Ward, has campaigned for both to be reinstated, and industry bodies have urged the Government to postpone rather than cancel them. A consultation closed in September, and with the Transport Secretary saying “no final decisions have been taken”, their future remains uncertain.
Rail faces a wait of its own. The Government has commissioned Rachel Skinner CBE to review rail infrastructure costs and report within six months, so how it intends to bring those costs down will not be clear until next year. HS2, meanwhile, did not feature in the Budget at all.
On aviation, the Budget promised an update on a third runway at Heathrow “as soon as possible”, which stops short of a decision. Active travel was absent too, with no new measures announced for walking or cycling.
In July, the Prime Minister said that “soon, every local leader will have the power and resources to improve public transport”. The Budget confirmed that a fiscal devolution roadmap will be published, but for now its devolved transport measures are aimed at mayors. They stand to gain from the mass transit powers being explored, while areas without a mayor, including many county and rural areas, have little in this Budget that moves them closer to that promise.
In London, the Budget confirms that the Greater London Authority will deliver a Business Rates Retention Zone at Euston, and exploratory work on international rail at Stratford International.
Have the Government’s priorities changed in your sector? Why?
Georgia Harris: The Government’s direction has not changed. Infrastructure remains central to its growth plans, and the Budget highlights “60% more decisions on major infrastructure projects compared with the same time in the previous Parliament”. The commitment to public control of transport also continues. The Railways Bill would establish Great British Railways, and the Bus Services Act 2025 made bus franchising available to every local transport authority.
Where the emphasis has shifted is devolution. As Mayor of Greater Manchester, Andy Burnham used franchising to build the Bee Network, which brought the last of the city region’s bus services under local control in 2025. As Prime Minister, he has signalled that he wants to extend this kind of local control beyond Greater Manchester. He has said that his Government is “giving local leaders the levers they need to take back control of local services”.
The Budget points in the same direction. The Government will explore new powers to help mayors unlock mass transit schemes, and the fiscal devolution roadmap it has committed to publishing could give local leaders a greater say over how transport is funded.
Defence sits in the background. The Chancellor confirmed that the Defence Investment Plan will be fully funded but did not say what that means for transport, beyond the £800m of savings announced in July.
Any additional reflections?
Georgia Harris: In many ways, this Budget is a starting point. The Mass Transit Taskforce reports at the end of the year, and the response to the ZEV Mandate review is due at the same time, with any changes taking effect from 2027. How those land will shape a good deal of what follows.
Funding models are also being tested. Through a pilot with the Greater Cambridge Development Corporation, the Government will provide repayable finance for infrastructure, with an ambition for “long-term certainty and flexibility for access to government finance”. The pilot could be extended to a development corporation in Oxford, subject to consultation. How it performs may influence how infrastructure is funded elsewhere while capital budgets remain tight.
For drivers and businesses, the fuel duty extension buys time until July 2027, but it cannot shield them from events abroad. On 2 October, the RAC reported that the average price of diesel had passed £2 a litre for the first time, up from around 142p when the conflict with Iran began in February.
Private hire operators also have changes ahead. From 2 January 2028, larger operators will be liable for 20 percent VAT on the full value of their fares, subject to a consultation on the turnover threshold, where £50m is the lead option. The wider reform promised in a draft Taxi and Private Hire Vehicles Bill remains to be seen, with no timetable confirmed.