Local transport funding at risk as Reeves considers big budget cuts

In an exclusive interview, mayors from England are expressing profound concerns over potential cuts to local transport funding that could jeopardize agreed-upon improvements to bus, tube, and tram services. As the Treasury prepares for next week’s spending review, there are fears that hundreds of millions of pounds in funding might be slashed, putting various transport initiatives at risk.

Most of the concerned mayors are affiliated with the Labour Party and are currently engaged in a last-minute lobbying effort to prevent the Treasury from tapping into their transport budgets as Rachel Reeves seeks immediate savings.

“Without this financial support, plans aimed at extending the night tube in London, launching electric buses, and increasing walking and cycling initiatives could face significant delays or may even be scrapped altogether,” one official commented. They noted that many mayors were under the impression that their budgets were secure through 2027.

A mayoral aide expressed growing apprehension: “We’re really worried about what might come out of the budget regarding transport funding. There are a lot of rumors circulating, and it’s creating a sense of instability.”

While a government source assured that there were no intended changes to the city region sustainable transport settlements—multi-year packages dedicated to various transport schemes—they did refrain from discussing the potential implications of other budget adjustments.

The Chancellor is expected to disclose a spending review alongside her budget announcement on October 30, eyeing cuts totaling billions to address what she describes as a £22 billion shortfall in government accounts.

Negotiations among cabinet ministers have been contentious, influenced by their push to safeguard capital spending allocations in light of Reeves’s long-term infrastructure investment promises. Recently, three cabinet ministers—Shabana Mahmood, Angela Rayner, and Louise Haigh—reached out to Keir Starmer, expressing their dissatisfaction with the substantial spending cuts they were being urged to accept.

While secretaries of state have secured their overarching funding agreements, not every individual programme has been formalized yet. Mayors are lobbying extensively to ensure that their transport budgets remain intact, particularly in regions where funds have already been designated as part of nationally sanctioned sustainable transport initiatives.

With billions already earmarked for funding schemes lasting until 2027—including improvements to rail services and the electrification of bus depots for zero-emission vehicles—industry insiders believe Reeves is particularly focused on trimming an additional £5 billion previously promised by Rishi Sunak to city regions following the cancellation of the northern leg of HS2. Sunak had characterized this as a “new plan for transport” aimed at revolutionizing transport across the north, although experts criticized the proposal for lacking proper funding at the time.

In London, Mayor Sadiq Khan is reportedly anxious that funding cuts could hinder proposed tube line extensions and plans to boost night services. He has formally requested the Treasury for sufficient funds to meet already signed contracts, including upgrades to the Bakerloo and Piccadilly lines and investments in new buses. Khan is among several mayors fearing that they may need to increase fares to finance necessary work.

While the government provided funds allowing several mayoral authorities to cap bus fares at £2, concerns are rising that this support will not continue once it expires at year’s end, forcing authorities to either hike fares or cut back on other programs. Many mayors in various city regions have begun reallocating capital spending to manage daily operational costs like the fare cap, and are worried about the sustainability of this approach going forward.

Richard Parker, the Labour mayor of the West Midlands, is particularly worried about bus services, which the combined authority is subsidizing by £50 million to £70 million annually. Despite current sustainable transport budgets remaining untouched, local leaders suspect the Department for Transport aims to redirect some of these resources to address the bus revenue funding gap, potentially leading to cuts in other areas.

Jason Prince, director of the Urban Transport Group, which represents transport authorities across the UK, emphasized the urgency for the Chancellor to reaffirm core transport funding. “Without it, our city regions’ ability to foster economic growth and support the government’s wider objectives could be severely compromised,” he stated.

A Treasury spokesperson reassured that “boosting transport remains vital for growth, and city region sustainable transport settlements will continue playing a fundamental role in achieving this.”