Autumn Budget 2024 – summary of key points related to rail and transport

The government has identified rail and transport as one of its priority areas for reform, stating:

“The government will improve the performance and reliability of rail services, ensuring the rail sector can operate effectively and become financially sustainable. The Secretary of State for Transport’s plans for reform will look at changes to fares, services and workforce practices to deliver a modern railway that meets how people now want to travel. These will increase efficiency and reduce costs, while boosting ridership and revenue and improving performance, laying the groundwork for the transition to Great British Railways.”

Details relating to the Department for Transport can be found on pages 95-98 of the budget document here and are summarised below.

Department for Transport (DfT) funding:

• The DfT settlement provides total Departmental Expenditure Limit funding of £30.0 billion in 2025-26. This is a £1.2 billion year-on-year cash increase;

• The DfT annual growth rate is negative (-2.5%) between 2023-24 and 2025-26 due to the reduction to the rail services subsidy as passenger numbers continue to recover post-pandemic.

Funding for rail/public transport/active travel:

• An additional £200 million for City Region Sustainable Transport Settlements, bringing local transport spending for Metro Mayors in 2025-26 to £1.3 billion. The government will also work with Mayoral Combined Authorities to increase the ambition on housing investment that accompanies expansion of transport links;

• Over £650 million for local transport beyond City Region Sustainable Transport Settlements in 2025-26 to improve transport connections in towns, villages and rural areas as well as in major cities. This includes funding to progress transport-related Levelling Up Fund projects from Rounds 1, 2 and 3. The Transport Secretary will set out further detail on how this funding will be allocated in due course;

• Over £1 billion to support local areas and bus operators in 2025-26. The government is extending the bus fare cap, which was due to end in December 2024. A new cap will run from January 2025 to December 2025 at the higher rate of £3;

• £485 million for Transport for London’s capital renewals programme in 2025-26. This includes funding for rolling stock on the Piccadilly and Elizabeth Lines;

• An additional £100 million investment in cycling and walking infrastructure in 2025-26, to support local authorities to install cycling infrastructure and upgrade pavements and paths.

Priority rail/transport projects:

• Committing to East West Rail between Oxford, Milton Keynes and Cambridge, including funding to accelerate delivery of the Marston Vale Line, ensuring services will run between Oxford and Bedford from 2030. The government is also due to launch the consultation for the next stage of East West Rail in November 2024;

• Delivering the Transpennine Route Upgrade between York and Manchester, via Leeds and Huddersfield, and maintaining momentum on Northern Powerhouse Rail by progressing further planning and design works to support future delivery;

• Progressing HS2 Phase One to improve connectivity between London and Birmingham and increase capacity on the West Coast Mainline;

• Confirming funding to tunnel from Old Oak Common to Euston to ensure HS2 trains terminate in central London, catalysing private investment into the station and local area.

Rail fares:

• The annual regulated rail fares cap will rise by 4.6% on 2 March 2025, one percentage point above RPI;

• Subject to an industry proposal, the government will also agree a £5 increase to the price of most rail cards (except the disabled person’s rail card).

Fuel duty:

• The government will freeze fuel duty rates for 2025-26. The temporary 5p cut in fuel duty rates will be extended by 12 months and will expire on 22 March 2026. The planned inflation increase for 2025-26 will also not take place.

Air passenger duty:

• For 2026-27, the government will increase rates of Air Passenger Duty (APD). This equates to £1 more for those taking domestic flights in economy class, £2 more for those flying to short-haul destinations in economy class, £12 for long-haul destinations, and relatively more for premium economy and business class passengers. The higher rate, which currently applies to larger private jets, will rise by a further 50% in 2026-27. From 2027-28 onwards, all rates will be uprated by forecast RPI and rounded to the nearest penny. The government is also consulting on extending the scope of the APD higher rate to capture all passengers travelling in private jets already within the APD regime.