Sunday Times Report on Railway Infrastructure Funding

[LTJ87]

There’s a report in this week’s Sunday Times suggesting there’s unlikely to be any funding for new railway infrastructure upgrades beyond the three schemes below until after the next election.

Although not mentioned, further electrification of the Midland Main Line now looks at risk.

Spending freeze to shunt major railway projects past general election

Rachel Reeves is expected to limit funding to maintenance work only as three schemes soak up budget and transport secretary warns on public ownership

www.thetimes.com

Rachel Reeves is expected to freeze spending on major new rail projects until after the next general election as Britain’s train network falls victim to a squeeze on the public finances.

Three major projects, all part way through completion, are set to soak up the Department for Transport’s funding allocation between now and the end of the decade, according to multiple senior industry figures.

They are the first phase of HS2 linking London with Birmingham, multi-billion pound upgrades to TransPennine infrastructure, and East West Rail, a new line that connects Oxford, Milton Keynes, Bedford and Cambridge.

The article includes classic non-denial denials “did not recognise” and “no decisions have been made”.

The government insisted it “did not recognise’ senior industry executives’ claims about new projects being mothballed and said that ministers were “committed to delivering the infrastructure this country needs”.

A Treasury source added: “No decisions will be taken until the spending review, where every single pound of taxpayer’s money will be scrutinised.”

 

[Nottingham59]

There’s a report in this week’s Sunday Times suggesting there’s unlikely to be any funding for new railway infrastructure upgrades beyond the three schemes below until after the next election.

Understandable. The time to spend on big long-term infrastructure projects is in a property recession, when construction costs will be half what they are now.

Although not mentioned, further electrification of the Midland Main Line now looks at risk.

Given that the only rolling stock likely to use it in the short term are bimodes, the MML is eminently postponeable.
.
TRU is much more important and will deliver actual economic benefits.

 

[Nicholas Lewis]

There’s a report in this week’s Sunday Times suggesting there’s unlikely to be any funding for new railway infrastructure upgrades beyond the three schemes below until after the next election.

Although not mentioned, further electrification of the Midland Main Line now looks at risk.

Spending freeze to shunt major railway projects past general election

Rachel Reeves is expected to limit funding to maintenance work only as three schemes soak up budget and transport secretary warns on public ownership

www.thetimes.com

The article includes classic non-denial denials “did not recognise” and “no decisions have been made”.

Quelle surprise with HS2 and TRU completely over budget and needing vast amounts of cash over the next few years.

What they should be doing is revoking NR''s CP7 settlement and coming up with an overall funding envelope for train operations and the infrastructure then investment could be more targeted to best drive increased ridership.

 

[Gerald Fiennes]

East-West? Presumably they are just thinking of the completion from MK to Oxford, but nothing more...?

 

[12LDA28C]

East-West? Presumably they are just thinking of the completion from MK to Oxford, but nothing more...?

Despite the Government having already pledged to have EWR services running to Bedford by 2030? The residents of Bedford would be happy, I’m sure.

 

[3RDGEN]

Quelle surprise with HS2 and TRU completely over budget and needing vast amounts of cash over the next few years.

What they should be doing is revoking NR''s CP7 settlement and coming up with an overall funding envelope for train operations and the infrastructure then investment could be more targeted to best drive increased ridership.

No evidence yet that TRU is over budget, it may have had some "silent" cut backs to stay in the £11 Billion but it's not gone over yet. Problem is the tens of billions been wasted on the white elephant of HS2 that's taking all the money out of the wider industry and we still don't know what it's going to cost.

 

[Grimsby town]

Its not overly surprising. There's a lot of investment going into HS2 and TRU over the next 5 years or so and there's not many large investment projects that are likely to be construction ready in the next couple of years.

I'd be surprised and a bit disappointed if MML electrification is cut. Its not a particularly expensive project, on annual basis, given how slowly its being done. Cancelling it would likely just lead to more skill loss and further increases in future electrification costs.

 

[778]

As well as no more infustracture projects does this mean there will be no investment in battery trains to replace DMUs? It looks like the government's target of all diesel trains being replaced by 2040 will not be met.

 

[Magdalia]

investment could be more targeted to best drive increased ridership.

What the Treasury will be doing is prioritising investment that delivers economic growth.

East-West? Presumably they are just thinking of the completion from MK to Oxford, but nothing more...?

For delivering economic growth, I'd expect East West Rail, including Cambridge, to be top of the Treasury's list.

 

[LNW-GW Joint]

As well as no more infustracture projects does this mean there will be no investment in battery trains to replace DMUs? It looks like the government's target of all diesel trains being replaced by 2040 will not be met.

Train leasing costs are outside the rail capital programme, so no constraint there (the capital comes from the private Roscos).
But DfT till has to authorise any increase in TOC running costs like increased leasing costs, so new train procurements might be delayed or descoped.
New trains also usually need new infrastructure to support them which NR provides (eh charging points for BEMUs), so that's another factor.

 

[The Planner]

Problem is the tens of billions been wasted on the white elephant of HS2 that's taking all the money out of the wider industry

Is there actually any evidence of that?

 

[JonathanH]

Quelle surprise with HS2 and TRU completely over budget and needing vast amounts of cash over the next few years.

Plus the revenue support needed to keep the operational side of the railway going. Even if it nominally comes from another budget, it still reduces the money to enhance the network.

 

[3RDGEN]

Is there actually any evidence of that?

Is there any evidence it isn't? The £50 to £100 Billion (anyone know yet?) spent on HS2 needs to come from somewhere and there is only so much the country can borrow so if it's going into the bottomless pit of HS2 it's not going on other projects. We shall see what actually comes out of the spending review in the Spring.

 

[Grimsby town]

Plus the revenue support needed to keep the operational side of the railway going. Even if it nominally comes from another budget, it still reduces the money to enhance the network.

Although that's currently decreasing year on year so it could be the case that the government is happy to keep spend what it currently speeds on rail which could mean additional money for extra services, lower fares, or improved rollingstock.

 

[Nicholas Lewis]

No evidence yet that TRU is over budget, it may have had some "silent" cut backs to stay in the £11 Billion but it's not gone over yet. Problem is the tens of billions been wasted on the white elephant of HS2 that's taking all the money out of the wider industry and we still don't know what it's going to cost.

True TRU isn't over budget although I would call 11B an excessive budget in the first place for what is being constructed and as a result of that high forecast its drained away funds for other projects forcing them to be pushed back to later in the decade.

 

[12LDA28C]

Is there any evidence it isn't? The £50 to £100 Billion (anyone know yet?) spent on HS2 needs to come from somewhere and there is only so much the country can borrow so if it's going into the bottomless pit of HS2 it's not going on other projects. We shall see what actually comes out of the spending review in the Spring.

The funding for HS2 has been created specifically for HS2. So if HS2 hadn’t ever been started, the money wouldn’t have been available for other projects anyway. It’s not really that much money in the grand scheme of things. Even if HS2 costs £100Bn, much more than that is chucked into the bottomless pit of the NHS every single year but apparently that’s perfectly acceptable.

 

[GRALISTAIR]

How disappointing if true.

 

[HSTEd]

As well as no more infustracture projects does this mean there will be no investment in battery trains to replace DMUs? It looks like the government's target of all diesel trains being replaced by 2040 will not be met.

I would assume that BEMU orders will be driven by the traditional train manufacturer threats of plant closures more than anything.

But even replacing all diesel passenger vehicles left on the system would cost much less than the stated cost of TPRU, to put things in perspective.

 

[tomuk]

The funding for HS2 has been created specifically for HS2.

It has not. HS2 spending is out of normal government funds. There are no HS2 bonds or HS2 loans.

 

[I'm here now]

Wish there was still those EU funds for regions to cover for Treasury’s fear of spending.

 

[Magdalia]

Wish there was still those EU funds for regions to cover for Treasury’s fear of spending.

What the Treasury fears is borrowing, and the costs of servicing the debt. What happened in 2022, and the financial market movements since the start of 2025, demonstrate why.

Without a return to economic growth of at least 2% per year the UK government finances are unsustainable.

That's why any investment, not just for rail, will have economic growth as the priority.

 

[philosopher]

What the Treasury fears is borrowing, and the costs of servicing the debt. What happened in 2022, and the financial market movements since the start of 2025, demonstrate why.

Without a return to economic growth of at least 2% per year the UK government finances are unsustainable.

That's why any investment, not just for rail, will have economic growth as the priority.

If you do not invest, it will be a lot harder to get that economic growth of 2%. It does seem a chicken and egg situation though, as increased government spending, even on investment will require either more taxes or increased borrowing which will probably make the markets jumpy and raise the UK‘s borrowing costs.

 

[Nottingham59]

If you do not invest, it will be a lot harder to get that economic growth of 2%. It does seem a chicken and egg situation though, as increased government spending, even on investment will require either more taxes or increased borrowing which will probably make the markets jumpy and raise the UK‘s borrowing costs.

The government are investing. Spending on phase 1 is only now reaching its peak.

What they need to do now is (a) decide soon what they want to do about phase 2 and getting to Manchester and (b) work out how to drive down the costs of building new infrastructure. Neither of those actions will involve much spending, but are key to encouraging investment in the economy.

 

[ainsworth74]

What the Treasury will be doing is prioritising investment that delivers economic growth.

That might be what they think they're doing but I'm reckon that not investing (that much) in infrastructure outside of the South East has itself probably had some negative economic impacts over the course of the last thirty odd years.

 

[Nottingham59]

That might be what they think they're doing but I'm reckon that not investing (that much) in infrastructure outside of the South East has itself probably had some negative economic impacts over the course of the last thirty odd years.

The sad part is that the bits of HS2 that would have delivered economic growth - new stations and capacity into and out of Leeds, Sheffield, Manchester etc - are precisely the bits that have been cut.

 

[ScotGG]

Some seem to give the Treasury far more credit than their record deserves.

Continual short term cutting which has cost vastly more long term is a chronic problem.

Putting spending off balance costs greater sums due to higher interest payments via private contracts eg PFI. Health Trusts on the hook for silly repayment levels for decades. Train leasing is another.

Where has 30 years of this thinking got us? Dept to GDP at 100 per cent and rising. All while infrastructure improvements are slow to happen.

Some of this would be less of an issue if power and funding wasn't so centralized in Westminster and local cities/regions could act and do more for local transport networks The UK is the most centralized developed nation in the world. Govt talk of reform there but the Treasury historically loath giving up power while chocking off growth.

 

[HSTEd]

The railway is burning government cash at a billion pounds a month, even ignoring spending on HS2.
Meanwhile the government has discovered, first hand, how jittery the bond markets are, both during the Truss debacle and in the last few months.

Expecting the good times of the last couple of decades to just keep rolling on, regardless of appalling railway performance on infrastructure projects, is unrealistic.

The railway needs to get its cost base under control before the government is going to give it more cash, given much better opportunities for return are available elsewhere in the economy.

For context, government subsidies to the non-HS2 railway now amount to approximately 0.5% of GDP!

 

[The Planner]

For context, government subsidies to the non-HS2 railway now amount to approximately 0.5% of GDP!

How much of GDP do the railways facilitate?

 

[HSTEd]

How much of GDP do the railways facilitate?

The counterfactual necessary to estimate that requires so many assumptions as to be almost meaningless.

But the fact remains that the railway is consuming a lot more public money than it once was, even ignoring the additional spending on HS2 etc. It represents a significant fraction of the entire public budget already.

 

[Magdalia]

If you do not invest, it will be a lot harder to get that economic growth of 2%. It does seem a chicken and egg situation though, as increased government spending, even on investment will require either more taxes or increased borrowing which will probably make the markets jumpy and raise the UK‘s borrowing costs.

Absolutely. They have a fine line to tread and, since 2022, that has become much harder.

That might be what they think they're doing but I'm reckon that not investing (that much) in infrastructure outside of the South East has itself probably had some negative economic impacts over the course of the last thirty odd years.

The civil servants advise but the ministers decide.

Continual short term cutting which has cost vastly more long term is a chronic problem.

Indeed but general elections come at least once every 5 years, and sometimes more often.

Where has 30 years of this thinking got us? Dept to GDP at 100 per cent and rising. All while infrastructure improvements are slow to happen.

We at least have a government that is talking the right language on this, but so far it is only talk.

Some of this would be less of an issue if power and funding wasn't so centralized in Westminster and local cities/regions could act and do more for local transport networks The UK is the most centralized developed nation in the world. Govt talk of reform there but the Treasury historically loath giving up power while chocking off growth.

The devolution agenda is an interesting one. The White Paper is more radical than I expected, but radical reorganisations are often a distraction that swallow up resources better used on other things.

How much of GDP do the railways facilitate?

20 years ago I would have tried to answer that but I couldn't attempt it now!