Executive Summary

Public spending on transport in the UK was £48.9 billion in 2025-26. Rail took £26.5 billion of it, more than half. Local roads took £8.1 billion, national roads £6.1 billion, and local public transport, mainly buses, £5.6 billion.¹ Rail carried 1.83 billion journeys in Great Britain in 2025-26, its highest since 1920.² Local buses carried 3.7 billion journeys in England alone.³ Yet outside London, bus journeys have fallen from 2.4 billion in 2008-09 to 1.9 billion, the miles buses run have fallen by more than a quarter since 2005, and fares rose 14% in the year to March 2025 against inflation of 3%.³

Spending is also uneven across the country. In 2024-25, public spending on transport was £1,195 per person in London and £376 in the East Midlands, the lowest of any nation or region.⁴ Part of that gap reflects London's dense network and the volume of travel it carries. Part reflects decades of decisions that have kept the rest of England's networks thin.

When the UK does build, it builds expensively. HS2's first phase is now expected to cost between £87.7 billion and £102.7 billion in 2025 prices, with the first trains between 2036 and 2039. The Transport Secretary told Parliament in May 2026 that two-thirds of the cost increase came from misunderstanding the work, underestimating it and doing it inefficiently.⁵ Independent reviews have found UK infrastructure costs high, in some cases against international peers, and the Competition and Markets Authority traces much of the problem to short-term, stop-start funding that gives neither government nor builders a reason to plan.⁶

Meanwhile the main tax on road use is eroding. Fuel duty has not been raised with inflation since 2011. The "temporary" 5p cut made in 2022 has been extended five times, most recently in the October 2026 Budget, and the OBR puts the cumulative cost of the freezes since 2010-11 at £139 billion. Fuel duty receipts are forecast to peak at £27 billion in 2028-29 and then fall as electric cars replace petrol and diesel ones.⁷

This pillar makes four proposals: multi-year capital budgets and a single published pipeline for every transport authority; multi-year funding for bus networks outside London, tied to the services they run; independent cost benchmarking for every major scheme; and an end to the default fuel duty freeze, with a published plan for a single per-mile charge on all vehicles before the fuel duty base disappears.

Key Proposals

1. Where the Money Goes

The Treasury classifies £48.9 billion of public spending in 2025-26 as transport. Rail is the largest part by far, at £26.5 billion, including the capital cost of HS2. Local roads, which councils maintain, received £8.1 billion; the motorway and trunk road network run by National Highways received £6.1 billion; local public transport, mostly buses and light rail, received £5.6 billion; and other transport, including ports and aviation, £2.7 billion.¹

The operational railway, leaving aside new lines, cost £26.0 billion to run in 2024-25. Passengers paid £11.5 billion of that in fares, and government funding paid £11.9 billion, so the taxpayer covers nearly half of what the railway costs to run.⁸ Rail use has recovered strongly since the pandemic: 1.83 billion journeys in 2025-26, the most since 1920.²

Most journeys do not use either. In 2025, according to the National Travel Survey, 59% of trips in England were by private transport, mainly car, 31% were walked or cycled, and 10% used public transport.⁹ Within public transport, the bus is the workhorse: 3.7 billion local bus journeys in England in the year to March 2025, about twice the number of rail journeys across the whole of Great Britain.³²

2. The Long Decline of the Bus Outside London

In London, buses are run under franchising: Transport for London sets the routes, timetables and fares and pays operators to run them. Outside London, since deregulation in 1986, most services have been run commercially by private operators, with councils paying for routes that would not otherwise run. The two systems have produced very different results.

Outside London, bus journeys peaked at 2.4 billion in the year to March 2009 and fell every year until the pandemic. They were 1.9 billion in the year to March 2025, still below their pre-pandemic level. Measured per person, the fall is steeper: from 55 journeys a year to 37.³ The service itself has shrunk. Buses outside London ran 28% fewer miles in the year to March 2025 than in 2005, and fares outside London rose 14% in a single year, against consumer price inflation of 3%.³ Concessionary journeys by older and disabled people, which councils must fund, make up 28% of all bus journeys.³

Government has responded with a national cap on single fares, which the October 2026 Budget sets at £2 outside London for one year from January 2027, paid for by moving money from another department's budget.¹⁰ Fare caps help passengers, but they are set one year at a time and do not guarantee that a route will still exist next year. A council deciding whether to support an evening service, or an operator deciding whether to buy new buses, cannot plan on that basis.

3. Where the Spending Lands

Public spending on transport per person differs widely across the UK. In 2024-25 it was £1,195 in London, £841 in Scotland, £711 in the North West and £669 across England as a whole. It was £496 in the North East, £475 in Yorkshire and the Humber, £450 in the South West and £376 in the East Midlands, the lowest of any nation or region.⁴

Some of this gap is justified. London has the UK's densest network and carries far more passengers than anywhere else, and a pound spent where people already travel can carry more of them. But the same logic, applied year after year, makes thin networks thinner: places with poor transport have fewer passengers, so new schemes there score worse on standard appraisal, so they are less likely to be funded. This connecting argument is this project's own. The Economy pillar proposes a National Infrastructure Mandate, bringing infrastructure spending per person in each region into line over fifteen years. Transport is the largest part of that, and spending that follows existing demand alone will not get there.

4. Why Britain Builds So Expensively

HS2 is the clearest example. In May 2026 the Transport Secretary told Parliament that completing the line between London and Birmingham would cost between £87.7 billion and £102.7 billion in 2025 prices, with first services between Old Oak Common and Birmingham between May 2036 and October 2039, and to Euston between 2040 and 2043. More than £40 billion had already been spent. She attributed two-thirds of the latest cost increase to past misunderstanding of the work, underestimation and inefficiency, and one-third to inflation that had not been built into earlier estimates. Cancelling, she said, could cost almost as much as finishing.⁵

HS2 is not an isolated case. The National Infrastructure Commission's 2024 study of major projects found poor outcomes "such as high costs including in some cases compared to international peers", and identified four main causes: a lack of strategic direction, weak client and sponsor capability, slow and costly consenting, and a constrained supply chain.⁶ The Transit Costs Project, which compares the cost of urban rail across dozens of countries, places the UK among the most expensive countries in its database.¹¹

The Competition and Markets Authority, studying the civil engineering market in 2025, found that public "pipelines are often short-term and volatile, reducing the opportunity and incentives for public authorities and the supply chain to plan and invest", and described a "self-reinforcing cycle of short-termism". Among its suggested remedies are multi-year capital funding settlements for every road and rail authority, and a single published UK-wide pipeline of projects.⁶

The same pattern shows up in maintenance. The Asphalt Industry Alliance's annual survey of councils put the backlog of repairs to local roads in England and Wales at a record £18.6 billion in 2026, about twelve years of work at current funding levels.¹² Councils have mostly been funded through annual and competitive pots, which makes it hard to plan the steady, preventive resurfacing that costs less than patching potholes.

5. The Tax That Is Disappearing

Fuel duty is expected to raise £24 billion in 2026-27, far more than the £14 billion spent on local and national roads in 2025-26.⁷¹ It is the closest thing the UK has to a charge for using the roads, since what a driver pays rises with how far they drive. It is also being allowed to wither.

Fuel duty rates have not been raised with inflation since 2011. In 2022 a "temporary" 5p cut was introduced; its reversal has now been delayed five times, most recently in the October 2026 Budget, which extended the freeze to July 2027.¹⁰⁷ The OBR calculates that freezing the duty and the 5p cut have together cost £139 billion between 2010-11 and 2027-28, compared with the government's own stated policy of raising it with inflation. If the duty is frozen again until 2029-30, borrowing will be £4.3 billion a year higher.⁷

The base is about to shrink regardless. On the OBR's forecast, and assuming the freeze really does end in 2027, fuel duty receipts peak at £27 billion in 2028-29 and then fall as electric cars replace petrol and diesel ones.⁷ From April 2028 a new electric vehicle excise duty, charged per mile, starts to fill part of the gap, adding just over £2 billion a year to vehicle tax receipts by 2031-32.⁷ That is a fraction of what fuel duty raises now. The UK will need a different way of charging for road use within the next decade, and the longer the question is left, the larger the hole it will have to fill at once.

6. Rail Reform

The railway is in the middle of its largest reorganisation since privatisation. The government has been bringing passenger services into public ownership as franchises expire: six operators had transferred by September 2026, with Great Western due in December 2026, Avanti West Coast in March 2027, and the remaining services by the end of 2027. A Railways Bill, introduced in November 2025 and still before Parliament, will create Great British Railways, bringing track and train together under one body, about a year after it becomes law.¹³

Whether public ownership improves performance or costs is not yet known, and this pillar does not prejudge it. What the change does make possible is the long-term planning that the rest of this pillar argues for: one body responsible for both running trains and maintaining the track, with a multi-year budget, can plan renewals and services together in a way that two dozen separate contracts could not. The test will be whether it uses that opportunity, and the figures to watch are punctuality, the cost of running the railway per passenger mile, and the share of costs paid by fares rather than taxes.

7. The Steel Man: The Case for the Current Approach

The strongest case against this pillar is that the current pattern of spending reflects where transport delivers the most, and that the proposals here would trade flexibility for rigidity. Rail carries the long commuting journeys into city centres where the UK's most productive jobs are; without it, those centres could not function, and the taxes they generate pay for services everywhere else. Spending more per person in London is not favouritism but a response to demand: a new line in a dense city fills up, while one in a thinly populated area may not. Standard appraisal favours schemes with high passenger numbers because they deliver the most benefit per pound.

Buses outside London are declining for reasons funding cannot fix: more people own cars, more people work from home, and towns have spread out. Pouring money into routes that fewer people use would subsidise empty buses. Fare caps, by contrast, are cheap, visible and directly help the people who do use buses.

Five-year settlements would lock in today's priorities and stop future governments responding to events, as they have had to do through a pandemic, an energy crisis and a war in the Middle East. And fuel duty freezes are a legitimate political choice: every government since 2011 has made it, because voters face real cost-of-living pressure, and a per-mile charge would be unpopular, intrusive and hard on rural households. Leaving the decision to each Budget keeps it accountable to voters.

This case has force. It is why this pillar does not propose cutting rail spending, accepts that London's network will always cost more per person, and makes the fuel duty proposal about how the decision is made rather than what it should be. Where it falls short is that it treats the outcomes of short-term decisions as if they were the result of a long-term plan. The cost of HS2, the backlog of road repairs and the £139 billion of foregone fuel duty were not chosen; they accumulated.

8. Counter-Arguments

'Bus funding just props up empty buses'

Outside London, buses still carried 1.9 billion journeys in the year to March 2025.³ The service has shrunk faster than demand in many places: miles run fell 28% since 2005, more than the fall in passengers per person, so some of the decline is a network too thin to be useful rather than a lack of people wanting to travel. Multi-year funding tied to service levels would let councils and operators test that, route by route, instead of cutting the marginal routes every year when one-year money runs out.

'Five-year budgets stop governments responding to crises'

Five-year settlements can include a clause allowing them to be reopened in a declared emergency. The point is to make stop-start funding the exception rather than the rule. The Competition and Markets Authority's finding is that the current volatility itself raises costs.⁶

'A per-mile charge is a tax on drivers by stealth'

It would replace an existing tax that is disappearing, not add a new one. Drivers of petrol and diesel cars already pay per mile through fuel duty; the question is what happens when most cars are electric, and the government has already started answering it with the new electric vehicle charge.⁷ The proposal here is that the answer be planned and debated openly, with the rate and any rural protections set out before it starts, rather than arriving piecemeal.

'HS2 shows the UK should stop building big projects'

HS2 shows how not to run one. The government's own account is that most of the latest overrun came from underestimating the work and inefficiency, which independent benchmarking before approval is designed to catch.⁵ Many other countries build urban rail for far less per kilometre.¹¹ The answer is to build at their costs, not to stop building.

10. Proposals for Change

These are the evidence-based proposals of this pillar, put forward for public discussion and challenge.

• P1 Give every road, rail and local transport authority a five-year capital settlement, with provision to reopen it only in a declared emergency, and publish a single UK-wide pipeline of planned transport schemes with their expected costs and dates.

• P2 Replace one-year fare caps and bidding rounds outside London with multi-year revenue funding for local bus networks, linked to published service levels, so that routes are planned for several years at a time.

• P3 Require an independent cost benchmark, against similar schemes in the UK and abroad, before any transport scheme over £1 billion is approved, and publish it and update it at each major stage.

• P4 Make fuel duty rise with inflation each year unless a Budget explicitly sets out and costs a freeze, and publish within this Parliament a plan to replace fuel duty and the electric vehicle charge with a single per-mile charge for all vehicles, including how rural households would be protected.

• Report transport spending per person by region every year alongside the Budget, with the main schemes behind each region's figure, so the pattern of where money goes is visible as it is decided.

Most of what is wrong with British transport was not chosen. The cost of building, the decline of the bus outside London and the shrinking of fuel duty all accumulated through decisions taken one year at a time. The Generational Reset does not claim that planning further ahead is free or easy. It argues that the cost of not doing so is already being paid.

The Generational Reset is a non-partisan, public-interest project. It is not affiliated with any political party, does not accept corporate funding, and publishes all its work under open licence for public discussion and adaptation.

For public discussion. Not affiliated with any political party. | generationalreset.org

The Generational Reset | S1_12: Transport | For public discussion. Not affiliated with any political party. | generationalreset.org