A Year of Change: A Look at Labour’s First Year in Government – Transport

Labour’s first year in government has been a busy one for transport. While the Prime Minister’s Cabinet has remained largely intact, one notable departure was Louise Haigh, who resigned as Transport Secretary in November 2024 following revelations she pleaded guilty to a fraud offence in 2013. She was swiftly replaced by Heidi Alexander – a familiar face from her previous role as London’s Deputy Mayor for Transport and Deputy Chair of Transport for London, between 2018 and 2021, and as the Labour MP for Lewisham East between 2010 and 2018. Despite the turbulence, the Government has pressed ahead with major transport reforms – not least on the railways.

Back on track?

One of Labour’s headline policies – nationalising the railways – quickly moved from manifesto pledge to legislative reality. The Passenger Railway Services (Public Ownership) Act received Royal Assent in November last year, having been one of the first Bills to be published after the General Election. The process of bringing franchises back under public control has been well underway since. South Western was the first to return to public hands in May, c2c went public just this past weekend, and Greater Anglia will follow in October. The goal is full nationalisation by 2027, adding to the list of already publicly operated services including LNER, Northern, Southeastern and the TransPennine Express.

Support for renationalisation is strong – a 2024 YouGov poll found that 76% of people back public ownership of the railways. The Government claims it can save £680m annually by scrapping dividend payments and competitive tendering. But while the structure may be changing, cost pressures persist: the latest fare hike of 4.6% in March – above inflation – has dampened hopes for cheaper tickets any time soon.

Growth beyond London

Last month’s Spending Review signalled a shift in transport investment priorities. The Department for Transport saw the biggest day-to-day funding cut of any department – down 5% annually– but capital funding rose by nearly 3.9% annually. £15bn of major transport projects were announced across the country: new tramlines in Birmingham, Manchester and the North East, East West Rail between Oxford and Cambridge, and a long-awaited mass transit system for West Yorkshire among others. Notably absent? Anything for new London projects.

The capital was granted a four-year, £2.2bn capital settlement for Transport for London (TfL) – described as the biggest in over a decade but widely seen as the bare minimum needed to keep the network running. TfL says the money will fund upgrades to signalling on 40% of the Tube network, new Piccadilly line and DLR trains, procure a new tram fleet, and long-overdue repairs to roads and flyovers – but this is little beyond core maintenance and renewals. The funding will ‘progress discussions’ on new Bakerloo line trains, with TfL commissioner Andy Lord suggesting they could be in service by the end of the decade.

Shovel-ready – but sidelined?

Missing from the Government’s transport package were three key London infrastructure projects: the DLR extension to Thamesmead, the Bakerloo Line Extension, and the West London Orbital. All three are long-planned, near shovel-ready and critical to unlocking thousands of new homes. Their absence stands in stark contrast to many of the projects funded outside London, some of which are still years from being deliverable, but has also not gone unnoticed given the Government’s ambitions to boost housing supply.

Combined, the three London projects could unlock over 150,000 homes – the equivalent of nearly two years’ worth of London’s housing targets. Given Labour’s own pledge to deliver 1.5m homes by 2029, failure to fund such enabling infrastructure raises questions about how housing targets will be met in the capital. The economic case for doing so is clear: TfL analysis shows that the Elizabeth line supported the creation of 378,000 additional jobs between 2015 and 2022 and helped drive housing growth within 1km of its stations between 2017 and 2022 – a model that London is ready to repeat, if given the funding.

HS2: Full steam to Euston

HS2 has already been significantly reduced in scope, with the northern legs to Manchester and Leeds scrapped under the previous Conservative government. The uncertainty didn’t end there – in the first few months of the Labour government it was unclear whether the line would even reach its intended London terminus at Euston, with suggestions it could terminate at Old Oak Common instead.

However, clarity and relief were brought when tunnelling to Euston was confirmed at the 2024 Autumn Budget, with an additional £25.3bn set aside to complete the line to Euston at the Spending Review. Questions do remain though over how the Euston HS2 station itself will be funded or delivered. What is clear is that HS2 is now on track to become one of the most expensive rail projects in history – and possibly one of the most delayed, with the Transport Secretary recently confirming the line will not meet its 2033 completion deadline.

Taking off but prepare for turbulence

The Government has also embraced airport expansion as a route to economic growth – approving or backing expansion projects at Heathrow, Stansted, Luton and London City airports, and signalling it is ‘minded to approve’ expansion at Gatwick, subject to conditions around noise and public transport provision. But while the political green light has been given, no public funding has been allocated – with delivery expected to be led and financed by the private sector.

Heathrow’s third runway remains the biggest of these proposals, and the Chancellor’s claim that the project is about ‘backing London’ has raised eyebrows. Three of the so-called ‘London’ airports are not actually in London at all, and the capital’s political leadership is largely opposed to expansion, including the Mayor of London. Airport expansions were previously justified as national projects in the best interests of the country as a whole. With a price tag estimated to be as high as £62.7bn, Heathrow’s third runway could become one of the most contentious planning battles of the Parliament, one that pits the Government’s growth ambitions against both local opposition and its own net zero targets. One wonders whether Sadiq Khan or Ed Miliband will also vow to lie down in front of the bulldozers as famously one previous Mayor did…

What’s next?

Labour has made no secret of its intention to shift Britain’s regional economic balance. The focus on regional transport investment is part of that mission – but risks leaving London in the slow lane just as it grapples with ageing infrastructure and an ever-worsening housing crisis. For London to achieve its housing targets, it is crucial to have the necessary enabling infrastructure in place first.

Key decisions loom: Heathrow’s third runway application is expected this summer; the HS2 station at Euston needs a funding plan; and time is ticking to fund shovel-ready schemes like the DLR and Bakerloo line extensions, and West London Orbital – all critical to meeting London’s housing needs.

The challenge for Labour is one of balance. Infrastructure is central to unlocking growth – but the benefits must be felt across all parts of the country, including the capital. As its second year in office begins, Labour will need to show that its transport agenda is not just ambitious, but deliverable – and that it hasn’t forgotten London in the process.