Autumn Budget: infrastructure commitments a promising sign as capital budgets cut

Autumn Budget commitments to update the Infrastructure Pipeline and give local leaders greater control over regional growth have been welcomed by BCIS, although reductions to departmental capital budgets could create challenges for some schemes.

The Budget confirmed that an updated 10-year Infrastructure Pipeline, last refreshed in March, would be released before the end of 2026. It will set out more than £750 billion of planned investment over the next decade and an estimated workforce requirement of more than 650,000 people. An additional £20.4 billion in capital and financial capacity for the National Wealth Fund and British Business Bank was also announced, aimed at attracting greater private investment into UK businesses, infrastructure and strategic industries. Of this, £15.4 billion will go to the National Wealth Fund, including £2 billion for a new Energy Wealth Fund.

However, the government confirmed that part of the additional funding required for its Defence Investment Plan would come from a further 1% reduction in departmental capital budgets between 2027-28 and 2029-30, on top of the cut announced in June. The cuts will contribute £3 billion towards the outstanding £4.7 billion required for the defence plan, with the remaining balance coming from the Treasury’s capital reserve. Analysis by the Institute of Fiscal Studies⁽¹⁾, suggests 40% of the government’s day-to-day-spending reserve between 2027-28 and 2028-29 has been allocated. One-quarter of its capital reserve has been allocated for the period between 2027-28 and 2029-2030.

BCIS chief economist Dr David Crosthwaite said the announcements offered welcome reassurance about the government’s long-term infrastructure ambitions but said the impact of departmental capital budget reductions would depend on how spending priorities are managed. ‘There were some encouraging announcements for infrastructure in the Budget, but the reduction in departmental capital budgets introduces an element of uncertainty at a time when the industry needs confidence in future workloads,’ he said.

‘Building costs are rising, particularly under pressures from energy markets and supply chain disruptions, and the concern is that cuts to departmental budgets could lead to a reprioritisation of spending, potentially making some projects less viable or harder to deliver. The updated Infrastructure Pipeline will therefore be particularly important. A more nuanced picture of the procurement, funding and workforce needs of planned projects will help clients, contractors and wider supply chains make informed decisions about investment, resources and skills.’

Among its transport announcements, the government confirmed the terms of reference for an independent review of rail infrastructure costs, which is expected to conclude within six months. Its scope includes how decisions are made to initiate rail infrastructure projects, the impact of regulation on delivery and how different authorities and delivery bodies interact.

The review draws on a similar approach to the government’s response to the independent Nuclear Regulatory Review led by John Fingleton, which identified opportunities to simplify regulation and reduce delays while maintaining safety and environmental standards. The government has committed to implementing the nuclear review’s recommendations and is considering how similar principles could improve the delivery of other major infrastructure projects.

‘The rail infrastructure costs review is a welcome step,’ Dr Crosthwaite added. ‘These are complex schemes, potentially exposed to concentrated cost pressures from specialist labour and key structural materials such as steel, so identifying opportunities to improve efficiency and delivery is worthwhile.’

The Budget was also used to reveal the government’s Fiscal Devolution Roadmap, setting out plans to give mayors and local authorities greater control over funding and investment decisions. From 2027, mayors will retain a 20% share of business rates, followed by a share of basic-rate income tax receipts from 2028. The government also confirmed a £1.5 billion borrowing facility for mayoral strategic authorities, alongside Good Growth Funds and £150 million to strengthen all strategic authorities’ capacity and expertise.

The measures could support investment in regional infrastructure by giving local leaders greater flexibility to coordinate transport, housing and regeneration projects and plan spending over the longer term.

On 2 November, the government launched its £700 million Strategic Sites Accelerator, pledging to work with mayors and local leaders to unlock up to 10 major industrial and commercial sites across the UK. The programme aims to attract up to £2 billion in private investment by addressing barriers to development, including planning constraints, grid connections, access to finance and site viability. It will combine financial support with technical expertise to help bring forward commercially viable sites with strong investor demand.

However, unlocking major development opportunities will also require careful consideration of existing infrastructure capacity and competing demands on local resources. Responding to the Budget, the Local Government Association (LGA) called for a more joined-up, place-based approach to ensure councils have reliable information about infrastructure demands and resource use (2). For example, it highlights the cumulative pressures that data centre development can place on electricity networks, water infrastructure and land, particularly in areas already balancing housing delivery, climate commitments, inclusive growth and wider resilience priorities.

The LGA emphasised the importance of councils being involved in strategic planning and decisions on such developments, to ensure infrastructure requirements are understood early, and investment delivers lasting benefits for local communities.

Dr Crosthwaite added: ‘Giving local leaders more control over funding and investment decisions could help bring forward infrastructure projects that respond directly to regional priorities. Transport, housing and regeneration are closely connected, and greater flexibility over funding could help authorities take a more joined-up approach to investment. The additional support for strategic authorities to develop their expertise is also welcome. However, greater financial powers need to be matched by the industry’s capacity to plan and deliver projects effectively. Ultimately, the success of the government’s infrastructure commitments will depend on how effectively projects move from the pipeline into construction.’

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^{(1) Local Government – Autumn Budget 2026: LGA briefing – here}