It was great to see that transport was a key feature in this year's Budget and the Government is investing in modernising Britain's transport infrastructure. So what does the future hold?

Driverless cars are just over the horizon

It is predicted that the UK driverless car industry will be worth £28 billion to the UK economy and employ 27,000 people. The Government wants to attract the world's most innovative companies to the UK and so the Budget introduces "further ground-breaking approaches to regulatory frameworks for AI and driverless cars", such as setting out how driverless cars can be tested with a human safety operator.

The Chancellor stressed that the government wants to see fully self-driving cars, without a human operator, on UK roads by 2021 and the lack of any clear regulatory framework has consistently been cited as a major barrier to industry development. It is possible that any such regulatory framework developed will be contained within the Automated and Electric Vehicles Bill, which is currently in committee stage and expected to become law by 2019.

Another major barrier to widespread use is the fact that most self-driving cars are designed on the assumption that roads are in good condition, with clearly visible markings and signage. This is an assumption not borne out by reality, and the likely reason behind the National Infrastructure Commission's new innovation prize to determine how future roadbuilding should adapt to support self-driving cars, that was also introduced by the Budget.

Driverless cars need geospatial data and the Budget recognises that the UK has some of the best geospatial data in the world, much of it held by public bodies, with a huge potential economic value. The Budget provides £40 million a year over the next two years to establish a new Geospatial Commission to provide strategic oversight to the various public bodies who hold this data. The government will work with the Ordnance Survey (OS) and the new Commission to work out how to open up freely the OS MasterMap data to UK-based small businesses in particular, under an Open Government Licence or through an alternative mechanism, by May 2018.

The Chancellor also pledged £5million for 5G trials, set to begin in 2018, which will explore how 5G can maximise future productivity benefits from self-driving cars.

A switch from diesel to electric

The government will invest £200 million, to be matched by private investment, into a new £400 million Charging Investment Infrastructure Fund; and commit to electrify 25% of cars in central government department fleets by 2022. There will also be £100 million to guarantee continuation of the Plug-In Car Grant to 2020 to help consumers with the cost of purchasing a new battery electric vehicle, and £40 million for R&D. From April 2018 there will also be no benefit in kind charge on electricity that employers provide to charge employees’ electric vehicles however, it falls short of the rise in fuel duty or diesel scrappage scheme many stakeholders had hoped for.

Meanwhile there will be £220 million for a new Clean Air Fund, paid for by a vehicle excise duty supplement on new diesel cars first registered from 1 April 2018 and a rise in the existing Company Car Tax diesel supplement from 3% to 4%, from 6 April 2018. This should have the effect of discouraging uptake of all but the cleanest diesel cars.

Transforming Cities Fund benefits metro mayors

The Budget announces a £1.7 billion Transforming Cities Fund to improve local transport connections and commits £385 million to projects to develop next generation 5G mobile and full-fibre broadband networks, both funded from the NPIF. However, half of this is allocated on a per capita basis to the six combined authorities with elected metro mayors (£74 million for Cambridgeshire and Peterborough, £243 million for Greater Manchester, £134 million for Liverpool City Region, £80 million for West of England, £250 million for West Midlands and £59 million for Tees Valley), whilst all the other local authorities have to compete for the other half. There is concern from large authorities like the West Yorkshire Combined Authority that they will miss out on the funding, due to not having an elected mayor.

On the other hand, there is £337 million from the NPIF to replace the Tyne & Wear Metro's 40-year-old rolling stock with modern trains: great news for that project, whose public funding was uncertain until confirmed in the Budget. That should accelerate that project and the much needed new fleet.

Local councils get discounted borrowing

Following a consultation earlier this year, the government confirms that it will lend local authorities in England up to £1 billion at a new discounted interest rate of gilts + 60 basis points accessible for three years to support infrastructure projects that are high value for money. Details of the bidding process will be published in December 2017, and corresponding shares will be made available to local authorities in Scotland and Wales.

Digital rail

There is £84 million for fitting in-cab digital signalling across a range of trains and a further £5 million from the NPIF for development funding for a digital railway upgrade on the South East and East London Lines. The government will also fund a digital signalling scheme at Moorgate that will enable more frequent and reliable services.

On the passenger side, the government will invest up to £35 million for trials of options to improve mobile communications for rail passengers, including installing trackside infrastructure along the Trans-Pennine route between Manchester, Leeds and York.


Freight even gets a rare mention in a Budget. There will be a new NIC study on the future of freight infrastructure, to be published in Spring 2019. It will look at urban congestion, decarbonisation and how to harness the potential of new technologies, including platooning, where trucks travel in convoy using smart technology to communicate.

Bad news for rich flyers

Air passenger duty rates for economy passengers will be frozen, but the rates for premium economy, business and first class will increase by £16 and by £47 for those lucky enough to travel by private jet.


A broad range of measures rather than any major announcements although Nexus will be pleased with the funding certainty provided for the new rolling stock fleet. It is noticeable that the Budget continues the theme of a modernised transport infrastructure for Britain and that is clearly the way we are headed – the question for the industry is how to embrace this policy direction because there seems to be funding available for schemes that chime well with the Government's modern transport agenda.

Key Contacts

Paul Hirst

Paul Hirst

Partner, Global Infrastructure and Co-head of Transport
United Kingdom

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Anna Sweeney

Anna Sweeney

Principal Knowledge Lawyer, Projects & Infrastructure

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