New devolved powers announced in the Budget are set to unlock billions of pounds for four major London transport projects, in what Mayor Sadiq Khan has called a “devolution revolution”. Chancellor John Healey described the changes as the “most radical act of decentralisation in a generation”, giving London greater control over transport funding and reducing its reliance on central government.
The four schemes named in the Budget as set to benefit are Tube upgrades at Euston, plans to bring international rail services to Stratford International, the Bakerloo Line extension and the proposed West London Orbital. However, business cases, legislation, borrowing and funding decisions, and individual project approvals will still need to be addressed before Londoners see any changes on the ground.
Mayor's Response
Khan welcomed the announcement, describing it as a “really positive and significant day for London”. He said: “After lobbying on the issue for many years, I’m delighted that the Government will help us to bring cross-channel rail services to Stratford International – making this station truly international for the first time. It will open up huge opportunities for jobs, investment and tourism.”
He added: “The Government has also taken significant steps to devolve transformational new powers and funding to the capital, alongside other communities around the country. Working with Number 10 North we’re delivering the largest devolution of powers to London seen in a generation. By giving London the ability to keep more of the money we raise, we can invest billions of pounds more in our future, helping to finally unlock transformational infrastructure projects such as the West London Orbital, the Bakerloo Line Extension and the Euston knowledge quarter project, supporting tens of thousands of new homes, jobs and economic growth.”
Bakerloo Line Extension and West London Orbital
The Bakerloo line would be extended south from its current terminus at Elephant & Castle into south-east London. The first phase could include new stations at Old Kent Road and New Cross Gate, with the line potentially running up to 27 trains an hour. A possible second phase would extend the line from Lewisham through Catford, Sydenham and Beckenham to Hayes, taking over an existing National Rail route. TfL is scheduled to hold a public consultation on the scheme between December 2026 and February 2027.
The West London Orbital is a proposed new London Overground route connecting Hendon in north London with Hounslow in west London, using existing railway lines currently mainly used by freight trains. Plans include up to six trains an hour and four proposed new stations at Neasden, Harlesden, Old Oak Common Lane and Lionel Road. The government plans to allow the Mayor to introduce a successor to the Business Rates Supplement (BRS), currently helping to pay for the Elizabeth line, to fund both projects. The existing supplement is due to end by 2041.
Stratford International and Euston
The Budget refers to proposed Mayoral Strategic Authority Business Rates Retention Zones as a way to help fund bringing cross-Channel rail services to Stratford International. These would allow some additional business rates income generated locally to be retained to support development, but the proposals remain subject to the relevant approval processes.
The proposed redevelopment of Euston includes improvements to the Tube station, the new HS2 station and the surrounding area. The Government confirmed plans to use a Tax Increment Financing (TIF) scheme to help pay for infrastructure at Euston, subject to a full business case being developed by the Greater London Authority and Camden Council. The scheme would use business rates income generated by growth in the area to help fund improvements, but the funding plan still needs to be worked up in detail.
Reactions
Caroline Russell, Green Party London Assembly Member, welcomed the Bakerloo line extension announcement, describing it as a “huge step forward for south London”. She said: “Securing the funding needed to extend the Bakerloo Line would be a huge step forward for south London. A new transport option with the potential to take 20,000 cars off our roads every day, will also mean less congestion and cleaner air for Londoners.”
Elly Baker AM, Labour's Transport Spokesperson on the London Assembly, said: "Funding unlocked for international services to Stratford, the Bakerloo line extension and the West London Orbital will create better transport links and provide a step change for many Londoners not only using public transport to get to work, but to stay connected with family and communities. Giving the Mayor more powers to raise revenue for future transport projects is an important step towards building a network that can keep pace with London's ever-growing needs. This Government is backing London with investment and ambition. The challenge is now about delivering it. Londoners have waited long enough for these projects to break ground. Now that the Government behind us, we must push forward."
