Spending Review: How it impacts logistics

Chancellor of the Exchequer Rachel Reeves delivered her long-awaited Spending Review on 11 June, setting out the government’s departmental budgets and priorities for the years to 2029/30 (2028/29 for day-to-day spending).  

Her headline message was that she wants to deliver “renewal” that is “felt in people’s everyday lives.” Plans include an increase in transport capital investment (excluding HS2) of 3.9% but a reduction of day-to-day DfT spending of 5%. This pattern is seen across Whitehall, with the Chancellor’s fiscal rules allowing for greater borrowing for investment.  

Transport investment announcements relevant to the logistics sector include £24 billion to maintain and improve motorways and local roads; a reconfirmation of a further £3.5 billion for the Transpennine Route Upgrade; funding to progress the Midlands Rail Hub West; and £445 million for railways in Wales over ten years, including infrastructure upgrades. 

The Chancellor added that there will be an announcement on Northern Powerhouse Rail in coming weeks. However, capital spending by HMRC will reduce by 15.3% which suggests there are no plans for major projects to digitise border processes. 

On transport decarbonisation, the Spending Review commits to £2.6 billion, including £1.4 billion to support the continued uptake of electric vehicles, including vans and HGVs, and £400 million to support the rollout of charging infrastructure. It also pledges to support the production of Sustainable Aviation Fuel by extending the Advanced Fuels Fund through the Spending Review period.  

Also relevant to the logistics sector is that capital investment on energy infrastructure (excluding Sizewell C) will increase by 2.6% across the period.  

Regarding day-to-day spending, the DfT has said it will make savings through the greater use of AI and automation at the DVLA. The Department for Energy Security and Net Zero will have its day-to-day spending cut by 0.5%, and the Ministry of Housing and Local Government will get a 1.4% cut.  

However, spending on HMRC will increase 1.8%, with £500 million to be spent on digital transformation to improve its efficiency. Local government will also receive a funding boost, important for the resourcing of planning officers  

The government published the outcome of its Green Book review (link added) on the same day, setting out reforms to how infrastructure and public investment projects are appraised.  

The changes aim to support more balanced regional growth and ensure greater consideration is given to strategic outcomes. The changes may benefit logistics projects which can have strategic, rather direct, economic benefits.