Transport for London (TfL) has secured a £2.17bn multi-year capital funding settlement from the UK government to support infrastructure renewal and major projects across the capital’s transport network.
Announced in a letter from UK transport secretary Heidi Alexander to London mayor Sadiq Khan, the settlement covers the four-year period from 2026/27 to 2029/30 and follows TfL’s business case submission under Spending Review Phase 2.
It includes funding for high-priority capital renewals such as rolling stock and signalling procurements, and support for procuring additional Elizabeth Line trains.
The UK Department for Transport (DfT) said the settlement aims to provide TfL with long-term financial certainty to maintain and upgrade London’s multi-modal transport system, which it described as “essential to both the capital’s and the UK’s economy”. The funding is expected to support thousands of jobs across the UK’s supply chain.
Under the agreement, TfL is required to strengthen its financial sustainability by increasing its operating surplus, making capital and operational efficiencies, and generating additional revenue – including assumed annual fare increases of RPI+1%.
TfL must also deliver a new capital efficiencies plan and manage any project cost overruns or pension liabilities without further central government support.
An independent body such as the Office of Rail and Road will oversee delivery of the settlement, with progress reviewed biannually through a dedicated Oversight Group and reported to the DfT’s Investment Committee.
While no direct capital funding is allocated to the Euston redevelopment, TfL is expected to continue working with government on a viable transport solution for the area.
The settlement also encourages TfL to maximise support for borough-led Local Implementation Plan schemes and finalise a business case for the proposed DLR extension to Thamesmead by autumn 2025.
The DfT emphasised that the settlement is intended to help TfL design and deliver a transport network that is accessible to all Londoners, with environmental and social benefits at its core.
Funding will be paid in biannual instalments, starting with £828m in 2026/27 and tapering to £428m in 2029/30.
Responding to the broader Spending Review, Sadiq Khan said: “I’ve been determined to stand up for London and it’s good news that we have won extra resources for transport and housing.
“I have been campaigning for years for a multi-year deal for City Hall and for Transport for London and I welcome this agreement.
“However, I remain concerned that this Spending Review could result in insufficient funding for the Met and fewer police officers.
“It’s also disappointing that there is no commitment today from the Treasury to invest in the new infrastructure London needs.
“Projects such as extending the Docklands Light Railway not only deliver economic growth across the country, but also tens of thousands of new affordable homes and jobs for Londoners.
“Unless the government invests in infrastructure like this in our capital, we will not be able to build the numbers of new affordable homes Londoners need.”
Achievements and innovations in urban mobility will be recognised and celebrated at the fourth annual CiTTi Awards on 25 November 2025 at De Vere Grand Connaught Rooms in London. Visit www.cittiawards.co.uk to learn more about this unmissable event for the UK’s transportation sector!
