TfL gets £2.2 billion for capital upgrades over the next four years

Transport for London (TfL) is set to receive £2.2 billion over the next four years to fund its capital renewal programme, the government has announced.

Announced in the government’s Spending Review, the Chancellor said that this represents the “largest multi-year settlement for London in over a decade”.

In total, the government is offering TfL £2.2 billion between 2026-27 and 2029-30.

This funding is for capital renewals only and won’t be for day-to-day running costs, which still needs to be sourced entirely from TfL resources – fares and non-fares revenues.

TfL has been contacted for details of how the spending will be allocated, but it has been campaigning for funding to upgrade the Bakerloo line, which has trains that are long past their retirement age, and showing it. If agreed, a Bakerloo line settlement would also secure long-term jobs at the Siemens rail village in Goole, where the new trains are expected to be built. If funded, the cost of replacing the trains and expanding the fleet for the line extension is expected to cost around £1.8 billion.

Even if not used for a train fleet replacement, a long-term funding settlement reduces costs on other projects by guaranteeing suppliers a reliable pipeline of work.

In a financial statement, TfL said that the terms of that funding settlement are approaching finalisation, but confirmed that the settlement “will support rolling stock upgrades on the Piccadilly, Bakerloo, Central lines and Docklands Light Railway (DLR).”

TfL added that it has “worked closely and productively with the Department for Transport (DfT) over the past few months on TfL’s funding settlement as part of the 2025 Spending Review and TfL will provide a further update on the settlement letter when it is finalised”

The government’s spending review said that it also recognises the potential growth and housing benefits of the Docklands Light Railway (DLR) Thamesmead extension and is committed to working with TfL to explore options for delivery – but didn’t make any commitments to funding the extension.

The Mayor of London, 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.

“As Mayor, I’ll continue to make the case to the government that we must work together for the benefit of our capital and the whole country. The way to level up other regions will never be to level down London. I’ll continue to fight for the investment we need so that we can continue building a fairer, safer and greener London for everyone.”

Andy Lord, London’s Transport Commissioner, said: “We are grateful that the Government has agreed a much-needed multi-year capital funding agreement similar to those in place with Network Rail and National Highways.

“This settlement will ensure that London’s transport network can continue to support new homes, jobs and economic growth in the capital. And it will boost jobs, skills, growth and opportunities across the UK. It will allow us to deliver a programme of sustainable investment, aligning our suppliers around a longer-term programme. And it will mean that we can complete the introduction of new trains on the Piccadilly line and DLR and new signalling on 40 per cent of the Tube, can procure a new tram fleet, progress discussions on new Bakerloo line trains and can get to work on renewing some of London’s critical roads, tunnels and flyovers.

“Our supply chain supports growth and opportunities right across the UK, with around two thirds of our suppliers based outside London, and nearly a third of our overall spend and resulting economic benefit felt outside of our city. We are pleased that, together with our suppliers, we can move on from the short-term and stop-start nature of funding over recent years and get on with the vital work of making our city and our country work for everyone.

“The prevailing macro-economic conditions and other factors mean that we will continue to have to make at times difficult decisions and we will need to continue to carefully prioritise investment and control our costs. We will now work through the detail of the agreement before re-setting our business plan for the years ahead.”