The Budget's key points for London, including TfL funding, property changes and beer prices

Chancellor of the Exchequer, Rachel Reeves MP and her Treasury team (including the Rt Hon Darren Jones MP, Chief Secretary to the Treasury in green tie), presents her iconic red box at 11 Downing Street
-Credit: (Image: Richard Baker / In Pictures via Getty Images)


Rachel Reeves has unveiled her Budget, and the measures within it will of course affect London. Sadiq Khan says it shows that the Chancellor of the Exchequer 'understands the problems and opportunities London faces and is working with us here in the capital, not against us'.

But others have expressed concern, with the London Chamber of Commerce, for example, saying that it is 'deeply concerned that the Budget has not gone far enough to protect London businesses', which are 'the engine room of nationwide growth'.

MyLondon has broken down what Ms Reeves announced and explained what they mean for the city.

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HS2 will tunnel to Euston

The Chancellor announced that cash will be provided for HS2 to begin tunnelling to Euston. But she stopped short of funding the new station after the former prime minister, Rishi Sunak, announced that it would be funded by private investment.

Construction work continues on the HS2 site in Euston on February 5, 2024
Construction work has halted at HS2's Euston site -Credit:Carl Court/Getty Images

The Budget says: "Progressing HS2 Phase One to improve connectivity between London and Birmingham, and increase capacity on the West Coast Mainline while delivering the Secretary of State for Transport’s commitments to control costs and bring the project back on track.

"HS2 trains will run to Euston, with funding provided for tunnelling to the Central London terminus, catalysing private investment into the station and local area. Investment at Euston will be further supported through the appointment of Bek Seeley to chair the Euston Housing Delivery Group, to drive forward an ambitious housing and regeneration initiative for the local area."

More cash for TfL

£485 million has been provided for Transport for London' (TfL) capital renewals programme in 2025-26. This includes funding for rolling stock on the Piccadilly and Elizabeth lines.

MyLondon also understands that the funding announced could help pay for new trains and depots on the Piccadilly line and DLR, as well as upgrades to District and Metropolitan line signalling. The cash could also be put towards paying for new trams and Bakerloo line stock.

London Mayor Sadiq Khan and Shadow Chancellor Rachel Reeves
London Mayor Sadiq Khan says funding given to TfL is 'substantial' -Credit:Dan Kitwood/Getty Images

Moreover, the money could be spent on 'improving' the A40 Westway. Sadiq Khan asked the previous Conservative government for a minimum of £569 million in 2023. Last week, the Mayor of London told the Local Democracy Reporting Service that he believed it would be 'a win' to receive 'anything more than £250 million' from the Labour government.

The Government has also announced that regulated train fares in England will increase by up to 4.6 per cent next year and the price of most railcards will rise by £5. The increase in fares is one percentage point above July’s Retail Prices Index (RPI) measure of inflation, which until 2023 was used by Westminster governments to set the cap on annual rises in regulated fares.

More devolution

London misses out on an 'integrated settlement' with the Government over devolution for now. This includes 'a single flexible pot of funding'.

The Budget says: "The Government is working closely with local leaders on the upcoming English Devolution White Paper, and the Budget introduces the first integrated settlements for the West Midlands and Greater Manchester from 2025-26. The integrated settlements will deliver a single flexible pot of funding with a single outcomes framework to support MCAs to deliver growth.

"The Government wants more regions to benefit from integrated settlements and is confirming the MCAs that are eligible to receive integrated settlements from 2026-27: the North East, South Yorkshire, West Yorkshire Mayoral Combined Authorities, and Liverpool City Region Combined Authority. The Government will also explore how an integrated settlement could apply to the Greater London Authority from 2026-27."

An aerial view from the Emirates Air Line cable car, of the A1011 North Woolwich Road and the London Assembly's new City Hall
The Government says it will explore how an integrated settlement could apply to the Greater London Authority from 2026-27 -Credit: Richard Baker / In Pictures via Getty Images

However, document notes that the Government is extending the 67 per cent business rates retention arrangements - meaning City Hall has kept a larger proportion of business taxes - for the Greater London Authority (GLA) for 2025-26.

Taxes affecting London businesses and people

Ms Reeves confirmed a £25 billion hike in employers' national insurance contributions. This includes higher rates overall and a lower starting threshold. London businesses will be hit by a 1.2 percentage point increase in employers' national insurance from April.

However, the Government has said it will not extend the freeze on income tax and national insurance thresholds beyond 2027/28, meaning fewer people will be dragged into paying higher taxes than would have been the case. Fuel duty will also be frozen, meaning there will be no higher taxes at the petrol pumps next year.

Draught alcohol duty will be cut by 1.7 per cent. This effectively means a penny off a pint in the pub.

Inheritance tax thresholds will be frozen until 2030. This means the first £325,000 of any estate can be inherited without paying a levy. This rises to £500,000 if it includes a home passed to direct descendants and £1 million when a tax-free allowance is passed to a surviving spouse or civil partner.

Capital Gains Tax rates on carried interest will increase to 32 per cent from April. Then, from April 2026, the Government will deliver 'further reforms to ensure that the specific rules for carried interest are simpler, fairer and better targeted'.

The stamp duty surcharge for second homes will increase by two percentage points, from three to five per cent, from Thursday (October 31). But stamp duty rates start at £425,000 for first-time buyers and £250,000 for other buyers. These will drop to £125,000 and £300,000 from April.

Housing changes

The Chancellor promised investment in housing. She told MPs: "We will increase the Affordable Homes Programme to £3.1 billion, delivering thousands of new homes."

Dame Meg Millar MP has raised housing in Hackney at Prime Minister's Questions before Ms Reeves' Budget speech. She told Sir Keir Starmer that nearly 4,000 children, who could fill eight primary schools, are in temporary accommodation. Many of these are outside London, she added, ‘ripping apart our communities’

Chesterton and Dexters estate agents for sale signs are displayed outside a house estate agents in Clapham south west London
Rachel Reeves talked about housing during her speech -Credit:HENRY NICHOLLS/AFP via Getty Images

The Prime Minister said it’s 'a source of national shame' that there are just under 1.3 million households on a social housing waiting list nationwide, including, he thinks, 8,000 in Hackney. Sir Keir then reiterated the Government's aim to deliver 1.5 million homes over the course of the parliament.

Rachel Blake, the MP for the cities of London and Westminster, raised rough sleeping. Sir Keir said homelessness is 'far too high', and that the Government is working on a 'long term strategy' to end hit 'once and for all'.

The Prime Minister added that he aims to tackle the 'root causes' of homelessness, including 'delivering the biggest increase in social affordable house building in a generation', and abolishing Section 21 evictions.

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