The Department for Transport (DfT) will reduce roads funding by up to £700 million over four years to help finance the government’s increased defence budget. This change follows the Prime Minister's announcement of raising defence spending to £80 billion annually by 2030.
Funding cuts to roads: £700m less by 2030
This amounts to a reduction ranging from -0.1% to 0.8% of the overall roads budget between 2026 and 2030. The DfT plans to consult on cutting parts of the third Road Investment Strategy (RIS3), potentially scrapping schemes like the A38 Derby Junctions and the A46 Newark Bypass. Neither project has reached contract stage, and stakeholder feedback will guide final decisions.
Further reductions may target unallocated roads funding. Despite this, funding for local authorities to repair potholes and maintain existing roads will be protected. Investment in rail infrastructure, including Northern Powerhouse Rail, is also maintained.
Energy budget faces £2bn reduction
The Department for Energy Security and Net Zero (DESNZ) must find £2 billion in savings over the next four years. This represents a cut from -0.1% up to -2% by 2030. More detailed plans will emerge in the autumn.
Despite cuts, the government intends to support renewables growth. The UK currently has one of the largest offshore wind development pipelines globally, comparable to China and ahead of the US. The capital budget for energy is set to grow faster than any other department within this spending review period to support the transition away from fossil fuels, which is seen as essential to national security and economic stability.
Supply chain concerns and industry response
At present, detailed impacts on contractors and suppliers are unclear. Industry figures express concern, particularly regarding the government’s £7.3 billion commitment to prevent road network decline. The Asphalt Industry Alliance has called on the government to honour this funding despite announced savings.
Why the cuts are happening
Rising geopolitical tensions, including Russia’s aggression and unrest in the Middle East, have prompted increased defence spending. At the July 2025 NATO summit, the UK committed to a defence spending target of 3.5% of GDP by 2035, aiming to raise the budget to £80 billion by 2029. For context, defence expenditure was £60.2 billion in the 2024/25 financial year.
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