Budget: More austerity for revenue budgets, historically high capital investment

An increase in NHS spending implies transport and other departmental revenue spending will face a bigger-than-expected cut of 6.5% over the next five years, according to the respected Institute of Fiscal Studies.

The IFS spelt out that non-health day-to-day spending will face a further squeeze larger than the 3.2% previously planned by 2023, which suggests less funding for measures such as revenue support for public transport and for smarter travel measures to influence travel behaviour, if savings do not come from elsewhere. Spending is yet to be allocated between departments beyond 2019–20.

However, in positive news, the IFS said that capital spending is going to rise to sustained levels unprecedented in decades. Public sector net investment is planned to rise to close to 2.5% of GDP - a level only surpassed since 1980 in the two years at the end of the last Labour Government. This will also put the capital share of departmental spending at its highest level in 15 years.

Ed Thomas, the head of transport at accountancy firm KPMG, was quoted by The Guardian major transport projects for northern England "will be seen to go some way to redress the balance" after the controversial cancellation of several rail electrification schemes in July. There was also warm reaction from the North East England Chamber of Commerce, which said the Budget were "a big step forward" on the need to change the distribution of investment in the UK. Labour had urged a rebalancing in investment away from London and towards the North.