The UK Budget: Infrastructure Investment Remains A Genuine Focus And Priority

The UK budget, delivered on the 26 November 2025, re-confirmed the Government's strategic commitment to infrastructure as a key driver to secure economic growth with confirmation that its commitment to an over £120 billion increase in departmental capital spending over the current Parliament to 2029-30. Its 10 Year Infrastructure Strategy, published in June, was also predicated on attracting even more private investment and on project delivery, a theme continued with this budget.

Public and private investment in UK infrastructure

The budget detailed Government plans to open 250 new neighbourhood health centres through the NHS Neighbourhood Rebuild Programme using a "a combination of public sector investment and a new model of Public Private Partnerships (PPPs)". The National Infrastructure and Service Transformation Authority (NISTA) is involved in the development of the new model, with support from the Department of Health and Social Care. HM Treasury is also considering the use of private finance, including PPPs, alongside Government funds, where value for money is demonstrated, to decarbonize the public sector estate. This demonstrates the Government's openness to further use of PPPs, including to help deliver the next generation of new towns.

An additional £891 million of Government funding was announced for the Lower Thames Crossing (taking the total to £3.1 billion.). The preferred financing option to secure the additional £7.5 billion private capital required is the greenfield Regulated Asset Base model being used for Sizewell C new nuclear plant. Market engagement on this model will be conducted in 2026.

The Government plans to carry out a strategic asset review before the 2027 spending review to better its understanding when making decisions on new transactions, the use of private finance and disposal of assets. This will report on and provide an insight into the management of public sector assets, liabilities and entities.

Growth and investment in the energy sector

Nuclear

The Government published the Fingleton report on Nuclear Regulatory reform on 23 November 2025. The Government is to respond within 3 months and provide a plan on how it will deliver its recommendations. Questions have been raised as to the compatibility of several of its recommendations with the UK's international treaty obligations. However, on 1 December, the Prime Minister in a speech said that "in addition to accepting the Fingleton recommendations...I am asking the Business Secretary to apply these lessons across the entire industrial strategy." We still await the detail on implementation plans, but this flags the possibility of changes designed to streamline infrastructure delivery beyond nuclear and so will be watched with interest.

The report sets out 47 recommendations, among them:

• establishing a collective decision‑making body for nuclear regulatory (Commission for Nuclear Regulation);
• creating an alternative pathway to comply with the Habitats Regulations;
• amending the cost cap for judicial reviews and limiting legal challenges to Nationally Strategic Infrastructure Projects to a 'single bite of the cherry';
• encouraging fleet approaches in National Policy Statement EN-7; and
• directing regulators to factor in cost to their behaviour.

Part of the protected capital spending includes protecting the funding provided to enable the first small modular nuclear programme, using Rolls Royce SMR technology in North Wales, to final investment decision.

The Government has also updated the Green Financing Framework to include nuclear energy, rated "dark green" by S&P.

Oil and Gas

As confirmed in the Autumn Budget 2024, the existing Energy Profits Levy (EPL) will remain in place until 31 March 2030 at the latest but will end at an earlier date if the EPL's price floor (the Energy Security Investment Mechanism) is triggered. Once the EPL ends, the Government is committed to ensuring that there is a new mechanism in place to respond to future oil and gas price shocks. Consultation on this mechanism took place earlier this year and the Government has now published its response. The Government has confirmed that a new permanent Oil and Gas Profits Mechanism (OGPM) will act as a new 'windfall tax' when oil and gas prices are unusually high. The OGPM will be revenue-based and will apply an additional tax rate of 35% above price thresholds of $90/barrel for oil and 90p/therm for gas. Legislation for the OGPM will be included in the Finance Bill 2027. This will come as a disappointment to those in the oil and gas industry who had been hoping for the EPL to be scrapped and not to be replaced, arguing that it has created a disincentive for investment in the North Sea.

Carbon Border Adjustment Mechanism

Following a number of policy and technical consultations, the Government has confirmed that a UK CBAM will be introduced. This will be a new tax which will ensure that highly traded, carbon intensive goods which are imported into the UK face a comparable carbon price to that paid by manufacturers producing the same goods in the UK (including under the UK Emissions Trading Scheme (ETS)). The UK CBAM will apply from 1 January 2027 to goods from sectors including aluminium, cement, fertiliser, hydrogen, iron and steel. While noting that refineries play a role in energy security and the UK's industrial base, the Government will also consider whether to include refined products in the CBAM.

Energy bills

The Government have been keen to mitigate, so far as they can, the Reform Party's attacks on the cost of energy in the UK and its link to 'green subsidies'. One key measure aimed at this in the Budget relates to the cost of the legacy Renewables Obligation, which paid for the first generation of wind farms. This will switch to being funded by the government through general taxation for three years, rather than being added to consumer bills. This should be seen in the context of the this current consultation (Renewables Obligation (RO) scheme: indexation changes) which will likely reduce the real value of the buy-out price each year from next year.

The Energy Company Obligation scheme and levy imposed on energy bills to fund household efficiency improvements is being wound down. The Government estimates that this will save households £1.7 billion a year.

Transport

Aviation

The Government announced on the 25 November 2025, that the third Heathrow runway will be operation by 2035 and entirely privately financed.

Electric vehicles

The Department for Transport published a consultation on 26 November 2025 on permitted development rights for cross-pavement charging and installing charging points. This consultation closes on 21 January 2026.

Transport consultation

The Government made a call for evidence on the 26 November 2025. In the call for evidence, the Exchequer Secretary referred to infrastructure rate payers, including airports, noting that a change in the business rates system is impacting long-term investment decisions. The Exchequer Secretary wants to provide greater certainty to promote long-term investment.

Trainee Kate Shipton contributed to the writing of this article.

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