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Spending Review 2025: Connected Places Catapult response
In recent weeks there have been a flurry of announcements leading up to last week’s Spending Review. We are also expecting announcements that will build on these plans, such as the 10-Year Infrastructure Strategy and the Industrial Strategy 2035.
Below are some reflections on what the Spending Review could mean for the Connected Places Catapult across our three focus areas; transport, built environment and local growth, and data and digital.
What is the Spending Review?
The Spending Review is a chance for the Government to set out its spending programme for the duration of the Parliament. This one sets out the UK Government’s spending plans through to the end of the decade, so beyond the end of this Parliament. It is aimed at “Britain’s renewal: its security, health and economy” and confirms departmental budgets for day-to-day spending up to 2028–29 and capital investment through to 2029–30.
What did it look like for the Connected Places Catapult?
This Spending Review marks quite a significant statement of intent from the Government on the future direction of investment across infrastructure, innovation, and public service reform. There is also a long-term focus on driving productivity and resilience across the UK.
This includes commitments to harnessing digital technologies, unlocking local growth, and supporting mission-led innovation, with notable uplifts in science and technology, affordable housing, and place-based growth.
Overall, departmental budgets are projected to grow by 2.3% per year in real terms, with a stronger 3.6% growth in capital investment. Over the Spending Review period, 2026/27 to 2029/30, investment in R&D will be £86 billion overall, rising from £20.4 billion in 2025/26 to £22.6 billion in 2029/30.
Of course, Government departments will now be working through the details of out how to spend their allocations. We will be working closely with Government to offer projects that ensure that spending in all departments is focussed firmly on innovation, as well as making places greener, and more inclusive and prosperous.
Below are the key highlight announcements relevant to our work at the Catapult:
Transport
Transport featured prominently in this Spending Review, with a clear focus on integrated, clean, and responsive networks. These commitments align with the Catapult's work efforts to bring forward innovation in transport planning, delivery, and decarbonisation – ensuring better experiences for users and better outcomes for places.
Key highlights include:
- £15.6bn for Transport for City Regions (TCR) to support new trams, rail connections, and integrated systems.
- £2.3bn Local Transport Grant for towns and cities outside TCR regions to support congestion relief, bus lanes, and cycling schemes.
- A £2.2bn multi-year settlement for TfL, supporting renewals and potential DLR expansion.
- £24bn for road infrastructure, and £10.2bn for rail, including major intercity and regional upgrades.
- £2.6bn for transport decarbonisation, enabling EV infrastructure and sustainable transport options.
- The Transport AI Action Plan, which sets out the Government’s approach to responsible AI adoption in mobility.
Built Environment & Local Growth
The Spending Review also sought to strengthen the conditions for innovation-led regeneration and signal a shift towards greater recognition of the value of place-based growth.
There are explicit commitments to not only drive growth in city regions, but to also improve connectivity between cities and the towns that surround them. The announcement of £15.6bn for Transport for City Regions (TCR) to empower metro mayors to deliver better connectivity across the country is a step in that direction.
The Government has also established a new Local Growth Fund for city regions, in the North and Midlands, as well as targeted investment in 350 deprived communities across the UK to support regeneration and public realm improvement. In addition to this it has also established a Growth Mission Fund to invest £240 million of capital in projects that enable local job creation and the economic regeneration of local communities.
One potential game changer at the local level is the announcement to modify. Green Book guidance so that value can be attributed to regional investment is a potential a game changer at the local level. This is an opportunity to make it easier to develop place-based business cases for public investment, including outside London and the Southeast.
Digital & Data
The Spending Review places digital transformation at the heart of the Government’s strategy for economic growth and public service modernisation.
Key announcements:
- The Department for Science, Innovation and Technology (DSIT) has announced investment of £86bn over the Spending Review period, reaching £22.5bn a year by 2029/30
- £1.9bn for cross-government digital transformation – Supporting the GOV.UK App and Wallet, cybersecurity upgrades, and productivity-enhancing AI tools across departments underpinned by a Government Digital and AI roadmap due in the Autumn
- A commitment to create a National Data Library to enable smarter, faster decision-making across public services by unlocking the full value of public data.
- £2bn for Government to deliver on its AI Opportunities Action Plan published early this year
- £500m for the Government’s R&D Missions Accelerator Programme which will leveraging £1.5bn in private investment into innovation challenges that support the government's missions
- £750m for a new UK supercomputer at Edinburgh University – Enabling breakthroughs in fields from drug discovery to climate modelling and fusion energy.
