Rachel Reeves blamed as Starmer redirects £700m road funds to defence
The government is canceling major road infrastructure schemes, including the A38 Derby Junctions and A46 Newark Bypass, to reallocate funds to defence.
Rachel Reeves blamed as Starmer redirects £700 million road funds to defence
Prime Minister Keir Starmer has announced that a number of road infrastructure projects would be ditched, with money reallocated to defence spending. The Department for Transport (DfT) will provide savings of up to £700million, with the possible cancellation of the A38 Derby Junctions and A46 Newark Bypass schemes. DfT is also set to explore limited reductions to as yet uncommitted roads funding as part of the new updates. The move marks the latest blow to motorists and has triggered a fresh wave of criticism aimed at Chancellor Rachel Reeves.
However, a Treasury report explains that the government was still set to remain committed to protecting funding for local authorities, with cash used to fix potholes and repair roads.
Media additions
Road projects shelved, defence receives a boost
The Express reported that the possible cancellation of the A38 Derby Junctions and A46 Newark Bypass schemes. DfT is also set to explore limited reductions to as yet uncommitted roads funding as part of the new updates.
“The government is to use monies scheduled for roads investment to fund their clueless attempt to bolster our nation’s defence. As usual because of @RachelReevesMP fiscal incompetence it’s UK drivers that are to pick up the tab to pay for her mistakes.”
Howard Cox, founder of FairFuelUK, via Express
David Giles, Chair of the Asphalt Industry Alliance (AIA) has also expressed his frustration at the news, adding that UK roads were already in a woeful condition.
“It is disappointing that capital funding for new road projects looks set to be cut, but it is vital that the Government honours the pledge made today to protect funding for local authorities to carry out much needed road maintenance and pothole repairs.”
David Giles, Asphalt Industry Alliance, via Express
Meanwhile, East Midlands mayor Claire Ward, where two projects will be ditched, stressed that the news was unacceptable.
Reeves’ own fiscal reshuffle hits motorists
The Chancellor has announced a significant change to how these drivers will pay car tax during a segment of the speech where she confirmed there would be a hike to Vehicle Excise Duty. Ms Reeves' amendments specifically outline how Vehicle Excise Duty will fall in line with inflation, as the new rates come into force from April 2026. In the Budget, the Chancellor also confirmed the Government would be updating car taxes for Heavy Goods Vehicles, which will also move in line with inflation.
“The taxation of motoring is a critical source of funding for public services and investment in infrastructure, including upkeep of the roads.”
Budget document, via Birmingham Mail
In this report, which was deleted after a brief time, it confirmed EV motorists will now face a charge of around 3p per mile on top of other road fees from April 2028. Ms Reeves' change is said to aim to offset lost revenue generated by fuel duty, which is paid by diesel and petrol car owners.
Political fallout: Reeves sidelined and the government rattled
Commentators at City A.M. have seized on the episode to argue that Starmer’s decision is a “humiliation” for the Chancellor. The piece notes that Starmer has moved economic policy back into the Downing Street “second phase”, effectively removing Reeves from her role as the chief economic adviser. The article adds that the move “has not reassured the markets” and that “Minouche Shafik … will fit right in” as the new economic brain at No 10.
The Standard described the Budget as a “nightmare on Downing Street”, stressing that the U‑turn on the party’s manifesto pledge to freeze income‑tax rates has spooked the gilt market. A sell‑off on gilts began “on Friday morning” and, after a brief rally, the cost of borrowing rose again.
Key impacts at a glance
- Road funding: Up to £700million redirected from the A38 Derby Junctions and A46 Newark Bypass.
- Motorist taxes: VED for petrol and diesel cars to rise with inflation from April 2026; HGV duties to follow the same rule.
- Electric‑vehicle levy: Proposed 3p per mile charge from April 2028, increasing annually with CPI.
What to watch next
- Parliamentary debates on the cancelled road schemes and the defence spend‑increase.
- Market response to any additional fiscal moves, especially gilts volatility.
