Major London transport projects could be unlocked by new powers for City Hall announced in the Budget, in what Mayor Sadiq Khan has hailed as a “devolution revolution”.

Chancellor John Healey announced the “most radical act of decentralisation in a generation” in the Commons today, as part of the Budget’s wider package of reliefs and fiscal reforms.

The changes will give London greater control over transport funding, reducing its reliance on central government and helping unlock billions of pounds for infrastructure projects across the capital.

Four major schemes are set to benefit: Tube upgrades at Euston, plans to bring international rail services to Stratford International, the Bakerloo Line extension and the proposed West London Orbital.

They were all named in the Budget as projects that would be given funding as a result.

But, business cases, legislation, borrowing and funding decisions, and individual project approvals will still need to be addressed before Londoners see any changes on the ground.

Transport for London (TfL) has previously made clear that both the Bakerloo Line extension and West London Orbital depend on funding becoming available.

The Mayor of London, Sadiq Khan, welcomed the announcement today, describing it as a “really positive and significant day for London”.

“After lobbying on the issue for many years, I’m delighted that the Government will help us to bring cross-channel rail services to Stratford International – making this station truly international for the first time. It will open up huge opportunities for jobs, investment and tourism,” he said.

“The Government has also taken significant steps to devolve transformational new powers and funding to the capital, alongside other communities around the country.

“Working with Number 10 North we’re delivering the largest devolution of powers to London seen in a generation.

“By giving London the ability to keep more of the money we raise, we can invest billions of pounds more in our future, helping to finally unlock transformational infrastructure projects such as the West London Orbital, the Bakerloo Line Extension and the Euston knowledge quarter project, supporting tens of thousands of new homes, jobs and economic growth.

“Proper devolution is something I have been calling for years, and this Government gets the scale of the ambition needed where previous Governments have failed.

“Action to address the cost of living and the cost of doing business is very welcome. Support for rising energy bills will be vital for many Londoners as the conflict in the Middle East continues to send shockwaves through the global economy.

“Alongside major new investment to tackle rough sleeping, to build more affordable homes and support for young Londoners to access vital skills training and employment opportunities, this Budget shows a real commitment to building a fairer, safer, greener and more prosperous London for everyone.”

The announcement puts funding and decision-making powers at the centre of the next phase for several infrastructure proposals in the capital.

Here’s what the Budget announcement means for four of London’s major transport projects:

The Mayor of London could get new powers to help fund the Bakerloo line extension and West London Orbital under plans announced in today’s Budget.

Under the proposals, the Bakerloo line would be extended south from its current terminus at Elephant & Castle into south-east London.

A possible second phase would extend the line from Lewisham through Catford, Sydenham and Beckenham to Hayes, taking over an existing National Rail route.

TfL is scheduled to hold a public consultation on the scheme between December 2026 and February 2027.

The West London Orbital is a proposed new London Overground route that would connect Hendon in north London with Hounslow in west London, using existing railway lines that are currently mainly used by freight trains.

The government plans to allow Lord Khan to introduce a successor to the Business Rates Supplement (BRS), currently helping to pay for the Elizabeth line, to fund both projects. The existing supplement is due to end by 2041.

In practice, this could give the Mayor another way to raise money for the extension, potentially by borrowing against future business rates income.

If delivered, the Bakerloo line extension could help improve connections to jobs, education and other services across south-east London, while easing pressure on existing transport routes.

Funding, however, remains a major hurdle for the extension project, with the initial stretch from Elephant and Castle to Lewisham estimated to cost between £5.2 billion and £8.7 billion.

Meanwhile, the West London Orbital would make it easier to travel across west and north-west London, with better connections to the Underground, Elizabeth line and other rail services. It could also support the development of new homes and jobs.

But further planning, consultation and funding decisions are needed.

Plans to bring cross-Channel rail services to Stratford International could create a new international rail link for the area, boosting jobs, investment and tourism.

The Budget refers to proposed Mayoral Strategic Authority Business Rates Retention Zones as a way to help fund the project.

These would allow some additional business rates income generated locally to be retained to support development.

But, the proposals remain subject to the relevant approval processes.

The proposed redevelopment of Euston includes improvements to the Tube station, the new HS2 station and the surrounding area.

In the Budget, the Government confirmed plans to use a Tax Increment Financing (TIF) scheme to help pay for infrastructure at Euston, subject to a full business case being developed by the Greater London Authority and Camden Council.

The scheme would use business rates income generated by growth in the area to help fund improvements.

But, the funding plan still needs to be worked up in detail. It does not guarantee that all proposed Tube upgrades will go ahead or that the scheme will cover the full cost of the Euston redevelopment or HS2 station.

Caroline Russell, Green Party London Assembly Member, welcomed the Bakerloo line extension announcement, describing it as a “huge step forward for south London”.

Ms Russell said: “Securing the funding needed to extend the Bakerloo Line would be a huge step forward for south London. A new transport option with the potential to take 20,000 cars off our roads every day, will also mean less congestion and cleaner air for Londoners.

“The Mayor and Government must work closely with London’s councils to fast-track the extension of the Bakerloo line and deliver the much needed refurbishment and upgrade of the existing line.

“The Bakerloo line extension has the potential to transform south London but it must be shaped by meaningful consultation with local communities and there must be a firm commitment to delivering the public transport improvements Londoners desperately need.”

Elly Baker AM, Labour's Transport Spokesperson on the London Assembly, said: "Funding unlocked for international services to Stratford, the Bakerloo line extension and the West London Orbital will create better transport links and provide a step change for many Londoners not only using public transport to get to work, but to stay connected with family and communities.

“Giving the Mayor more powers to raise revenue for future transport projects is an important step towards building a network that can keep pace with London's ever-growing needs.

“This Government is backing London with investment and ambition. The challenge is now about delivering it. Londoners have waited long enough for these projects to break ground. Now that the Government behind us, we must push forward."