National Audit Office urges DfT to tackle innovation challenges facing UK's transport sector
Mon 18 May 2026
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A new report by the National Audit Office (NAO) says that stronger support for innovation in the UK's transport sector can unlock economic and environmental benefits. While the Department for Transport (DfT) has strengthened support for innovation and is addressing barriers, it still lacks a strong process for prioritising innovation funding and could better support the development of innovative ideas.
The NAO - the Government's independent public spending watchdog - says that the Department for Transport (DfT) must establish a clearer risk appetite to guide its investment decisions and provide better support to see innovative concepts through to widespread practical use.
The report - 'Innovation in Transport' - says that DfT does view innovation as key to tackling some of the challenges facing the transport sector and that it plans to spend approximately £1.1 billion on innovation activities between 2022-23 and 2029-30 across various work programmes and transport modes, nearly three-quarters of which relates to decarbonisation programmes.
The report finds that DfT does not have a strong process for prioritising its innovation funding to support its three departmental priorities. However, it says, DfT’s three highest-spending arm’s-length bodies, Network Rail, National Highways and HS2 Ltd, have clearer processes for prioritising and managing their respective portfolios. It says that DfT also has limited strategic oversight of its innovation activity, leading to potential missed opportunities for coordination across different modes of transport.
The NAO would like to see the Department for Transport more actively seeking and managing risk-taking investments. It says that DfT has not set out a clear risk appetite to guide its decisions to invest in innovation.
The report identifies several internal barriers to successfully supporting innovation – including a risk-averse culture, a lack of clear messaging from leadership and gaps in staff knowledge. While the report acknowledges that the DfT has recognised these issues and has taken steps to address them, it concludes that more work is needed to embed a broader culture of innovation across the department.
Gareth Davies, Head of the National Audit Office said: “DfT has taken positive steps to raise the profile of innovation within the department and widen the type of interventions it makes in this area.
“To achieve good value for money, DfT should better define how its innovation activity can help deliver its priorities – including clarifying how much risk it is willing to take – as well as collect the data it needs to manage and assess this activity.”
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