Digital infrastructure set to feature strongly in chancellor's spring Budget

With the government's spring Budget scheduled for 8 March, what can we expect from the chancellor? Julian Francis reports.

The chancellor of the exchequer, Philip Hammond, will once again step up to the dispatch box to outline his thinking on the state of the UK economy on Wednesday 8 March as he delivers the spring Budget.

The spring Budget is one of the two key financial statements of the year where the government sets out the plans for the economy using forecasts from the Office for Budget Responsibility and so allows the country and the markets an insight into the priorities for the coming year. 

This year’s Budget will be the last to take place in the spring. Hammond is scrapping the bi-annual updates from the autumn statement and spring Budget, replacing them with just a single fiscal event in the autumn. The adjustment will mean businesses and the public will face less frequent changes to the tax system, which the government claims will provide more stability and certainty.

The government is also aiming to make sure finance bills, which set out the legislative changes to the tax system, get royal assent in time for the new tax year.

The spring Budget this year falls, however, at a time when most attention in Westminster is focused on the Article 50 notification. Having used his autumn statement last December to set out the government’s fiscal response to the aftermath of the EU referendum, the pressure is off the chancellor to deliver the flashy financial statements expected under his predecessor, George Osborne. 

This Budget is likely to feature small-scale, nuanced changes as the government avoids major reforms that could lead to further business or economic uncertainty, and it will almost certainly be overshadowed by the triggering of Article 50.

Although prime minister Theresa May has set the deadline for beginning the formal process for leaving the EU at the end of March, there were suggestions that the government could trigger Article 50 on 9 March. Reuters has since reported that Brexit secretary David Davis indicated it would be enacted before the end of March, but he did not comment on the precise date. All of this depends on the House of Lords passing the Brexit bill in a speedy fashion, which looks unlikely at this time. 

Whatever date is chosen for beginning the process, businesses, foreign investors and other key stakeholders are looking to the Treasury to demonstrate a steady hand on the tiller as the UK embarks on its Brexit odyssey. Given this, we should not expect fireworks from the chancellor but rather a boring 'steady as she goes' approach that will protect the UK economy from any shocks that may follow the triggering of Article 50. 

One area that does looks likely to do well in the Budget is digital infrastructure investment which has somewhat lagged behind the enthusiasm for hard infrastructure projects over the past couple of years. 

Financial secretary to the Treasury David Gauke has said that the government will respond to the National Infrastructure Commission’s report Connected Future at the spring Budget. The report contains an urgent call for the government to “play an active role” in ensuring basic digital connectivity is available to all in the UK, and that “roads, railways and city centres” are made “5G ready as quickly as possible”. 

On 14 February, digital and culture minister Matt Hancock stated that the government would publish details of the new programme of fibre and 5G trials at the Budget, alongside the new 5G strategy. This announcement sits neatly in the context of the government’s industrial strategy, which features a strong emphasis on infrastructure and the potential of the UK’s creative industries.

This could well prove to be the most important announcement in this year's Budget statement as it will pave the way for smart infrastructure and a more connected economy that has the potential to drive the UK’s economic growth in a post-Brexit world. 

Julian Francis is the director of policy and external affairs at the Association for Consultancy and Engineering.