Industry gives its verdict on Spring Budget

More tax cuts for working people, more investment and a plan for better public services headlined chancellor Jeremy Hunt’s “Budget For Long Term Growth”.

But with little on offer for the infrastructure sector, industry has given a disappointed reaction to the chancellor’s statement. 

Announcements for industry included a £360m package to support innovative R&D and manufacturing projects across the life sciences, automotive and aerospace sectors. 

The Green Industries Growth Accelerator will be allocated an extra £120m to build supply chains for offshore wind and carbon capture and storage. 

More than £240m will help build nearly 8,000 homes in Barking Riverside and Canary Wharf alongside a new life sciences hub.

For nuclear energy, the government this week reached a £160m deal with Hitachi to purchase the Wylfa site in Anglesey and the Oldbury site in South Gloucestershire.

The chancellor said the North-east trailblazer devolution deal comes with a funding package potentially worth more than £100m and powers will also be devolved to Buckinghamshire, Warwickshire and Surrey.

SMEs will be supported to invest and grow through a £200m extension of the Growth Guarantee Fund. 

But the Spring Budget did little to excite the infrastructure sector.

Kate Jennings, the newly appointed CEO at ACE - the Association for Consultancy and Engineering Group - said: "Today’s budget could have served as a catalyst for market confidence, enhanced global competitiveness and acted as a rallying call for climate change adaptation and mitigation. 

"However, it was silent on the pivotal role for infrastructure investment in unlocking productivity and growth.

"In recent weeks, the government published its delayed infrastructure pipeline and announced the reallocation of funds following the HS2 announcement. ACE welcomes this clarity given the importance of pipeline visibility for providing the long-term stability crucial for our members amidst a period of significant change.

"Budget announcements regarding nuclear investment, AI skills, support for SMEs and devolution deals are positive, as was publication of the National Networks National Policy Statement.

"ACE and our members stand ready to work in partnership with Government to enable economic prosperity."

The Institution of Civil Engineers (ICE) said the general election will be “crucial” for infrastructure.

Chris Richards, director of policy at ICE said: “Today’s budget confirms that the general election will be a crucial one for infrastructure. It's now been confirmed that the spending review will take place after the election. 

“That means the next government will be responsible for implementing the next National Infrastructure Strategy, delivering the next carbon budget and reallocating HS2 funds for the North and Midlands.

“Certainty that there will be no significant changes to infrastructure projects and spending before the election is welcome, but there are still many decisions to be made.

“The ICE will shortly launch a programme of work that aims to spark conversations about what the next government’s day one infrastructure priorities need to be.”

Peter Hogg, UK cities director at Arcadis, said there was little for the built environment sector in the chancellor’s statement

“The North Eastern Trailblazer devo deal is welcome, as is more money for levelling up in culture projects and an extension to the towns fund,”  he said. 

“A £242m commitment to Docklands 2.0 is also a symbolic recognition that London is in the levelling up mix too. Measures to encourage life sciences investment is welcome.”

He said measures that business will welcome, include extensions to full expensing, commitment to further planning reforms, more support to the strategic manufacturing sectors and boosting growth through investment zones. 

“Overall, this wasn’t a budget for large and soaring commitments on things such as decarbonisation and energy transition, the housing crisis or acceleration in investment in infrastructure. 

“This was a budget where the value is in the detail and the set-piece was all about the politics rather than the sweeping delivery of growth.”

Alasdair Young, partner and global energy lead at Buro Happold said the chancellor’s statement was “another missed opportunity”.

“Government recognises that the ‘cost of living crisis’ was triggered in no small part by our reliance on energy imports,” he said. 

“Whilst energy costs have fallen they are still much higher than during the pre-crisis period. 

“The UK has the resources to be much less dependent on imported fossil gas and oil; we import around half of our gas demand which is around 38% of our total energy demand. 

“Whilst there is action to unblock grid connections for renewable energy projects, there is still no real movement on onshore wind, the cheapest form of power generation. It remains to be seen if the increased support for offshore wind announced in the autumn is enough to restart investment in that sector. 

“On the demand side there is little to support reducing energy use in buildings or encouraging electrification of transport. 

“It’s essential that the government commits to clean heat sources which can run on UK generated energy; the Clean Heat Market Mechanism will reduce our reliance on imported energy by encouraging uptake of heat pumps so it is important it isn’t delayed. 

“I’d like to see further investment in using waste energy sources, especially wasted heat via heat networks. Government should also unlock investment in public sector energy efficiency.”

Colin Wood, chief executive of AECOM Europe, UK/Ireland and India, said: “For many years, we’ve heard from the government about building back better, investing in infrastructure and connecting Britain. 

“In the context of the very difficult past five years, these messages have always been welcome. However, with a General Election looming, there remain fundamental challenges which infrastructure investment could help solve.

“We need to level up the country, build a workable regional and national transport system and speed up decarbonisation and the energy transition, all through policy centered on the needs of communities and the opportunities better infrastructure brings. 

“This budget won’t, in itself, significantly shift the dial on these big-ticket issues.

“The construction sector is ready to help Britain thrive. As an industry, we need the government to give us direction around the recently published multi-billion pound National Infrastructure and Construction Pipeline (NCIP) so we can build the skills base, invest in innovation and partner with the public sector to deliver. 

“It’s time to restore faith in the UK’s ability to deliver major infrastructure.”

Property and construction consultants Gleeds said the Spring Budget failed to offer a long-term recovery plan. 

Graham Harle, CEO of Gleeds Worldwide, said: “Construction and property are a bell weather industrial sector as well as big employers and our numbers make for grim reading, with construction activity recording almost flat output levels in February after five months of falls. 

“This is the core issue that the Chancellor should have been addressing - how to inspire confidence, fan growth and improve productivity. 

“Rather than tinker around the edges doing things like increasing the VAT registration threshold by a meagre £5K, minimal investment in housing and full lease expensing ‘when affordable’, the chancellor should look at the anaemic UK economy as needing a transfusion, not a sticking plaster. 

“GDP is only predicted to be marginally higher this year at 0.8%, for instance. This was a budget to stop us bleeding out before the election, not a long-term recovery plan.”

Beatrice Barleon, head of policy and public affairs at EngineeringUK, said: “We welcome the government’s commitment to invest in crucial sectors, such as engineering and technology, and small to medium sized enterprises in the UK, including for example the Green Industries Growth Accelerator (GIGA). 

“We also share the pride that the Chancellor clearly felt when talking about how the UK is becoming a leading force in the technology sector, comparing it to the Silicon Valley.

“However, given all this, we are extremely disappointed that there is no mention of the need to invest more and focus on skilling the future workforce. 

“Without more skilled young people coming through the UK education system, UK businesses will struggle to grow and stay competitive compared to other countries.

“There is an acute STEM teacher shortage affecting young people’s STEM education and therefore their ability to pursue careers in these vital sectors, yet there was no mention of teachers and how the government intends to support them. 

“There was also a lack of focus on how crucial training routes, such as apprenticeships, will be enabled to grow into the future, and how this will be funded.

“We renew our ongoing call for the Government to develop a clear and properly funded STEM skills plan. This should include investment in careers outreach and education, apprenticeships for young people aged 16-19 and commitment to sustaining existing funding levels for STEM teacher professional development.”

Other key points of the Spring Budget 2024 included: 

• Office for Budget Responsibility says inflation to fall below 2% in next few months
• 2p cut in National Insurance in April from 10-8%
• Freeze on alcohol duty extended until February 2025
• 5p cut to fuel duty to continue for 12 months
• High Income Child Benefit Charge threshold raised from £50,000 to £60,00 – it will be assessed on a household basis by April 2026
• Public Sector Productivity Plan – for investment in new technologies
• The ‘non-dom’ tax regime will be abolished and replaced with a fairer system from April 2025
• The higher rate of Capital Gains Tax (CGT) on property will be cut from 28% to 24% from April