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Last edited 17 Mar 2023
2023 Spring Budget summary and industry response
Early in the afternoon of the 15th of March 2023, Chancellor Jeremy Hunt unveiled what he described as a “Budget for growth”. He did so against the back drop of strikes amongst junior doctors, London Underground, civil servants, teachers, lecturers and BBC journalists. A copy of the full budget is available on the Government website, whilst as summary of key points and responses from industry are given below.
As part of his announcement he stated that "Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year." He informed British MPs that the British economy was “proving the doubters wrong” in the face of “enormous challenges” and a number of measures would boost efforts to get people back to work such as;
The energy price guarantee rise has been axed with the cap remaining at £2,500 for an additional three months to help 'bridge' the gap as companies wait for wholesale prices to fall. Whilst for homes he said "High energy bills are one of the biggest worries for families, which is why we’re maintaining the energy price guarantee at its current level."
12 new investment zones were announced, that will provide access to £80 million of support for raising skills and infrastructure. Meanwhile, over £200 million will be invested in local regeneration projects, including in Scotland, Wales, Northern Ireland, the North East, East and West Midlands, Manchester, Liverpool, Teeside, as well as South and West Yorkshire.
A £1.8 billion package of support for SMEs who spend more than 40% of their total expenditure on R&D, who will be able to claim a credit worth £27 for every £100 they spend. An expenditure credit rate of 34% for the film and television industry and for theatres, orchestras and museums. The current 45% and 50% reliefs will be extended for two years.
£100 million to support charity work that helps struggling families, £63 million to keep public pools and leisure centres open, and £10 million in extra funding over the next two years to help the voluntary sector.
Fee childcare to be expanded to allow up to 30 hours a week of free childcare extended to nine months and two-year-olds, with funding paid to nurseries increased by £200 million in December rising to £288 million next year with increased flexibility as ratios change.
 Universal Support
A new programme known as Universal Support to provide support for disabled people to find work with a £400m plan for mental health and other resources for those unable to work due to medical issues. £400 million plan to increase the availability of mental health and musculoskeletal resources.
Universal Credit claimants subject to higher sanctions for refusing job offers, administrative earnings threshold to change from 15 hours to 18 hours at National Living Wage per claimant, and greater work coach support for those working below this level.
£5 billion towards the military over a two-year period - accompanied by an extra £1.98 billion this year and £2.97 billion next year. £11 billion to be added to the defence budget over the next five years, stabilising at 2.5 per cent of Britain's GDP. £5 billion towards the military over a two-year period with an extra £1.98 billion this year and £2.97 billion next year.
An increase in the pensions annual tax-free allowance from £40,000 to £60,000 and the maximum amount that can be drawn from pensions (workplace or personal) in a lifetime without paying extra tax, the lifetime allowance (LTA) has been abolished.
 Industry response
However, ECA has warned that the Chancellor’s corporation tax hike could harm electrotechnical businesses, especially SMEs, as they continue to face fiscal pressures from the energy crisis, the cost-of-living crisis, and inflation.
ECA Director of Legal and Business Rob Driscoll said:
“SMEs are a vital part of the construction sector, which itself is the backbone of the British economy. Today’s corporation tax hikes come at a time when SMEs have dealt with Covid, hyperinflating labour, materials and energy costs, rising insolvencies, receding demand and increased borrowing costs. Today’s budget may prove to be counter-intuitive and hinder businesses’ ability to pivot into delivering our urgent Net Zero targets. The drive to Net Zero hinges on skilled engineering services professionals doing the frontline work to upgrade our grid, electrify transport and heating, and connect our homes and businesses to clean energy sources.”
“The measures announced by the Chancellor to encourage people back to work fail to address sector-specific labour and skills shortages. The extended energy bill support will provide some peace of mind, but this will be short-lived. To make the UK energy independent, a skilled, competent workforce is vital to maintain existing electrical Infrastructure. As the electrification of the UK accelerates rapidly, our sector needs stronger engagement from Government to develop a flexible and competent electrical workforce in sufficient numbers to meet growing demand and ultimately help deliver Net Zero on time.”
This section appears in a Press Release and on the ECA website as 'Spring Budget: Electrical sector welcomes energy bills U-turn, but warns of skills crisis' dated March 15, 2023.
Eddie Tuttle, Director of policy, external affairs and research at CIOB said: “A number of the proposals in the budget statement will rely heavily on the construction sector, including the creation of new investment zones, growing renewable energy generation and local schemes to improve roads. The prospect of investment in local infrastructure will be welcome news to construction companies across the country.
“Our concern however is that construction is already battling a huge skills gap, and this has to be addressed if the industry can play its vital part in delivering the Government’s growth plans. Schemes to get retired and disabled people back into work are unlikely to help fill many of the more physically demanding vacant roles, however we’re keen to hear more about the proposed “Returnerships” which could be a good opportunity for older workers to retrain for less physical roles of which there are a growing number in the sector.
“At a time when we’re looking to dramatically improve the diversity of the built environment workforce we were also pleased to hear the Chancellor’s plans on childcare costs which could help more women get into work. It’s important the construction sector now seizes this opportunity and works together with Government to promote the vast range of roles available and the value women can bring to what is typically a male dominated working environment.”
 CIOB comments on Investment Zones
“We are pleased to see that further long-term policy making is being pursued in the 12 new investment zones announced in today’s budget. However, while we are in favour of greater regional investment to level up the geographical disparities between London and the rest of the UK, there was no acknowledgement of the crucial role that industries like construction will play the success of these zones. Construction is facing an acute skills gap and is feeling the brunt of large infrastructure projects like HS2 absorbing large numbers of skilled workers. We feel that greater emphasis needs to be placed on implementing strategies to recruit trained workers into industries like construction to ensure that these infrastructure investments are more than just empty words.”
 CIOB comments on repair and maintenance of roads and infrastructure
“We are pleased to see a further investment of £200m in 2023-24 to repair potholes. Potholes in local roads lead to deaths and accidents with cyclists particularly at risk. At a time when there is a push to increase cycling for environmental and health reasons, deteriorating roads provide a barrier. When policy makers highlight the need for more construction, greater emphasis falls on strategic infrastructure – homes, digital highways, schools, hospitals, roads and railways and this is typically on new builds and structures. Less attention tends to be paid to the work needed to maintain and improve the vast stock of existing buildings, structures and roads that make up the UK’s built environment.
“Research undertaken by the CIOB in 2017 that looked at how the public values investment in the built environment, found road repairs, such as mending potholes topped the poll ratings (60%) ahead of new transport connections (37%) and improvements to the local economy (34%). Road repair and maintenance is labour intensive and grounded in local supply chains, making it ideal to maximise employment within the construction sector, support regional growth and improve the livelihoods of local people.”
“The construction industry continues to face numerous skills shortages, resulting from a mixture of lack of new entrants, to skilled professionals reaching retirement age. This is why migration continues to be a necessity for construction, helping dampen the harmful effects of having a volatile labour market.
“We are therefore pleased that today’s budget states that the government has accepted the Migration Advisory Committee’s (MAC) interim recommendations to initially add five construction occupations to the Shortage Occupation List (SOL), ahead of its wider SOL review concluding in Autumn 2023, with reviews taking place more regularly.
“CIOB has been working with a consortium of trade and professional bodies in the built environment to inform the MAC on these skills gaps and shortages and hopes that the Government will continue to listen to the advice of the sector.”
“It is well documented that the construction workforce has an ageing population with Office for National Statistics (ONS) data indicating that this is rising on the back of a 13% increase in the number of construction workers aged 45 and over in 2018 (representing 47% of the industry as a whole). Alongside this, similar data from Q4 2022 suggests that over 500,000 UK-born construction workers are expected to retire in the next 10-15 years. With this in mind, we support the principle of the ‘Returnership’ scheme announced in today’s budget targeted at getting those over 50 back into work. While many roles in construction may not be suitable for those over a certain age due to its physical nature, there is huge untapped potential to mentor the new intake of construction professionals.”
Association for Project Management (APM) has welcomed measures in the UK Government’s new Budget aimed at addressing issues affecting project delivery, but has called for more to be done to help projects fulfil their intended economic and social benefits.
Research by APM has shown that the UK’s project management sector employs 2.13 million full-time equivalent workers and adds £156.5bn of value to the UK economy each year. Ahead of the Budget, APM polled 100 senior project professionals about their concerns on issues that might impact the delivery of projects and programmes they’re working on. Nearly 9 out of 10 respondents (88%) said their main project was aligned to at least one government policy, highlighting the important role projects play in supporting government initiatives; both economic and social.
- 92% said they have concerns about the impact of supply chain issues on their main project.
- 91% said they’re concerned about the impact of ongoing economic instability.
- 87% said they’re concerned over shortages in the UK labour market.
In his Budget statement, Jeremy Hunt, Chancellor of the Exchequer, announced measures intended to tackle barriers to recruitment for UK businesses, and measures to grow the economy. However, there was little mention of supply chain-related issues, which are also significant to economic growth.
Measures announced by the Chancellor include:
- Increasing the main rate of corporation tax paid by businesses on taxable profits over £250,000 from 19% to 25%.
- The creation of 12 new investment zones around the UK, which will each receive £80 million of investment support for ‘innovation clusters’.
- Funding for Levelling Up initiatives, including £200 million for regeneration projects across England and £8.8 bn for transport infrastructure.
- Launching Great British Nuclear (GBN) to address constraints in the nuclear market and support new nuclear builds.
- Measures to incentivise investment and research in artificial intelligence (AI).
- Providing 30 hours of free weekly childcare for working parents with children below the age of three, along with measures to help people aged over 50, people with disabilities and young people in the care system into work.
In his Budget statement, Jeremy Hunt said: “This is a budget for growth. We tackle the two biggest barriers that stop businesses growing – investment incentives and labour supply. An enterprise economy can only grow if it can hire the people it needs. This is a comprehensive plan to remove barriers to work.”
 Adam Boddison OBE, APM Chief Executive
Professor Adam Boddison OBE, Chief Executive at APM, said: “A healthy and stable economic environment is vital for the successful delivery of projects – especially those that are supporting government initiatives. And of course, people deliver projects, so having more people in the workforce will make it easier for project teams to recruit. We therefore welcome measures announced by the Chancellor today that support economic growth and tackle barriers people face when joining or re-joining the workforce. However, the most sustainable way to grow the economy is not merely by growing the size of the workforce, but by ensuring people have the skills and capabilities they need to succeed in areas like project management that bring financial benefits as well as social ones. We therefore urge the Government to commit to investing in the skills necessary for delivering projects that will help the UK address challenges such as climate change, infrastructure improvement and digital transformation.
“We would also have liked to have seen more detail on plans to address how post-Brexit supply chain issues might be addressed, as people in our profession tell us they’re concerned with the impacts of these issues on projects they’re working on.
“While most headlines will focus on the additional support for childcare costs – something we support as a way of helping women in our profession to progress in their careers – the success of this budget will be judged on how effectively it enables projects that will improve people’s lives and shape the future landscape of the UK.”
This section appears and on the APM website as 'Budget response: APM urges Government do more to tackle issues impacting projects' dated March 15, 2023.
 Barbour ABI
Tom Hall, chief economist, Barbour ABI:
“Meanwhile, other listed areas such as Manchester, Liverpool, West Midlands, Yorkshire and Scotland are currently some of the weaker areas in terms of contract awards value growth, though the Northeast is an outlier, having already experienced 70% growth in the past two years.
“Subcontractors and suppliers would do well to explore these regions in the coming years to take advantage of any opportunities. However, there is a real danger that this will just be a case of moving money around and leaving other areas underinvested in. It’s also unlikely to make any difference to the significant imbalance between London and other regions.”
 UK Sustainable Investment and Finance Association
UKSIF exists to bring together the UK’s sustainable finance and investment community and support our members to expand, enhance and promote this key sector. Our work drives growth and new opportunities for our members as global leaders in the sustainable finance industry. UKSIF represents a diverse range of financial services firms committed to these aims, and our 300+ members, managing over £19trn in assets under management (AUM), include investment managers, pension funds, banks, financial advisers, research providers, NGOs, among others.
Chief executive James Alexander,
“While a number of today’s Budget measures are welcome, including support for carbon capture and storage technologies and some clarity provided on the UK’s ‘green taxonomy’, this Budget should have begun serious consideration of a positive UK response to the global clean energy ‘arms race’.
“The upcoming ‘Green Finance Strategy’ should give this further attention, particularly in light of actions outlined by the United States and more recently the EU. As a priority, many investors want to see from government credible decarbonisation roadmaps for key economic sectors, including for those areas where policy clarity is particularly lacking, as well as incentives in place to unlock private capital into the wider economy and the UK’s transition. We look forward to continue working with policymakers and other stakeholders ahead of the Strategy, and hope that collectively we can seek ways to secure the UK’s ongoing leadership on sustainable finance.”
UK Energy Systems Catapult was set up to accelerate the transformation of the UK’s energy system and ensure UK businesses and consumers capture the opportunities of clean growth on the way to Net Zero, it is an independent, not-for-profit centre that bridges the gap between industry, government, academia and research.
Chief executive Guy Newey said ;"
Support for nuclear has been steadfast for 20 years, but progress has been slow. This Budget focused not on the big projects, but more on SMRs. In addition to the competition, the government has already committed to investing £210m into the Rolls-Royce SMR project. Only by committing to a standardised nuclear program can we sustain the learning curve and trigger the virtuous cycle of economic performance as supply chain capabilities are developed, and perceived technological, project delivery, and financial risks fall. This vote of confidence from government is welcome and will help to further diversify our energy mix. It is great to see this support for the big stuff. The next challenge for the government to start grappling with is how this smorgasbord of new clean technologies is going to fit together. This is as big an innovation challenge as any of the progress we have made on renewables and means unlocking the potential of flexible technologies like storage and demand side response. If we don’t get this right, the faint sound of our creaking grid will get louder.”
For two decades the Ashden Awards have accelerated the most exciting climate innovators, through a rigorous global search, working to scale up impact and inspire others. Ashden supports proven climate innovation in the UK and developing countries focussing with on-the-ground solutions will drive the system changes our planet needs. The cities manager Cara Jenkinson
“This budget was a terrible wasted opportunity. Mr Hunt referred to four Es in his budget –‘ Enterprise, Employment, Education and Everywhere’ but the two that could have helped all four were missing – ‘Energy Efficiency’. This budget showed a UK government committed to investing £20bn in nuclear and carbon capture. £20bn could retrofit millions of homes and provide the government and society with huge quick wins – tackling the energy, climate and cost of living crises at the same time. The chancellor’s thinking needs a rapid upgrade – just like 19 million homes in the UK that need retrofitting. By laying out measures to boost retrofit demand and creating a generation of skilled retrofit workers, he could have not only generated savings for struggling households, but also given businesses the confidence needed to generate over 200,000 new energy efficiency jobs. A missed opportunity, that UK households, workers and businesses will keenly feel in years to come.”
“Although there wasn’t much by way of noteworthy interventions or headline-grabbing incentives for the property sector, it’s encouraging to see greener shoots emerge in the economy as interest rates start to fall.
“Hunt’s laissez-faire approach to housing in the Budget is perhaps no bad thing, especially given Kwarteng’s meddling in the last budget. After a tumultuous year, the sunnier economic outlook will no doubt deliver a shot in the arm for homebuilders in terms of the viability of homes, mortgage affordability and the reduction in costs for construction and materials.
“A noteworthy intervention which presents the built environment with real opportunity is the announcement of £80m to support 12 new Investment Zones - delivering streamlined planning in line with the government’s strategy for the UK to become a life science and tech powerhouse. It’ll be interesting to see how this pans out across the UK, against Hunt’s ‘back-to-work’ strategy - getting the ‘economically inactive’ back to work and whether it can deliver jobs and bridge the skills gap in sectors such as life sciences and construction.”
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