Following one of the most significant and sustained economic shocks in recent history, the Chancellor has revealed his plans to kick-start the economy after the coronavirus pandemic with the announcement of his budget last week.
The pandemic has dominated the Chancellor’s actions outlining the major impact of Covid-19, shrinking the economy by almost 10%. Rishi Sunak has pledged additional business support and financial stimulus. Capital spending is to increase to £100bn next year, with the Chancellor declaring the economic boost to be a “once in a generation investment” in the UK’s infrastructure.
The new infrastructure strategy sets out four targets: boosting growth across the whole of the UK, putting the country on path for hit its 2050 climate goals, supporting private investment, and accelerating the delivery of infrastructure projects.
A new Treasury base will be set up in the north with the introduction of a northern bank to push on attempts to even out economic opportunities and provide further financing for projects in conjunction with the private sector.
The chancellor set out longer-term tax implications with the introduction of 130% Super Deduction capital allowance on qualifying plant and machinery investments. From 2023, corporation tax will rise from 19 per cent to 25 per cent. Smaller businesses with £50,000 earned profit or less will continue to be taxed at 19 per cent with tapered rate introduced up to the £250,000 threshold.
New bases for key Government departments including HM Treasury and the Department for Business, Energy & Industrial Strategy were announced. New investment in research and clean energy sources, investing in a greener future by delivering Boris Johnson’s recently announced ten-point plan for climate change and further funding to support hundreds of thousands of new jobs.
The Chancellor stated that, “ £100bn was the highest sustained levels of public investment in more than 40 years. Projects include:
- £5bn to support the rollout of 5G infrastructure across the country.
- £5bn investment into buses and cycling.
- £4.2bn for intra-city transport links.
- £500m to restore rail links lost in the Beeching cuts of the 1960s.
- 27bn in investment for the UK’s strategic road network.
- HS2 high-speed rail link between London and the north.
- £1.3bn for the installation of new electric vehicle charging points.
- £525m for the development of new nuclear capabilities.
- £1bn for carbon capture and storage (CCS) technology.
- £5.2bn to protect 336,000 properties against flooding and coastal erosion.
Over £1 billion has been allocated for an additional 45 towns in England with £135 million development money for key schemes including the A66 Trans-Pennine upgrade, details of a forthcoming 4.8 billion ‘Levelling Up Fund’ for infrastructure and local areas, town centre and high street regeneration and local transport projects with plans for eight new ‘Freeports’. These will be located at East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.
The budget addresses many areas including carbon reduction and new money for house building, with a new £7.1bn fund assigned as part of a new National Infrastructure Strategy.
£50M will be provided to develop proposals for transport improvements around the High Speed 2 Birmingham Interchange Station, and a further £59M is pledged towards the construction of five new stations in the West Midlands.
£40M of funding is to be assigned to reinstating passenger services on the mothballed Okehampton to Exeter line and £30M is committed to support establishment of a new Global Centre for Rail Excellence in Neath Port Talbot.
Local areas can bid for funding for projects such as new libraries, bypasses and train stations as long as the developments can be completed within the current parliamentary term.
Businesses will be able to access government-backed loans of up to £10m under a recovery loan scheme. This will be open for applications on 6 April, similar to its coronavirus business interruption loan scheme (CBILS).
With the country finally able to begin looking beyond COVID-19 thanks to the vaccination programme, the budget will help build the country towards economic recovery, if the government delivers the initiatives promised.
The UK Infrastructure Bank’s focus on green construction is particularly good news, which will encourage investment in projects and programmes that will drive sustainability. The budget provides opportunity to unlock jobs and offers real prospect with associated work in construction and infrastructure. For those that have lost their jobs, in particular young people, the commitment to increase funding for skills and support for apprenticeships is reassuring.
A further extension of the furlough scheme, combined with new grants for small businesses and additional support for the self-employed, are extremely welcome measures, which will give many firms the best possible chance of emerging from the pandemic with jobs intact.
The huge borrowing spree that the Government has been on will need to be paid back. The decision to not raise the threshold for income tax is positive news, though the announcement to raise corporation tax in 2023 may be a bitter pill to swallow for some businesses, particularly with countless larger firms choosing to exploit the current UK tax loopholes by paying lower or zero amounts of tax.
Specifics of the budget will unfold in due course. Though certain criticisms have already surfaced with the Asphalt Industry Alliance chair Rick Green voicing concern over the lack of a new funding for local roads.
The promise to improve the delivery of projects comes with a number of the UK’s biggest construction schemes, such as HS2, facing lengthy delays. With further significant infrastructure planned over the coming years, we must learn the lessons of foregoing failed projects such as Heathrow and Cross Rail, ensuring effective delivery for the taxpayers’ money.
As TRIQS we can aid in the success of projects that make a real difference to peoples’ lives, ensuring delivery on time and on budget.