On Monday 29 October, the Chancellor of the Exchequer Philip Hammond outlined his vision for the UK economy.
Arguably, this was a Budget unlike any other in recent memory; the UK’s last as an official EU member state. But given that negotiations between London and Brussels have so far failed to bear fruit, Mr Hammond had an oddly specific set of circumstances on his hands. Is it possible to accurately chart a country’s economic road-map when the destination has yet to be agreed?
And so, it was perhaps unsurprising when – in the run up to Monday’s announcement – the Chancellor revealed that a ‘no-deal’ scenario would likely require a very different approach; an entirely new Budget in point of fact.
Understandably, with so much up in the air, UK economists forecast a fairly modest announcement from Mr Hammond – one that erred on the side of caution. For his part, the Chancellor confirmed that all spending plans would go ahead regardless of the outcome of Brexit, thanks to lower borrowing in the year to date.
He did have a few surprises up his sleeve however, most notably the much-publicised end to austerity. With windfalls gained from tax revenue boosting funding for the NHS, headlines have noted that this budget is the ‘biggest giveaway’ in a generation. However, once the NHS funding is used up, there is little left to go around and some departments might yet still face cuts.
Those in the construction industry were waiting on announcements to help their businesses go forward into the post-Brexit future.
The salient points for the industry were these:
- Fuel duty remains frozen for the ninth year in a row – meaning freight and transport costs won’t be rising.
- A £30Bn funding package for England’s road network, including a programme of highway maintenance and pothole repairs. The largest ever investment of its kind, the fund will benefit the Strategic Road Network as well as the Major Road Network and help to fund larger local road projects. While local authorities will receive £420M as a pothole fund, plus £150M for local traffic hotspot improvements.
- While the six Metro Mayors will have access to an extra £240M to create significant transport improvements in their regions. Plus some £37M will be available to support the development of Northern Powerhouse Rail.
- Tackling the housing crisis still remains a huge priority for the government, and Mr Hammond announced that the borrowing cap on local authorities will be lifted to allow them to build more housing. The Welsh Government is also taking immediate steps to lift the cap in Wales.
- This will be supported by a £500M investment into the housing infrastructure fund, bringing the fund up to £5.5Bn and allowing a further 650,000 homes to be built.
- While some £75M from the Home Building Fund will go to St Modwen plc to fund the infrastructure required for some 13,000 new homes.
- SME home builders will benefit from a British Business Bank scheme, which will see loan guarantees of up to £1Bn to help Britain’s SME builders to help plug the housing gap.
- From April, large businesses will be able to invest up to 25% of their apprenticeship levy to support apprentices in their supply chain. Smaller firms will have levy contributions slashed to five per cent, with a £695M package to support apprenticeships.
- PFI schemes were also finally killed off by the Chancellor, with the announcement that he will ‘never sign another deal’. Existing projects will continue to go ahead, but no new projects will be furthered- this raises questions over how the Stonehenge A303 project will be financed.
- Individual project funding announced in the budget will see £70M go towards developing the national element of the Defence and National Rehabilitation Centre and £100,000 to developing proposals for Eden Project North in Morecambe.
- While local high streets will benefit from a £675M fund to develop town centre infrastructure.
Overall it was an interesting budget, with some loosening of the purse strings which will consolidate national priorities at a time where a grasp on the future is tenuous.