Spring Budget 2024: Industry reacts to lack of infrastructure investment

While the industry is pleased to hear investment is being made in aiding the decarbonisation of the UK’s grid through the purchase of two nuclear sites and further investment in the Green Industries Growth Accelerator (Giga), many believe the announcements are not enough.

Costain nuclear sector director Bob Anstey said: “To meet the UK’s domestic energy requirements over the coming decades, accelerating our ability to generate safe, low carbon and sustainable electricity is essential. SMRs will play an important role alongside larger plants, and we are sure that the civil nuclear industry will be encouraged by the signals from the chancellor.

“At the same time, there are pressing infrastructure and skills shortfalls that need to be addressed to ensure these initiatives land on fertile ground. We know from working on complex civil nuclear projects that collaboration is key to delivering successful and cost-efficient projects, and it will be even more crucial if we want to make the next generation of clean, affordable energy a reality.”

Smart Energy and Sustainability director Josh Bullard said: “We welcome the chancellor’s spotlight on nuclear energy and the ambition to make it a cornerstone of the UK’s energy mix by 2050.

“However, true leadership in the global energy landscape requires a multifaceted approach. It’s well-known that nuclear power offers reliability and low-carbon benefits, however, a truly balanced energy landscape must be complemented by investments in renewable energy.

“Neglecting this risks missing opportunities for energy security, resilience, and long-term competitiveness. Allocating funds to the Giga is a positive step towards building robust supply chains for emerging technologies. To maintain momentum, we urge a holistic strategy that harnesses the strengths of both nuclear and renewables, creating a balanced portfolio that not only meets net-zero targets but also positions the UK as a frontrunner in the transition to a sustainable energy future.”

Trade union Prospect senior deputy general secretary Sue Ferns said: “Today’s budget fell far short of the action needed to accelerate the clean energy rollout and create good jobs.

“Progress on future nuclear sites and small modular reactors is welcome, but the chancellor had no update on the urgent task of getting Sizewell C over the line.

“And while today’s contracts for difference announcement shows the government has learned from last year’s offshore wind disaster, we are yet to see a proper industrial strategy to deliver good jobs across the renewables industry.”

Infrastructure sidelined

Other commentators are disappointed more infrastructure measures for transport weren’t announced today, 6 March.

GHD Europe, the Middle East and Africa chief executive Simon Light said: “Whilst I welcome the recent progress in reform across road and rail, it is clear that investing in transport and infrastructure is not a top priority for the current government. Collaborating with both private and government stakeholders to deliver transport solutions has made us aware of the challenging years ahead for the industry, and we know the immense pressure facing public transport which will only grow without significant investment and change.

“The chancellor has rightly indicated that future public service investment decisions will be focussed on improving productivity. However, he has failed to build on the measures laid out in the Autumn statement, and the chancellor’s silence on overhauling the UK planning system and cut project delivery times is a cause for concern. This is consistently flagged as a barrier to investment, progress and the success in the programmes and projects needed to improve the infrastructure across the country.

“It is equally concerning that we’ve heard no concrete investment in measures to improve our rail industry. This week we’ve seen another 5% hike in national rail fares, yet the Chancellor has opted to freeze fuel duty for the fourteenth year running, instead of intervening and addressing the challenges we face across the transport market. Compounded by the capital spending freeze, any guarantee of substantial new spending commitments in transport infrastructure have been effectively eradicated, leaving the industry in a difficult position.

“We know private sector capital is available, but it is currently being held back. What we need now is certainty and reassurances that these projects are backed up by policy and public spending. Without long-term proposals, the industry risks stagnation for years to come, casting doubt on the future of transport delivery.”

Turner & Townsend UK infrastructure managing director James Corrigan said: “Today’s Spring Budget has arrived in the context of limited fiscal headroom, and against this backdrop, the chancellor’s reserved approach to new investment in areas such as infrastructure comes as little surprise.

“Major programmes in the UK would benefit from a similar approach to that which government is taking in areas like life sciences, advanced manufacture, and nuclear power – where clear ambitions are set out and stuck to, and the government can play more of an enabling role in stimulating private investment, rather than relying on funding from public sources.

“Even when the pipeline of major infrastructure projects is limited, we cannot underestimate the underlying need for investment in maintaining and renewing existing networks – from rail and road to water and electricity.

“This will require government to work more closely with the sector to understand the reassurance and commitment that we need.”

British Cost Information Service chief economist David Crosthwaite said: “The Spring Budget has continued the trend of fiscal events being distinctly underwhelming for the construction industry.

“There was very little in it that would give confidence to investors or to firms who are operating in still very challenging conditions.

“The chancellor says he has a plan for ‘sustainable, long-term growth’ but we’re simply not seeing evidence of that in the announced policies and investment.

“Despite construction being a key lever of economic growth via the multiplier effect, there was no increase in spending announced.

“The repeated commitments to housebuilding were limited to only certain areas and schemes and there remain many questions over how the government intends to increase efficiencies in the planning process.

“Likewise, the claim of investing in infrastructure is there, but still not enough detail following the cancellation of HS2 Phase 2 and promised Network North plans.”

With this lack of commitment to infrastructure spending in this statement Institution of Civil Engineers (ICE) director of policy Chris Richards states the upcoming general election is of all the more importance.

He 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.”

Further reaction

Arcadis UK cities director Peter Hogg said: “It’s not often that you can conjoin the Chancellor’s budget with a bit of Shakespeare wonkery but, looking at the detail within Mr Hunt’s one hour 12 minute speech, it’s hard not to conclude “He draweth out the thread of his verbosity finer than the staple of his argument”. Fittingly, of course, that quote comes from Love’s Labour’s Lost – Labour’s loss feeling like the main ambition of the chancellor’s very political speech.

“Listening to the speech, there was little for the built environment sector; 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. 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.

“Looking into the detail of the ‘Red Book’ things are more promising; the Government’s plan for growth brings forward a number of measures that business will welcome, including extensions to full expensing, commitment to further planning reforms, more support to the strategic manufacturing sectors and boosting growth through investment zones. Commitments to a support a private sector-led HS2 station solution at Euston is very welcome, as is the commitment to the next stage of East West Rail. It was a shame for our cities’ central activity zones, however, to see tax-free shopping once again absent.

“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.”

Civil Engineering Contractors Association (Ceca) director of operations Marie-Claude Hemming said: “Our sector is being asked to decarbonise its plant fleet at a time when profit margins are under strain at all levels of industry.

“Moves towards enabling the full expensing of leased construction plant has the potential to unlock vital funds to enable the roll-out of low-carbon machinery, as well as making it more affordable for the hirers that many contractors use to upgrade their fleets.

“We welcome the UK government’s stated intention of publishing draft legislation on this issue as a move that it is taking seriously the need to decarbonise UK construction, while enabling businesses across the supply chain to remain profitable.

“At the same time, the condition that these changes will only be implemented ‘when fiscal conditions allow’ potentially implies unnecessary delay to the roll-out of this vital reform.

“Ceca has long campaigned for this change as a means of unlocking necessary investment to help decarbonise our industry.

“We look forward to working with Government, our members, and industry partners, to ensure the delivery of this vital policy within a time-scale that matches the urgency of reaching net zero.”

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