Spring Budget: Impact on the UK infrastructure sector

Commentary

Juliet Reingold, Partner in on our Government Group, commented on 24 November 2016 on the Autumn Statement and its impact on UK infrastructure.

In the Spring Budget, 08 March 2017, Chancellor Philip Hammond re-iterated Government’s commitment to raising living standards through increased productivity, facilitated by investment in both training and infrastructure. There was also some clarity on how some of the £23bn committed through the National Productivity Fund (announced in the Autumn Statement) will be invested, together with announcements of some additional funding for health and social care, and maintenance of the existing schools estate.

Infrastructure and PF2

Both the 2016 Autumn Statement and the BEIS Green Paper in January 2017 confirmed that a new pipeline of PF2 projects would be set out early in 2017, providing “new opportunities for the private sector to play a role in delivering infrastructure”. There was no major news on this in the budget statement, other than clarity on some allocations from the £23bn already committed in the Autumn Statement for infrastructure and innovation, including:

• £300m to support research talent, focussed on stem subjects
• £270m for future potentially disruptive technologies such as biotech, robotics systems and driverless vehicles
• £16m for a new 5G mobile technology hub
• £200m for local projects to leverage private sector investment in full fibre broadband networks
• £90m for the North and £23m for the Midlands from a £220m fund to address pinch points on the national road network, and
• Launching a £690m fund to be allocated to local authorities through a competitive process to tackle urban congestion and get local transport networks moving (further details to follow from Government later this year).

Healthcare and social care

Whilst the Chancellor did address some of the short term funding issues for social care, there was a recognition that long term sustainable funding for care in older age requires a strategic approach, which will be set out in Green Paper later this year.

Government funding for capital investment in approved Sustainability and Transformation Plans (STPs) is expected to be announced in the Autumn Budget. In addition, the Chancellor announced further STP funding of £325m for capital investment over the next three years in “high quality” and approved STP’s which are ready to invest now.

Education

Whilst the Autumn Statement focussed on infrastructure spending and research and development in schools, the emphasis in this Spring Budget was on education and skills - closing the productivity gap through delivering greater fairness and opportunities in schools to prepare pupils for the jobs of tomorrow.

The forthcoming Schools White Paper will ask universities and private schools to sponsor new free schools, and will enable the creation of new selective free schools. There was also an announcement of funding for an additional 110 new free schools to be established, which will include new specialist schools.

There was an additional commitment of £216m over the next three years to repair and maintain the existing schools estate.

Devolution

Additional funding was committed to the:

• Scottish Government: £350m
• Welsh Government: £200m
• Incoming Northern Ireland Executive: approximately £120m, and
• There was also a commitment to bolster the regions, with the appointment of six new city Mayors by May 2017.

Conclusion

The Spring Budget, 08 March 2017, doesn’t detract from the statements made by the Chancellor in the Autumn Statement on UK infrastructure investment. There was some detail on how some of the National Productivity Fund will be allocated, together with confirmation on the timing for funding STPs, which is helpful. We await further detail from Government on PF2, and the extent which this will be used to deliver future UK infrastructure investment. A further announcement on this is expected later this year.