Muted industry response for chancellor’s spring statement

Leading industry figures have given a muted response to the chancellor’s spring statement, describing it as missed opportunity on energy, net zero and levelling up.

Set against a background of the highest inflation rate for 30 years, the continuing effects of Brexit and the post-Covid recovery, and now the energy crisis and increased instability and economic turmoil as a result of the war in Ukraine – it’s fair to say that chancellor Rishi Sunak didn’t have a great deal of room to manoeuvre.

That said, the feeling amongst several leading industry figures is that the chancellor missed an opportunity in a speech that didn’t go far enough to address energy and net zero concerns and also failed to give any emphasis to the government’s much heralded levelling up ambitions.

Here’s an edited selection of industry reaction that landed here at Infrastructure Intelligence.

Stephen Marcos Jones, CEO of the Association for Consultancy and Engineering (ACE), said: “Inflationary increases affect every single company which is why we would have expected more proactive, immediate and targeted moves to mitigate current inflationary pressures on UK PLC. The review of the UK’s approach to R&D investment, with a wider scope and promise of increased relief is welcome. We would like to have seen more targeted measures to support government ambitions on net zero and levelling up. The statement was a missed opportunity to drive progress in these areas and use them as catalysts for both economic growth and recovery.”

Richard Robinson, CEO, Atkins UK and Europe: “This was the spring statement that we all expected, given the challenges faced by households and businesses right across the UK. We did note that the government is launching the second round of its levelling up fund and hope that this investment reaches the areas where local infrastructure improvements are needed most. We now await the energy security strategy which we hope will be used as an opportunity to fast track the UK’s net-zero plans and deliver transformational change.” 

Colin Wood, AECOM chief executive, Europe and India, said: “As expected, the chancellor’s statement was light on any significant new investment and fiscal measures. Given rising energy costs, it was disappointing there were no measures to support the acceleration of energy security. We now look to the much-anticipated energy security strategy for a clear, long-term plan for the UK’s future energy mix that will decarbonise and improve the security of supply.”

John Mullen, country market director, UK energy, Ramboll, said: “A focus on family finances is of course important and understandable, but attention must also be paid to the cause of the problem, as well as the effect, otherwise we fall short in addressing the real issues. The UK has for decades lacked a long-term energy strategy that allows us to balance and react to changes in cost, security, environmental issues and social equality, and we must avoid further ‘sticking plaster’ policies that don’t get to the root cause of the problem.”

Turner & Townsend UK managing director Patricia Moore said that maintaining investment in major programmes was critical for construction in the coming months: “Government departmental spending - from healthcare and housing, to roads and rail - has been a key driver for the post-Covid recovery. Without any new funding this is set to take a real-world hit as budgets are hit by rising costs. Pulling back from planned investments will be tempting in the months ahead, but the government needs to stay the course.”

Paul Hamer, CEO of Sir Robert McAlpine, identified inflation as the presiding elephant in the room: “The chancellor’s economic outlook suggests that there could be a lot for the construction industry to celebrate in the future, but inflation remains a deep concern for business. The rising cost of materials will play a significant role in determining the long-term performance of the sector, and so we are keen to see the UK remain on track to meet the forecast of returning to normality by 2024.”

Graham Harle, CEO of Gleeds Worldwide, delivered a more withering verdict. He said: “Today we saw a chancellor playing for time, offering thin gruel for business when what we wanted at this time of uncertainty was the full English. He is gambling that business confidence, corporate deposits and consumer savings are robust enough for him to sit on the fence and wait until the autumn statement to announce new investment stimulus. This is a mistake when we see rampant inflation, record materials and energy price increases impacting construction investment which is beginning to slow. I was hoping for a creative and impactful budget at a challenging time, aimed at supporting a sector which has been told to build back better. I didn’t get it.”

Mark Robinson, SCAPE group chief executive, said the public purse should continue delivering the infrastructure investment needed to support local regeneration while addressing the cost-of-living crisis. “As part of this, we need to see increased funding to support a nationwide approach to domestic energy efficiency – something we are actively campaigning for alongside the UK Green Building Council. All eyes will therefore be turning to the prime minister’s national energy strategy for clear direction on how the government intends to address long-term cost pressures within the construction industry.”

Darren Caplan, chief executive of the Railway Industry Association (RIA), said: "Whilst there were of course many areas for the chancellor to address, the fact that rail is not mentioned anywhere in his speech or supporting documents is concerning, when one considers rail contributes £43bn in economic growth, sustains over 700,000 jobs and generates £14bn in tax revenue for the UK.”

Nick Cooper, CEO of Storegga, said: “The UK energy industry will be largely disappointed by today’s announcement: there was no rabbit out of the hat for carbon capture and storage and hydrogen as hoped. We have an opportunity to decarbonise the British energy industry, whilst also securing supply. But today’s statement does not give us the broader decarbonisation roll out we so desperately need.” 

Jamie Holmes, CEO, VU.CITY, said: "The cost-of-living crisis and the war in Ukraine have, understandably, meant that levelling up and planning reform have slipped down the priority list in this year’s spring statement. However, it’s vital that the chancellor demonstrates material support for levelling up between now and May when the levelling up bill is expected to come into force.”

Sunand Prasad, principal, Perkins&Will, said: "There is no doubt we are reaching boiling point when it comes creating energy-efficient homes. This battle to retrofit our homes is not only vital to combat the climate emergency. It will also help families across the country save on skyrocketing energy bills. We strongly welcome the cut to VAT on energy-saving materials such as solar panels announced today and we urge the government to continue prioritising energy efficiency to level up the entire country towards a greener future."

Gregory Dewerpe, founder of A/O PropTech, said: “It’s no secret that the UK’s building stock is some of the oldest and leakiest in Europe, compounding an energy bills crisis that is already making life difficult for millions up and down the country. As the cost of living crisis worsens, the government should be funding better insulation and heat pumps if we are to have a hope of bringing down consumer bills and greening the country’s homes.”

Eddie Tuttle, director of policy and external affairs at the Chartered Institute of Building, welcomed the VAT cut on home energy solutions, but said: “We feel that more can be done to tackle the current cost-of-living crisis and that government should implement a long-term national retrofit strategy to improve the energy efficiency of homes in the UK, helping drive energy bills down and improve the health and wellbeing of occupants.”

Click here for details of a spring statement analysis webinar on Thursday 24 March at 12 noon, organised by ACE.