Cautious industry welcome for chancellor’s Autumn Statement

Leading industry figures have given a cautious welcome to the Autumn Statement on 17 November, which saw infrastructure, innovation and energy placed firmly at the heart of the economy’s future.

Chancellor Jeremy Hunt’s statement outlined firm commitments to major infrastructure projects including HS2 and Sizewell C, in a keenly-anticpated speech that helped calm financial markets and industry fears after the brief and turbulent reign of previous prime minister Liz Truss.

Here, in a longer read than usual, is an essential selection of leading industry reaction that landed here at Infrastructure Intelligence:

Stephen Marcos Jones, CEO of the Association for Consultancy and Engineering (ACE), said: “It will come as no surprise that the chancellor presented a challenging macro-economic picture, and with tax increases previewed in the media over the last few weeks, today’s tax announcements have already had time to be digested by the business community.

“I wrote to the chancellor outlining the importance of investment in infrastructure to deliver the jobs and growth that will help drive the economy through the challenging times ahead. With this in mind I was pleased to see the government maintain the capital programme, which means the Northern Powerhouse Rail core, HS2, and the new hospitals programme can all progress. ACE also welcomes the commitment to new energy infrastructure in Sizewell C.

“As important was the news that devolution deals have been struck for Suffolk, Norfolk and Cornwall, as well as increased powers for the Combined Authorities in West Midlands and Greater Manchester. Increasing local decision-making is crucial if we are to make real progress on levelling up across the UK, but we would have liked to have seen the government use this opportunity to consolidate and ringfence spending, rather than introduce another round of competitive funding.

“We were also pleased to see a new focus on innovation for investment zones. While it may impact councils that initially expressed an interest, we look forward to seeing what can be made of these initiatives.”

“We were, however, surprised to see road duty on EV vehicles raised and it does raise broader questions around the long-term viability of the current system which relies on fuel duties to fund road investment. ACE has long argued for reform in this space, and we look forward to engaging with government departments on the issue.”

Alasdair Reisner, chief executive of the Civil Engineering Contractors Association (CECA), said: “In recent months CECA has campaigned to ensure the continuation of existing programmes of investment. The chancellor has today confirmed that our message - that cutting capital spending would ultimately be counter-productive for economic growth - has cut through in Whitehall.

“While we recognise the extremely challenging nature of the UK current fiscal position, nonetheless we welcome the government’s recognition that cutting investment in infrastructure would not only harm growth but would cost jobs and negatively impact businesses and communities.

“We call on the government to work with industry to redouble efforts to accelerate growth in the short and medium term, so that potential future cuts can be mitigated.

“We are now exploring the government’s commitments in greater detail to ensure that the agenda on which it was elected in 2019 - that of levelling up the economy and investing in the infrastructure the UK will require in the coming years - remains in place, even in the context of the difficult choices the chancellor has had to make today.

“The UK government has today said that it has confidence in the infrastructure sector to deliver growth. CECA members stand ready to deliver on this ambition, and we look forward to working with our members and government at all levels to secure the economy, deliver the recovery, and return UK plc to economic growth as quickly as possible.”

Chris Richards, director of policy at the Institution of Civil Engineers, said: “In today’s Autumn Statement the chancellor needed to uphold confidence in long-term infrastructure projects. His commitment to maintaining investment in line with the National Infrastructure Strategy, the much-needed plan to increase energy efficiency, and the continued commitment to levelling up underperforming economic regions are all common-sense measures that acknowledge the critical role infrastructure development plays in building a more sustainable nation.

“However, there were a few cans kicked down the road. The choice to maintain capital budgets in cash terms from 2025/6, rather than increase them in line with inflation effectively means a cut.

“With inflation at over 11%, we will have to do more with less, and the spectre of project reprioritisation still looms large. If the government wants to avoid delivering bad news on infrastructure investment further down the line, then it should become an ardent champion of everything the industry is doing to deliver infrastructure better, like the initiatives outlined in the Construction Playbook and in Transforming Infrastructure Performance.”

Mark Robinson, group chief executive at public sector procurement authority SCAPE, said: “Public sector investment in infrastructure has been a major driver of growth since the pandemic and any reduction in local budgets has the potential to hinder the effects of regeneration.

“Existing funding pots such as the Levelling Up and the Towns Fund will now become even more important in supporting the progress of major projects for both commissioning local authorities and those contractors who target public sector work. 

“Applying for central funding remains a competitive business though and as we head into what is likely to prove a challenging winter, early engagement between both local authorities and contractors can only prove beneficial in making sure projects are planned effectively to overcome any budgetary constraints.”

Richard Robinson, CEO of Atkins, UK & Europe, said: “The government has acknowledged that investment in critical infrastructure is vital to rebalance the UK's regions and meet net zero commitments.

“Projects such as HS2 and Sizewell C will provide us with greater energy resiliency, greater connectivity and greater opportunities across the UK, and we welcome the decision to stick to long term commitments which will help deliver growth and give industry the confidence it needs to plan ahead and invest in people and skills.

“As our recent research confirmed, it is vital that we level up people as well as places, ensuring investment delivers improvements in infrastructure but also wider social value.

“We now look forward to a period of stability and getting on with the important work which needs to be delivered across the UK.” 

Philippa Spence, managing director, Ramboll UK, said: “This budget has given us confidence in the outlook for our sector in 2023, despite the many headwinds. I welcome the chancellor’s ongoing commitment to the Glasgow Climate Pact, his decision to enable growth through increased investment in renewable energy, and to stick with key infrastructure projects and the levelling up agenda. 

“Combined with the commitment to enabling innovation in digital, life sciences and green industries amongst others, there will be sighs of relief in boardrooms across the country. Instead of the austerity we feared we potentially have a strong platform for growth.   

“In particular, ending electrical vehicles’ exemption from road tax is the right thing to do as vehicles of any kind carry costs - such as direct costs for roads - which should not be borne by only a percentage of road users. However, I believe there also needs to be a recognition of the ability of taxes to result in behaviour change and benefits of having less vehicles on our urban roads. In isolation, I doubt that this tax will result in reduced demand for electrical vehicles.

“However, there was no mention of a just transition or skills requirements to deal with the climate crisis or allow our economy to take the opportunities it may provide. The fact is, local authorities do not have the resources or knowledge to be able to adequately tackle the climate issues they are facing and urgently need more targeted funding from the national government to plug the skills gap. The devil will be in the detail for the government’s climate commitments and investment in infrastructure.”

Colin Wood, AECOM chief executive, Europe & India, said: “We all understand this was a budget delivered at a time of extreme economic pressure and, in the words of the chancellor, unprecedented global headwinds.

“Against this backdrop, the announcement that High Speed 2 to Manchester, core Northern Powerhouse Rail and East West Rail will go ahead demonstrates a long-term commitment to infrastructure and growth. At AECOM we welcome these announcements and will work with our industry peers to ensure value, sustainability and accelerated delivery of these projects.

“The chancellor’s commitment to net zero and honouring the COP26 agreement should also be commended in these challenging times. Investment in renewable energy is a win-win as we target energy independence and efficiency. 

“The green light for the Sizewell C nuclear power station and renewables, such as wind and solar, will enable our sector to build on our technical know-how and support the high skills, high wage workforce of the future. 

“We are already working with clients on building decarbonisation and the Energy Efficiency Taskforce (EETF) funding is much needed as a 15% reduction in energy consumption requires significant investment.

“Ultimately, infrastructure investment is all about outcomes. We don’t build for the sake of it, we build to enable people and goods to move around in a way which benefits communities and the economy. 

“AECOM believes local leaders, in partnership with their communities, are best placed to make these decisions and welcome today’s support for new mayoral devolution deals and ‘trailblazer’ devolution deals to give increased fiscal powers to established mayors.

“Let’s now use this focus on stability, growth and public services to get on and deliver these projects – the sooner we do, the sooner people and communities will benefit from them.”

Patricia Moore, UK managing director, Turner & Townsend, said: “There will be a sense of relief today from those who feared cuts to capital spending. The chancellor's commitment to a pipeline of much-needed rail and nuclear investment in particular brings certainty that can allow these schemes to continue in earnest. But the reality of inflation means that government departments will need to do more with less.

“Growth doesn't need to be expensive, but it will fall to our industry to ensure that we are efficient and targeted despite the pressure on resources. Focusing investment in the right way to build skills and expertise, and driving opportunities across the nation, including key schemes in the north, and priority areas like life sciences, advanced manufacturing and green industries, will be essential.

“Digitalisation has a huge role to play in transforming performance and efficiency, recognised by the chancellor as he spoke of the UK becoming the next Silicon Valley - and our sector needs to heed that call.

“We welcome the further £6bn of planned investment in the mission to reduce the UK’s energy consumption, and the taskforce to retrofit the UK’s homes, offices and public buildings. The strategic approach taken to retrofit, already exemplified by the successes of the existing accelerator schemes, can set an example of how targeted spending can stimulate private investment and innovation. They bring benefits to the country and the climate, all without breaking the bank.”

Jim Coleman, head of economics at WSP, said: “Though the measures outlined in the Autumn Statement clearly reflected the challenging economic situation in the UK, it was positive that the chancellor recognised the essential focus on education that is required to keep the UK at the forefront of innovation and deliver economic growth.

“Building a workforce with the skills ready for our green future will be critical to our economic recovery; indeed many of the growth priorities highlighted in the Autumn Statement rely on green jobs and utilising new technologies, so additional funding for schools to invest in skills and strengthen employability is an important step forward.

“Investment in transport infrastructure allows wealth and opportunity to move around the country and connect communities, so it was also pleasing to see the chancellor give the green light to a number of major projects. All opportunities to harness innovation and growth the length and breadth of the country must be taken to drive productivity through the difficult years ahead.”

Hilary Leevers, chief executive at Engineering UK, said: “We need a well-funded education, skills and careers system to ensure that we have enough engineers, scientists and technicians to achieve the government’s ambitions for net zero and energy independence as confirmed in today’s statement – along with ‘superpower’ status in science and innovation.

“We cautiously welcome the announcement on education spending made today. The Autumn Statement suggests that the government understands the financial pressures that the education sector is experiencing. Only by investing in the future of young people will we be able to tackle the chronic and increasingly acute skills shortages across the economy, and in particular in the engineering and technology sector, that are threatening companies’ ability to grow.

“We look forward to working with Sir Michael Barber on the implementation of the government’s skills reforms. The engineering and technology sector is crying out for more skilled people and to ensure this we need T Levels to be a success and falling apprenticeships numbers to be addressed. 

“We would welcome a broader look at the education system and hope government will work with stakeholders to develop a STEM skills strategy and identify any further reforms needed to ensure that we have an education system able to deliver on the UK’s ambitions.”

Simon McWhirter, UKGBC’s director of communications, policy and places, said: “This could signal the most important boost to energy saving and reduced energy bills in many years. The shift to make energy saving an equal priority with energy supply, setting a clear level of ambition and path forwards for industry, and new government funding could be the turning point needed. 

“Getting the details and wider strategy right will be critical; but this is progress in the right direction. The new task force to advise government is welcome news. Bringing in experience from across industry, academia and civil society will be essential to make this a success, and learn from the mistakes of the past. 

“The size of the prize is enormous, in terms of new and secure skilled jobs, accelerating levelling up across the country and scaling up the green economy. 

“Fundamentally changing Investment Zones is the right thing to do; otherwise this sort of deregulatory approach risks a race to the bottom on planning and environmental protection, and it won't deliver the high-quality and low-impact new homes and buildings the country so badly needs. 

“Our members have shown that we can already build low carbon, nature-friendly homes. Anything else puts the next generation of new homeowners at risk of sky-high energy bills in places that don't give us the wider access to nature and green spaces that we need to thrive.” 

Darren Caplan, chief executive of the Railway Industry Association, said: “Last month we wrote an open letter to chancellor Jeremy Hunt, setting out how rail is not just essential for UK connectivity and levelling-up, but that it is also an important national industry which plays a major role in boosting economic growth in other sectors too. Given this, we said it is essential to push on with rail projects, even given the current difficult economic circumstances.

“On the face of it, it is therefore welcome that the chancellor has confirmed in the Autumn Statement that three key rail projects will be built in the coming months and years. This isn’t just the right thing to do when it comes to connectivity, but is also in the long-term economic interests of the country and the efforts to decarbonise, as well.

“Rail suppliers are very clear that clarity and certainty are essential, and so whilst we welcome the government’s announcement today, we urge the government to simply deliver what it says it is going to deliver. The industry still needs clarity on the details, including on all elements of HS2 and Northern Powerhouse Rail, and sight of the Rail Network Enhancements Pipeline, which still hasn’t been updated in over three years.

“While we welcome the chancellor’s decisions announced today, it is concerning that capital budgets will seemingly not rise as planned after 2024. RIA will of course monitor to see that the rail renewals budget is maintained too, to ensure there is no deterioration in the network.”

Mark Kemp, president of ADEPT said: “I think I can safely speak for most local authorities when I say what a waste of time, resource and money we have had to spend on putting in bids for Investment Zones at a time when councils can ill-afford it. We will have to wait and see what the new direction means in the spring budget, but I hope that whatever the application process for new funding is, the government will factor in the resource implications for councils.

“ADEPT is pleased to see significant investment in the energy efficiency of homes, it is something we have long campaigned for. However, to be truly effective, it has to be locally led and it is a real missed opportunity not to start this work now, particularly with the ongoing energy crisis experienced by our communities."

Dr Graham Winch, professor of project management at Alliance Manchester Business School, said: “Today’s autumn statement was made against a miserable economic output. Combined headwinds caused by Brexit, the Covid pandemic and the war in Ukraine - compounded by recent policy errors – have forced the government to introduce tax increases and spending cuts of major proportions. There is no doubt that we are all going to be poorer because of today’s budget.

“The common consensus is that any viable route out of the present situation will involve stimulating economic growth and a central element of any growth plan is infrastructure investment, which drives growth directly by stimulating GDP growth through the multiplier effect, while enabling businesses everywhere to operate more effectively.

“For this reason, it’s encouraging to see the chancellor commit to the pledges made by his predecessors to deliver core NPR, the reduced HS2 and Sizewell C. However, more needs to be done to ensure our country reaches its growth potential, so it’s important that the government delivers on these promises, as well as on its commitment to deliver gigabit broadband across the country, and further investments in energy and transportation infrastructure.

“It’s also imperative that we boost investment in the construction industry’s ability to deliver home energy retrofits. Not only will this be key in accelerating our path to net zero, but it will also provide us greater protection through energy resilience, helping us to avoid a repeat of the surging prices experienced so far this year.”

Graham Harle, CEO of Gleeds, said: “The timing of this Autumn Statement was born out of self-created chaos by the government, with the chancellor making the best of a bad hand and aiming to give investors the sense that lunatics are no longer in charge of the asylum.  

“For those operating in the creation of the built environment there is a huge sigh of relief that major infra projects in transport, health, and education were left unscathed in the short term and that the provision of nuclear energy was ring fenced, while action on business rates is also helpful. There is disappointment that this government fails to recognise that we desperately need to loosen migration restrictions to expand our skilled labour force to deflate wage costs as inflation is one of our biggest challenges and I simply do not see the measures outlined today directly containing materials or labour costs. 

“On energy efficiency plans, we need to see the detail from government, but they must incentivise house owners to implement energy saving improvements - the UK is not going to reach its net zero aspirations without reconfiguring its housing stock. Finally, today shows we need a strong voice at the treasury table. With our ninth construction minister in less than four years and 13th housing minister in the last 10 years we are hardly being treated like an industry that is worth 8% of GDP by the chancellor.”  

Mark Elsey, infrastructure partner at law firm Ashurst, said: "We welcome the chancellor's commitment to continuing the government's infrastructure investment programme. While we need fiscal prudence, an increasingly competitive and prosperous future Britain will not be achieved by cutting back our investment in the building blocks that allow our society to function effectively. Given the current fiscal, cost and supply chain challenges, it has never been more important to spend public money wisely and efficiently, and for the public and private sectors to work together in increasingly smart and aligned ways."

Peter Sibley, who sits on the UK’s Nuclear Industry Council, and is also divisional director (nuclear) and energy sector lead at Hydrock, said: “After hearing the announcements from the chancellor’s Autumn Statement today, the whole energy sector can finally breathe a sigh of relief. 

“After alarming indications from Sunak that he wasn’t taking our future energy needs seriously as prime minister – initially snubbing COP27 and then a dramatic policy flip-flop regarding the Sizewell C nuclear plant – we appear to now have some clarity about the future of our energy mix in the UK. 

“Today’s decision to maintain funding in nuclear puts us back on track to achieve what was set out in Boris Johnson’s Energy Security Strategy in April: the diversification of our energy supplies to help drive us to net zero.

“While this investment is vital in developing the UK’s future diverse energy-mix, it’s not enough. We need a firm commitment from government to a robust, long-term renewable energy policy that brings together nuclear, wind and solar energy to ensure that our long-term energy security is not put at risk by party politics again.” 

Richard Twinn, associate sustainability consultant at Cundall, said: “In recent months, we’ve seen gradual slowdown in investment decisions on construction, with investors nervous about the economic outlook. Today’s confirmation that the UK is now in recession obviously puts additional strain on the industry, and highlights what many of us in the industry have been saying for years – that the government needs to stimulate growth in construction by investing in energy efficiency measures for existing building stock.

“The announcement of the new Energy Efficiency Taskforce (EETF) is to be welcomed, but it really doesn’t feel like enough. Compelling policy proposals already exist for everything from stamp duty incentives for homes through to mandatory energy ratings for commercial buildings, so yet another taskforce is unlikely to make a difference. 

“With the cost-of-living skyrocketing and the climate crisis worsening, now is the time for meaningful action. With energy costs rising to eight times historic levels, investment in energy efficiency has never been more cost-effective.

“As Hunt himself said today, "Over the long term, there is only one way to stop ourselves being at the mercy of international gas prices: energy independence combined with energy efficiency." Now more than ever, he urgently needs to back up that rhetoric with policies and investment.” 

Félicie Krikler, director at Assael Architecture, said: “A decade of low levels of insulation installation rates means that energy efficient retrofit of homes needs a boost and today’s promise of funding is a sizeable step in the right direction. However, how can we really afford to delay this until 2025 to address our housing stock's poor energy efficiency?

“In the meantime, cash absolutely needs to be injected into up-skilling and increasing our workforce to make this a success. In 2012, ONS data shows there were just 12,000 vacancies in the construction sector, while today that number hovers near 50,000. A retrofit revolution would cut bills and carbon emissions for households across the country but this can only be achieved if the government solves the skills crisis.”