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Infrastructure blog

3 takeaways from the UK government’s 2024 Budget

06 March 2024

The Budget was light on detail around infrastructure – but it was clear that the next Parliament will face major decisions.

3 takeaways from the UK government’s 2024 Budget
The Budget document confirmed that the next spending review will take place after the general election. Image credit: HM Treasury/Flickr (licensed under CC BY-NC-ND 2.0 DEED)

Chancellor Jeremy Hunt has set out the UK government’s latest spending plans in the 2024 Budget.

In what is potentially the last fiscal event before a general election, Hunt’s announcements mainly focused on tax cuts, with little detail on infrastructure.

The Office of Budget Responsibility (OBR) also published its latest update on the outlook for the economy and public finances.

Economic growth is expected to be slightly higher this year than was thought in November’s Autumn Statement.

The UK economy is now expected to grow 0.8% in 2024, 1.9% in 2025, and 2.2% in 2026.

However, public sector net investment this year is expected to be 0.4% lower than outlined in November, and lower again by a similar percentage in every fiscal year to 2027/28.

Here are three takeaways for infrastructure from the 2024 Budget.

1. The upcoming general election will be decisive for infrastructure

The Budget document confirmed that the next spending review will take place after the general election.

This means the next government has some major decisions to make within a constrained financial picture.

These decisions include implementing the next National Infrastructure Strategy, how to deliver the next carbon budget, and how to fill the strategic gap in connectivity and capacity left by the cancellation of HS2’s northern leg.

A look at capital spending

The Budget confirmed that departmental capital spending will follow the cash profile set at the 2023 Autumn Statement.

Essentially, this means capital spending is frozen in cash terms from 2025/26, and not increasing in line with inflation.

However, without a spending review, there’s no clarity as to how that spending will be allocated.

The National Infrastructure Commission’s recommendations from its recent infrastructure assessment require gross public investment from 2025 to 2040 to be close to 1.3% of GDP.

This means the next government faces the unenviable task of navigating a real-term freeze in capital spending without undermining the UK’s infrastructure ambitions.

2. Nuclear ambitions gain traction

The chancellor confirmed that the government is to buy the Wylfa site on Ynys Môn (Anglesey), and Oldbury in Gloucestershire, where planned nuclear projects were scrapped in 2019.

Nuclear provides a low carbon, reliable and long-term source of power.

The government’s aim is for nuclear to represent one-quarter of the UK’s electricity generation by 2050.

Wylfa in particular has been identified as a prime location for a new approach to generating nuclear using small modular reactors (SMRs).

The UK's nuclear landscape

The UK’s nuclear ambitions have been dogged by high costs and delays in recent years.

With the acquisition of these two sites, plus further progress on the SMR tender process and development of Great British Nuclear, the UK appears to be putting the foundations of a pipeline of nuclear projects into place.

This would allow the nuclear sector to develop the expertise and economies of scale that can drive down costs and reduce the risk of future project delays.

The announcement came alongside confirmation from Hunt of £360m of funding for advanced manufacturing and research and development projects.

This included an additional £120m for the Green Industries Growth Accelerator and support for a series of electric vehicle, renewables, and carbon capture programmes.

3. Further progress on planning reforms

Following on from the package of infrastructure planning reforms announced at the 2023 Autumn Statement, the government outlined further progress.

This includes a consultation on the proposed design of a new accelerated planning service.

A new taskforce will explore alternative dispute resolution mechanisms on compensation between landowners and electricity network operators.

Alongside this, the government also published the revised National Networks National Policy Statement (NNNPS), which covers road and rail.

This update represents the first review of the NNNPS since it was published in 2015.

The revised NNNPS includes a commitment that it will be reviewed at least every five years to ensure it remains appropriate, agreeing with recommendations made by the ICE.

Reducing carbon emissions

The NNNPS includes a number of changes around reducing carbon emissions.

These include providing more information on the requirement for whole-life carbon assessment and signposting the PAS 2080 standard as best practice for managing and reducing carbon in the built environment.

The revised NNNPS moves away from a focus on reducing congestion.

Instead, it identifies a range of challenges which may require the development of rail and road infrastructure, including supporting economic growth, net zero and resilience.

The ICE’s view

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 making some major decisions about infrastructure spending.

Given the proximity to the general election, it’s unsurprising that the chancellor favoured relatively short-term tax cuts instead of long-term infrastructure investment.

However, even though the chancellor provided certainty that there will be no significant changes to infrastructure projects and spending before the election, 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.

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  • David Hawkes, head of policy at ICE