JBP Analysis: Spring Budget 2023 

A Budget for Growth? 

Key Points: 

  • 30 hours free childcare for children over the age of nine months
  • Full expensing of capital expenditure for businesses
  • Extension of the Energy Price Guarantee for households
  • Measures to help older people and those on benefits to get back into work
  • Lifetime Allowance charge on pensions set to be abolished in 2024

At a first glance, Jeremy Hunt will be satisfied with his first full Budget – pitched as a Budget for Growth, whilst attempting to calm the turbulence the UK economy is still experiencing. The headline figures from the IMF and OBR will calm fears amongst Government more than anything else – with the OBR reporting inflation is set to halve by the end of 2023 and the IMF suggesting that HM Treasury’s current approach puts the UK economy ‘on the right track.’  

That’s not to say that some measures won’t be badly received in Conservative Party circles. Hunt’s refusal to U-turn on the planned rise in Corporation Tax (from 19 to 25 per cent) has drawn dissent from several factions, and so-called Trussites are not impressed with the watering down of her flagship investment zones policy. 

There were, however, enough rabbits out of the hat to assuage concerns – on childcare and full expensing of capital spending – and businesses can expect a more radical plan to be set out as we move closer to a General Election. For families, the extension of the Energy Price Guarantee will be a relief amidst fears of a cliff edge. 

Whilst the majority of Liz Truss’ policies died with her Premiership, the Conservative rhetoric on growth did not. Hunt called growth the focus of his Budget and noted the position of growth amongst the Prime Minister’s key priorities.  

Full expensing of capital expenditure, whilst not as generous as the Super Deduction borne from the pandemic, will be welcomed by business – though despite a tentative commitment to make the policy permanent, a time limit of three years on the initial Government investment will leave the policy open for dispute.  

On growth and investment, measures split across regional investment, removing barriers to investment and encouraging people back into the workforce, are acutely targeted to yield results as an election looms large. With the attention of the business community continuing to turn to Labour – eyes will be peeled for further business engagement from the Shadow team. 

All eyes on Labour 

Sir Keir Starmer, responding for the Opposition, lambasted 13 years of Conservative failure in his response, claiming that the Budget did not meet Labour’s ambitions for the UK – calling the UK the ‘sick man of Europe.’  

With the Labour Party looking to position itself as ‘the Party of sound money,’ Starmer and his Shadow Chancellor, Rachel Reeves, will have been heartened by more optimistic economic forecasts. With Labour riding high in the polls, the prospect of inheriting an economy in a more stable position will give the Shadow Cabinet more confidence in engaging with business – with the Shadow Business team engaging more closely with the private sector than Labour has in the last decade. 

Starmer’s speech was indeed confident and shows the Party moving away from ‘Opposition for Opposition’s sake,’ as they have been accused of in the past. Tentatively welcoming measures on Ukraine and Childcare, whilst suggesting alternatives on windfall taxes and abolishing ‘non-dom’ tax status, shows a Party thinking seriously about Government – not least with revision of its nationalisation plans. 

Hunt Goes Nuclear 

The Chancellor launched Great British Nuclear (GNB) as part of his statement today. GBN will propel forward the UK’s nuclear industry and continually assess the constraints in the market, while also supporting new nuclear builds. Jeremy Hunt also confirmed that the Government intends (following consultation) to change the investment classification of nuclear to ‘environmentally sustainable’ supporting the availability of public and private sector investment, in a major step forward for proponents of nuclear energy. A competition was also announced for the construction of Britain’s first small modular nuclear reactors, which is expected to conclude by the end of 2023. 

Jeremy Hunt also committed £20bn of government investment in carbon capture, utilisation and storage (CCUS) technologies over the next 20 years. While there are multiple uses for CCUS technologies, including using them to offset carbon emissions from fossil fuel derived products, it could indicate a deeper commitment by government to the use of ‘blue’ hydrogen long term. 

Housing – is there a plan? 

As Sir Kier Starmer outlined in his budget response, the Chancellor has ‘no real ambition on house building’. While there were extensive announcements on regeneration and levelling up throughout the UK, housing seems to have fallen short with no real policies outlined that could make homeownership possible for younger people throughout the UK. This is reenforced by the budget document which emphasises additional funding to fixing potholes over any firm commitments to support to the housing industry and market. As such, there is a risk that Labour makes housing one of their main policy pillars at the 2024 General Election. 

Levelling Up & Devolution  

The 2023 Spring Budget saw a renewed commitment to Levelling Up in the regions, with the Chancellor committing to twelve new investment zones across Northern England, Scotland, and Northern Ireland worth upwards of £80M each. Whilst Hunt also promised regional leaders, such as Greater Manchester Mayor, Andy Burnham, more autonomy and more money with the goal of better harnessing civic entrepreneurship at a local level. 

Indeed, this was something of the ‘Regeneration Budget,’ with Jeremy Hunt paying lip service to the regeneration of Canary Wharf, and pledging £161M for regeneration projects in London and other Mayoral Combined Authorities.  

However, it should be noted these incentives saw little focus on the South West or indeed Southern England more generally, with accusations that the Government is solely focusing on London as a gateway to the South. Rather, Government focus will instead be on key northern constituencies such as Redcar and regions such as Teesside, both of which Hunt mentioned by name. This shows that there is still ambition in the Conservative Party to fight to keep hold of the ‘Red Wall’ seats the Party so shockingly won under Boris Johnson in 2019.

Following the recent resignation of the Bristol City Council Liberal Democrat councillor for Hotwells and Harbourside, a by-election was held yesterday (2.2.23). Behind the headline result, there are some key trends and issues to consider for the Bristol development industry which we’ve explained below. Hotwells and Harbourside ward covers an expanse of city centre Bristol, including Brandon Hill, Anchor Road, Canon’s Marsh (the old docklands), and up to the Cumberland Basin.

Want to know more about what’s next in 2024?

The JBP Team would be delighted to talk to you about elections and their impact on the development industry. Get in touch with us for more insight and how we can assist you with your projects, and delivering your messages to local politicians.

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