The Chancellor presented his second Spring Statement on Wednesday 13 March. The Office for Budget Responsibility’s (OBR) forecast for the deficit, debt, GDP and productivity formed the backbone of the statement. On this occasion, the Chancellor gave explicit warnings on a no-deal Brexit:
“I need to be straight with the House: a no-deal Brexit would deliver a significant short- to medium-term reduction in the productive capacity of the British economy.
“Assuming a Brexit deal is agreed over the next few weeks and the uncertainty that is hanging over our economy is lifted, I intend to launch a full three-year Spending Review before the summer recess”
OBR expects Britain to grow in every year of the forecast:
- 1.2% this year
- 1.4% in 2020
- 1.6% in each of the final three years
- By 2023 the OBR expect to see 600,000 more new jobs in our economy.
- Borrowing this year will be 1.1% of GDP falling to £13.5 billion in 2023-24.
- Announced up to £260 million for the Borderlands Growth deal covering the border regions of England (and Scotland).
- Reiterated HMG commitment to the Northern Powerhouse Rail project and will consider TfN’s business case ahead of the Spending Review.
- HMG will publish the updated National Infrastructure Strategy alongside the Spending Review.
- HMG published a consultation on supporting private infrastructure investment once we leave the European Investment bank.
HMG referenced £60 million of investment in 10 cities across England, from the fund announced at Budget 2017. This will fund 30 new schemes such as bus station upgrades, new cycle lanes and road improvements, supporting the wider programmes being delivered by city regions as part of the Industrial Strategy.
The 10 cities were selected for the competitive fund in September 2018, and are as follows:
- Derby and Nottingham £7.2 million
- Southampton £5.7 million
- Leicester £7.8 million
- North East CA £10 million
- Portsmouth £4 million
- Norwich £6.1 million
- Sheffield City Region £4.2 million
- Plymouth £7.6 million
- West Yorkshire CA £2.2 million
- Stoke-on-Trent £5.6 million
Local Full Fibre Networks
Wave 3 allocations – £53 million of funding, for nine local areas who have successfully bid since Budget, from the third wave of the Local Full Fibre Networks challenge fund – enabling next-generation full fibre connections to key public buildings, and nearby homes and businesses.
The locations of the nine local areas are as follows:
- Colchester £3.5 million
- Rutland £2.0 million
- Isle of Wight £0.8 million
- Shetland Islands £2.0 million
- Norfolk £8.0 million
- South Essex £4.5 million
- North Wales £8.0 million
- Stoke-on-Trent £9.2 million
- Northern Ireland £15.0 million
Budget 2018 announced that the co-investment rate will be halved from 10% to 5%, and the amount employers can transfer to their supply chains would increase to 25%. These changes will now take effect from April 2019.
HMG to publish a consultation exploring potential changes to help local areas make better use of planning tools to support their local high streets, including through Compulsory Purchase Orders, Local Development Orders, and other innovative planning measures.
Future of Mobility
HMG to publish Urban Strategy – setting out the government’s approach to putting the UK at the forefront of mobility, and responding to the significant changes taking place in transport technology – such as the growth in electric vehicles, the development of self-driving vehicles and advances in data and internet connectivity.
- Financial Services. Following consultation later this year, the government will legislate as necessary to ensure that in the immediate period after we leave the EU, the UK can maintain world leading financial services regulatory standards, remain open to international markets, and realise new trading opportunities.
- New UK Export Finance (UKEF) General Export Facility – UK will introduce a new General Export Facility to provide more flexible short-term support to UK exporters. UKEF will make the new product available over the coming months and will publish further details once they become available.
- Competition and Markets Authority. The CMA announced today that, subject to an orderly exit from the European Union and therefore resources, they will carry out a review to assess how regulation affects competition in the UK business environment.
- International Education Strategy. To be launched by the Departments for Education and for International Trade, which will help to strengthen our position at the forefront of global education.
- International Research and Innovation Strategy – A strategy setting out the government’s ambition to ensure the UK retains its place as a global partner of choice for science and innovation collaboration. As a first step in implementing this, the government has launched an independent review to assess and make recommendations on our future frameworks for international collaboration.
- Digital Market Place: Professor Jason Furman, Barack Obama’s former Chief Economist, reviewed competition in the digital market place – his report is published today. He sets out far-reaching recommendations including new powers for consumers and an overhaul of competition regulation.
Science and Technology
HMG announced an allocation of over £200 million in cutting-edge infrastructure to support UK world-leading scientists, innovators and industry. These investments underpin the government’s ambition to raise economy-wide investment in R&D and drive progress against the Grand Challenges, such as healthy ageing and the AI and data revolution, and include:
- Photonics – Allocating £81 million to a national Extreme Photonics Application Centre in Oxfordshire. This centre will help researchers and industry better understand the composition of new materials and how they behave in different conditions.
- Bioinformatics – Investing £45 million in a critical upgrade to data storage cloud computing infrastructure at the European Bioinformatics Institute in Cambridgeshire, to support researchers using big data to drive genetic research.
- Supercomputers: Archer funding – Allocating £79 million to a new UK supercomputer (ARCHER 2) which will replace the current national high-performance computing platform (ARCHER), providing researchers with a fivefold increase in computing capacity.
- Joint European Torus (JET) Funding (Fusion) – Setting aside up to £60 million to confirm funding is guaranteed for the facility over 2019/20.
Education & Skills
- The Augar review will be published shortly and will “represent an important contribution to our overall plan for post-18 education”.
- To help small businesses take on more apprentices, HMG announced bringing forward the £700 million package of reforms at the Budget to the start of the new financial year in April.
- Have asked Professor Arin Dube, a world-leading expert in the field, to undertake a review of the international evidence on the employment and productivity effects of minimum wage rates.
- HMG announced a new £3 billion Affordable Homes Guarantee scheme, to support delivery of around 30,000 affordable homes.
- HMG to launch £1 billion Enable Build SME guarantee fund in April 2019.
- Announced £717 million from the Housing Infrastructure Fund to unlock up to 37,000 new homes on sites in West London, Cheshire, Didcot, and Cambridge.
- HMG Published a new ‘vision statement’ today on the ‘Oxford-Cambridge Arc’
- Independent Report on Build Out Rates – HMG to publish additional planning guidance to support housing diversification on large sites. Sir Oliver Letwin concluded that greater differentiation in the types and tenures of housing delivered on large sites would increase build out rates.
- Response to consultation on Planning Reform – HMG will introduce a package of reforms including allowing greater change of use between premises, and a new permitted development right to allow upwards extension of existing buildings to create new homes.
- Accelerated Planning Green Paper – HMG will publish a Green Paper setting out proposals on how greater capacity and capability, performance management and procedural improvements can accelerate the end-to-end planning process.
- Future Homes Standard – HMG aim to introduce this by 2025, future-proofing new build homes with low carbon heating and world-leading levels of energy efficiency. The new standard will build on the Prime Minister’s Industrial Strategy Grand Challenge mission to at least halve the energy use of new buildings by 2030.
- Greening the Gas Grid – Accelerating the decarbonisation of our gas supplies by increasing the proportion of green gas in the grid. The government will consult on the appropriate mechanism to deliver this commitment later this year.
- Red Diesel – HMG to publish summary of responses to the May 2018 call for evidence on red diesel and air quality.
- Vehicle Emissions: HMG will publish a call for evidence on whether all passenger carriers should be required to offer genuinely additional carbon offsets.
- Business Energy use – HMG published a call for evidence on the Business Energy Efficiency Scheme to help small businesses cut their carbon emissions and their energy bills.
Late payments for SMEs. HMG will publish a full response shortly to last year’s call for evidence, but HMG announced that as a first step they will require company Audit Committees to review payment practices, and report on them in their Annual Accounts.
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