Tomorrow Chancellor Rachel Reeves will set out the first Budget delivered by the party since Alistair Darling’s Spring 2010 speech.
Back then the Government talked about setting up a national infrastructure framework alongside the launch of a review to drive down the cost of infrastructure.
It is a measure of how things move in Whitehall that both ideas remain current, with a review currently under way looking at cost of transport infrastructure, while there are plans for a new National Infrastructure Strategy in the Spring.
So if things seem to go round in circles, does this mean that tomorrow’s Budget will be equally predictable for the sector? Here I try to tease out what we might expect when the Chancellor stands at the dispatch box:
Fiscal rules
The biggest story for the sector in the run up to the Budget has been the floating of a relaxation of the ‘fiscal rules’, the guardrails that the Government sets itself to ensure that it tackles debt and does not overspend. Reeves has confirmed a new ‘investment rule’ that could free up an additional £50 billion while still cutting debt. This gives some wriggle room to avoid stepping into the mantrap set by the departing Conservative administration of having to cut un- or under-funded projects that were not affordable under the existing rules. Infrastructure may be a major beneficiary here.
Planning
Given that the Budget is broadly aimed at tax and spend measures, it may seem strange to flag up planning as a measure to be mentioned. But planning reform is at the heart of how the Government is expected to deliver economic stability, its highest priority mission. As such, i would expect that the Budget would flag up activities to streamline planning consenting, and provide more resources to those processing applications.
Private finance
Even with relaxed fiscal rules, the constraints on public funds are likely to mean that the Government will continue to explore options to leverage private finance into UK infrastructure. PFI will not come back, but might we see promotion of new models (or a review into available non-PFI options)?
Transport expenditure
One of Transport Secretary Lou Haigh’s first actions after being elected was to launch a review of her Department’s capital spending programme. Having already axed the A303 Stonehenge, the A27 Arundel Bypass and Restoring your Railways programme, might the Budget be seen as another opportunity to clear out the DfT’s stables?
On the flip side, the Government has pretty much confirmed that HS2 will now run to Euston, ending the uncertainty for the southernmost part of the route. North of Birmingham things get a lot more fuzzy, with Haigh going as far as announcing that Phase 2 will definitely not go ahead. This despite the fact that there is a Bill that was carried over from the last Parliament that is focussed on delivering parts of Phase 2.
The knotty problem of how to avoid HS2 actually diminishing rail capacity between Birmingham and Manchester is not going away, so I would be in no way surprised to see an announcement that Network Rail/DfT/the Mayors/a private consortium are being asked to pick up the project to find an affordable solution.
Local & devolved bodies
Under the last Government there was steady progress to devolve funding for local and regional transport to Mayors and combined authorities in England. With much already done, it seems unlikely that the Government will tinker too much, and it has already said it will not try to cut devolved funds. But we might see some deals for parts of the country where deals are not already in place?
Energy
Becoming a Clean Energy Superpower is one of the Government’s core missions, so expect a decent amount of content on this in the Budget. Given much of the new energy capacity will use private funding, suspect most announcements will focus on unlocking policy blockers, or pump-priming funding to crowd in this private support. May we see big interventions to move Sizewell C, small modular reactors and Carbon Capture projects forward?
Water
Like Energy, water projects are typically privately financed, with Ofwat well advanced in it review of the next five years of investment. As such, the role for the Chancellor may be limited, but might we see flagging up of some of the pipeline (excuse the pun) of strategic water transfer and reservoir projects?
Skills
The Budget typically includes some measures on skills, particularly on apprenticeships. With the Skills England Bill in parliament, might the Chancellor take the opportunity to reform the apprenticeship levy. This seems likely – responding to a specific commitment in Labour’s manifesto.
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Come noon tomorrow we will get clarity on many of these issues. Only then will we know if things have been predictable, or whether the Chancellor has surprises in store for CECA members.
CECA members will as usual be briefed on the most important aspects of the Budget before the close of play tomorrow – if you would like to input your views please get in touch.