The architecture sector has responded to Chancellor Jeremy Hunt’s first Autumn Statement, in which he outlined a series of measures designed to protect the UK against global economic forces, but also provided some relief to businesses expecting more hardship, and less cuts in expenditure than many had foreseen.
Chancellor Hunt left Labour somewhat disarmed as he announced protections for the poorest in the cost of living crisis, for example in announcing that social rent would be capped in 2023, and a total of £2.8bn spending on social care. He also recommitted to the UK’s COP26 climate goals, and announced a further £6bn would be spent on achieving the targets in 2025. He also announced a target of a 15% “reduction in energy consumption by businesses and industry” by 2030, but it was unclear how this relates to previously announced goals.
Countering rumours that government infrastructure spending would be a casualty, Hunt recommitted to £600bn of spending over the next five years, including HS2 to Manchester, and nuclear plant Sizewell C’s construction. There was however no mention of precedessor Kwasi Kwarteng’s 138 prioritised infrastructure projects prioritised, suggesting these have been shelved.
Hunt promised a £14bn “tax cut” in business rates, particularly targeted at helping smaller firms, but an increase in the energy profits levy for large energy firms from 25% to 35%. There would also be a new “temporary” 45% tax on electricity generators from 1 January 2023.
To assist with inflationary pressures, interest rate rises and the downturn in house prices, Hunt gave homebuyers a stay of execution on the stamp duty cut, until March 2025. He also announced that that tax perks would be restricted to clamp down on “fraudulent R&D” in SME businesses.
Angus Duguid, vice president of HKS Architects, commented: “It was widely anticipated the Autumn Statement would bring a landslide of capital spending cuts, and we are pleased to see that this is not the case and that there has in fact been a recommitment to large infrastructure projects including the New Hospital Programme.
Duguid added: “It’s also positive to see a keen focus on energy efficiency. It’s now key to ensure funding is directed to make buildings more operationally efficient in terms of their energy usage.”
Brendan Sharkey, head of construction and real estate at accountant MHA, said he was relieved infrastructure spending has not fallen victim to spending cuts:
“The big thing the construction sector hoped for from the Autumn Statement was for infrastructure spending to be protected. Many in the industry will have breathed a sigh of relief that there were no reductions to existing infrastructure spending. and the decision on Sizewell C was especially heartening.
“The construction industry needs governments to be committed to infrastructure decisions that have been made. They should not be subject to the vagaries of different governments or chancellors, and Jeremy Hunt stuck to existing plans.”
Philippa Spence, MD at Ramboll UK, gave a cautious welcome but sought more detail:
“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.
“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.”