UK Budget 2023: Growth is the answer, but questions remain.

Focused on long-term investment and getting more people into the labour market, Jeremy Hunt’s announcements laid out a clear message: fixing Britain’s growth crisis is key to solving a range of problems.

The big consumer and business issues are consistent with those which dominated when Hunt delivered a hastily-arranged Autumn Statement last year: the cost of living, energy bills, and industrial relations. As has become orthodox in recent years, many policies were trailed in advance, with this so-called continuity Budget seeking to reflect the Government’s focus on stability and sense of predictability.

In that spirit of continuity, Hunt extended the energy price guarantee through to June. Another headline grabber is the Treasury’s plans for getting people back to work – with an expansion of free childcare announced at one end of the spectrum and changes to pension tax rules at the other.

The UK’s energy security is both a circumstantial and structural problem, so Hunt’s announcement of a large new funding package for nuclear energy will be welcome, and comes alongside a move to categorise nuclear as ‘environmentally sustainable’ – making planning easier and meaning it will receive the same tax benefits as renewables such as wind and solar energy.

The launch of Great British Nuclear is accompanied by a goal for a quarter of the country’s energy to come from this source by 2050. This will be supported by the creation of a competition for Small Modular Reactors which, if proven viable, will be co-funded by government. Other areas of technological investment include artificial intelligence and a new quantum strategy, as well as support for the carbon capture and storage sector.

Investment Zones are back but look different to Truss and Kwarteng’s original incarnation, and there will be far fewer than when the model was first proposed. Taking inspiration from freeports and growth clusters, Hunt’s vision focuses on R&D and universities as the backbone, working with combined authorities to apply for funding.

These regions must “identify a location where they can offer a bold and imaginative partnership between local government and a university or research institute in a way that catalyses new innovation clusters”. If successful, they will each get access to £80m of support for a range of interventions from tax reliefs to skills infrastructure.

A number of other funding packages were announced for regeneration and partnership opportunities, but most radical is the discussion of greater devolution opportunities for regional mayors. Long seen as England’s devolution trailblazers, the two Andys; Burnham in Greater Manchester and Street in the West Midlands, will be handed greater financial autonomy. Multi-year single settlements for both authorities are due at the next spending review, with a view to this being expanded to other mayoral authorities. Meanwhile, councils across the country will get additional funding packages to help with local transport and to deal with the perennial problem of potholes.

Elsewhere across Britain’s ever-more complex map of economic governance, the fate of Local Enterprise Partnerships was finally sealed. Hunt set out a plan for all functions of LEPs to be delivered by local government, and central government support to be withdrawn from April 2024.

Noticeably missing were significant announcements on retrofitting and decarbonisation, which many in the industry had hoped would feature. The topic was mentioned in passing as something mayoral authorities should focus on, but otherwise limited to an announcement of funding for local leisure centres to help with improving energy efficiency.

This new package of growth policies come alongside an increase in corporation tax, but one which will taper in line with business investment, in a move that government hopes will encourage innovation.

The Chancellor summarised that in November he delivered stability, and today he was delivering growth. The reality is murkier and there remain major pressures on sectors across the economy – but while there were few rabbits from his hat, there’s plenty for property and the built environment to get behind.

Today’s statement comes off the back of the OBR predicting the nation will avoid recession and see inflation return to 2.9 per cent by Q4 2023, which is more optimistic than many were predicting. Controlling those big numbers and metrics will be the real test for the Government, and set the context for whether their plans for growth can be delivered anytime soon.