5 Key themes from the 2021 Autumn Budget & Spending Review 2021
Written by Euan Bradley
In yesterday’s Autumn Budget, the Chancellor set out his vision for the UK’s recovery from the impacts of COVID-19, with the Office for Budget Responsibility having upwardly revised its forecast of GDP growth this year from 4% to 6%.
Furthermore, the conclusion of the Spending Review period also provided a clearer image of how Government funds will be allocated over the next three years. And whilst the Department for Transport was a relative loser with only a 1.9% increase in its budget, the joint lowest (along with the Home Office) of any of the major departments, the Chancellor also announced several new funding streams targeted at levelling up the UK, decreasing carbon emissions, and aiding the UK’s business-based recovery from the COVID-19 pandemic.
SYSTRA has analysed the plethora of proposals and figures contained within the Chancellor’s remarks, and picked out five key themes from today’s 2021 Autumn Budget.
1) THE ROLE OF TRANSPORT IN LEVELLING UP
One of the most heavily-hyped but not yet clearly defined policy in Government, nearly two years on from the 2019 general election in which the Conservatives campaigned on a commitment to level up the UK, the calls for the Government to tangibly deliver on its levelling up promises have only been getting louder.
Today’s budget responds in part, to those calls, confirming the allocations of the City Region Sustainable Transport Settlements (CRSTS). The CRSTS will provide £5.7bn to the eight English city regions (up from the £4.2bn announced previously), targeted at improving local transport infrastructure and creating ‘London-style’ urban transport systems with the following funding allocations:
- £1.07bn for Greater Manchester
- £1.05bn for the West Midlands
- £830m for West Yorkshire
- £710m for the Liverpool City Region
- £570m for South Yorkshire
- £540m for the West of England
- £310m for Tees Valley
Furthermore, the first round of bids to the Levelling Up fund has resulted in £1.7bn being allocated to fund successful local improvement projects across the UK, with £3.1bn still to be allocated. However, the Government’s comprehensive Levelling Up ‘white paper’ which was trailed for release alongside todays Budget is yet to be published, and will eventually set out in more detail how the Government plans to pursue its levelling up agenda.
2) ‘BUILDING BACK BETTER’ POST-COVID-19
With the Government looking to the future after the impacts of the COVID-19 pandemic, attracting investment into local economies and providing necessary infrastructure has emerged as a cornerstone of the Treasury’s strategy for rebuilding the national economy. Today’s budget reflected the emphasis on locally-driven economic growth through commitments such as:
- £2.6bn over the next three years for the UK Shared Prosperity Fund, which succeeds the EU Structural Fund programme and aims to help people access opportunities in places of need
- Continuation of the High Street Heritage Action Zone programme to revive high streets
- Commitment to the £5bn investment in gigabit capable broadband across the UK, as well as £180mn to support the rollout of 4G mobile coverage in rural areas
- Support for the haulage sector through a freeze in Vehicle Excise duty for HGVs, and the further suspension of the HGV levy for another year
With these proposals, the Government hopes that spending directed towards small towns and left-behind areas suffering from what the Chancellor termed ‘the UK’s uneven economic geography’ will be multiplied by increased prosperity and local spending, following the economic downturn resulting from COVID-19.
3) THE CONTINUED DRIVE TOWARDS ‘NET ZERO’
As Glasgow gears up to host the COP26 summit, the Chancellor today reaffirmed the Government’s commitment to the UK becoming a net zero carbon economy by 2050 via several emissions-focused measures in the Budget, totalling around £30bn and including:
- £620m of new investment over the next three years to support electric vehicle uptake
- £3.9b for the decarbonisation of buildings across the UK
- £107m for an offshore wind farm in the North Sea (from the new UK Infrastructure Bank)
- Tax relief for businesses investing in green technology such as solar panels
- A new Air Passenger Duty (APD) band for ultra-long haul flights
However, several measures were at odds with this ambition, and fly in the face of the Government’s green agenda, including a 50% cut in APD for domestic flights within the UK and the continued freeze on fuel duty. These measures, announced just one week before the COP26 summit, undermine the viability of public transport provision and are unlikely to result in large-scale decreases in emissions.
4) CONNECTING TOWNS, VILLAGES & RURAL AREAS
Post-lockdown, there has been a great deal of discussion about the viability of urban centres, with more people living, working and socialising in their local areas, with less of a need to travel into major towns and cities. Several measures in today’s budget aimed to improve connectedness across the UK, including:
- £24bn of investment over the next three years to upgrade the strategic road network
- £8bn to fund road improvements and deliver 50 ‘vital’ local route improvements
- £35bn for rail upgrades over the next three years, to deliver HS2 and local connections
- More than £710mn of new funding to boost infrastructure provision for cycling and walking
However, the continued delay to the long-awaited Integrated Rail Plan have left many unanswered questions about the future of the UK’s rail network, particularly with regards to future of HS2 in the North. Moreover, despite the Prime Minister using his Conference speech earlier this month to call for workers to return to offices en-masse, research by SYSTRA has found that many workers will generally commute less and use public transport less in future (for more on this, see https://www.systra.co.uk/en/newsroo....
5) FUNDING FOR BUS IMPROVEMENTS
The Chancellor’s speech again demonstrated the importance this Government places on the role of bus travel, previously the Cinderella of public transport provision in the UK. The Bus Back Better strategy (published in March) requires all local authorities to develop a Bus Service Improvement Plan (BSIP) by the end of this month, and to put in place proposals for either London-style statutory bus franchising or a looser Enhanced Partnership, setting out how bus operators, local authorities, community transport groups could work together to deliver improved bus services.
The Government has today confirmed £1.2bn in new funding to deliver on the BSIPs, which will be used to accelerate the provision of new services, infrastructure, improved ticketing schemes, and greater levels of customer service. This will be delivered alongside £355m of spending on zero-emission buses across the UK, and £70mn for the creation of Zero Emission Bus Regional Areas.
Yesterday’s Autumn budget has shown that the Chancellor is committed to achieving a very specific brand of economic growth in the wake of the COVID-19 pandemic, focused on levelling up the UK’s least prosperous areas and delivering local transport infrastructure where demand is most acute, whilst meeting the UK’s climate goals and attempting to make public spending more sustainable.
Although the fiscal challenges of the COVID-19 pandemic are still burdening the Treasury, the measures announced today by the Chancellor have the chance to unlock notable improvements in productivity, prosperity and quality of life across the UK, particularly in left-behind areas. However, achieving this against the backdrop of climate policy goals and regional economic disparity will no doubt be challenging, and the Chancellor must stay the course if the expected benefits are to be realised – the impacts of the various funding streams announced today will only be maximized by the relevant stakeholders if long-term funding security is assured.