In his Spring Statement, Chancellor Jeremy Hunt set out a plan to deliver long-term growth for the UK with a number of key investments, including a £160m nuclear power deal, £120m for the Green Industries Growth Accelerator, £3.4bn towards digital transformation in the NHS, £270m for R&D projects and £650m investment in a vaccine manufacturing hub. However, some spokespeople in the engineering and tech industries think more could have been done.
Chancellor Jeremy Hunt began his speech to parliament by saying that “the policies I announce today mean more investment, more jobs, better public services and lower taxes in a budget for long-term growth”. However, he was quick to point out that this growth would not be sustained by immigration.
In the lead up to the budget – the Chancellor’s final one before the general election – there has been much speculation about the headline announcements, two of which were a National Insurance tax cut of 2% and the scrapping of non-dom status.
While the Chancellor made no mention of the UK entering a recession, he was rather optimistic in saying that “we turned the corner on inflation [and] we will soon turn the corner on growth”.
In its latest report of the UK economy, which accompanies the Spring Budget, the Office for Budget Responsibility (OBR) stated that the UK’s near-term growth prospects have improved marginally from its Autumn Statement.
This most recent OBR report shows that GDP grew by just 0.1% in 2023, and the OBR expects the economy to grow by 0.8% in 2024 as interest rates fall and real household incomes recover. For 2025, GDP is forecast to rise by 1.9%, 2.2% in 2026, 1.8% in 2027 and 1.7% in 2028.
At the Autumn Statement, the OBR said growth was expected at 0.7% in 2024, 1.4% in 2025 and 1.9% in 2026, meaning the expected GDP growth for the next three years has been upgraded.
Although this strengthens near-term growth prospects and should enable a faster recovery in living standards from last financial year’s record decline, the fiscal watchdog warned that the medium-term economic outlook “remains challenging”.
Clean energy investments, particularly nuclear
The Chancellor first turned to announcing investments, starting with investments in nuclear power. “We want nuclear to provide up to a quarter of our electricity by 2050. As part of that I want the UK to lead the global race in developing cutting-edge nuclear technology,” said Hunt.
He announced a new £160m deal to acquire two sites to develop nuclear – one of which is Wylfa, an island off the coast of north Wales. Efforts to build a new plant in Wylfa were abandoned by Hitachi in 2019 after it failed to strike a financial agreement with the government.
Hunt also said that “Great British Nuclear will begin the next phase of the Small Modular Reactor selection process, with companies now having until June to submit their initial tender responses”.
Other green energy investments
Up to £120m will also be allocated to the Green Industries Growth Accelerator to build supply chains for new technology, ranging from offshore wind to carbon capture and storage (CCS).
However, Hunt also confirmed that the government will continue to invest and support oil and gas industries, although there was no expansion on this during his speech.
The government’s investment in the renewable energy sector was received positively by many in the industry. Neil Poxon, CEO at engineering company Oxford Flow, said. “The Chancellor’s announcement, earmarking additional funds for its Green Industries Growth Accelerator to support enhancing the UK's manufacturing sector, marks a positive step in the right direction in our journey towards meeting net zero ambitions. This funding is not just financial – it’s a signal to the industry and the market that the shift towards cleaner energy practices is not just necessary, but inevitable.”
Grid connection
Along with investment in clean energy, Hunt also announced that by January 2025 “we will have a new faster connection process to the grid up and running”.
Grid connection reforms were welcome news to many within the energy sector. As Rt Hon Philip Dunne MP, Environmental Audit Committee chair, said: “Delays in grid connection have been stifling opportunities for developing Net Zero Britain. I therefore welcomed the moves, announced last year, to reform the planning system to surge ahead with the delivery of energy infrastructure, and for efforts to be taken to remove ‘zombie projects’ from the grid connection queue. Today’s Budget built on these important developments.”
Investing in innovative tech industries
Hunt acknowledged that further steps need to be taken to attract investment into the UK’s technology-related industries. He went as far as saying that “the UK is on track to become the world’s next Silicon Valley”.
To help fund these industries, he said that 28,000 SMEs will be taken out of VAT registration altogether – encouraging them to invest and grow – along with providing a £200m extension of the Growth Guarantee Fund, which he claims will help 11,000 small businesses to access the finance they need. A new UK ISA was also introduced, which will allow an additional £5,000 annual investment in UK equities tax-free.
However, some in industry thought there was a lack of substance around how the government plans to ensure that the UK tech sector will indeed evolve into the next Silicon Valley. For instance, Amanda Brock, CEO of OpenUK, said: “Although the introduction of the new £5k individual ISA for investment in the UK is a welcome concept, the scale lacks the necessary vision to meet the needs of building that sector.”
No mention of investing in tech skills
While the focus was on how to fund the technology industries, there was no mention of any investment in the skills required to work in these industries. This was despite Hunt saying earlier in his speech that growth “cannot come from unlimited migration – it can only come from building a high-wage, high-skilled economy”.
Stephanie Baxter, head of policy at the IET, said: “To maximise the potential of investment in nuclear and R&D, it must be underpinned by a strong skills pipeline. That is why we welcome the further investment for apprenticeships in key growth sectors, including nuclear technicians and electrical power network engineers.
“However, while increasing the number of apprentices will be crucial to fixing the skills pipeline in the long term, there remain significant gaps in the existing workforce. That is why we need to upskill and reskill current workers in the adoption of new and emerging technologies like AI and digital twins.”
Beatrice Barleon, head of policy and public affairs at EngineeringUK, picked up on the lack of any mention of funding the STEM skills pipeline. “Without more skilled young people coming through the UK education system, UK businesses will struggle to grow and stay competitive compared to other countries,” she said.
“There is an acute STEM teacher shortage affecting young people’s STEM education and therefore their ability to pursue careers in these vital sectors. Yet there was no mention of teachers and how the government intends to support them. There was also a lack of focus on how crucial training routes, such as apprenticeships, will be enabled to grow into the future, and how this will be funded,” she added.
R&D spending
Hunt announced that there will be £270m investment into innovative automotive, aerospace and R&D projects, including clean aviation and green emission vehicles.
For some, this investment also does not go far enough. Dr Joe Marshall, CEO of the National Centre for Universities and Business (NCUB), argued that technological advancement is rapidly transforming the world and the UK’s short-termism risks putting the country on the back foot.
“To unlock economic growth, it is vital that the government sets an ambitious target and plan to raise private R&D investment. The government must not forget their commitment to making the UK a science superpower. We need action now if we are to continue to build to secure a central role in the age of innovation,” said Marshall.
Manufacturing investments
Along with R&D spending, the government will also bolster the manufacturing sector through various investments. One of these is a £650m AstraZeneca investment to build a new vaccine manufacturing hub in Liverpool. Hunt said: “We believe that we should be manufacturing medicines as well as developing them.”
Commenting on this aspect of the Budget, Stephen Phipson, CEO of Make UK, said: “Industry will welcome this statement, which builds on a number of other key announcements in recent months. The Chancellor clearly sees manufacturing as a key sector in the economy of the future, and is slowly but surely putting in place the building blocks of an industrial strategy.”
AI and digital transformation in the NHS
As part of Hunt’s announcement in what he called a “landmark public sector productivity plan,” the government announced £4.2bn in funding, which will allow public services to invest in new digital technologies.
The NHS will receive £3.4bn as part of this to invest in digital transformation to replace an outdated IT system, including the use of AI to cut admin tasks and using AI-fitted MRI scanners.
This will certainly help the NHS improve efficiencies, but some felt that more should have been made of the potential of AI technologies in healthcare, and not just as a technology capable of processing large amounts of data quickly and accurately.
Julian Mulhare, managing director EMEA at technology consulting firm Searce, said: “Leaders must take a more holistic approach to AI adoption, firmly rejecting the notion of AI as a tool to cut headcounts and replace humans.
“To foster trust and expedite AI’s integration among teams, it must be incorporated not as a threat but as a collaborative tool for workers, propelling business agility and growth.”
