As the dust settles on this years’ Spring Budget, the first to be delivered by Philip Hammond, we take a look at some of the key areas that could affect our clients in the years to come. Whilst cuts were announced in several areas, new funding has also been allocated in a bid to boost infrastructure and fill the much-reported gaps in social care.
Oil and Gas
In the Spring Budget, the Chancellor announced plans to support the oil and gas sector, a vital industry which meets 50% of the UK’s primary energy needs and which is struggling following a dramatic global fall in the value of its products. A report will be published later this month detailing how tax incentives might help the ailing industry by boosting confidence and stimulating additional investment. A panel will be formed to scrutinise tax relief surrounding decommissioning liabilities, which will conclude before the autumn budget, building positive momentum and encouraging maximum recovery. Extending the life of oil and gas fields rather than moving towards decommissioning will protect jobs both onshore and off. It would further allow smaller companies to profit from this crucial industry, in key areas of support such as transport and IT, as well as development and technology. Of course, some assets are reaching the end of their financial and economic viability and decommissioning opportunities will still be considerable.
In what has been seen as further development of the “Northern Powerhouse” strategy - attempting to spread prosperity beyond the South East - £90 million has been allocated to Northern England and £23 million to the Midlands in to tackle pinch points in the national road network. Smaller businesses outwith London will find an opportunity to compete in their own locale for lucrative contracts. Further, £690 million will be competitively allocated to councils across England to tackle urban congestion. The Department of Transport will soon announce details of the individual schemes, subsequently only those councils who submit outstanding bids to Whitehall will be successful in securing funding for these vital projects.
Health and Social Care
An extra £2 billion has been announced for social care in England, in a bid to ease pressure on hospitals, as the strain of budget cuts and growing demand have taken their toll. It was also indicated that more substantial extra capital spending for the NHS will be announced in the Autumn Budget. In the meantime, an additional £325 million will be set aside to allow the first NHS Sustainability and Transformation plans to proceed, funding local consultations aimed at developing proposals and making improvements to health and care in specific geographical areas. Those businesses wishing to compete for contracts in these areas will have to evidence cost effectiveness and efficiency in order to achieve success in an area where budgetary constraints are constant.
A fund of £216 million for existing schools has been announced, to be used towards repairing and updating school infrastructure. The money is to be allocated over two years as part of the Department of Education’s plans to make all schools fit for purpose. Put into context, this would work out at approximately £9000 per school. It is likely those businesses wishing to compete for these lucrative contracts would need to demonstrate not only economic efficiency but also consider environmental implications and time management issues, with a need to complete work in the limited school holidays where possible. £300 million will be made available to support 1000 PhD placements and fellowships in STEM subjects to address the issue of skill shortages within these areas of study.
Although new funding has been indicated across several sectors, due to the uncertainty placed upon the UK government by the Brexit vote, this may alter Mr Hammond’s intended plans for the economy and clearing the deficit. It remains to be seen how the impending departure from the EU will impact levels of funding awarded to sectors which have previously relied heavily upon subsidies from the European Union.