The Office for Budget Responsibility (OBR) has forecasted that the UK is expected to avoid a technical recession in 2023, but it is undeniable that the country is going through a cost-of-living crisis that is impacting businesses and families, support is needed.  

Inflation and taxes  

Chancellor Hunt announced they will surpass their aims to halve inflation, with OBR projections forecasting a fall in inflation from 10.7% to 2.9% by the end of 2023.  

The Chancellor acknowledged that inflation impacts people and business’ the most, claiming it is behind the many strikes the country has seen in the last months and set out the following actions:  

• Energy bills are guaranteed to remain capped at £2500 per month until the end of June 
• Fuel duty frozen- the 5p cut to fuel duty on petrol and diesel to end in April will be kept for another year 

Sue Percy CBE, Chief Executive, CIHT said: 

“CIHT welcomes the positive projections on the fall of inflation but we would like to see investment plans accounting for the impacts of inflation on the wider supply chain and not only on energy resources. Over the next few years, even if at lower rates, supply chain costs will continue to rise, and investments should rely on flexible contingency budgets to account for inflation.”    

Transport and Levelling Up for Economic Growth 

Local Transport  

Local Transport got much mention in today's budget, with more powers going to Mayoral authorities – as well as a focus on skills, employment, housing, innovation and net zero priorities - in the form of ‘Trailblazer’ deals. In addition, Chancellor Hunt announced an additional £200 million to be added to the current £500 million pothole fund that can be used to repair potholes, undertake resurfacing and repair critical infrastructure on the Local Highway Network (LHN).  

CIHT welcomes the focus on local transport and the impact on the local highways network, which is the biggest piece of infrastructure in the UK. We welcome the allocation of funding for local maintenance and something that CIHT has repeatedly called for investment in. However, CIHT wants to underline that if the devolution of responsibilities to the local level must be pursued, the government will have to face the issue of lack of money available to local authorities for both people and resources to deliver effective maintenance and services for a fundamental infrastructure service that impacts upon everyone. CIHT is also disappointed to see no mention of funding for biodiversity initiatives by the Chancellor, something that CIHT recommended in the recent publication ‘Green and Blue Infrastructure: A Transport Perspective’. 

Levelling Up  

Chancellor Hunt unveiled a plan for economic growth that focus on regional and local hubs and partnerships to maintain the commitment to levelling up the country:  

• 12 investment zones were announced: West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool. Zones in Scotland, Wales and Northern Ireland will also be identified. These zones will represent investment hubs where local authorities, entrepreneurs, research centres and local communities will drive high-tech regeneration projects that can drive innovation.  
• £8.8bn pounds will be allocated over the next 5 years for improvements in the local transport infrastructure,  
• Working with the levelling up secretary, the Chancellor will invest £200ml in regeneration projects in England, £161ml for mayoral combined authorities (and Greater London) and £400 mil for new levelling-up partnerships. 
• The government will also be looking at devolving responsibilities to local public-private partnerships to better control local economic development.  

Artificial Intelligence  

It was announced that the Chancellor has accepted all nine recommendations made by Sir Patrick Vallance in his review of pro-innovation regulation, and will: 

• Create an AI sandbox to trial new faster approaches to get cutting edge products to market 
• Work at pace with the intellectual property office to provide clarity on IP rules and report on growth duty for regulators  
• Ask Sir Patrick’s successor, Dame Professor Angela McLean, to report before the summer on options around the Growth Duty for regulators 
• Publish a quantum strategy (today) which will set a 10-year vision for the UK to be a world leading quantum enabled economy by 2033 with a research and innovation programme totalling £2.5 billion 

• Award a prize (‘the Manchester prize’) of £1m every year, for the next ten years, to the person or team that does the most ground-breaking British AI research 

CIHT is currently researching how AI can be used in the transport sector to achieve transport decarbonisation goals. You can discover more about this research by attending our information event next month.  

Workforce  

Currently the UK market has more than 1 million vacant working places and the OBR reported  that 7 million adults of working age are currently not part of the workforce. The government announced a plan to tackle into this unused workforce and create a high wages, high skills economy by investing in removing barriers related to disabilities, long-term illnesses and out of date skills.  

The actions announced today:  

• The ability assessment to work will be reformed and measures will be taken to allow people with disabilities or long- term illnesses to have the right support and opportunity to find occupation 
• Apprenticeships for over-50s people to reinstate them into the workforce and update their knowledge and skills  
• Universal support funding programme for England and Wales to assist disabled people finding appropriate jobs.  

CIHT welcomes the government’s effort to tap into the inactive workforce and support a more inclusive market space. Training and update of skills for the older employable is a positive announcement and will support those that lost their jobs during the pandemic enter the workforce again. However, we suggest that more comprehensive measures to support also the younger workforce is essential for a resilient jobs market.  

CIHT will follow up with a more detailed analysis of the budget in due course.