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‘A missed opportunity’: engineering and industry reaction to the 2024 spring budget

Professional Engineering

RenewableUK said the Treasury had missed the opportunity to maximise the amount of offshore wind capacity (Credit: Shutterstock)
RenewableUK said the Treasury had missed the opportunity to maximise the amount of offshore wind capacity (Credit: Shutterstock)

Reaction to the 2024 spring budget has been predictably dominated by the 2p cut to National Insurance, and the forecast effect on already stretched public services.

READ MORE: 5 key points for engineering and industry in the 2024 spring budget

Engineering and industry bodies have also been having their say following the statement by chancellor Jeremy Hunt yesterday (6 March), with some praise for policies – and criticism for perceived oversights and omissions.

Here is a round-up of what some key organisations said.

‘We are extremely disappointed’

Beatrice Barleon, head of policy and public affairs at EngineeringUK, said: “We welcome the government’s commitment to invest in crucial sectors, such as engineering and technology, and small to medium sized enterprises (SMEs) in the UK, including for example the Green Industries Growth Accelerator. We also share the pride that the chancellor clearly felt when talking about how the UK is becoming a leading force in the technology sector, comparing it to the Silicon Valley.

“However, given all this, we are extremely disappointed that there is no mention of the need to invest more and focus on skilling the future workforce. Without more skilled young people coming through the UK education system, UK businesses will struggle to grow and stay competitive compared to other countries.

“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.

“We renew our ongoing call for the government to develop a clear and properly funded STEM skills plan. This should include investment in careers outreach and education, apprenticeships for young people aged 16-19, and commitment to sustaining existing funding levels for STEM teacher professional development.”


‘A missed opportunity’

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said: “Government has been keen to assure the UK automotive industry’s competitiveness, with support for EV development and manufacturing – including £2.1bn in autumn’s Advanced Manufacturing Plan – but there is little to help consumer demand.

“Today’s budget is, therefore, a missed opportunity to deliver fairer tax for a fair transition. Reducing VAT on new EVs, revising vehicle taxation to promote rather than punish going electric, and an end to the VAT ‘pavement penalty’ on public charging would have energised the market. With both government and industry having statutory requirements to deliver net zero, more still needs to be done to help consumers make the switch.”


‘Important that the government moves swiftly’

Sir Jim McDonald, president of the Royal Academy of Engineering, said: “The government’s announced investment to accelerate late-stage R&D and support engineering and manufacturing projects across life sciences, automotive and aerospace sectors is welcome, as many of these technologies are pivotal for delivering healthcare and achieving the UK’s net zero and growth ambitions.

“The Green Future Fellowships delivered by the academy will also be vital for achieving these ambitions and driving economic growth. The government’s ongoing investment in aerospace through the Aerospace Growth Partnership, the Aerospace Technology Initiative and Advanced Propulsion Centre has been successful for its long-term commitment beyond budget and political cycles, an approach that needs to be replicated across the research and innovation sectors.

“To maintain the UK’s place as a leading tech ecosystem, it’s important that the government move swiftly to implement the Mansion House reforms to support innovative companies to access the capital they need to scale-up domestically, and we encourage the government to explore other sources of investment held in UK financial institutions.

“Continued investment in the UK’s AI sector, including through the Alan Turing Institute, is vital to support the development of emerging technologies and engineering that can help to address complex societal challenges. However, it’s crucial that this continued investment is delivered in a way that unlocks opportunities for innovation, skills development and economic success in all nations and regions across the UK, to ensure that advancements in AI engineering contribute to a more inclusive economy.”


‘Clean energy budget announcements do not go far enough’

Commenting on the government’s announcement that more than £1bn of funding will be available for this year’s auction for new clean energy projects, and that £800m of that will be available for new offshore wind farms, RenewableUK chief executive Dan McGrail said: “Although we welcome this budget increase, as it recognises that global economic conditions have changed, the Treasury has missed the opportunity to maximise the amount of offshore wind capacity which the UK could have secured in this year’s auction for new clean energy projects.

“We have more than 10GW of capacity eligible to bid in this summer. Building this is essential if we’re to make up lost ground from last year’s auction and create the substantial pipeline required to accelerate supply chain investment and growth in the UK. This funding will only secure between 3-5GW.

“This means a delay in attracting billions of pounds in private investment, which we could have secured in this year’s auction to build and operate these projects, and opportunities to grow our supply chain to provide goods and services for projects here and abroad will not be maximised”.  

McGrail added: “Offshore wind is one of the UK’s cheapest sources of new power and is vital in boosting our energy security and independence from expensive imported gas. That’s why we’re urging ministers to be more ambitious in revising this year’s auction budget upwards if new projects are consented in time, and to aim high in future annual auction rounds. This would enable them to get closer to their own target of 50GW of offshore wind by 2030 – over three-times our current capacity. At the current pace, this target looks unachievable.

“This is crucial at a time of intense competition in the international offshore wind market, in which the UK is a global leader – although many other countries are taking bold steps to try to steal our crown by offering attractive incentives to build projects elsewhere”.


‘We welcome further investment for apprenticeships’

Stephanie Baxter, head of policy at the Institution of Engineering and Technology, said: “The Institution of Engineering and Technology welcomes today’s spring budget announcements on nuclear, apprenticeships and R&D investment.

“Further developing the UK’s nuclear capacity, particularly in small modular reactor development will be critical to support the move towards net zero. However, this 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, which will address shortages in the sustainability and digital skills pipeline – key to sustainable, long-term economic growth.

“However, whilst 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 were disappointed to see that, once again, calls to reform the Apprenticeship Levy by making it more flexible for employers to upskill and reskill existing employees, particularly with micro-credentials in new and emerging technologies like AI and digital twins, has been ignored.

“In order to maximise the potential of R&D investment, it must be accompanied by plans to upskill workers in the adoption of new technologies. For example, digital twin technology can reduce downtime for manufacturing and optimise processes, but currently only 23% of employers surveyed in 2023 said that the UK has skills in this area.

“This is particularly the case for SMEs, who have the most to gain but the least time and resource to invest in training. We were therefore pleased to see the government’s upskilling fund pilot to help SMEs develop AI skills, and look forward to seeing further plans set out in the SME Digital Adoption Taskforce. Only by remaining agile will we plug skill gaps now and in the future.

“There is also clear recognition in this budget about the role technology plays in improving productivity, especially in the NHS – where interoperability remains a significant hurdle. The application of engineering technologies to healthcare promises a revolution in the way we diagnose, monitor and treat disease, and will empower healthy lives.”


‘The UK risks losing carbon capture opportunity’

Ruth Herbert, chief executive of the Carbon Capture & Storage Association, said: “The UK's CCUS (carbon capture, utilisation and storage) industry is still waiting for the funding announced in last year's spring budget to be committed to projects, with final investment decisions for projects in the north-west and north-east of England needed in the next few months.

“Today's budget was a missed opportunity for the government to put in place a longer-term revenue support envelope for the next wave of projects, to provide the level of certainty they need to move forwards.

“Without this, the UK risks losing the opportunity to attract around £30bn of private investment into UK CCUS by 2030, which would create and protect tens of thousands of jobs and transform industrial regions across the UK.”


‘The general election will be crucial’

Chris Richards, director of policy at the Institution of Civil Engineers (ICE), said: “Today’s budget confirms that the general election will be a crucial one for infrastructure.

“It's now been confirmed that the spending review will take place after the election. That means the next government will be responsible for implementing the next National Infrastructure Strategy, delivering the next carbon budget, and reallocating HS2 funds for the North and Midlands.

“Certainty that there will be no significant changes to infrastructure projects and spending before the election is welcome, but there are still many decisions to be made.

“The ICE will shortly launch a programme of work that aims to spark conversations about what the next government’s day one infrastructure priorities need to be.”

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Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.

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