Chancellor Philip Hammond has vowed to make the UK economy “match fit” for the transition that will follow Brexit and has pledged to invest billions in innovation, infrastructure and housing.
In his Autumn Statement the chancellor said the government would prioritise "additional high-value investment" in innovation and infrastructure, which would be funded by additional borrowing.
"We will maintain our commitment to fiscal discipline", the chancellor said, "while recognising the need for investment to drive productivity".
The measures announced include:
- National Productivity Investment Fund of £23 billion to be spent on innovation and infrastructure;
- An extra £2 billion per year by 2020 for research and development funding;
- £1.1 billion extra investment in English local transport networks;
- £220 million to reduce traffic pinch points;
- £110 million for East West Rail and commitment to deliver Oxford to Cambridge Expressway;
- £390 million for the development of low-emission vehicles and connected autonomous vehicles;
- £1 billion in digital infrastructure, including 5G and mobile;
- Doubling of UK Export Finance capacity "to make it easier for British businesses to export”;
- £400 million into venture capital funds through the British Business Bank to unlock £1 billion in finance for growing firms;
- A £2.3 billion housing infrastructure fund to help provide 100,000 new homes in high-demand areas;
- £1.4 billion to deliver 40,000 extra affordable homes.
Industry response to the Autumn Statement 2016:
Dr Colin Brown, director of engineering at the IMechE, said: “Today’s announcement of additional spending for transport, technology, energy and infrastructure, leaves one crucial part of the puzzle out: skills. All this funding, without the skilled people to deliver these projects, is like funding an empty shed. Government wants home-grown talent to deliver research & development, driverless cars and new energy infrastructure, but we just don’t have the sufficient engineers to deliver this. We have a shortage of key skills today and no clear plan on how to develop a skills pipeline for tomorrow. Government must face facts and outline a clear strategy to ensure the UK has the skills it needs for the economy to thrive.
“Increasing the uptake of Ultra Low Emission Vehicles play a huge role in the UK’s future but we must ensure it’s part of an integrated transport strategy in the UK so today’s announcement for continued support to these initiative are welcomed. Major infrastructure projects are being developed in isolation which still focus on how journeys are made, and not on the ‘why’ or ‘when’.
“We suggest that government departments collaboratively develop a strategy to incentivise and support an integrated approach that would better serve passengers, providing a resilient infrastructure which is cost effective, efficient and reliable encouraging modal shift towards modes that better protect the environment.”
Professor Dame Ann Dowling, president of the Royal Academy of Engineering, stated: “These investments recognise the critical role that engineering plays in stimulating economic growth and supporting communities, not just in the South East of England, but right across the country. There are neglected areas of the UK with a long and proud engineering heritage that could be revitalised through the right investment, creating jobs where they are most needed and supporting economic growth.
“Creating jobs is only a part of the solution however. The engineering profession faces a well-documented skills crisis, and the government’s promised investments can only deliver for communities and for national productivity if there is investment in the skills that employers need. The government’s industrial strategy will be critical in delivering that step change in our skills base.”
Dowling added: “The promised investment in 5G is very welcome news, as digital connectivity plays a crucial role in day to day life, benefitting individuals and enabling businesses to be more competitive. The UK has the potential to be an international leader in digital technology, and investing £700 million in 5G technology is a step in the right direction, but we will need enough skilled engineers to make this a reality and to ensure economic resilience as the UK leaves the EU.”
Terry Scuoler, chief executive of EEF, said: “Business was looking for reassurance from the chancellor at a time of considerable uncertainty and he has helped calm nerves with the right level of pre-Brexit tonic. He is walking a fiscal tightrope but his pragmatic statement provides enough stimulus in key areas vital to improving productivity, whilst holding back some fiscal firepower if, as the OBR suggests, the economy stutters.
"The chancellor has also provided industry with a down payment on a modern industrial strategy. The boost to science and innovation is vital if we are to be at the forefront of the fourth industrial revolution, whilst the doubling of support for exports should grease the wheels for business in growing markets abroad. The Chancellor has also signalled a welcome recognition that our digital network and local roads are not fit for purpose and need major upgrade."
Mike Hawes, chief executive of the Society of Motor Manufacturers & Traders, said: “SMMT welcomes the government’s commitment to improving infrastructure and investment in R&D, an area in which UK automotive punches above its weight.
“One of the main areas in which UK automotive is playing a lead role is in the development and introduction of low emission and connected and autonomous vehicles. We welcome the investment to enhance the charging network for electric vehicles, as well as further support to boost uptake of low emissions buses and taxis. These markets are still developing and it’s critical the government continues to encourage this through consistent policies and investment.
“We are, however, disappointed that the government has not done more on business rate reform, SMMT called for the removal of plant and machinery from business rates valuation which would have helped encourage further investment at this time of great uncertainty.”
Paul Everitt, chief executive of ADS Group, added: "The chancellor’s Autumn Statement announced important measures to encourage investment and sustain business confidence. The additional £4.7 billion in funding for innovation and new technology is particularly important for high skill, high value industries like aerospace, defence, space and security. The focus on improving productivity and supporting innovation sends a strong signal about the government’s commitment to industrial strategy."
Carolyn Fairbairn, CBI director-general, commented: “The chancellor has prioritised a pragmatic down payment on future productivity growth. His emphasis on R&D, housing and local infrastructure will help businesses in all corners of the UK to invest with greater confidence for the long-term, during turbulent times. This will be warmly welcomed.
“These measures must now be translated into action. That means tarmac, tracks and telecoms being laid, and clear, deliverable timetables for major projects – only then will they act as a catalyst for investment, jobs and growth.
“The chancellor should keep a watching brief on the challenges created by higher inflation and uncertainty weighing on near-term business investment.”
Len McCluskey, general secretary for Unite the union, stated: “As business investment further dries up, we needed boldness from government on a scale that shows it is committed to re-shaping the economy. Instead we have disjointed announcements. The £23 billion promised for the productivity investment fund will have to work extremely hard to make amends for years of Tory economic vandalism.
“Nervous manufacturers will regard the £2 billion for research and development as ‘thin gruel’ when the country faces desperate skills’ shortages in vital industries. The promised industrial strategy needs to do so much more – and without delay – to put this economy on the front foot for life outside of the European Union.”
Stephen Cooper, head of Manufacturing at KPMG in the UK, added: “At a time of great uncertainty and change for industry, the chancellor has announced a number of positive actions to help manufacturers in the UK.
“The promise of new fibre networks through the new £400 million Digital Infrastructure Investment fund should help to support the industry’s future needs. As a key piece of the infrastructure puzzle, the delivery of this rollout needs to be clear, providing both reliability and resilience.
“Much needed investment in our transport and roads infrastructure is encouraging as is the doubling of support for our exporters, and continuing to prioritise these areas will help bring more confidence for life post-Brexit.”
Mike Cherry, national chairman at the Federation of Small Businesses, said: “We welcome government responding to our calls to increase investment in local roads and digital connectivity to help rebalance the UK economy.
“We also back the £2 billion per year boost for research, development and innovation, plans to improve management skills, the £400 million to improve small business finance through the British Business Bank, and the doubling of export finance. The latter is vital as we need to reach new markets in the wake of the Brexit decision.
“But there will need to be stronger fiscal interventions to boost the economy next year, with the prospect of weaker longer-term growth looming. Small firms want to grow, export, innovate, recruit and be more productive - and they need to know as soon as possible the framework they will operate in."
The Energy Intensive Users Group added: "EIUG is disappointed the Chancellor is not yet ready to announce the abolition of Carbon Price Support, which continues to undermine the competitiveness of UK industrial electricity users. The Government should use the months ahead to plan for its phase out."
Dustin Benton, acting deputy director of environmental think tank Green Alliance, said: "The chancellor announced £23 billion in investment today for the economy of the future. That future is low carbon, so we should make sure our infrastructure is too. But most of the low carbon announcements today are jam tomorrow.
"Renewable energy infrastructure, which could deliver an additional £22 billion in private sector investment before 2020, has been put on hold until the March budget. Energy efficiency infrastructure didn’t get a mention, despite the headline that fossil fuel prices are now driving UK inflation. The best news is that the chancellor has backed electric vehicles, by announcing £390 million for EVs and tax credits for charging infrastructure.
"But the bigger picture is of overstretched public finances. If there’s no money on the table, we should use smarter regulation to drive the investment in the low carbon and resource efficient infrastructure we’ll need for the future.">