Summary Reflections on the Spring Statement
By Donna James, Research Director at Populus Select
It’s been a rocky road so far for the Chancellor who has had to revise her numbers to retain her fiscal headroom. She has been keen to point out that while the headroom is not large – it’s higher than that of the previous government.
We want to buck the trend and have a look at any positives in the economic landscape that might counteract the gloom from the business community facing the double hit of the upcoming NI contribution hike and the rise in the living wage.
- To complement the planning changes to unlock more housebuilding and infrastructure, the Government has pledged more than half a billion pounds (£600m) to train new construction workers, including through 10 new ‘technical excellence colleges’, skills bootcamps to help those who have left the industry skill up, and, furthermore, financial incentives for foundation apprenticeships.
- Defence is one of the few industries that distributes its largess across a wide range of industries. It is also rare in that a majority of spend (70%) goes to businesses outside London and the SE, bolstering local economies. Historically only a fraction of this spend goes to SMEs (4% in 2023-2024), but the Government has announced a new support scheme is being set up to help them get their foot in the door in the defence supply chain, to invest and train up workers.
- Increased access to Community Diagnostic Centres and new or expanded surgical hubs will speed up the current trend of falling waiting lists which are keeping people out of the labour market and on benefits.
- Even the rise in the National Living Wage may have its silver lining. With a huge amount of benefit spend going to people in work, this may lift some out of benefits and provide them with additional disposable income to spend in their communities.
- Additional funding to aid people into employment is to be welcomed when certain sectors are suffering from labour shortages. The jobcentre model has needed reform and hopefully now that will be achieved delivering meaningful help into work.
- A continued focus on building home grown energy within the UK will ultimately deliver skilled jobs, and crucially bring down our energy costs, amongst the highest in the developed world, that are stifling the growth of many of our businesses.
Although there are many headwinds in the current economic outlook, many of which are outside of national control, and while many employers are feeling the pain of increased costs, there are some areas of activity from which we can take positives for future sustained and sustainable economic growth.