Excessive caution and, on the other hand, expediency seemed to blight the Spring Budget statement of 26 March, in the eyes of environmental commentators, and the Chancellor’s speech outlined a pivot towards defence as a key engine of growth
The OBR’s downgrading of the growth forecast for this year from 2% to 1% presaged Rachel Reeves’ address, and set the emotional tone as one of doggedness and facing up to a cloudy horizon.
Her speech avoided any mention of climate concerns or Net Zero – a merciful omission, concluded The Guardian, but the reprieve from cuts could only be temporary, in its reading of events.
The absence also seemed at odds with reports of green growth outstripping that of the rest of the economy (by a factor of three, in the CBI’s recent estimation). “The Chancellor previously said there was ‘no trade-off between economic growth and net zero’, but we need to see these goals embedded in a long-term strategy,” said the Green Building Council’s Simon McWhirter.
A pledge to turn the UK into a “defence-industrial superpower”, and put this sector at the heart of economic growth seemed to leave feathers mostly unruffled, in the sustainability sphere. The crisis-into-opportunity rhetoric has been a mainstay of successive governments, and this new pledge might have been expected to hit an uncomfortable note for those recalling similarly Manhattan-Project-esque pronouncements of the past.
On defence, the government has said it plans to spend at least 10% of the MoD’s equipment budget on things like drones- and AI-enabled technology, giving a boost to advanced manufacturing production in places like Glasgow, Derby and Newport.
The plans also include a protected budget of £400m within the MoD for defence innovation, and £200m specifically for Barrow-in-Furness, formerly a major hub for the UK’s nuclear and defence industries, particularly submarine construction.
Ann Carruthers, president of the Association of Directors of Environment, Economy, Planning & Transport (ADEPT), seemed fine with the renewed focus on defence, but less happy about the omission of other important matters, particularly support for local services.
“Times are indeed uncertain, and the global landscape has demanded a response acknowledging the need for increased spending in areas including defence.”
“These are urgent requirements which need clear and decisive action because of their immediacy.
“But what must also be acknowledged is that in the not-too-distant future, other challenges including those concerning our ageing highways infrastructure, climate change adaptation, housing delivery, planning and waste management will, in their turn, also become immediate, non-negotiable issues requiring urgent spending and action.”
Addressing these challenges requires long-term thinking, and the kind of research being undertaken by her own group and its partners, she said.
“The reality we face is that the essential services people rely on every day are being pushed to breaking point. We expected more time and attention to be given to these concerns in this Spring Statement.
“Place-based services – from roads to waste collection, housing and green spaces – are integral to supporting healthier, more sustainable communities that subsequently deliver the desired growth and prosperity the government has aspirations for.”
Private and public sector: who should carry the burden?
Business groups’ prescriptions for growth were more about lifting some of the burdens the new government has been imposing on the private sector.
Protecting state spending was a welcome theme of recent government announcements, said the CBI, and in its view the foundation of economic growth. But only the private sector could deliver actual growth. The group wanted to see things like setting a world-leading goal for R&D investment, and giving employers the flexibility to choose the training and qualifications that make sense for their workforce.
Policy thinktank the Institute of Economic Affairs said: “Turning increased defence spending into an exercise in ‘modern industrial strategy’ suggests that the government still has too state-centric a view of economic growth – one that is almost certain to disappoint in the long-run.”
One silver lining was an unexpected bonanza from the government’s planning reforms, currently making their way through parliament, which are projected to provide a 0.5% increase in the housing stock by 2030, in turn adding about 0.2% to GDP.
Reeves’ speech also mentioned an additional £2bn of investment in social and affordable homes next year, which would deliver up to 18,000 new homes.
Absent, however, was any mention of insulation or energy efficiency measures, and “much more bravery is required”, said the Green Building Council’s Simon McWhirter. On the £2 billion investment in social and affordable housing, he added that “these homes need to be aligned with a Future Homes Standard which ensures the high quality and energy efficient homes people deserve, and prevents the need for expensive retrofitting in the future.”
“The UK urgently needs a comprehensive long-term National Retrofit Strategy, to deliver the warm, comfortable, healthy homes people need, with funding to match.
“The initial £3.4 billion committed in last year’s budget is also welcome, but not enough.
“Too many people are still living in damp, draughty homes that are making them sicker and poorer.”
There were also promises of support for the skills the construction industry needs, with more than £600m having been announced earlier in the week to train up 60,000 more construction workers, “including with 10 new Technical Excellence colleges across every region of our country”.
Kate Jennings of the Association for Consultancy and Engineering (ACE) welcomed the recognition of the need for skills in the sector, but added: “There is an opportunity to connect these plans to the green transition, ensuring workers are equipped to support not just the Government’s ambition to build – but also its aim to create a nature-positive, climate-resilient, circular economy.”
EngineeringUK wanted to see more investment across the whole STEM skills pipeline, and for the government to address “the financial barriers to technical and vocational entry routes into engineering and technology”.
It also wanted the government to “look to move towards a new model of directly funding apprenticeships for 16- to 18-year-olds to help reverse the decline in uptake of apprenticeships for this age group.”
Still untouched by any of this, however, are issues like the UK’s housing unaffordability crisis, as Roger Mortlock, chief executive of CPRE, the Countryside Charity noted, with the OBR predicting that house prices will continue to rise.
“The Chancellor appears to have no plan to hold the housebuilding industry to account and ensure it actually delivers the homes the government is promising.”
“We know the big housebuilders control supply to maximise profit. They have a role to play, but unchecked, it’s like putting the fox in charge of the hen house.”
As periods of transition go, this one seems unusual for the great number of reassessments taking place. The pledge to increase defence spending to 2.5% of GDP, and for this to become the principal engine of economic growth, was clearly beyond the horizon of possibility at the time of Sunak’s March 2021 “green industrial strategy”, and Reeves’ and Starmer’s pre-election Green Prosperity Plan, which promised £28 billion per year of green investment.
The rationale for investing in measures like energy efficiency, grid modernisation, and net zero is certainly not being openly challenged, so it seems likely the apparent silence on these topics will be broken soon.
