Amid gloomy projections for the economy in the wake of the pandemic, all eyes were on the Chancellor and how he would use his Spending Review to help drive a recovery in the years ahead. Infrastructure investment emerged as a clear priority along with further moves to support the government objective to reach net zero. It included plenty of good initiatives from a business perspective, including a number of policies that we’ve been campaigning for on behalf of our members.
After more than two years of waiting for it, the National Infrastructure Strategy was finally published alongside the Spending Review. It affirms government backing for some key projects in areas like transport, energy and broadband, and confirms the plan to spend £27 billion in these sectors next year. For businesses, often worried about the reliability of political backing for projects, it represents an important statement of intent although some of the policy detail underpinning the strategy will not be seen until the new year.
One of the more eye-catching announcements within the Strategy was the promise of the creation of a National Infrastructure Bank that will be tasked with co-investing alongside the private sector in a wide range of networks. This is a move the CBI has strongly pushed for, and with the right remit, we think it could be a game-changer in crowding in private investment, particularly in the low-carbon economy. More details on the bank’s scale and mandate are likely to be announced at the Budget next year. To underpin these efforts, the government has said it will set a new strategic direction for economic regulators and update their main duties to support new objectives like net zero and promote higher levels of private investment.
This was also a Spending Review at which Chancellor attempted to add some substance to the government’s ‘levelling up’ agenda. A new £4bn fund to support local projects turned heads as it was not pre-trailed in the media – it could be a catalyst for smaller schemes that can be delivered in this parliament. The government has also updated the Green Book - its guidance for civil servants appraising infrastructure projects - to favour more investment in places outside of London and the South East. Again, this reflects a key ask for the CBI in recent months.
On net zero there was confirmation of the funding to support measures set out recently in the Prime Minister’s ten point plan including for carbon capture and storage, home insulation and electric vehicles. All good stuff. However, perhaps predictably, some important decisions such as on the future of nuclear power, further greening of the transport network and the decarbonisation of heat and buildings were promised in future policy papers – we’ll be holding some feet to the fire until then!