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This lunchtime, Chancellor Jeremy Hunt MP stood up to deliver his last Budget before the next general election.
He was tasked with walking a fine line, demonstrating fiscal responsibility, while trying to drive a meaningful economic uptick that could turn around the Government’s continuing poor polling.
For businesses, the focus was on what the Chancellor might do to drive investment, support advanced manufacturing and spur economic productivity. What measures could he take to give businesses the certainty to invest, grow, and crucially, list in the UK?
Hunt took steps to reduce the tax burden on small businesses by increasing the VAT threshold to £90,000. This will be welcomed, but in the context of high energy bills, reduced consumer demand, and stubborn inflation, might not be felt by businesses as keenly as the Government would like.
Unsurprisingly, increasing investment was a central focus of Hunt’s statement. The Chancellor promised reforms to unlock more pension capital and to make it easier for pensions funds to invest in the UK.
UK funds currently invest just 4% of their assets in UK shares, and as part of the next stage of Mansion House reforms, Hunt announced that he would require local government pension funds to disclose their level of investment abroad. He also announced a new British ISA to support British businesses with capital to help them expand.
Hunt spoke proudly of the UK’s record in tech, describing the country as the next Silicon Valley, and putting further funding behind quantum and AI upskilling. There was also £100 million in additional funding for the Turing Institute, the National Institute for Data Science and AI.
AI will also underpin the Chancellor’s potentially landmark announcements on delivering modernised and more efficient public services, with the Public Sector Productivity Programme driving change in areas such as policing, the courts and health.
The NHS will receive £3.4 billion in funding to modernise and digitise its IT services, while an additional £2.5 billion will fully fund the NHS productivity plan. £230m has been earmarked for IT and efficiency improvements for policing, £34m for IT to tackle fraud in the public sector, and £170m for the justice system.
The Chancellor’s announcement provides a very clear opportunity for businesses that have either a service or product that could help drive productivity or efficiency in the NHS or other areas of the public sector.
Through considered engagement, organisations with solutions will be well-placed to guide departments and public bodies about the best approach to realising the political ambitions laid out today.
Building relationships with officials and civil servants, as well as politicians, tasked with mapping out a course for spending these budgets will be crucial. It will also be important to establish relationships, and shared positions, with professional and industry associations that will have considerable sway over which approaches are pursued.
The Chancellor will hope that the measures announced today will prevent the country falling into more than the current shallow recession, and allow him to steal a march on the Labour Party.
The Government wants to escape the perception that it is merely tinkering at the edges, while the economy is still flat-lining, and families around the country continue to feel the harsh effects of two years of high inflation.
Will businesses have the confidence that the current administration is on the right path to creating a business environment that will help them to thrive?
Ultimately, we will only be able to judge the success or otherwise of this Budget, and the answer to that question, once a General Election takes place.
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