Contributors
On 6 March 2024, Womble Bond Dickinson (WBD) experts shared their thoughts following the Chancellor's Spring Budget announcement, at the North East Chamber of Commerce's event.
On transport, Kevin Bell, Partner at WBD, commented:
"In his Budget, the Chancellor acknowledged the "historic under investment" in the nations and regions in confirming that more powers will be devolved to local areas. The North East trailblazer devolution deal announced this afternoon is promised to provide a package of support for the region potentially worth over an extra £100 million to the previously announced £4.2 billion devolution deal. From a transport perspective, this includes £58 million of funding brought forward to cover the maintenance and renewal of the Tyne and Wear Metro, the expansion of the Pop card to local rail services and the creation of a new North East Rail Board to develop plans for new rail infrastructure and services in the North East. That is in addition to the Government funding contribution (albeit a "drop in the ocean" at £350,000)announced last night to develop a new business case for Leamside South (a section of the Leamside Line running from Washington to Ferryhill in County Durham).
But as the political party that openly admit they are "on the side of drivers", have the Conservatives missed a real opportunity in driving down the cost of public transport and encouraging active travel by freezing fuel duties for yet another 12 months and extending the temporary cut on fuel duty that was due to end later this month? Interesting to note that the DfT will receive a 32% budget reduction in the coming year too, placing further pressure on public transport services."
From a corporate finance viewpoint, Partner Robert Phillips added:
"From a North East perspective, there is not much new or of note to be particularly excited by.
Clearly, the significant announcement was the "North East Trailblazer Fund" – which promises revenue of "up to and exceeding £100m". This plan – which NEMCO falls under, has already been discussed and the areas that it is targeted at identified. It is hoped that this funding will be made available to and support the North East devolution that we will be looking forward to in May.
Any funding for our region is welcomed – but if we wanted to be cynical, a number of the areas identified (specifically the £58m of funding identified to cover maintenance and renewal of the Tyne and Wear Metro System) should already have been funded within the ability of local authority budgets to fund – real cuts here have been made historically – so we could argue that this is just gap filling.
Again, being critical, these sums lumped into a single "fund" are relatively small in the context of other announcements that were made when thinking about "levelling up" - especially in the context of the substantial funding announced for Canary Wharf and Surrey and other areas of the South East (whose economies are all predicted to grow at greater rates than the regions by EY's economic forecast published by the EY Item Club).
For items specifically identified in respect of business – expensing of leased assets sounds positive (but this is only identified as being available "when affordable"). Some of the catch up provisions relating to the threshold for VAT are not really enough to cater for the areas where more businesses have been dragged into the regime by the inflation rates triggered by the government's policies over recent months.
There is some hope that the amount announced towards advanced manufacturing will lead to some funding being made available to the North East region but the biggest specific investment that was announced was a £650m investment (by AstraZeneca) – but this is a private sector investment – and not one which the Government has necessarily committed funds to."
Alastair Mitton, Technology Partner at Womble Bond Dickinson, gave his thoughts:
"The strength of the UK's tech economy and the adoption of new technology for public services were highlighted in the budget, as expected. The Chancellor gave the example of upgrading NHS IT systems (to create the world's largest integrated healthcare system) with a £3.5bn investment that could yield 10 times that amount in savings. He also envisioned similar IT projects across the public sector, which would create a whole range of opportunities for technology providers to get involved.
So good news from that perspective. However, at the same time the tech sector also faces challenges from the EU's efforts to regulate 'big tech', as shown this week by the Commission's fine of Apple (for its app store rules) as well as the deadline for the biggest 'gatekeepers' to comply with the Digital Markets Act. As we’ve discussed before, there also seems to be a growing contrast between the UK and the EU's regulatory approaches to emerging areas such as AI and which could affect many multi-national companies in the sector - so definitely not all plain sailing for the tech sector despite the Chancellor's upbeat tone."
Dale Armstrong, Managing Associate, shared his views from a real estate perspective:
"The main announcement relating to the Housing sector in the budget was the abolishment of SDLT multiple dwellings relief (MDR). The availability of MDR is a consideration for large scale residential investors and this change may lead to some investors reconsidering their strategies in the private rented sector. There is potential for this to lead to a reduction in investment activity which, in turn, does nothing to help stimulate the delivery of much needed new homes.
Perhaps the most interesting element for the Housing sector, sadly, is what the budget didn't say. There was a total lack of announcements to help stimulate more housing delivery. There was some hope that the budget may contain market stimulus or additional investment or policies to assist the planning system and unlock the housing that is currently stuck within that system, but that did not materialise."
