Autumn Statement 2024: What Key Infrastructure and Development Sectors Can Expect
Prepared by Mark Cawdrey and Iwan Lloyd-Smith MCIPR
As the Chancellor prepares to deliver this year's Autumn Statement, we have been watching closely to understand what the policies may be. From suggestions that strategic rail freight interchanges and healthcare estates may be significantly affected, we have analysed how this could impact the industry, alongside providing some insight into what the policy could do for UK Infrastructure and Development.
The upcoming Autumn Statement, to be delivered by Rachel Reeves on 30 October, is expected to bring opportunities and challenges for sectors such as education, energy, healthcare estates, infrastructure, and industrial distribution—each of which has its own pressing priorities. With Labour inheriting a possible £40 billion deficit, the Autumn Statement is set to be a balancing act of fiscal pragmatism and growth aspiration, particularly in light of Labour's campaign commitment to sustainable investment and societal wellbeing.
Energy and Grid Infrastructure: A green boost amid fiscal tightening
In the energy sector, there is a glimmer of optimism. The government has committed £960 million to green industry initiatives, such as wind and solar energy, a move that highlights Labour’s efforts to bolster renewable energy and address the pressing need to decarbonise the UK’s energy landscape (Gov. UK). This could prove transformative for renewable energy projects and strategic industrial sites requiring robust power infrastructure.
National Grid Chief Executive John Pettigrew's endorsement that “Networks are critical to connect cleaner, more affordable, home-grown energy to Britain's homes and businesses” suggests significant opportunities for energy infrastructure development. Communities hosting new power infrastructure may benefit from reduced electricity bills and dedicated funding for local projects, potentially easing the path for new development approvals.
However, the statement could also mean tighter scrutiny of existing fossil fuel projects, with a renewed emphasis on transitioning to sustainable solutions. Energy firms might need to adapt their strategies to align with a growing focus on decarbonisation and energy resilience, potentially influencing ongoing and planned projects.
Education Sector: Navigating rising costs
Education, particularly independent institutions, could see significant tax implications. Labour’s decision to impose VAT on private school fees, effective from 1st January 2025, is anticipated to generate notable revenue, but it could also lead to rising costs for the education sector. This VAT addition has been labelled as “necessary to achieve fairness” by Labour ministers, but it raises questions about the financial burden on parents and schools' ability to fund critical infrastructure and expansion efforts (Forvis Mazars). The public education sector could face spill-over impacts as resources may need to be stretched to absorb an influx of students, should some parents reconsider their choice of private schooling.
The education and healthcare sectors are also likely to benefit from the anticipated expansion of capital allowances, with full expensing potentially becoming permanent. This could accelerate essential modernisation programs for ageing facilities. However, as PwC UK notes, the real impact will depend on how these measures interact with existing public sector capital funding mechanisms.
Healthcare Estates: Preparing for new tax measures
Healthcare estates are likely to see a focus on significant infrastructure investment, particularly aimed at replacing ageing facilities and upgrading existing hospitals. The need for modernisation is critical to ensure that healthcare facilities are fit for purpose, meeting current standards and effectively supporting future demand. The government is expected to prioritise funding for refurbishing outdated buildings and constructing new hospitals, aligning with Labour’s commitment to improving public services and addressing longstanding infrastructure deficiencies in the healthcare sector.
Labour’s approach also involves using modern methods of construction (MMC) to reduce building time and enhance quality, efficiency, and sustainability.
Infrastructure and Rail: Balancing fiscal prudence with growth
In infrastructure, including rail and urban regeneration, Labour’s approach will likely be cautious but aspirational. There have been discussions around business rates reform, though many experts expect any changes to be more of a "short-term fudge" rather than a comprehensive overhaul (KPMG). The broader infrastructure sector might see targeted relief or incentives, particularly if Labour remains committed to stimulating growth through strategic investment in public services and urban transformation. However, increased scrutiny on planning applications and environmental impact assessments could affect timelines for infrastructure projects, making effective project management crucial.
The rail sector, particularly Strategic Rail Freight Interchanges (SRFIs), should watch for announcements about investment zones and infrastructure funding. With their doubled flexible funding, the confirmed investment zones for Greater Manchester, West Midlands, East Midlands, and Wales could create new opportunities for integrated transport and logistics hubs.
Recent rumours suggest the government is looking at options to extend HS2 from Birmingham to Crewe. It has been confirmed that the land sales along this section of the route have been frozen while this investigation is carried out.
Industrial, Distribution, and Strategic Residential: Adapting to potential tax increases
Businesses in the industrial and distribution sectors could see implications related to Corporate and Capital Gains Taxes (CGT). Given Labour’s commitment to raising funds, a possible alignment of CGT rates with income tax could be on the cards. This means companies and investors may look to crystallise gains in the short term to avoid higher rates—an issue particularly relevant to those dealing with land acquisitions and strategic residential developments. As one commentator from MHA, a leading UK-based accountancy and business advisory firm, noted, “Aligning CGT with income tax rates could lead to a surge in disposals before the new rules are implemented” (MHA).
The industrial and distribution sector stands to gain from several anticipated measures. Make UK's insights suggest the nationwide expansion of the Made Smarter scheme in 2025 could drive digital transformation in manufacturing and logistics. The confirmation of investment zones with extended incentives may create prime opportunities for strategic industrial development.
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Urban Regeneration and Telecommunications: A forward-looking green push
Urban regeneration projects could benefit from the £960 million green boost mentioned earlier, which includes plans for power network reforms and investments in renewable energy sources (Gov.uk). This aligns well with ongoing urban regeneration projects, particularly those incorporating sustainability as a core feature. Telecommunications firms may need to work closely with energy and urban planning sectors to ensure infrastructure development keeps pace with technological demands, especially as smart city initiatives gather pace.
With grid modernisation high on the agenda, telecommunications infrastructure is expected to receive attention as part of broader digital connectivity goals. Industry observers anticipate announcements about accelerated planning processes for digital infrastructure, which is crucial for supporting both urban regeneration and strategic residential developments.
Strategic Rail Freight Interchanges (SRFIs): A strategic advantage?
SRFIs stand at an intersection between industrial distribution and strategic infrastructure, potentially benefiting from any fiscal incentives to stimulate transport efficiency and reduce emissions. While direct SRFI-specific measures are unlikely, an overarching commitment to greener transportation methods could see these hubs becoming more integral to the supply chain landscape—especially if incentives for electrification and decarbonisation of freight transport are on the agenda. Additionally, Freeports could provide new opportunities for SRFIs, as they share similar goals of enhancing logistics efficiency and stimulating regional growth through special tax and customs arrangements.
Skills and Workforce Development
A cross-cutting theme affecting all sectors is workforce development. The expected £50 million investment in engineering apprenticeships could help address critical skills gaps across infrastructure, construction, and technical sectors. As one industry expert notes, “The success of these capital investments will depend entirely on having the skilled workforce to deliver them.”
Council Housing and Urban Development
In the latest news, Labour’s Angela Rayner has reportedly been allocated nearly £1 billion to fund a council housing drive, which is part of Labour's broader commitment to addressing housing shortages and affordability. This significant funding is expected to empower local councils to increase council housing stock, directly contributing to urban regeneration and alleviating the housing crisis in many regions.
Conclusion: Challenges and opportunities Ahead
The Autumn Statement is expected to be a nuanced blend of fiscal tightening and selective stimulation, with key implications for sectors such as energy, healthcare, and infrastructure.
The emphasis on green investment is a positive sign, particularly for urban regeneration and energy sectors. At the same time, education and healthcare will need to brace for potential challenges related to taxation changes. Businesses must remain agile, particularly those in industrial and strategic residential developments, as shifts in CGT and NI could significantly influence project viability and investor sentiment.
The real question is whether Labour can push forward its growth narrative while navigating the realities of fiscal constraint and political pressure. For now, each sector should prepare for both challenges and opportunities, maintaining readiness to adapt as further details are unveiled.
This Autumn Statement could mark a significant moment for stakeholders in multiple sectors. The key will be how effectively these measures combine to support sustainable development and growth across these vital sectors.
Quoted sources Sources
1. Gov.uk - Green Industry Initiatives (https://www.gov.uk/government/news/huge-boost-for-uk-green-industries-with-960-million-government-investment-and-major-reform-of-power-network)
2. Forvis Mazars - Autumn Budget Predictions (https://www.forvismazars.com)
3. KPMG - Autumn Budget 2024 Summary and Predictions (https://home.kpmg/uk/en/home/insights/2024/10/autumn-budget-2024-predictions.html)
4. Money to the Masses - Autumn Budget Predictions](https://moneytothemasses.com)