ICE Briefing: Budget 2016

The Institution of Civil Engineers have provided an excellent summary of yesterday’s budget:

“Dear all

Today the Government published their 2016 Budget.

Please find below a summary of the key economic headlines and infrastructure related announcements. Please do pass on to colleagues as necessary. You can also find a copy of the full speech, wider summary and accompanying documents.

The Chancellor’s message was that his Budget would offer “long-term solutions to long-term problems”, with announcements which are ” pro-infrastructure and pro-devolution” and to make Britain “fit for the future”. Most importantly, the Chancellor confirmed his support of the National Infrastructure Commission’s “impressive” recent reports on Crossrail 2, smart power and greater transport connectivity in the north. In particular, he confirmed that Crossrail 2 will be commissioned, he gave the green light to HS3 and confirmed he will adopt all the recommendations on smart energy.  This includes ICE’s recommendations for reducing regulatory barriers to greater deployment of electricity storage. The Chancellor also set out areas for the Commission to carry out further work and to provide targeted recommendations to the Government, including helping the UK become a leader in 5G infrastructure and to maximise the potential of the Cambridge – Milton Keynes – Oxford corridor, as a single, knowledge intensive cluster. You can read the relevant correspondence here.

 We have also issued the following press statement by Nick Baveystock:

“The confirmed financial backing for vital transport projects in the North is excellent news.  The next step should be to underpin this commitment with an integrated plan embracing a mix of ambitious, transformational projects alongside smaller scale investments. If the plan can be developed swiftly, it will maintain confidence in the vision and enable the benefits to be felt sooner. Similarly, the funds allocated to develop the case for Crossrail 2 are welcome, but this should move forward at a good pace so the hybrid Bill can be submitted in Parliament.”

“While the headlines are focussed on important large projects, the upkeep of our existing infrastructure – from flood defences to local roads – should not be forgotten. We await details on any local authority cuts and the impact on maintenance budgets, and will continue to encourage a shift from reactive patch-up work towards a ‘whole life’ approach to infrastructure investment.”

If you need any further information or have any questions, feel free to get in touch.


Economic headlines

  • OBR pronounced that a vote to leave the EU could usher in an extended period of uncertainty, with negative implications for economic activity and greater volatility in financial markets.
  • OBR revised down the UK’s growth forecasts but Chancellors says UK is still set to grow faster this year than any other major advanced economy in the world.
  • UK on course to achieve a budget surplus.
  • Target to lower debt as share of GDP missed.
  • Government spending set to fall to 36.9% of GDP by 2020, a further cut of an extra £3.5bn a year up to 2019/2020.
  • UK productivity growth forecast revised down.
  • Inflation forecast for 0.7% this year and 1.6% next year.
  • Unemployment rate falling fastest in North East and youth unemployment falling fastest in West Midlands.

Relevant infrastructure announcements


  • Confirmed that Crossrail 2 will be commissioned – £80 million funding.
  • Green light for HS3 – £60 million announced to develop plans to cut journey times to around 30 minutes between Leeds and Manchester, as well as improving transport connections between other cities in the north.
  • New funding for a four lane M62.
  • New tunnel road from Manchester to Sheffield.
  • Upgrades to A66 and A69.


  • A £700m boost in funding for flood defences by increasing the standard rate of insurance premium tax by 0.5% (all extra funds raised committed  to flood defences).
  • Go ahead for flood defense schemes for York, Leeds, Calder Valley, Carlisle and across Cumbria.
  • Review under way with Environment Secretary (Liz Truss) and the Chancellor of the Duchy of Lancaster (Oliver Letwin)  to determine how the money is best spent.

Energy and climate change

  • Changes to climate change levy.
  • New £730 million auctions for renewable technologies and small modular reactors.
  • Abolishing petroleum revenue tax and halving the supplementary charge on oil and gas producers (from 20% to 10%).
  • Adoption of NIC’s recommendations for smart power.
  • Government work with Ofgem to remove regulatory and policy barriers to flexible energy technologies, including storage.


  • New Thames Estuary Growth Commission led by Lord Heseltine.
  • Negotiations beginning for a new city deal with Edinburgh.
  • Fiscal framework agreed with the Scottish Government.
  • Devolved administration budgets will be adjusted in line with the Barnett formula.
  • Committed to devolving new powers to Wales, including additional funding for Cardiff city deal, new city deal for Swansea and better connection for north wales to the Northern Powerhouse.
  • Halving the price of the tolls on the Severn Crossing from 2018.
  • Working towards devolution of corporation tax.
  • New powers on criminal justice system to greater Manchester.
  • New devolution deals across English regions including new elected majors in English counties and southern cities such as a new East Anglia Combined Authority with £1bn of new investment, and a new West of England Mayoral Authority, and Greater Lincolnshire, and second devolution deal to Liverpool.
  • GLA to retain all business rates from April 2017.


  • New national funding formula for schools in England.
  • Focus on performance of schools in the north.
  • Look at teaching maths to 18 for all pupils.
  • Education Secretary (Nicky Morgan) will publish a White Paper on further improvements in education tomorrow.

Gloria Liu
Public Affairs Executive
Institution of Civil Engineers
+44 (0) 207 665 2152
m +44 (0)7827 953 860

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