News Item: The Spending Review and its Impact on the UK Hire Sector
On Wednesday 11th June, Chancellor of the Exchequer Rachel Reeves gave details of the long anticipated Spending Review. These reviews happen periodically usually covering a 3-5 year span. All cabinet members have been engaged in detailed, complex negotiations with Treasury ministers about their departmental spending envelope for the period to 2028/29.
This matters, as it covers not only the revenue each department has to spend (up to 2028/29), but also the allocation of capital to 2029/30. The Treasury has redefined the rules around capital expenditure thereby greatly increasing the available amount. Given several of the Government’s key missions relate to the built environment, homes, transport and defence, the capital element will be critical in funding delivery.
For the hire sector, the announcement has to be seen alongside other measures. If we look at homes, transport and general infrastructure, the forthcoming changes to the planning system to speed up decision making (and for major national projects, to remove the local decision making element altogether) may increase the pace of both approval and eventual delivery.
Mayoral Authorities will have a new duty to prepare area-wide spatial development plans working with constituent councils (who produce local plans). These documents must tie together and prioritise areas of growth. This is also for a strategic approach to flood protection, energy networks, nature and community infrastructure (parks etc). Again, for much of this work, the hire sector has a vital enabling role.
During this period of global insecurity, defence is taking up a bigger slice of national spend, particularly for Research and Development but also capital. The NHS is also the recipient of a major uplift which may include modernisation of the NHS estate (hospitals, care sites and other medical buildings). Transport, on paper less of a winner, has had a significant boost to capital (£15.6 billion on major transport schemes announced last week).
In summary, the public finances remain in a challenging situation and economic growth is sluggish. The capital position is better placed given the Treasury’s rule changes and this will push forward the delivery of new homes and other projects.
Spending reviews are usually revisited given how circumstances and pressures inevitably change, so we expect another review around 2027, otherwise there will be a spending cliff edge as the current review comes to its expiry. The next major event in the Treasury calendar will be the Autumn Budget (date to be announced). This may bring tax increases and other painful measures if growth remains in the doldrums.
The Government Spending Review Highlights
If you have any questions about the UK Spending Review or other government matters, contact Mark Bradshaw, HAE EHA Director of Public Affairs on 0121 380 4621.