What lies ahead for infrastructure after the Autumn Budget?

The Savills Blog

What lies ahead for infrastructure after the Autumn Budget?

The Autumn Budget has set the stage for a significant transformation of the UK's infrastructure and utilities sector with a commitment to inject over £100 billion into infrastructure and innovation over the next five years. 

Although the budget itself didn’t highlight any new news for infrastructure or energy, it did repeat previous future plans. With a focus on sustainability, innovation, and equitable growth, the government aims to revitalise the nation’s infrastructure to tackle pressing challenges such as climate change, energy security, and the modernisation of public services in the 21st century.

1. Green energy

One of the standout features of the budget is its commitment to green energy initiatives, for example supporting the first round of electrolytic hydrogen production contracts. By allocating significant funds towards renewable energy projects, the government seeks to accelerate the transition away from fossil fuels and this is seen in the shift for a net zero electricity grid from 2035 to 2030. For utilities companies, this shift presents both challenges and opportunities: they must adapt to new regulatory environments while investing in the infrastructure needed to support renewable energy sources such as wind, solar, and hydroelectric power. This proactive approach not only addresses environmental concerns but also positions the UK as a leader in the green energy sector.

2. Infrastructure

Additionally, the budget proposes enhancements to the country’s aging infrastructure, which will be highlighted in a 10-year infrastructure strategy, to be published alongside Phase 2 of the Spending Review in spring 2025. With significant investments in public transportation, water systems, and digital connectivity, the government seeks to build a more resilient and efficient infrastructure network. This move is crucial, as outdated systems often result in inefficiencies and increased costs for utility providers. The implementation of the National Infrastructure and Service Transformation Authority (NISTA) hopes to drive more effective delivery of infrastructure across the country. By updating these services, the government aims to enhance operational efficiency, reduce maintenance costs, and improve service delivery to consumers.

3. Costs 

The Autumn Budget also places a strong emphasis on energy affordability, recognising the pressures rising energy prices are placing on households and businesses alike. Taking the first step towards a Warm Homes Plan was announced, committing an initial £3.4 billion towards heat decarbonisation and household energy efficiency over the next three years. Measures aimed at capping energy costs and supporting vulnerable communities are crucial to mitigate these impacts. For utilities, this could mean adjustments in pricing strategies and a renewed focus on customer service, as companies strive to balance profitability with social responsibility.

In conclusion…

The Autumn Budget represents a transformative moment for the UK’s utilities and infrastructure sector. By prioritising sustainability, modernisation, affordability, and public accountability, the government is paving the way for a more resilient and equitable future. The successful implementation of these initiatives will be crucial in navigating the complex challenges ahead. Further government ambitions for the sector will be published in the infrastructure 10-year strategy next spring, and meanwhile it has recently confirmed rail nationalisation will commence next year, although we await further detail.

Further information

Contact Hannah Solley or George Marffy

 

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