More tax cuts for working people, more investment and a plan for better public services was the message from Chancellor Jeremy Hunt in what the Government has named the “Budget for long-term growth”.
The Conservatives say it sticks to the plan by delivering lower taxes, better public services and more investment, while increasing the size of the economy by 0.2 per cent in 2028-29 and meeting fiscal rules – “taking the long-term decisions needed to build a brighter future”.
Commenting from a railway perspective, Darren Caplan, Railway Industry Association Chief Executive, said: “There are some positives related to rail in the Spring Budget announced today by the Chancellor Jeremy Hunt. It is good to see endorsement of the timescale for East West Rail, and news of some additional East Coast Mainline services.
“However, the Railway Industry Association and our members will be disappointed that an opportunity has been missed to leverage rail to drive economic growth more widely. It is worth remembering that for every pound spent on rail, £2.50 is generated in the wider economy. Rail suppliers will be disappointed the Chancellor has failed to provide certainty or clarity on the outlook for network enhancements, and there a black hole on rail infrastructure remains following the scrapping of HS2 Phase 2. The Network North schemes will be welcomed by rail suppliers should they proceed but do not amount to the overall rail spending lost with many conditional on business case approval and the HS2 Euston proposals are far from certain.
“So, we look forward to seeing more detailed plans from the Government on rail infrastructure and rolling stock in due course, so that the railway industry can have the certainty it needs to get on with delivering a world-class service the UK and providing value for the money for both passengers and taxpayers.”
The Budget was met with disappointment from Andy Bagnall, Chief Executive for Rail Partners, specifically with the announcement of the 5p cut and freeze to fuel duty being maintained until March 2025.
He said: “While the 14th consecutive year of fuel duty being frozen will be welcome news for motorists and lorry drivers, rail freight businesses continue to see rising costs, and rail passengers have seen fares rise by 4.9 per cent.
“Britain has a legally binding target to meet net zero by 2050, and the budget today does nothing to encourage people and companies to make more sustainable transport choices and choose rail over road.
“In order to decarbonise our transport sector government must take a more holistic approach to make sure rail freight can be competitive on price with road haulage and that the costs of passenger transport modes reflect their environmental impact.”
Among the headlines from Budget, the Government has said:
- Chancellor capitalises on progress with ‘Budget for Long Term Growth’, sticking to the plan by putting over £900 a year back into the average worker’s pocket thanks to changes at Autumn Statement and a second Employee National Insurance tax cut from 10 per cent to 8 per cent in April for 27 million working people.
- 2 million self-employed will get a second tax cut through a further 2p reduction in the NICs main rate from 8 per cent to 6 per cent – saving the average self-employed worker £650 when combined with cuts at Autumn Statement.
- Personal tax cuts since Autumn are worth £20 billion, slashes the effective personal tax rate for an average earner to its lowest level since 1975, and will lead to equivalent of 200,000 more full time workers joining the labour market.
- High Income Child Benefit Charge to be assessed on a household-basis by April 2026, and immediate support for working families by increasing the threshold to £60,000 and halving the rate at which Child Benefit is repaid – representing a £1,260 boost on average for around half a million working families.
- The average car driver will save £50 this year as the 5p cut and freeze to fuel duty is maintained until March 2025, while pubs, breweries and distilleries will benefit from a further freeze to alcohol duty until February 2025 – which will also save consumers money on their favourite tipple.
- New tax reliefs and investments will help establish the UK as a world leader in high-growth industries such as the creative sector, advanced manufacturing and life sciences, while 28,000 SMEs will be taken out of VAT registration altogether – encouraging them to invest and grow.
Responding, Paul Tuohy CEO of charity Campaign for Better Transport, said: “By once again choosing to keep the 5p fuel duty cut and continue freezing fuel duty for another year, the Chancellor has committed to costing the Treasury a further £4.2 billion in lost revenue. Together this revenue would be enough to triple support for bus services across England and freeze rail fares for more than three years, positively impacting millions of public transport users and driving economic growth.
“Instead, the Government continues with retrograde measures that will do nothing to help those who have seen their bus services disappear, their rail fares rise and congestion blight their communities. It’s about time the Treasury reconsidered its priorities when it comes to transport.”
Noel Dolphin of the Campaign to Electrify Britain’s Railways, said: “We should be investing in a tried and tested solution to reduce carbon emissions, slash journey times for commuters and boost productivity with a rolling programme to electrify our railways.
“Instead, we have the fuel duty cut – extended in today’s Spring Budget – which is expected to cost £27 billion over five years.
“This is roughly the same amount it would cost to electrify 11,000 kilometres of Britain’s railway – 17 times the length from London to Edinburgh on the East Coast Mainline and the same amount Network Rail says it needs to electrify to meet Net Zero.
“It’s another opportunity missed to put our infrastructure on the right track.”
It was slightly more positive from the Construction Equipment Association (CEA) with potential positive news for construction equipment manufacturers and users.
After continued representations from the industry, the Chancellor undertook to bring forward changes to the full expensing rules to bring leased equipment into the scheme. Whilst in an ideal world “leasing” may also cover equipment bought for rental purposes, the published supporting information is unclear regarding the timing and detailed content of the necessary legislation.
CEA Director, Nick Ground, said: “It is too early to tell if this is going to be of help to construction equipment purchasers, but it will benefit some of our members who lease equipment for production purposes. The danger is that the promised legislation may remain as a promise as the general election looms.
“What can be welcomed is the fuel duty freeze after the unwelcome extra costs associated with the banning of rebated red diesel for construction purposes in 2022.
“The much-trailed reduction in employees’ national insurance will be a boost for working families’ household budgets and may reduce some of the pressure on employers for wage increases. Employer’s national insurance contributions remain untouched and are still a significant tax on employment.”
It has also been revealed that the Chancellor has announced a £15 million investment from the Government’s Levelling Up Fund in the National Railway Museum’s transformative masterplan.
This significant contribution will safeguard the museum’s plans for the future of its estate and collections care, and inspire the next generation with the past, present and future of the railways.
This announcement follows the investment of £18.6 million in 2019 under the Cultural Investment Fund, from the Department for Culture, Media and Sport.
Through the National Railway Museum’s masterplan, around £95 million is being invested in capital projects that will extend and improve both the York museum and its sister site Locomotion in Shildon, County Durham. Both museums are part of the Science Museum Group.
Director Judith McNicol said: “This is incredible news for the National Railway Museum. The £15 million package is a major milestone in our transformational journey to become the world’s railway museum – globally relevant and open for all. It will help us attract upwards of 1.4 million visitors to both museum sites and fulfil our role as the cultural gateway to York Central.”
The Budget also included a permanent extension to tax relief for theatres, orchestras, museums and galleries.
Sir Ian Blatchford, Chief Executive and Director of the Science Museum Group said: “This £15 million investment in our ambitious plans for the National Railway Museum represents a strong vote of confidence in the transformative work underway right across the Science Museum Group, while the continuation of vital tax relief included in the Budget will be hugely welcomed by all in our sector.”
