Chancellor Jeremy Hunt presents his first spring budget © Photo by Carl Court/Getty Images
Chancellor Jeremy Hunt presents his first spring budget © Photo by Carl Court/Getty Images

Five takeaways from the Spring Budget for procurement

15 March 2023

Business groups have criticised the UK budget for a lack of support for energy costs and labour shortages, which will leave many small businesses “feeling short-changed”.

Logistics UK said it was “dismayed” by the budget while the Federation of Small Businesses (FSB) pointed to a “distinct lack of new support”.

Martin McTague, national chair of the FSB, said: “The chancellor has set high expectations for supporting small firms during these challenging times, but today’s budget will leave many feeling short-changed. 

“The distinct lack of new support in core areas proves that small firms are overlooked and undervalued.  Budgets are about tough choices, and with today’s billions of pounds being allocated to big businesses and households, 5.5m small businesses and the 16m people who work for them will be wondering why the choice has been made to overlook them.”

Chancellor Jeremy Hunt said he was “proving the doubters wrong” as the UK economy faces “enormous challenges”. 

The UK will not enter a technical recession, according to the Office for Budget Responsibility, and it anticipates inflation will fall to 2.9% by the end of 2023, down from 10.1% in January.

Hunt announced the budget will focus on “four pillars” including: employment, enterprise, education and everywhere.

Hunt said: “In the autumn we took difficult decisions to deliver stability and sound money.

“Today, we deliver the next part of our plan: a budget for growth. Not just growth from emerging out of a downturn.

“But long term, sustainable, healthy growth that pays for our NHS and schools, finds good jobs for young people, provides a safety net for older people, all while making our country one of the most prosperous in the world.

“Today I deliver that by removing the obstacles that stop businesses investing’ tackling the labour shortages that stop them recruiting; breaking down the barriers that stop people working; and harnessing British ingenuity to make us a science and tech superpower.”

He concluded: “Declinists are wrong and the optimists are right.”

What the budget means for businesses and procurement:

1. Tax

The government is introducing a full capital expensing programme for the next three years – with the aim of making this permanent – which will allow companies to write off the full cost of qualifying plants and machinery investments in the year they invest.

Corporation tax will also rise to 25% from April 2023. 

Shevaun Haviland, director general of the British Chambers of Commerce, said: “The plans for full capital expensing are also a step in the right direction to offset the rise in corporation tax, but the jury is out on how it will impact businesses compared to the Super Deduction scheme.”

2. Energy costs

The government announced it will continue support on domestic energy costs, but made no mention of industrial energy support once the Energy Bill Relief Scheme comes to an end in March. 

McTague said: “We’ve got a budget that on energy helps households but not small firms. On business taxes, it spends £27bn extra on big businesses, arguing that small businesses are already catered for. This will lead to a feeling of being left behind instead of being considered equal partners in economic recovery – trickle down economics here simply does not work.”

Haviland added: “Almost half of businesses have told us they will struggle to pay their energy bills from April, and they cannot invest when they are fighting to survive. There is little in today’s announcement that will provide comfort to these firms.”

3. Investment zones

The Spring Budget announced the launch of 12 investment zones across the UK to drive growth in key future sectors and bring investment to the local area. Each zone will have access to interventions worth £80m over five years, including tax reliefs and grant funding. 

Simon Geale, executive vice president of procurement at Proxima, told Supply Management: “Investment zones, R&D and climate incentives all point towards futureproofing the workforce and schemes designed to remove the barriers to get into, or stay in work are very much about sparking growth in the here and now.

“And while broad and fairly moderate in places, this budget looked like it was all about removing barriers for businesses and the individuals who work for them whilst providing some moderate incentives for investment, particularly in high-tech and climate. 

“Even so, we should proceed with caution, and wait to see how realistically businesses will adapt to the needs of the new workforce, and that the schemes provided will be taken advantage of and produce the desired results.”

4. Logistics

The government announced fuel duty will be frozen at current levels for the next 12 months.

Paul Hollick, chair at the Association of Fleet Professionals, said “there was little content that showed government has been thinking about business road transport”.

However, he noted: “The one bright point for fleets was the freeze in fuel duty. An increase in 11p per litre would’ve been extremely unwelcome at a point in time when the economy is struggling and removing that possibility is very much welcome.”

David Wells, chief executive of Logistics UK welcomed the freeze to fuel duty, but said: “Logistics UK is dismayed by the lack of support to help businesses with energy costs and our sector’s transition to a low carbon economy, something which the government has urged industry to commit to.

“This is a missed opportunity. Our members will also be concerned about proposals for a reformed HGV road user levy and together we will be seeking urgent clarification as to the detail involved.”

5. Labour shortages

The government said it is looking to tackle labour shortages through a range of initiatives designed to support disabled into work, as well as helping those aged over 50 to retrain. 

It will offer “returnerships" to operate alongside skills boot camps and sector-based work academies “targeted at the over 50s who want to return to work”.

McTague continued: “Proposals to help people with health conditions are ill-designed and won’t help people get back to work, and we fear the work capability assessment changes won’t happen for years. The chancellor has failed to take any action to make it easier for small firms to recruit people locked out of the labour market.

“Those with health conditions and disability have been let down by a government that does nothing to work with small employers and is continuing with its failing Jobcentre-focused approach. Small measures on subsidising occupational health are welcome but not the big bang needed.

“Measures on the over 50s are token efforts at best, though we are pleased the government is committing to the skills bootcamp model.”

☛ Want to stay up to date with the news? Sign up to our daily bulletin. 

CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates