Earlier this month, the Chancellor unveiled her Spending Review setting out how government departments will allocate money over the coming years. While much of the focus was on large-scale public services, such as the NHS and schools, there are some important takeaways for businesses both in terms of opportunity and outlook.
Zero-based Review
A theme of the review was scrutiny. The Chancellor described the exercise as a “zero-based” review – meaning department budgets were built from scratch, rather than from making changes to what was already in place. The aim, to focus spending only where it delivers value for money.
This may strike a chord with business owners. As you plan for the coming months, there’s something to be said for taking a zero-based approach yourself and questioning whether each cost is still serving the business.
This approach may help identify areas where reallocating funds could help the business grow or improve efficiencies.
Everyone is Under Pressure with Costs
Public sector pay rises in education and healthcare are being part-funded through expectations of increased “productivity” in those sectors.
This provides a reminder that cost pressures are widespread and efficiency will be a watchword in public contracts and procurement. If you supply to public sector organisations, you may need to be prepared for closer scrutiny of your prices and performance.
Increases in Capital Investment
Elsewhere, the review confirms increased capital investment in areas like transport infrastructure and social housing. Over time, this may bring new opportunities for construction and related industries.
Similarly, investment in AI, tech and scientific infrastructure (including a new supercomputer in Edinburgh) could create demand for highly specialised services, but again the benefits are likely to take time to filter through.
Speeding Up Infrastructure Projects
The Chancellor also flagged changes to the way the Treasury evaluates infrastructure projects, promising a more modern approach. This might affect the type and speed that projects get greenlit, – something worth watching if you’re bidding for public contracts or working in the construction industry.
Final Thoughts
While headlines may focus on big numbers and high-level priorities, the underlying message of this Spending Review is relevant for businesses of all sizes: pressure on budgets, rising expectations of value, and a focus on getting more from what’s already being spent.
If you’d like help reviewing your own budgets or planning for the year ahead, we are here to support you.
For more information contact Kerry Tyas who is based in our Taunton office.
