Will the government’s spending review affect your business?

Government department funding. Eight departments will see spending cuts. The Department for Business and Trade sees a reduction of 1.8%. The Department for Culture, Media and Sport has a 1.2% cut. However, there’s a significant increase of 7.4% for the Department for Science, Innovation and Technology. There’s also more funding for NHS England and defence. From next year to 2028/29 HMRC receives £500million funding to improve digital services. 

 

Business finance. The British Business Bank helps smaller businesses obtain funding and provides loans for start-ups. Its funding capacity is due to increase by £25.6billion. Its yearly investments could therefore reach £2.5billion, which is good news if you’re looking for financial support. 

 

Education and training. If you have school-age children or grandchildren, you could feel extra financial pressure. Although there’s extra funding for free school meals, the overall effect of the review is a frozen budget for schools. As announced in the Spring Statement, VAT now applies to independent school fees and extra funding is available to train construction workers. By 2028/29 the review promises £1.2billion funding per year to help 16 to 19 year-olds access training. 

 

Artificial intelligence (AI). At the beginning of the year the government announced an AI Opportunities Action Plan. It’s intended to encourage AI use by small businesses and increase growth in the AI sector. The government has allocated £2billion and plans to set up a special unit to work with the British Business Bank. It has also announced a digital skills action plan with £187million funding, including £18million for small businesses. 

 

Research and development. The West Midlands is one of the areas to benefit from £22billion of research and development funding by 2029/30. 

 

Priority sectors. The government has identified eight priority business sectors and says it will provide ‘significant funding’ and a plan for each. They are: 

 

Transport. A total of £15.6billion funding is promised for transport in England but outside London by 2031/32. For civil engineering companies and supporting sectors this could bring new opportunities. The cap on single bus fares in England at £3 will continue until March 2027. That’s good news for people using public transport for work. 

 

Communities. While the Chancellor highlighted projects in 350 communities, funding is likely to come from increased Council Tax. Any additional council funding will probably support social care and other existing local services. Despite this, new community projects could provide valuable opportunities for local businesses. An extra £39billion will go towards funding 1.5million new homes by 2030. For construction and associated businesses this could provide additional work too. 

 

While doing more for less across government departments is positive, we already know services are under pressure. With ongoing questions about productivity, you could find it harder to obtain advice, support and funding. Fees for services could also increase. As large employers, government departments will have little scope for salary increases. Small businesses could see reduced sales as customers prioritise their spending. While extra funding in targeted areas should increase business opportunities, it could take a long time to make a difference.