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Home / News and Insights / Press / Our experts respond to the Spring Budget 2023

On the 15 March 2023, Chancellor Jeremy Hunt outlined tax, welfare and public service spending decisions in his Spring Statement, explaining how he plans to boost the UK’s economic growth. He claims that the country is not forecast to enter technical recession this year and will in fact see inflation halved and debt reduced.

Taking a view across the tech, transport and infrastructure and energy sectors, our expert lawyers have responded to the statement, covering what the measures mean for their various practice areas.

Tech and innovation

With the Chancellor stating he wishes to make the UK a better place for AI investment by trialling an ‘AI sandbox’ and attempting to drive growth in this area by announcing an annual £1million prize for AI research, solicitor Ludo Lugnani, from our specialist tech team, comments on these proposals:

‘Following yesterday’s news of Open AI’s launch of its upgraded GPT-4 chatbot, the Budget’s announcement as to the creation of an AI sandbox offers a promising outlook for the UK to speed up the arrival of AI products to market. As part of this, particular emphasis should be placed on providing effective guidance as to the implications of copyright law on generative AI applications following the recent claim by Getty Images against Stability AI over breach of copyright.’

Energy – Nuclear

The Chancellor confirmed the launch of Great British Nuclear, announcing that nuclear will be classed as environmentally sustainable. Small Modular Reactors (SMRs) are going ahead and carbon capture is set to get a big investment. Legal Director Mustafa Latif-Aramesh,  comments:

‘The establishment of Great British Nuclear is to be welcomed; industry has reached a standstill whilst Government has been considering its precise functions. It will be important to provide developers with much needed certainty about what their role is within the Great British Nuclear organisation and process. On that front, it is disappointing that the Future Nuclear Enabling Fund bid winners have still not been announced, despite more than three months since the government’s own deadline. The measures relating to site selection for new nuclear are due to conclude by the end of this year, but Government should make clear that it does not intend to distract new nuclear projects whilst it decides on a series of appropriate sites. It can clearly do this by ensuring that its own site-list is non-exhaustive, and making clear that nuclear will be supported in any location which can be proven to be suitable. Government would also be well-served to provide officials with resources to expedite a new National Policy Statement for New Nuclear – 2025 as the target date is too slow, and avoids providing nuclear projects with the confidence they need to proceed.’

Transport and Infrastructure

With the Chancellor announcing that fuel duty will be frozen, partner Duncan O’Connor, had the following comments:

‘The freezing of fuel duty tends to get cheers, particularly when petrol prices are high.  But it needs to be set against the declining revenue generated by motoring taxes and the Government’s plans to reach net zero by 2050. Last year the Transport Committee called for an honest conversation and for urgent work to look at road user charging. The £35bn black hole they identified in the public finances has partly been filled by the announcement in last year’s Autumn Statement that owners of electric vehicles will pay Vehicle Excise Duty. But fuel duty raises much more than VED and this revenue will continue to decline as a result of the ban on new petrol and diesel vehicles from 2030. The freeze on fuel duty may get cheers today, but it’s still not clear how it answers the longer term problem.’

Employment

There were a number of items announced in this area, including 30 hours of free weekly childcare for working parents of children below the age of three, no cap on the amount workers can accumulate in pensions savings over their lifetime, an increase to the tax-free yearly allowance for pension pots (which now extends to £60,000) and the abolition of the Work Capability Assessment, among others. Partner Brian Gegg commented:

‘Today’s Budget contains some interesting benefits for employees which will help serve the dual purpose of encouraging workers to stay in or return to the workplace and enabling employers to recruit and retain talented staff. The changes to private pension rules, particularly if lifetime allowances are to be completely abolished, will inevitably remove a real concern for many highly qualified employees of a certain age who are currently left with little alternative than to retire or stop building pension savings and not take new roles where auto enrolment laws can currently damage the tax position on their pensions. Keeping such experienced people in position to improve businesses and train others can only assist progress and helps employers in avoiding Age Discrimination claims that were otherwise starting to bubble under the surface .Equally the increase in the annual allowance to £60,000 will assist staff of all ages and allow employers to use increased pension contributions as an employment benefit. The announcements on free weekly childcare also come at a time when most employers are wrestling with the challenge of balancing a demand for part time and flexible / hybrid working against the impact of strained employee finances. Encouraging people to be in their workplaces more often when benefitting from these allowances can only be of benefit to businesses.’

In addition to this, a large increase in the maximum award for unfair dismissal claims has also been announced which will have significant employment law ramifications. Employment law partner Nicholas Le Riche commented:

‘The increase of almost £12,000 in the maximum award for unfair dismissal will incentivise employee’s to bring claims where they feel that their employment has been terminated without good cause.  This is particularly relevant given the increase in employees losing their jobs as a result of the UK’s faltering economy.  Given the increased exposure, employers may become more wary of letting employees go, or look to settle claims at early stage.  There has been a similarly large increase in the rate of a week’s pay, up by more than 12% to £643, which is used by employers to calculate statutory redundancy awards.  This again may make employers reconsider their workforce planning and look at other options if they have to reduce costs.’

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