Autumn statement budget

Autumn Statement: digital rail signalling, broadband investments and R&D funding

Chancellor Philip Hammond has announced measures designed to boost broadband infrastructure and R&D as well as digitise the railways in his latest Autumn Statement.

While Britain is facing economic uncertainty in the wake of the Brexit vote, Hammond said his package of financial stimuli was designed to get the economy “match fit” for the “new chapter” ahead.

In addition to a raft of measures covering taxation, worker wages, welfare, fuel duty and housing, Hammond announced:

  • A new £23bn “National Productivity Investment Fund” to be spent on innovation and infrastructure over the next five years
  • Extra investment in R&D, rising to an £2bn per year by 2020/21
  • An additional £1.1bn to be spent on English local transport, including pinch points on strategic roads and digital signalling on railways
  • £390m for “future transport technology” which includes £100m for driverless car testing infrastructure, £150m for “at least” 550 new electric and hydrogen buses and £80m to install charging points for electric vehicles
  • Investment of more than £1bn in digital infrastructure and 100 per cent business rates relief on fibre upgrades to existing networks

Measures designed to boost Britain’s communication networks were anticipated with details emerging yesterday also showing that £700m will be provided to fund a new programme of 5G trials. 

But the budget laid bare the current state of the UK’s floundering economy with the Office for Budget Responsibility slashing growth forecasts for next year and predicting higher than previously expected borrowing.

Growth forecasts for next year were cut from the 2.2 per cent predicted in March to just 1.4 per cent as a result of the vote in June’s referendum, the Chancellor said.

Shadow Chancellor John McDonnell said the Autumn Statement placed on record the “abject failure of the last six years”.

The Chancellor said: “We have chosen to borrow to kick-start a transformation in infrastructure and innovation investment.

“But we must sustain this effort over the long term if we are to make a lasting difference to the UK’s productivity performance.”

He said he had told the National Infrastructure Commission to make plans on the assumption that the Government would invest between 1 - 1.2 per cent of GDP in economic infrastructure every year from 2020.

In order to help pay for the measures, Hammond set out a range of tax hikes, including a crackdown on “unfair” salary sacrifice schemes which are used to reduce levies on employee benefits.

But he said ultra-low emission cars, pensions saving, childcare and the cycle-to-work scheme will be excluded from the change.

£450m has been set aside for the digitisation of signalling technology on Britain’s railways. The technology is already used on high-speed TGV lines in France and can allow trains to operate closer together, enabling more services to run without building new lines.

Hammond joked that the funding would be welcomed by Jeremy Corbyn, after CCTV images were released in August appearing to show the Labour leader walking past empty unreserved train seats before he was filmed sitting on the floor complaining about “ram-packed” carriages.

The Chancellor told the Commons of the “£450m to trial digital signalling on our railways to achieve a step change in reliability and to squeeze more capacity out of our existing rail infrastructure.

Responses from the engineering and technology sector

Chris Pike, development director for infrastructure at design and consultancy firm Arcadis, said the funding for digital railway trials would “take our country out of the Victorian era”.

“It will totally revolutionise our railways, increasing capacity, improving the much-maligned experience of passengers and improving punctuality and safety,” he said.

“Recognising the benefit that rail digitalisation has had across Europe, it is our belief that the digital railway programme will keep the UK at the leading edge of the rail industry and will contribute substantially to increasing growth and productivity across the country.”

Paul Scarrott, director with Nimble Storage that develops flash storage technology, said: “For those companies that increasingly rely on digital technologies, it is important that they look into their own infrastructure to reduce the time currently wasted by employees on software delays.

“With the typical employee experiencing an average of four software-caused delays per work day, and each of these lasting about seven seconds, the cost of this time to the British economy amounts to £744,235,520 every year.

“By taking simple steps to reduce the app-delivery gap in their own infrastructure, businesses can make a concerted effort to improve productivity in their company and the wider economy.”

Robin Kent, director at internet infrastructure firm Adax said: “We applaud the chancellor for putting aside more than £1bn for faster UK broadband, to accelerate the country’s digital transformation and allow local authorities the chance to trial superfast 5G mobile networks.

“There is a lot of talk about 5G being the next big thing in the telco world. However, it is important to be cautious. We are still seeing issues with current 3G and 4G networks, so the move to 5G isn’t necessarily going to be as smooth as some might think. It is, therefore, vital that service providers don’t run in blind, but have the right tools in place for 5G to be successfully implemented.

“As and when 5G makes its arrival, operators will need to ensure they have an effective Stream Control Transmission Protocol (SCTP) solution in place for Diameter signaling. As implementations begin to roll out, the growth of Diameter will continue to accelerate so the need for a good transport layer should be a priority for operators. If operators aren’t prepared they could face not being able to carry the huge levels of traffic required by the host application to any and all of its possible destinations.

“The focus right now should be on ensuring that 4G works sufficiently before turning our attention to the much mooted 5G. Whilst 5G is theoretically 40 times faster than the hypothetical limit of 4G, for it to fulfil its claims it will take a great deal of pricy upgrading of the current infrastructure.”

Anna Bonne, head of transport at the Institution of Engineering and Technology, said: “We welcome the Chancellor’s announcement of major new investment for Britain’s transport networks and hope the detail of this investment will help deliver a much-needed integrated air, road and rail transport infrastructure for all areas of Britain.

“We would also urge the Government to consider a consultation into the ways we are likely to use our transport infrastructure in the future, given the anticipated expansion of both electric and autonomous vehicles. It’s important that any new schemes will be able to accommodate the way in which transport is likely to change over the next decade and beyond.

“The announcement earlier this week of £1bn investment in digital infrastructure to help make the UK a world-leader in 5G will also play an important and welcome role in enabling autonomous and connected vehicles.”

Lucy-Rose Walker, CEO of business consultation firm Entrepreneurial Spark said: “Investment into R&D is crucial for British firms to compete in a global economy. The commitment of £2bn per year in tax breaks between now and 2020 for research and development will certainly help, however we’d like to see more done to help start-ups and scale ups access finance to help them grow.”

John Smith, principal solution architect are cyber security firm Veracode said: “We are delighted that the UK Government has affirmed that it will continue to invest in autonomous vehicles. However, cybersecurity factors must be brought to the forefront of policy agendas from the outset. Government bodies and manufacturers need to prioritise security across systems that impact safety – such as software and applications downloaded to the vehicles.

“Today, vulnerable software is one of the most significant challenges faced by the automotive industry. Findings from a recent IDC report indicated that there could be a lag of up to three years before car security systems are protected from hackers. With over 200 million lines of code in today’s connected car, not to mention smartphone apps linked to the car, we must ensure they are developed with security at the heart of the strategy, rather than as an afterthought.

Dr Colin Brown, director of engineering at the Institution of Mechanical Engineers, said: “Today’s announcement of additional spending for transport, technology, energy and infrastructure, leaves one crucial part of the puzzle out: skills. All this funding, without the skilled people to deliver these projects, is like funding an empty shed. Government wants home-grown talent to deliver R&D, driverless cars and new energy infrastructure, but we just don’t have the sufficient engineers to deliver this. We have a shortage of key skills today and no clear plan on how to develop a skills pipeline for tomorrow. Government must face facts and outline a clear strategy to ensure the UK has the skills it needs for the economy to thrive.

“Increasing the uptake of Ultra Low Emission Vehicles play a huge role in the UK’s future but we must ensure it’s part of an integrated transport strategy in the UK so today’s announcement for continued support to these initiative are welcomed. Major infrastructure projects are being developed in isolation which still focus on how journeys are made, and not on the ‘why’ or ‘when’.

“We suggest that Government departments collaboratively develop a strategy to incentivise and support an integrated approach that would better serve passengers, providing a resilient infrastructure which is cost effective, efficient and reliable encouraging modal shift towards modes that better protect the environment.”

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