The 2024 Autumn Budget outlines an ambitious plan for public procurement, introducing new funding opportunities across Central Government, Local Government, and the NHS.
This investment opens up enhanced opportunities for suppliers to engage with the public sector, especially in areas such as digitisation, efficiency, clean energy, research and development, defence, infrastructure, health and social care, education, and justice.
Additionally, the UK government has pledged to support business growth by developing plans for the eight key sectors driving growth: advanced manufacturing, creative industries, clean energy industries, defence, digital and technologies, financial services, life sciences, and professional and business services.
Technology & Security
One area that has seen less investment is cybersecurity, which is surprising given the rise in cyber-attacks in recent years. This seems like a significant oversight in our increasingly digital society. However, the commitment to technology investment in both the public and private sectors is a positive development. The demand for IT and digital procurement professionals is expected to rise, making this a crucial area for recruitment.
Impact on Wages
The increase in both the National Minimum Wage and Employers’ National Insurance contributions will put significant pressure on procurement departments. There is already a notable gap between the skills in demand and wage inflation, a situation that has worsened since the pandemic. Employers are finding it increasingly challenging to hire procurement professionals who possess both the technical skills and the soft skills necessary to achieve successful outcomes without offering salaries that are 15-20% higher than they were 1-2 years ago. There needs to be a renewed focus on training and upskilling of procurement professionals to help alleviate this burden and align salary expectations with the required skills.
If headcount budgets remain tight, we may see an increase in outside IR35 engagements, as the cost differences between inside and outside engagements narrow due to the higher employers’ NI costs. Businesses that have been hesitant to hire contractors outside of IR35 may become more open to this option in the coming months and seek advice on how to onboard contractors in this manner.
Industrial Sector
The November Purchasing Manager’s Index (PMI) will reflect the budget’s impact on business conditions and confidence. Currently at 49.9, this is the first time the sector has fallen below 50.0 since April 2024.
The government has however, committed £2 billion to the automotive sector, which could provide a much-needed boost for electric vehicle manufacturers experiencing a slump in sales. An additional £500 million has been allocated to the Affordable Homes Programme, which should help stimulate development activity in the short term.
Clean Energy and Sustainability
The 2024 Autumn Budget promises £3.9 billion (US$5 billion) in funding for 2025 and 2026 for CCUS Track-1 projects aimed at decarbonising industry. This includes contracts with 11 green hydrogen producers. Central to this strategy is the creation of Great British Energy, supported by a £125 million investment in FY 2025/26 to increase the country’s clean energy supply.
Fuel Duty
One of the most notable highlights is the freeze on fuel duty and the extension of the temporary 5p cut for one year. This is positive news for the logistics sector, which operates on very narrow margins with fuel costs making up a significant portion of operating expenses. As logistics is the backbone of supply chains, this announcement should provide real confidence to the sector.
Regardless of your opinion on the budget, the businesses that will thrive in the coming year will be those that focus on their technology infrastructure, embrace AI and other advanced technologies, and ensure their workforce is well-trained and equipped with the necessary tools and processes to be effective.
