This was never going to be a budget with big capital investment pledges

Rishi Sunak’s third budget and second spending review involved a careful political judgment forged during a period of unusually high uncertainty.

The chancellor opened his speech with a forecast of an extended period of inflation which he book-ended with an aspiration to cut taxes by the end of the Parliament. Having announced historically large increases in corporation tax, national insurance, and income tax allowances in previous statements, now was the time to share some of the largesse.

There were a lot of spending announcements and, as is now traditional, the challenge for observers is to work out what is new and what is recycled money.

The one that stood out for me both in terms of potential promise and the extent of recycled promises was the 42% increase in skills spending. As our industry is highly dependent on skills development, it is a very welcome confirmation of the direction of travel for skills.

There was also a new set of fiscal rules. Perhaps we shouldn’t rely on these too much as, according to the IFS, 11 sets have been announced and superseded in the past seven years. Nevertheless, they include a commitment “only to borrow to invest”. That will be music to the ears of a construction sector that is increasingly reliant on the public pound.

From a capital investment perspective, this was never going to be a budget to remember. Having responded to industry calls for long-term investment programmes in last year’s spending review, there were few opportunities for big announcements. Multi-year spending for flood prevention, hospitals, prisons and transport was confirmed last year.

It is becoming increasingly clear that smaller projects, the ones that make a difference in years rather than decades, are the new political currency

The major outstanding confirmation was for schools – and the news was mixed. The current scale of programme will be maintained, but in practice will grow by only 0.5% per year in real terms between now and 2024/25. Little wonder the chancellor kept quiet on that.

By contrast, the newly rebadged DLUCH, or Department for Levelling Up, Housing and Communities, has done much better, being allocated funding that will increase by 5% in real terms per year over the next three years. Clearly the levelling-up and housing agendas have financial backing as well as the leadership of a Cabinet heavy hitter.

Further good news came with the announcement that the UK Infrastructure Bank had cut its first deal. UKIB finance could make a real difference, particularly for local authorities.

Listeners hoping for an update on the Integrated Rail Plan were left disappointed. There was more detail in the chancellor’s speech on reforms to alcohol duty than on the long-term plans for High Speed 2. This was a determinedly “local” budget, and with the first projects from the Levelling-Up Fund and the Intra-City Transport Fund allocations being announced and a focus on youth clubs, football pitches and pocket parks, it is becoming increasingly clear that smaller projects – the ones that make a difference in years rather than decades – are the new political currency.

That is great news for embattled regional contractors who have recently seen budgets consolidated into larger and larger nationally managed transformation programmes. Tactical, regionally controlled spend will increasingly become the name of the game.

On the surface this was a clever budget, building on what in the long term will be seen as a very effective economic response to the covid crisis. Difficult tax rises have already been announced and the spending taps can be opened a notch.

A £30bn annual boost from a faster and fuller covid recovery supports many of Boris Johnson’s popular spending instincts. There are also hints of reform.

However, we should not kid ourselves. Sunak is a fiscal conservative who went out of his way to stress that there is a point at which the public sector stops, and where the private sector takes the strain. The clock is ticking.

Simon Rawlinson is a partner at Arcadis and a member of the Construction Leadership Council