Budget Summary: Key Points for Construction with Construction Wave
Chancellor Jeremy Hunt has published his Spring Budget.
Let’s review the key announcements for construction:
- £20 billion for carbon capture and storage
- £200 million for pothole repairs in England
- £200 million towards regeneration schemes
- £400 million towards Levelling Up projects
- £63 million to get over 50s retirees back to work and for “returnerships”
- Immigration rules relaxed for five sector jobs (including bricklayers, roofers, carpenters and plasterers)
- Tax breaks for 12 new UK Investment Zones (£80 million each for five years)
- Corporation tax on profits over £250,000 increased to 25%
- 19%-25% tax for firms with profits between £50,000 and £250,000
- Less paperwork for international traders
- Deductions on new plant and tech
- 30 hours free childcare for under-twos from April 2024
- UK economy to shrink by 0.2% in 2023 but avoid recession
- 1.8% growth predicted in 2024, 2.5% in 2025
- Inflation to drop to 2.9% by end of FY2023
What is the industry saying?
John Ryan, CEO of construction management software SymTerra, said: “Irrespective of any ‘technically avoided’ recession, we’re in a time of low confidence in UK construction’s position on the global stage. We needed a Budget that gave decisive backing and confidence to the construction sector, particularly in prioritising incentives and funding for innovation and R&D.
“Innovation is not only a critical partner in achieving net zero, it also contributes to greater resilience for all construction businesses – especially the vast majority of SMEs that make up a huge portion of the supply chain.
“Technology adoption is a key enabler for businesses to improve efficiencies and profit margins across their operations; to achieve greater commercial defensibility in an evolving regulatory environment; and to retain their competitive advantages as pricing and market instability continues to put pressure on project pipelines.”
Construction Products Association economics director, Noble Francis, said: “Jeremy Hunt positioned his Spring Budget today as a plan to remove obstacles to investment, tackle labour shortages, break barriers to work and harness science and technology for growth.
“There were a few positives for the construction industry and wider supply chain with the chancellor announcing large ambitions of £20 billion for carbon capture and storage, £960 million for low-tax investment zones, £200 million for regeneration projects, £400 million for Levelling Up projects and £200 million for potholes.
“In light of the recently announced delays to HS2, however, the key to the impact of the Budget will be whether government can actually deliver on its announcements. The delays to HS2 announced just before the Budget will hit both infrastructure and economic activity in the near term and increase the cost of HS2 by billions in the medium term.”
Mr Francis added: “The CPA welcomes the announcement on full expensing of business investment, which allows 100% of qualifying UK capital expenditure to be written off against taxable profits. This could help spur much-needed investment in capital expenditure and green investments for manufacturers.
“We also welcome the government’s announcement that it will launch a call for evidence on the critical issue of ‘nutrient neutrality’, which is currently delaying the delivery of 120,000 new homes. Government has said it will also provide funding to support clearer routes for housing developers to deliver ‘nutrient neutral’ sites. Addressing this critical issue will be crucial for developers and the whole house-building supply chain to ensure that more homes can be built each year.
“However, the lack of any government help for first-time buyers, which is critically needed after the sharp rise in mortgage rates and the substantial fall in housing demand since the Mini Budget in Autumn, means that there will be a significant double-digit fall in house building in the next 12-18 months.”
Eddie Tuttle, director of policy, external affairs and research at CIOB, said: “A number of the proposals in the Budget statement will rely heavily on the construction sector, including the creation of new investment zones, growing renewable energy generation and local schemes to improve roads. The prospect of investment in local infrastructure will be welcome news to construction companies across the country.
“Our concern however is that construction is already battling a huge skills gap, and this has to be addressed if the industry can play its vital part in delivering the government’s growth plans. Schemes to get retired and disabled people back into work are unlikely to help fill many of the more physically demanding vacant roles, however we’re keen to hear more about the proposed ‘returnerships’ which could be a good opportunity for older workers to retrain for less physical roles of which there are a growing number in the sector.”
Mr Tuttle added: “The construction industry continues to face numerous skills shortages, resulting from a mixture of lack of new entrants, to skilled professionals reaching retirement age. This is why migration continues to be a necessity for construction, helping dampen the harmful effects of having a volatile labour market.
“We are therefore pleased that [the] Budget states that the government has accepted the Migration Advisory Committee’s (MAC) interim recommendations to initially add five construction occupations to the Shortage Occupation List (SOL), ahead of its wider SOL review concluding in Autumn 2023, with reviews taking place more regularly.”
Source: Construction Wave