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Today, Jeremy Hunt, Chancellor of the Exchequer, outlined the Spring Budget for 2023. The Treasury describes this as “Aimed at achieving long-term, sustainable economic growth that delivers prosperity for the people of the United Kingdom.”
Industry specific points are:
Construction trades like bricklayers and carpenters added to the Shortage of Occupation List
“Full expensing” policy to help companies invest tax-free
Low tax investment zones
Inflation is falling, debt is down and growth is up
We round up what those in the industry have to say about the chancellor’s budget below:
Measures to address the chronic skills shortages in the construction industry by relaxing immigration rules are a welcome boost, says the Federation of Master Builders (FMB) in response today’s Budget.
Brian Berry, Chief Executive of the FMB, said “It’s good to see the Government listening to the FMB and other industry stakeholders about the current skills shortages. Adding trades such as bricklayers and carpenters to the Shortage of Occupation List delivers on calls from the construction industry.”
Berry did note however that “It was disappointing that measures to improve the energy efficiency of our homes didn’t feature in this Budget. It is one of the most pressing issues and could result in a huge boost in jobs and economic activity at the local level…. Keeping the energy price guarantee is a big win for homeowners’ pockets for now, but ultimately money will keep leaking out of our draughty, inefficient homes until a sustained retrofit programme gets political backing.”
Berry concluded “Another big issue absent from the Budget is housing. Given that small local builders are delivering a mere 10% of new housing and the UK could end up delivering the lowest number of homes since the Second World War Two, this should have been front and centre. While there were some minor actions on improving housing delivery from those affected by nutrient neutrality issues, there is very little that will comfort FMB members. If the Government is to deliver its own aims of building more beautiful, diverse, and local focussed housing, then they must help boost delivery from SME house builders”.
Tom Hall, Chief Economist at Barbour ABI said: “The twelve low-tax investment zones announced in the budget could provide a boost for the construction industry in areas which have not rebounded as strongly post-Covid.”
Hall continued, “In particular, our research suggests that contract values in the East Midlands have fallen 6% in 2021 and 2022 compared to figures before 2020, even with rising construction costs. Meanwhile, other listed areas such as Manchester, Liverpool, West Midlands, Yorkshire and Scotland are currently some of the weaker areas in terms of contract awards value growth, though the Northeast is an outlier, having already experienced 70% growth in the past two years.
“Subcontractors and suppliers would do well to explore these regions in the coming years to take advantage of any opportunities. However, there is a real danger that this will just be a case of moving money around and leaving other areas underinvested in. It’s also unlikely to make any difference to the significant imbalance between London and other regions.”
David Alcock, MD at Blend, had his own take on the budget too, saying “Today’s Spring Budget was expected to focus on the government’s plans to boost economic growth, but frankly economic growth is entwined with the housing market and there cannot be sustainable economic growth if first the housing market is not fixed. Many parts of the country, including London and the Southeast are just unaffordable for most people. In the past, the government’s answer to the housing crisis has been throwing demand at the problem – we have seen successive governments trying to [unsuccessfully] tackle the housing issue by coming up with measures to support demand, but that sadly left the supply of housing struggling to keep up. So, in today’s budget I was looking forward to a larger focus on supply-side measures and support for SME property developers in today’s budget. Unfortunately, that wasn’t to be, and today’s budget yet again missed the opportunity to tackle the UK’s deep-running housing crisis.”
Alcock went on to highlight he was looking forward to seeing “a re-introduction of house-building targets, but this time with credible plans to actually meet those targets.” He was also hoping for “more targeted support measures for SME property developers” like a return of the Help to Buy Scheme but for homes provided by SME housebuilders. Alcock expressed his frustration that “The government failed to deliver this.”
Paul Wrighton, Director of Sustainable Infrastructure at Johnson Controls has responded to the budget also:
“The chancellor’s action on energy – especially the extension of the Climate Change Agreement scheme – sends a relatively positive message, however the lack of clear ringfenced funding for wider energy efficiency measures is disappointing, especially at a time when cost pressures for households and businesses are going nowhere fast. What was missing from the budget was a bold fresh programme promoting heat pump uptake and other energy efficiency opportunities – heat pumps especially are a no brainer for cost, efficiency and sustainability compared with old gas boilers.
“The current boiler upgrade scheme has a budget of £150m each year for three years and aims to issue 30,000 vouchers annually. But in the first eight months of operation, only 9,888 grants were awarded. There’s a huge opportunity to put tension on the matter with a real nationwide programme to accelerate the change.
What we need to see now is the government supporting businesses in getting the technical assistance they need directly or via industry partnerships so they can identify opportunities to reduce emissions and develop a plan to transition to net zero. This could include providing access to experts in energy efficiency, renewable energy, or other relevant fields. It’s also important for the government to facilitate knowledge sharing and best practices by creating networks or platforms for businesses to share information and ideas about how to reduce emissions.”
Ross Matthewman, Head of Policy and Campaigns at The Chartered Institute of Environmental Health, said: “We are disappointed that the Chancellor appears to be taking his foot off the pedal in his Spring Statement.”
Matthewman continued “By failing to bring forward planned spending on energy efficiency measures, he has missed a golden opportunity to both reduce energy bills and decarbonise the housing sector. While we welcome plans to postpone the planned hike in the Energy Price Guarantee, this is only a temporary measure. Furthermore, this policy pales in comparison to the positive impact a national insulation programme would have in both reducing energy bills and minimising the carbon footprint of our housing stock. “
William Scoular, Head of Private Client Lending at Investec Real Estate spoke on the budget’s VAT policy in particular:
“Despite calls from the wider industry getting increasingly loud, it’s disappointing that another budget announcement has come and gone without the government addressing the highly punitive VAT policy that discourages retrofitting residential property over building new developments. The government’s net zero ambitions will not be met without existing real estate being modernised and this is unlikely to happen at the required volume while these financial barriers remain in place. Repurposing is already often more expensive than new developments, so the government should be trying to alleviate those costs and make it more attractive, given the environmental benefits of the carbon savings associated with these projects.”
Trevor Harvey, CEO of Stelrad Group plc, also highlighted home retrofitting in response to today’s budget:
“The Chancellor’s U-turn on energy bill support will come as a welcome relief to people struggling with their heating bills but it was a shame that there was nothing beyond this. There was a real opportunity in this Budget to help people heat their homes more effectively for the long term but it’s been passed up in favour of a short term sticking plaster. The Government should be incentivising homeowners when it comes to practical measures such as insulating their homes more effectively and installing more modern and efficient radiators. Short term price guarantees, alongside encouraging the mass adoption of heat pumps which aren’t even suitable for the vast majority of homes, isn’t really a coherent strategy that will help the country reduce its heating bills. When you layer in the fact that heating in UK homes produces around 17% of the country’s greenhouse gas emissions, it’s clear we need a more effective plan to help the country’s houses become both more efficient and less carbon intensive.”
