Industry Reaction to the Summer Budget 2015

Industry Reaction to the Summer Budget 2015

As the Chancellor George Osborne announces his first budget under a majority Conservative government yesterday (08/07/2015), we round up some of industry comments.

With the Chancellor’s fiscal priorities laid bare in today’s announcements, the CIOB responds to the government’s core commitments that affect the construction industry and built environment.

Eddie Tuttle, Senior Policy and Public Affairs Manager said:

“Regional infrastructure is vital for economic growth. Although there is a clear case for devolution, local authorities will need to react quickly to harness the opportunities for local growth and employment. Whilst this announcement details a commitment to devolve more powers, it remains to be seen how effective implementation will be across the UK.”

“Alongside devolution, there is a pressing need to improve access to finance for SMEs. With a significant proportion of the construction industry either self-employed or linked to an SME, the announcement that SME builders will get a £100m boost through the Housing Growth Partnership is welcome. However, more must be done to find solutions to the housing crisis and it is concerning that the Office for Budget Responsibility predicts there will be 14,000 fewer affordable homes built as a direct result of social housing rent cuts.

“The CIOB welcomes the rise in employment allowance to £3,000, which will allow small firms to employ four people on the national living wage without paying any national insurance.

“The government has set itself an ambitious target of delivering 3 million apprenticeships over the next five years – equivalent to six hundred thousand new apprenticeships a year. The introduction of a new apprenticeship levy is a big ask for business, but one that recognises the acute skills shortages industries such as construction will face in the future unless significant investment is made in training. And if the government is to deliver on its ambitions, more needs to be done to promote construction as a viable career path.

“The introduction of the National Living Wage is another promising addition, and the CIOB now asks whether the government should go further and increase the minimum wage for apprentices, which is likely to improve the appeal for individuals considering this route into industry.”

With an upsurge in the economy, the CIOB is predicting greater employment opportunities within construction, which already accounts for 10 per cent of the total workforce. Given the importance of the sector to the economy, the CIOB will continue to work with policy makers to promote and deliver real reform to the industry.

Commenting on measures outlined in the Government’s Summer Budget aimed at boosting levels of house-building, Mike Quinton, Chief Executive of NHBC said:

“NHBC registered 145,174 new homes for development in 2014 across the UK, up 9% on 2013, but with research showing that 245,000 homes are needed every year to meet demand, there is still some way to go.”

He added:

“We welcome the launch of The Housing Growth Partnership earlier this week, which gives vital financial support to small and medium sized housebuilders. It also helps to increase the supply of new homes that our country so desperately needs.

“Small housebuilders and developers have contributed to UK housing output throughout history. However, in recent years the number of smaller builders have not returned to the market at the same rate following other recoveries. Research by NHBC last year found that access to finance is one of the biggest barriers preventing smaller housebuilders.”

The Construction Products Association welcomed the Chancellor’s 2015 Summer Budget Statement, which backs British manufacturers and industry.

Dr Diana Montgomery, Chief Executive of the Association said:

“we were pleased by plans – that were in line with our recommendations – of the permanent setting of the annual investment allowance of £200,000 from January 2016. This will offer industry confidence in the long-term to invest in new innovative plant and machinery equipment which will impact positively on productivity.

“We are encouraged by the announcement that government will be bold in in the delivery of infrastructure especially in terms of roads. The Chancellor’s commitment to the £15 billion road spending plan and his recognition of a long-term road investment programme offers certainty to industry.

“Finally, we are pleased to hear that the main rate of Corporation Tax which had already been cut from 28% in 2010 to 20%, will now fall further, from 20% to 19% in 2017, and then to 18% in 2020.”

Dr Montgomery concluded:

“All of this was good news for the UK economy and industry specifically. However, what was starkly missing was any indication of policies to incentivise energy efficiency of existing housing. We continue to press the government to recognise the tremendous potential for improving the housing and commercial building stock and improve the cost of living for home owners.”

The Government is refusing to address a major source of carbon emissions, according to the Federation of Master Builders (FMB). In response to today’s Budget Statement, the FMB has called on the Government to make our existing homes a national infrastructure investment priority.

Brian Berry, Chief Executive of the Federation of Master Builders, said:

“The construction industry is at a loss as to why the Government is ignoring the need to improve our current housing stock. By refusing to acknowledge the importance of these improvements, the Government is exacerbating problems such as high household fuel bills, carbon emissions and the national housing shortage.”

Berry continued:

“First and foremost, the Government has a legally binding target to reduce the UK’s carbon emissions by 80% by 2050 and our existing homes account for 27% of our current emissions. Simple logic suggests that if they do not address 27% of the issue, that target will not be met. Climate change is an issue that concerns the majority of the population, but without tackling the energy inefficiency of our housing stock, the Government is not taking cutting carbon emissions seriously. This is rather surprising when you consider that not long ago; the Prime Minister wanted his Conservative-led Coalition to be the “greenest Government ever.”

Berry concluded:

“What’s more, the issue goes to the heart of household finances. By improving energy efficiency in our homes, the Government will reduce fuel bills and put more money back in the pocket of the consumer. The benefits of taking action in this area are clear and the Government is aware of this but seems determined to sit on its hands. Making our existing homes a national infrastructure priority, re-directing carbon taxes, putting an energy efficiency financing framework in place and reducing VAT on housing renovation and repair work from 20% to 5% are all effective and implementable measures. We urge the Government to wise up on energy efficiency – we want to work with Ministers to find a sustainable solution.”

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