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After Chancellor of the Exchequer, Jeremy Hunt, gave his Autumn Statement on Wednesday, some of the construction industry’s biggest organisations gave their responses to the measures that will affect the industry.
Autumn Statement boost for growth, says FMB
Measures announced in the Autumn Statement to speed up planning, cut taxes for small businesses, increase support for business investment, and to provide financial backing to boost apprenticeships are welcome steps to help stimulate much needed growth in the economy, say the Federation of Master Builders (FMB).
Brian Berry, Chief Executive of the FMB sad: “The Autumn Statement will be welcomed by small builders, with the Government finally taking steps to support micro and SME businesses in a sector which has faced significant difficulty in recent years. However, this must only be the start if the Government is serious about tackling the challenges we continue to face. Measures to reform the way local authorities process planning applications is good news, as are plans to help fund local authorities tackle nutrient neutrality mitigation. However, substantial increases in funding for local authority planning departments are needed if we are to see real progress.”
Brian continued: “There were some surprising outcomes, like the changes to permitted development rights, which will bring work for house builders and the repair, maintenance, and improvement sector. Buried in the details is additional support for housing associations to deliver energy efficiency improvements. This support should also be rolled out to the owner occupier sector to help improve the UK’s leaky housing stock”.
Brian Berry concluded: “Financial support for SMEs represents another positive step, along with other announcements to boost SME growth, such as adopting digital technology. It is good to see that skills training has received a boost, with additional funding announced to increase the number of apprenticeships undertaken.”
BMF responds to Chancellor’s Autumn Statement
The Builders Merchants Federation has welcomed the announcement to make full expensing permanent but says the government has missed an opportunity to create new jobs and boost local growth by failing to support a national retrofit strategy to improve the energy efficiency of millions of existing homes across the UK.
BMF CEO John Newcomb said:
“The announcement on full expensing will be welcomed by builders merchants and building material manufacturers along with many other businesses as they invest to expand and upgrade their facilities. But, beyond a pledge to reform elements of the planning system, there was little direct support for the construction sector in the main headlines of the Autumn Statement.
“We want to get Britain building again, but there was nothing in the budget relating to our number one ask, support for a national retrofit strategy. This was a missed opportunity to stimulate the repair maintenance and improvement sector, create thousands of appropriately skilled jobs and boost much-needed local growth, while at the same time helping millions of families to improve their homes’ energy efficiency and cut heating bills.
“We will continue to speak directly to government to promote the positive impact of a skilled RMI programme. Our parliamentary reception next week will focus on the work we are doing to build a workforce to deliver the low carbon solutions that are the essence of the national retrofit strategy and the impact kickstart support from government would make.”
National Federation of Builders (NFB)
The Chancellor of the Exchequer’s Autumn Statement announced 110 growth measures, with an explicit ambition to unlock British business and make work pay.
Richard Beresford, Chief Executive of the National Federation of Builders (NFB), said: “It has been some time that a Chancellor played Prime Minister by linking the importance of regulatory reforms with growth, and it is hugely welcomed. For decades, business has felt increasingly dictated to, rather than enabled and we hope this is a sign of much needed direction change where business is enabled to innovate and invest, rather than placated with tax cuts.”
The announcements to cut to self-employment taxes, increase investment in housing, regulatory reforms on the grid and permitted development, funding for nutrient neutrality and an acknowledgement that commercial premises should not be stifled by planning permissions all showed that the Government is taking the environment for growth seriously.
Even housebuilders were given a glimmer of hope, signalling that the Government is taking their challenges seriously.
Rico Wojtulewicz, Head of Policy and Market Insights said: “We would like to thank the Chancellor for listening to the NFB regarding nutrient neutrality and grid connections, which both disproportionately harm the construction industry the most, especially SME housebuilders. Reforms and investments in planning were long overdue, and our long running campaign to support increased use of Local Development Orders, plus ensure planning supports heat pumps has finally gained traction.
We are hopeful this is the start of a future where the Government realises that construction needs enabling and supporting, rather than being the cash cow for underinvestment.”
The BCIS (Building Cost Information Service) response
BCIS chief economist, Dr David Crosthwaite, said: “In light of the OBR’s central forecast being downgraded, the Autumn Statement was really quite underwhelming for the construction industry, which has been crying out for some clarity, commitment and consistency in policies.
“We welcome full expensing of plant and machinery becoming permanent, for those firms who qualify. Having the ability to plan capital investment more effectively will be a huge benefit for firms looking to invest now and in the future, and maybe even a lifeline for some.
“For house builders, the promise of more streamlined planning processes and investment in new schemes may be welcomed, but we can’t forget that the significant slowdown in the housing market has been primarily caused by high interest rates creating a lack of demand. The housing sector would benefit more from tangible growth in the economy, which could in part have been boosted now by transparency around and commitment to infrastructure plans.
“The abolition of class 2 NI contributions for the self-employed, a growing demographic in our industry, is a saving of just £3.45 a week, and so a drop in the ocean considering the considerable costs construction trades have faced and continue to face.
The British Property Federation reaction
Melanie Leech, Chief Executive, British Property Federation said:
“We know that two of the biggest blockers to delivering the homes, workplaces and vibrant communities needed across the country are an inefficient planning system and delivery of the right infrastructure, and the Chancellor is right to focus on these as part of a wider plan to boost business investment and stimulate growth.
“However, the planning system can only work more effectively, and be held to account for delivering swifter outcomes, if it is resourced properly. The planning system has been under-funded for at least a decade and its expertise in handling major projects hollowed out. We need a long-term planning skills strategy for local authorities to enable them to determine applications more quickly and make increasingly complex decisions that balance sustainability, heritage and local need.”
“Confirmation that full expensing will continue is welcome but the Chancellor missed an opportunity to go further and incentivise investment to upgrade older commercial and residential buildings to make them more energy efficient. Tax relief on future profits will not impact the viability of complex retrofit projects and the Chancellor should have delivered ‘above the line’ measures such as tax credits for green plant and a zero VAT-rating for residential refurbishments.”
“Measures to provide relief for small businesses are welcome but only scratch the surface. The Chancellor should have gone further and frozen the multiplier for all businesses to prevent the unsustainable burden on the high street rising even higher.”
CEA (Construction Equipment Association)
Suneeta Johal’s (Chief Executive of CEA statement in full:
“Chancellor Jeremy Hunt’s initiatives were positive and we recognise them as significant steps towards establishing the UK as a leading player in innovation and sustainable technology.
“We welcome the Chancellor’s initiative to accelerate planning applications, as it could significantly benefit the construction sector by enabling faster project starts and potentially reducing uncertainties. However, it’s crucial to recognise that while these changes present opportunities, their overall impact on the construction sector will depend on a variety of factors. These include broader economic conditions, the availability of funding, labour and material resources, and environmental considerations. The effectiveness of these reforms in truly shortening application times and their actual implementation will be critical in determining their tangible impact on our industry.
“The Chancellor’s commitment to making the full expensing policy a permanent fixture is a landmark achievement. The ability for companies to claim 100% capital allowances on qualifying plant and machinery investments, and write off the cost of investment in one go is not just a financial boon; it’s a catalyst for accelerated growth and modernisation.
“This significant policy change, a result of concerted efforts by MAKE UK, CBI and the Construction Equipment Association alongside over 200 organisations, stands as an example of the powerful outcomes that can be achieved through collaborative industry-government engagement.”
CPA (Construction Product Association)
“For UK construction product manufacturers, it is the ‘Full Expensing’ announcement that will resonate most with them. CPA was a key part of the letter calling for this measure to be made permanent and is pleased to see this confirmed today. This will allow companies to invest in the UK to reduce their tax by up to 25p for every £1 they spend on plant and machinery. Other announcements today that will also be of interest to our industry include:
- More funding for apprenticeships and skills.
- Planning reforms to allow councils to recover the full costs of planning applications – provided they meet prompt deadlines.
- A consultation on allowing any house to be converted into two flats – provided the exterior is respected.
- Speeding up and providing more certainty for developers and investors on infrastructure delivery.
- Support for strategic manufacturing sectors, manufacturing SMEs and green industries.
- New Investment Zones announced in the Midlands, Manchester, and Wales.
“While these announcements are helpful, the Chancellor could have gone further with industrial policy by providing a clearer strategy on key growth areas. Equally, more could be done on housing supply and home buying, as well as energy efficiency in housing such as introducing a green stamp duty. While the announcements on improving infrastructure delivery are welcome, how effectively they will translate into reality on the ground is yet to be seen. The Government published a policy paper ‘Getting Great Britain building again: Speeding up infrastructure delivery’, which demonstrates that it finally understands the difficulties associated with delivering major infrastructure projects. It is disappointing, however, that Government hasn’t published an updated National Infrastructure and Government Construction Pipeline since September 2021 and announced in the Autumn Statement that there also won’t be a revised National Infrastructure Strategy until next year. This lack of certainty over the project pipeline means that it is difficult for all firms in the construction supply chain to justify signing-off significant new investments in skills and capacity, especially after all the Government announcements of infrastructure projects being paused, delayed and cancelled this year.
“This Autumn Statement marks a step in the right direction from Government for the construction industry, but how much of it is electioneering as opposed to real action is not yet clear.”
Reforms to the LHA and additional funding for local planning initiatives are among several reforms aimed at supporting the UK’s property market
David Hannah, Group Chairman of Cornerstone Tax, discusses the steps required to inject life back into the property market
“The Chancellor needed to use this opportunity to provide liquidity support to the construction industry to enable them to build speculatively and increase the housing stock more rapidly in this country. The decision to commit an additional £110m to deliver nutrient mitigation schemes to unlock 40,000 new homes in cities including London, Leeds and Cambridge is positive news. Earmarking £32m to address the planning backlog and beginning a consultation to allow any house to be converted into two flats marks an important step in freeing up the rental sector’s supply problem, potentially easing the strain felt by both landlords and tenants.
“At another level the crisis in the private rental sector, could have been eased by removing the second home surcharge from bona fide private rental sector investors giving them a reduction in their acquisition costs and also reinstating full relief for mortgage interest payments in common with other businesses that have to borrow money to provide their services.
“This double measure would have both reduced the costs of purchase, whilst allowing landlords to freeze, or even potentially cut, rents which have had to have both these penal measures “costed in” over the last few years. It would also stimulate purchases in the market at a time when owner occupiers are unable to purchase because of affordability issues.
“The above would have provided a robust solution to providing homes, stimulating the property market at the lower end and restoring what has been a politically motivated but economically disastrous strategy from a government that, as little as 14 years ago, was begging the private rental sector for help during the crash.”
“This was an autumn statement by a government that appears to have little insight into the challenges faced by those working in property and construction, having shuffled 16 housing ministers in 13 years and just cancelled HS2. Of the measures announced, full expensing is to be welcomed but is only helpful if you have projects requiring you to buy plant and machinery. It doesn’t help firms struggling to make a profit or investing in people. It’s all jam tomorrow and while planning reforms sound appealing they take time to implement and may not be supported by any future government. Reducing business rates is helpful for a struggling retail sector and abolition of aspects of national insurance for self-employed tradespeople looks good but is worth little more than a few hundred pounds for the average plumber or electrician.
“Where was the VAT relief on the greening of housing stock when over 31m people live in buildings that meet sub-standard EPC ratings and £50m to support apprenticeships is meagre. We were promised 110 measures to help industry but in fact there was little there to inspire confidence & stimulate investment.“
Graham Harle is the CEO of Gleeds Worldwide
Leaders Romans Group
Lawrence Turner, Director, Boyer (part of Leaders Romans Group):
“The Chancellor’s Autumn Statement has once again raised the issue of planning reform in the UK, acknowledging the system as a barrier to investment. However, this reaffirmation of intent to reform the planning system falls short in terms of substantial action.
It is evident that over the last 13 years, the Government has proposed multiple reforms to the planning system, yet none has been implemented due to lack of support and backing. During this time, the position of Planning Minister has been occupied by 16 different ministers. This constant rotation is quite evidently one of the main obstacles preventing the achievement of significant reform.
The proposed reforms in the Autumn Statement, such as the introduction of a premium planning service and funding to tackle backlogs in local planning authorities, lack sufficient substance to effectively address the issue at hand.
What is truly needed are reforms that directly result in the building of more homes. This should involve significant funding to increase resources for local planning authorities, measures to ensure up-to-date Local Plans are in place, and legislative changes to deal with issues such as nutrient neutrality. Without these essential reforms, the Government’s aspirations for growth through improved infrastructure and commercial development will remain unattainable.
In essence, the Government’s current proposals for planning reform are inadequate to address the long-standing issues within the system. The time for meaningful and effective planning reform is now, and it requires more than just lip service from policymakers.”
Following the Chancellor’s Autumn Statement today (22 November 2023), Brendan Sharkey, Construction and Real Estate Specialist at MHA, says that the Chancellor should have announced stamp duty cuts to shake up the housing market:
“Housebuilding was absent from the statement. It’s a shame the Chancellor didn’t announce cuts to stamp duty. This would have created demand and at the same time provided more affordable properties.
“There were some very positive developments though. The unfreezing of the local housing allowance, fixed since 2020, provides an element of relief for families who are on low income and struggling to find affordable housing or pay their rent.
“Permitted development will now extend to enable one property to be converted into two flats, thereby increasing the supply of new homes, though building controls will need to be upheld during this process. Finally the planning application reforms should speed up the process of new projects and recoverable costs will ease concerns if project deadlines are not met. However, will the Local Authorities have enough resource or will those that pay the piper get priority and the application from smaller SMSs get overlooked?”
National Home Decarbonisation Group (NHDG)
Derek Horrocks, chair of the National Home Decarbonisation Group (NHDG), said: “While the Autumn Statement claimed to make the lives of people up and down the country better, the lack of any major new announcements on the decarbonisation of all housing types is disappointing.
“Decarbonising homes is about so much more than just achieving net zero. While that’s a clear goal, it’s also about supporting millions of people feeling the impact of the biggest crises of our time. The ongoing energy, cost of living and health crises are all worsening and the sooner we get these homes decarbonised, the better.
“A huge amount of momentum has been built in recent years – largely because of the first two waves of Social Housing Decarbonisation Fund (SHDF). We are pleased to see inclusion within the detailed policy paper of the £6bn to support energy efficiency from 2025 previously announced in the 2022 Autumn Statement, however, we would have liked the government to go much further by bringing forward Wave 3 of this scheme.
“Policy consistency is of vital importance to sustainable growth of the supply chain. It’s crucial that current momentum is built on, not stalled – and naturally filters across all housing types, not just social homes. That momentum cannot go to waste – nor can the investment from contractors and housing providers when it comes to time, resource and money funnelled into skills and innovation. There is a need for renewed confidence throughout the supply chain and wider market. And, with this round of funding not yet being allocated, this confidence is needed now more than ever to ensure that all-important decarbonisation at scale does not slow down.
“There was huge opportunity here to place focus on housing decarbonisation and its benefits, including announcing Wave 3 funding as our members’ letter to the Prime Minister advised several weeks ago. Especially with the opportunity to place more focus hot on the heels of the £80m SHDF Wave 2.2 application window opening this week. Although we recognise that substantial funding remains included within future spending projections, it is disappointing to see an opportunity to bring forward funding and improve lives, society and the economy missed.
“Together, our members will continue to champion the vital work happening up and down the country – and maintain our close relationship with the government to achieve collective goals that benefit us all.”
The Royal Town Planning Institute (RTPI)
The Royal Town Planning Institute (RTPI) responded to the Autumn Statement and highlighted that the additional investments in planning resources will be added to other increases already seen.
Victoria Hills, Chief Executive of the Royal Town Planning Institute said: “The Chancellor of the Exchequer has emphasised the importance of planning in his Autumn Statement for growth, placing investment into the planning system at the heart of today’s announcements.
“By giving planning the time and significance it deserves, it is a recognition that, when appropriately resourced, planning is an enabler, not a blocker to unlocking the economic, environmental, and societal gains of the country.
“Investments such as Local Authority Housing fund and planning backlog funding are welcome. We eagerly await further information on this funding. A full cost recovery of planning applications for businesses will be a step toward providing Local Planning Authorities with the essential resources they need to help both communities and businesses thrive. We estimate that 15% of planning applications that Local Planning Authorities process come from businesses.
“Nutrient and Water Neutrality is holding up an estimated 100,000 homes and putting the future of small and medium-sized developers at risk for a problem that is due to both agricultural pollution and existing sewage. We have been advocating for the Government to address this issue for a long time and we are pleased to see that they have recognised the problem and invested in resolving it.
“The Institute and our members will begin considering consultations on new uses of Public Development Rights for duplex conversions and heat pumps, which can serve a delivery purpose but may reduce the quality of homes. We will also consider the NPPF’s impact on electric vehicles.”