Industry shrugs after ‘pretty average’ Spring Budget

The construction industry has given a mooted response to chancellor Jeremy Hunt’s Spring Budget, which provided scant new money or reform relating to the industry.

On Wednesday afternoon (6 March), Hunt extended the fuel-duty freeze; access to finance for small and medium-sized businesses through a Recovery Loan Scheme; and full expensing to leased assets – allowing companies to claim capital allowances for investment in even more plant.

He also announced £650m of funding from AstraZeneca for new schemes at Cambridge’s Biomedical Campus and at its manufacturing facility in Merseyside, and said that the government had bought two nuclear sites from Hitatchi in a £160m deal.

Headline policies included the abolition of non-dom tax status and a further cut to the national insurance contribution rate, from 10 to 8 per cent, while Hunt also said he was lowering the higher rate of property gains tax from 28 to 24 per cent and scrapping tax relief on holiday homes.

A 98-page HM Treasury document accompanying the Budget meanwhile unveiled new details about plans for a mega-development around the HS2 Euston station, as well as pledging steps towards “removing barriers to investment within the infrastructure and commercial planning system”.

New funding was also announced for initial investment in 15 free schools for children with special educational needs (worth £105m), maintenance work at the National Theatre (£26m); and a memorial for Muslim soldiers (£1m).

However, the construction industry was not directly mentioned in either the chancellor’s speech nor the accompanying policy documents. The budget also contained little new funding or reform for housebuilding.

Reaction

Commentators from across the UK construction and built environment sector criticised the Spring Budget for the absence of reforms aimed at increasing output or helping the sector with its transition to net zero.

Marie-Claude Hemming, director of operations for the Civil Engineering Contractors Association, said: “Moves towards enabling the full expensing of leased construction plant has the potential to unlock vital funds to enable the roll-out of low-carbon machinery, as well as making it more affordable for the hirers that many contractors use to upgrade their fleets.

“At the same time, the condition that these changes will only be implemented ‘when fiscal conditions allow’ potentially implies unnecessary delay to the roll-out of this vital reform.”

Eddie Tuttle, director of policy, external affairs and research at the Chartered Institute of Building, said: “The chancellor’s budget speech lacked long-term focus on issues like housing supply.

“The government must give serious consideration to […] ensuring all homes built are of the highest quality and are future-proofed to reduce the need for retrofitting down the line.

“The government also needs to urgently review its unfit-for-purpose apprenticeship system, which regrettably was not mentioned in today’s budget.”

Robbie Blackhurst, founder of Black Capital Group and a former framework manager at Kier, said: “[This was] a pretty average budget for the built environment sector [although] the announcement that inflation is to fall below 2 per cent within months is positive news.”

Peter Hogg, UK cities director at Arcadis, said: “Listening to the speech, there was little for the built environment sector […]; overall, this wasn’t a budget for large and soaring commitments on things such as decarbonisation and energy transition, the housing crisis or acceleration in investment in infrastructure.”

Graham Harle, chief executive of Gleeds, said the chancellor did nothing to address the economic difficulties faced by the construction sector, describing the announcement as “a budget to stop us bleeding out before the election, not a long-term recovery plan”.

He added: “Construction and property are bellwether industrial sectors as well as big employers and our numbers make for grim reading, with construction activity recording almost flat output levels in February after five months of falls. This is the core issue that the chancellor should have been addressing – how to inspire confidence, fan growth and improve productivity.”

Mark Robinson, group chief executive of SCAPE, said: “The chancellor’s decision to redirect funding from public services will have an impact on local authorities whose budgets are already under significant strain. The past year has shown the risk of under-resourced public departments, with the ongoing RAAC crisis highlighting the urgent need to take public funding and maintenance strategies seriously.”

Simon McWhirter, deputy chief executive at the UK Green Building Council, said: “Unfortunately we’re yet again seeing vote-chasing sticking-plaster politics as opposed to the longer term political leadership we so desperately need.

“The chancellor has failed to address the urgent need for upgrading our homes and buildings in this budget, which wouldn’t just help address the climate crisis, but also directly tackle rising energy bills, poor-quality homes and provide a jobs boost into the economy.”

Allan Willen, economics director at construction intelligence provider Glenigan, said: “Given the lack of fiscal headroom, the lack of additional public sector funding for construction-related areas will be a disappointing but unsurprising turn of events for many in the industry.

“The government has been cautious about making any big infrastructure commitments during the run-up to the next general election, affecting the delivery of existing and planned major capital projects.

“This lack of clarity may have a knock-on effect across the construction sector, with private investors likely to keep their powder dry as they wait out the uncertainty.”