Addressing a packed House of Commons, Rishi Sunak, the Chancellor of the Exchequer, has delivered his Autumn Budget and Spending Review 2021, striking an upbeat and optimistic tone, focussing on levelling up and building a stronger UK economy, as the country recovers from the pandemic, and battles with supply chain shortages, worries of inflation hitting 5%, and possible interest rate hikes.
Measures announced included investment in the property market over the coming years. With a multi-year housing settlement totalling nearly £24 billion, £11.5 billion has been allocated for the Affordable Homes Programme in England from 2021-26 to help build up to 160,000 new affordable homes, with brownfield sites targeted for development.
The government has also announced that it will increase the National Living Wage for individuals aged 23 and over by 6.6% from £8.91 to £9.50 per hour, effective from 1 April 2022. In addition, the National Minimum Wage for people aged 21-22 will rise from £8.36 to £9.18 an hour and the Apprentice Rate will increase from £4.30 to £4.81 an hour.
Meanwhile, an allocation of £1.6 billion for 16-19-year olds’ education in England to maintain funding for T Levels has been announced, along with apprenticeship funding increasing in England to £2.7 billion in 2024-25.
Elsewhere, an eligibility criteria has been confirmed for the new Scale-Up Visa, to help make it faster and easier for businesses to employ highly-skilled individuals from abroad.
Business investment
The government will extend the temporary £1 million level of the Annual Investment Allowance to 31 March 2023, in order to encourage businesses to bring forward investment, and make tax simpler for any business investing between £200,000 and £1 million.
Regarding business rates, the frequency of revaluations will take place every three years, instead of every five years, starting in 2023, although the transitional relief for small and medium-sized businesses and the supporting small business scheme, is to be extended for a year.
Between 1 April 2023 and 31 March 2035, targeted business rate exemptions will apply for eligible plant and machinery used in on-site renewable energy generation and storage, and a 100% relief for eligible heat networks, to support the decarbonisation of non-domestic buildings.
Elsewhere, the Vehicle Excise Duty (VED) rates for cars and vans will be updated in line with the Retail Price Index (RPI) from 1 April 2022, while VED and levy rates for heavy goods vehicles (HGVs) will remain frozen for 2022-23. The HGV levy will be suspended for another 12 months from August 2022.
From 6 April 2022, the van benefit charge and the car and van fuel benefit charges will increase in line with consumer price inflation. As announced at the Budget 2020, the government has confirmed that the Company Car Tax rates already announced for 2022-23 will remain frozen until 2024-25. Meanwhile, fuel duty will be frozen in the UK in 2022-23 for the 12th consecutive year.
Industry response
Reacting to the Chancellor’s statement, James Talman, chief executive of the National Federation of Roofing Contractors (NFRC), said: “We are delighted that the Chancellor has listened to our calls to exempt plant and machinery used in on-site renewable energy generation and storage from business rates. The business rates system currently discourages investment in commercial rooftop solar PV, taking up 40% of any potential cost savings.”
He added: “Commercial rooftop solar has huge potential and according to Solar Energy UK, there are over 250,000 hectares of south-facing commercial roof space in the UK that could be used to deploy 30 GW of solar power, creating 2,600 green jobs a year. The [Chancellor’s] announcement will help make this a reality.
James continued: “We also welcome the Chancellor’s Business Rate Improvement Relief which will allow businesses to make property improvements and pay no extra relief for 12 months, and we look forward to seeing further details on what measures this will cover. We would also urge the Treasury to monitor the implementation of these business rate changes carefully to ensure that there isn’t a stagnation in investment whilst building owners wait until 2023.
“It was also good to see investment in training bootcamps and facilities for HGV drivers – the construction supply chain has been badly hit by HGV driver shortages, intensifying the material shortages the industry is facing.”
Meanwhile, the Builders Merchants Federation (BMF) expressed its disappointment that the government did not include financial support to kick start the upgrade and decarbonisation of the UK’s housing stock. However, it welcomed the announcement of more investment in further education, which will help promote a low-carbon skills revolution.
John Newcomb, chief executive officer of the BMF, said: “With the UNCOP26 Climate Conference less than a week away, we believe a National Retrofit Strategy is the best way to tackle an urgent national infrastructure priority – namely to improve the energy and thermal performance of homes – especially with rising gas prices adding to pressure on household bills.
“The BMF and others involved in property repair, maintenance and improvement (RMI) put together the Construction Leadership Council’s 20-year fully-costed plan to improve existing homes; an investment of £5.3 billion over the next four years to tackle emissions.
“The [Chancellor’s] announcement means that international visitors arriving in Glasgow will see a missed opportunity to decarbonise by doing something simple – upgrading homes properly.”
Elsewhere, the Chancellor has faced criticism from across the industry for the lack of a retrofit plan. Brian Berry, chief executive of the Federation of Master Builders (FMB), said: “The Chancellor has missed the opportunity to give householders peace of mind about how they can tackle the net zero challenge. With nothing on retrofit for owner occupiers in last week’s Heat and Buildings Strategy, I’m struggling to see how the country will reach its legally binding net zero targets by 2050 if it doesn’t fix the UK’s 29 million leaky homes.
“I do, however, welcome the investment for skills and training confirmed at £3.8 billion over this Parliament. Long-term skills shortages are delaying jobs for builders, with 60% reporting paused jobs in the latest FMB membership survey. I’m also glad to see further investment in housing, and warmly welcome the grant funding for local authorities to free-up small brownfield sites for housing given that land availability is the major obstacle to SME house builders. Relief for businesses by reducing the burden of the business rates system will be well received by some firms.”
Finally, Jeff May, director of government relations and business development at the Construction Products Association (CPA), concluded: “We were disappointed to see little help for major industrial users with energy costs, or any further financial details on net zero strategies. That said, we welcome a handful of relevant items in particular: the announcements of a 12-month relief on businesses rate hikes arising from premises investment, the cancellation of the planned increase to the business rates multiplier, and the extension of the uplift to the Annual Investment Allowance will go some way to supporting manufacturers while we seek to exit the pandemic in the short-term.
“Given the pre-Budget announcements around various net zero and related sustainability strategies, along with the release in September of the National Infrastructure and Construction Pipeline, the major elements of spending for our sector appear set. The key then, as always, will be delivery. If industry and government can work together and address the supply side risks in particular – labour and skills shortages, energy prices, logistics bottlenecks, for example – then the economic stimulus from our sector in support of this Budget will be considerable.”
