The construction industry has reacted to today’s ‘Growth Plan’ set out in the government’s mini budget set to back businesses and tackle rising energy costs.
The Chancellor of the Exchequer Kwasi Kwarteng announced today that the corporation tax rise has been cancelled, keeping it at 19% as the government sets sights on a 2.5% trend rate of growth.
This has been announced among other new measures such as reversing the 1.25% rise in National Insurance contributions, a move which the government said will save 920,000 businesses almost £10,000 on average next year.
Additionally, there will be more relief for businesses by making the Annual Investment Allowance £1 million permanently, rather than letting it return to £200,000 in March 2023. This gives 100% tax relief to businesses on their plant and machinery investments up to the higher £1 million limit.
Stamp duty has also been cut for properties costing less than £250,000 (which rises to £425,000 for first time buyers).
FMB
The Chancellor’s ‘Mini Budget’ with its strong emphasis on economic growth is a gamble but offers hope to small builders, says the Federation of Master Builders (FMB).
Brian Berry, Chief Executive of the FMB, said: “The strong focus to ‘get Britain building’ by unlocking government surplus land and extending the stamp duty threshold to help prospective house buyers is a welcome boost in a tough market. However, at a time when we are building fewer homes than needed, more action is required to boost delivery of more high-quality homes from small, local builders.”
He added: “Although not announced by the Chancellor in his statement, we’re pleased to see a small step forward in improving the energy efficiency of homes in the Chancellor’s ‘Growth Plan’, which will incentivise energy companies to help customers upgrade their homes. However, what’s really needed now to boost local growth and skills is a fully fledged national retrofit strategy focusing on the UK’s 29 million leaky homes.”
BMF
John Newcomb, CEO of the Builders Merchants Federation (BMF) said: “In the fortnight since coming to power, the new UK government has acted quickly to put Liz Truss’s leadership election campaign pledges into action.
“Today’s Growth Plan provides BMF members with some degree of certainty and indicates the direction of travel of the new ministerial team.
“We welcome the cuts in business taxes at time when BMF members face the cumulative effect of higher raw material, labour, energy and transport costs.
“We are also looking closely at the moves to ease rules on nutrient neutrality, which have had a direct impact on builders merchants since the ‘Dutch N’ court ruling in Europe prompted revised guidance from Natural England to local authorities advising all planning applications should guard against pollution from nitrates and phosphates.
“As local councils are not approving applications, SME customers of merchants face laying off staff because they cannot resume onsite or begin new projects.
“New housing projects in 74 local authority areas have now been stalled as developers are required to demonstrate nutrient neutrality, delaying the construction of an estimated 114,800 new homes.
“These issues were discussed at BMF Members’ Day last week between merchants and manufacturers to come up with practical solutions on nitrates and phosphates.
“The BMF and others have been lobbying DLUHC and DEFRA ministers to find a way forward so local authorities can grant much-needed planning applications again.
“As Mr Kwarteng said, there is more detail to come, especially on reforming planning permission for new housing, so our hope is that today’s announcement is the first step on the way back to Getting Britain Building Again.”
NBS
Russell Haworth, CEO of NBS and UK CEO of Byggfakta Group, commented: “Today’s announcement will be welcome news to many in construction battling with rising energy costs and the price of materials – hopefully these string of tax cuts will release some financial pressure. It was also promising to see a streamlining of planning processes – with less red tape, we should see the wheels begin to move on key infrastructure projects and new housing to encourages cashflow into the industry.
“Although the cost-of-living crisis remains the biggest hurdle, the government mustn’t lose sight of its ‘levelling up’ agenda. There was an opportunity today to show a longer-term strategy, highlighting the power of digital transformation and its ability to upskill our workforce. Skills shortages are holding the country back, and a meaningful skills development package is needed if it’s to reach its potential.
“Climate change and sustainability in construction still seems to elude the government. The much-needed ‘retrofit’ of the UK plays a key role in lowering overall energy bills – we need to hear how it can support investment into alt tech such as heat pumps and renewable energy sources to reduce the country’s reliance on fossil fuels.”
MHA
However, Brendan Sharkey, head of construction and real estate at MHA, says the Stamp Duty reduction is positive but it won’t have the impact it did during the pandemic.
He said: “When it comes to Stamp Duty relief the help for first-time buyers is positive but it is very disappointing there was no specific relief for downsizers. Encouraging more people to downsize would free up more family-sized homes.
“Also, this Stamp Duty reduction won’t work as well as previous reductions made during the pandemic. In 2020 and 2021, people had savings and an incentive to move given we all had to spend more time at home. Today trying to stimulate the housing market is going to run head first into inflation and higher interest rates. In addition, what we see in the market currently is that developers are still optimistic about future sales: they don’t need another incentive.
“Reforming and streamlining the planning system sounds like a good idea but the trouble is the government has said it has this ambition at many previous budgets and nothing ever happens. So the industry will believe this when it sees it.
“Finally, the industry will always applaud the promise of more work, so the goal to speed up a series of infrastructure project will boost confidence.”
