Rishi Sunak, the Chancellor of the Exchequer, has delivered his spring Budget statement for the year, which includes measures that will impact the construction sector directly. Here RCI outlines some of the measures below and the implications it could have on the roofing, cladding and insulation sectors.
As the implementation of the government’s roadmap to recovery is about to start, the Chancellor, having to tread a fine line between supporting an economy still ailing from the repercussions of a pandemic and restart it after almost a year of restrictions, has announced a series of measures he hopes will “protect the jobs and livelihoods of the British people.”
In brief, the Coronavirus Job Retention Scheme, also known as the Furlough Scheme, is being extended, along with self-employed support, as well as the business rates holiday and stamp duty holiday. Moreover, the government is establishing an infrastructure bank in Leeds to fund projects to help the country achieve its net-zero goals.
Furlough Scheme extension
The Coronavirus Job Retention Scheme is being extended until September 2021, Rishi Sunak revealed in the Budget, where the government has announced an additional £65 billion to support the economy.
The Furlough Scheme will be extended until September with no change of terms. However, after July, businesses will be asked to make a 10% contribution, which will then rise to 20% in August and September.
Support for self employed
Meanwhile, self-employed income support will also be extended until September, with 600,000 more people being eligible for government help as its grants become more accessible.
The Chancellor added that as the economy is set to reopen in the summer, the government will help people whose turnover has fallen by 30% or more the most. In total, the government will have sent £33 billion supporting the self-employed during the COVID-19 crisis.
Taxes and business rates
Moreover, it was confirmed that the business rates holiday will be extended through to the end of June, with plans to raise corporation tax to 25% in 2023.
Additionally, he said he is creating a Small Profits Rate to ensure only businesses with profits of over £250,000 will be taxed at the 25% rate.
Stamp duty extension
The Chancellor also announced that up-to-£500,000 “nil-rate band” for stamp duty has been extended until the end of June, rather than the end of March.
First-time buyers will get a “government guarantee” on mortgages, with a deposit of 5%.
Infrastructure bank
The Chancellor also launched plans to establish a new National Infrastructure Bank to fund schemes to help the country achieve its net-zero targets.
The bank, set to be based in Leeds, will launch with £12 billion and aims to draw in £40 billion from private investors to put into green projects. Furthermore, the Chancellor will launch a green sovereign bond and a retail investment project, allowing people to personally invest in green schemes.
Industry thoughts…
Commenting on the Budget announcement, Christian Cubitt, head of UK Government Affairs at the Royal Institute of Chartered Surveyors (RICS), said: “From getting thousands more young people onto the housing ladder to breaking ground on transformative projects backed by a new UK Infrastructure Bank, the billions invested represents a shot in the arm for the sector and the levelling up agenda.
“Extending the business rates holiday and discounting these costs for the rest of the year is another positive step, particularly for small business that have arguably been hit hardest by the global pandemic.
“When it comes to stamp duty, what we really need to see, and what RICS has been calling for, is a full and thorough review of all property taxation. We will also continue to call for a VAT cut for builders looking to retrofit existing homes – an important step in really helping to deliver a greener Britain.”
Meanwhile, Tom Brown, managing director of Real Estate at Ingenious, added: “The Chancellor’s decision to extend the Stamp Duty Land Tax (SDLT) holiday and provide a government-backed guarantee to mortgages with deposits of just 5%, reflects the importance of maintaining optimism in the UK housing market.
“This level of support shows that the government continues to view the housing market as key to the UK economy at a time when the latest Nationwide House Price report confirmed that demand from buyers is being sustained. The support provided by the SDLT relief extension, saving up to £15,000 on property purchases of £600,000 is positive news for our strategy as an alternative lender focused on the affordable end of the market.”
Elsewhere, James Talman, chief executive of the National Federation of Roofing Contractors (NFRC) said: “The Chancellor has set out a solid investment-led economic roadmap in his Budget that supports the UK economy as it comes out of lockdown and into recovery. He is right to focus on tax incentives, many of which will help boost construction – particularly the extension to the cut in Stamp Duty, the ‘super deduction’ for companies that invest in plant and machinery, and the enhanced ‘Structures and Buildings Allowance’ at Freeports.”
He added: “However, the Chancellor can and must go further to encourage investment – not only to help the economy grow but to ensure we make our buildings fit for the future. To spur on investment in the upgrading of commercial buildings, he should extend his ‘super deduction’ policy so that it applies not only to plant and machinery but to buildings too. This will help businesses to not only bring down their energy bills but also to support the UK to reach its net-zero target.”
He concluded: “The increase and extension of the payment for employers who take on an apprentice to £3,000 is extremely welcome and will provide much-valued support for those companies that invest in the careers of today and tomorrow.”
What’s more, John Newcomb, chief executive officer of the Builders Merchants Federation (BMF), said: “The Chancellor largely struck the right notes in announcing continued support for business as we move through the final stages of the coronavirus roadmap and plan for recovery.
“We were particularly pleased that the Chancellor sought to support smaller businesses by recognising the need for continued furlough support and business rates discounts, which will help our SME members as they return to pre-COVID levels of operation. Similar extensions to self-employment grants will help small builders and other trades who form the main merchant customer base and ensure they are still in business to service the needs of homeowners helped by the new government-backed mortgage guarantee scheme and the extension of the Stamp Duty Holiday.
“We also welcome the announcement of a new UK Infrastructure Bank which was a key ask of our Construction Leadership Council colleagues, and noted the reference to investment by construction firms in the Chancellor’s announcement of his Super Deduction tax initiative. Clearly, he is looking to the construction industry to help drive economic recovery.
“However, while the Chancellor spoke of the government’s commitment to Green Growth, we were disappointed that this announcement did not include support for a National Retrofit Strategy. This would not only upgrade the country’s housing stock to the highest levels of energy efficiency, but would also provide a platform to upskill the building trade with skills required both to retrofit existing homes and build low carbon new homes, helping to achieve the Government’s Net Zero ambition.”
