The construction industry has given its take on last week’s Autumn Statement announced by recently appointed Chancellor of the Exchequer Jeremy Hunt.
One point the sector has praised is the introduction of an Energy Efficiency Taskforce (EETF), which will be charged with delivering energy efficiency across the economy.
This came as the government announced a new long-term commitment to drive improvements in energy efficiency to bring down bills for households, businesses and the public sector with an ambition to reduce the UK’s final energy consumption from buildings and industry by 15% by 2030 against 2021 levels. New government funding worth £6bn will be made available from 2025 to 2028, in addition to the £6.6bn provided in this parliament.
This is in addition to the government adjusting the Energy Price Guarantee, which places a limit on the price households pay per unit of gas and electricity, from April 2023. This means that a typical household in Great Britain will pay £3,000 per annum (up from the current £2,500 per annum) from April 2023 to April 2024, saving £14 billion of government spending.
It’s good news that increased energy efficiency for all buildings is a top priority for the government, but delivery will be key to ensuring carbon reduction ambitions are met, says the Federation of Master Builders (FMB).
Brian Berry, chief executive of the FMB, said: “The FMB welcomes the strong focus on energy efficiency with the creation of a new EETF and an extra £6bn in funding. The industry stands willing and ready to help improve the energy efficiency of our existing buildings and will be looking to be an active partner in the Taskforce.
“The appointment of an adviser on skills reform and investment in the education system to focus on improving vocational skills is also very welcome. Local builders have long been grappling with a shortage of skilled workers and now is the opportunity to properly invest in vocational skills routes and get more people into the construction industry.”
Brian concluded: “It is disappointing that no direct mention was made about the need to of boost housing supply at a time when we need more homes or to reform the planning system which is holding back development.”
Furthermore, the Builders Merchants Federation (BMF) has also welcomed the announcement of the EETF after the organisation has been calling for a long-term National Retrofit Programme to upgrade 29 million UK homes to make them warmer and cheaper to run.
John Newcomb, CEO of the BMF, said: “Soaring energy bills have focused attention on the need to insulate our homes. The Chancellor has had to make difficult decisions to support our economy, but we are extremely delighted that he has responded to this key issue raised by our industry, which will have economic benefits as well as meeting commitments on carbon reduction made at the COP26 climate conference.
“BMF members are already providing the materials, products and solutions required to create low carbon, energy efficient homes. We are ready to work with the new taskforce and the wider construction industry to make retrofit a success.”
In response to the Chancellor’s Statement, James Talman, CEO of the National Federation of Roofing Contractors (NFRC), said: “We are pleased to see the Chancellor commit further funding to improving the energy efficiency of the UK building stock from 2025. The NFRC and the rest of the construction industry have been calling for additional commitments in this area: improving the energy efficiency of homes and commercial and industrial buildings is a logical step as we seek to lower energy bills and cut carbon emissions. NFRC members stand ready to deliver on these ambitions.
“In order to support contractors to deliver a successful ongoing programme of retrofit, we encourage the government to continue to invest in and improve incentives for owners with limited financial resource to retrofit buildings. The government must also set aside funds to train operatives in the necessary green skills, to ensure that roofing contractors have access to the people they need to carry out this important work. Currently, skills shortages present major challenges for many construction businesses when they wish to expand.
“Consequently, the Chancellor is right to highlight the importance of skills reform and ensuring that young people leave school ready for the working world. We look forward to further details about plans to invest in and improve skills offerings, and ask that the government works with industry to develop more for young people that prepares them to enter the construction workforce. This includes showing them the diverse range of opportunities available. This is key as the government commits to funding building work that will require a larger ‘green skilled’ workforce.”
A comment from the Royal Institution of Chartered Surveyors (RICS) said: “RICS is pleased that the UK government announced its commitment to energy efficiency and decarbonisation in the Autumn Statement keeping to its promise to reduce final energy consumption from buildings and industry by 15% by 2030. RICS welcomes the announced £6.6bn investment in energy efficiency for this parliament and a further £6bn annually committed from 2025. We hope this funding can reach projects as soon as possible.
“Energy costs greatly impact prices throughout the economy, particularly the building sector. Establishing efficient use and low-cost energy production is vital for economic recovery, and this recognition is clear in the statement.
“RICS looks forward to working in partnership with the new EETF and advising it on our recommendations which include radical reforms to the EPC system and the means to track carbon output throughout the built environment.”
Dr David Crosthwaite, head of consultancy services of the Building Cost Information Service (BCIS), said: “With the wider economy falling into recession the Chancellor had a real balancing act to perform in the Autumn statement. The announcements will affect the various sectors of the construction industry in different ways.
“Proposed increases in taxation, both personal and corporate, combined with the high interest rates will have a negative impact on the investment climate, leading to potential projects being stalled or postponed in the private sector.
“Housing is likely to be worst hit, with housebuilders already scaling back investment. The retention of the stamp duty relief until 31 March 2025 will do little to offset this.
“The proposed funds for research and development and investment zones may produce increased capital expenditure in the medium term, in the private, commercial and industrial sectors.
“The continued commitment to capital investment and the announcement to continue with the major infrastructure projects such as HS2, Northern Powerhouse Rail and Sizewell C, is likely to maintain infrastructure spending at its current high level and will be welcomed by the industry.
“The continued commitment to the New Hospital Programme and increased investment in the NHS and schools may well support spending in the public sector.
“With the economy shrinking and increasing costs, output from the commercial and industrial sector is likely to fall.
“The setting up of the EETF and the commitment of an additional £6bn funding between 2025 and 2028, to deliver energy efficiency, should give a boost to this sector if the funds are taken up.”
BCIS estimates of the impact on construction output over the next two years are as follows:
- Housing – down
- Infrastructure – steady
- Other private – steady
- Commercial – down
- Industrial – down
- Repairs and maintenance housing – possibly up if people will spend the money on energy efficiency
- Repairs and maintenance infrastructure – up as some investment will be repairs and maintenance
- Repairs and maintenance public sector other – up given funding for health and schools
- Repairs and maintenance private sector other – down, less money available in the commercial sector.
