The construction sector has reacted to the Autumn Statement announced last week [22 November], with overall industry experts somewhat supporting announcements from Chancellor of the Exchequer Jeremy Hunt but there still leaves a lot to be desired.
Key points
- Taxation – The “full expensing” capital allowance, which allows companies to deduct spending on new machinery and equipment from profits, was made permanent, having been introduced temporarily in the 2023 Spring Budget.
- Business rates – The government has extended the current 75% business rates relief for eligible retail, hospitality and leisure properties for one year in 2024/25 and frozen the small business rates multiplier for business in 2024/25.
- Planning – The government has announced plans for accelerated planning decision dates for major developments in England to be guaranteed in exchange for a fee.
- Apprenticeships – The government will be investing £50 million on a two-year pilot starting in Spring 2024 to create more opportunities for training and break down the barriers which might prevent some employers from offering high quality apprenticeships.
James Talman, NFRC CEO, said: “The Chancellor has failed to go far enough on measures that support SME construction businesses, including roofing and cladding firms. Whilst the intention to take late payment seriously in the public sector is a welcome step, the government also needs to adopt this attitude to cash retentions, which leave construction SMEs in an impossible position with regards to cashflow.
“Whilst additional funding for supporting greater numbers of people into apprenticeships is a welcome move, it is not yet clear whether this will exclusively support careers in engineering. We would ask the Chancellor for clarity as to whether the broader construction sector will benefit, in the midst of a severe skills shortage.
“Finally, we would have hoped to see widespread and meaningful improvement to the Structures and Buildings Allowance, which the Chancellor has still only enhanced within special tax zones in investment zones and freeports.”
Meanwhile, the Builders Merchants Federation (BMF) has welcomed the announcement to make full expensing permanent but says the government has missed an opportunity to create new jobs and boost local growth by failing to support a national retrofit strategy to improve the energy efficiency of millions of existing homes across the UK.
John Newcomb, CEO of the BMF, said: “The announcement on full expensing will be welcomed by builders merchants and building material manufacturers along with many other businesses as they invest to expand and upgrade their facilities. But, beyond a pledge to reform elements of the planning system, there was little direct support for the construction sector in the main headlines of the Autumn Statement.
“We want to get Britain building again, but there was nothing in the budget relating to our number one ask – support for a national retrofit strategy. This was a missed opportunity to stimulate the repair maintenance and improvement sector, create thousands of appropriately skilled jobs and boost much-needed local growth, while at the same time helping millions of families to improve their homes’ energy efficiency and cut heating bills.
“We will continue to speak directly to government to promote the positive impact of a skilled RMI programme.”
Dr David Crosthwaite, BCIS chief economist, said: “In light of the OBR’s central forecast being downgraded, the Autumn Statement was really quite underwhelming for the construction industry, which has been crying out for some clarity, commitment and consistency in policies.
“Crucially, the already delayed National Infrastructure and Construction Pipeline is still nowhere to be seen, with the government saying it will publish a National Infrastructure Strategy next year.
“Investment in infrastructure, and removing barriers to private sector investment, is hugely important to driving economic growth. With the Autumn Statement, construction firms operating in an uncertain market have simply had that uncertainty prolonged yet again.
“We welcome full expensing of plant and machinery becoming permanent, for those firms who qualify. Having the ability to plan capital investment more effectively will be a huge benefit for firms looking to invest now and in the future, and maybe even a lifeline for some.
“For house builders, the promise of more streamlined planning processes and investment in new schemes may be welcomed, but we can’t forget that the significant slowdown in the housing market has been primarily caused by high interest rates creating a lack of demand. The housing sector would benefit more from tangible growth in the economy, which could in part have been boosted now by transparency around and commitment to infrastructure plans.
“Other measures, which will be welcomed by the industry, include a slice of a £50 million investment pot for engineering apprenticeships, but this doesn’t address a much wider skills gap we have across construction. The abolition of class 2 NI contributions for the self-employed, a growing demographic in our industry, is a saving of just £3.45 a week, and so a drop in the ocean considering the considerable costs construction trades have faced and continue to face.
“As BCIS recently launched the Built Environment Carbon Database, to unite the industry in making the measurement and reporting of whole life carbon assessments consistent, and as we approach COP28, it’s hugely disappointing that the government hasn’t addressed the built environment and other sectors’ significant contribution to carbon emissions. Ambitions to reach net zero continue to be hampered by a lack of mandate for reporting from government level.”
Graham Harle, CEO of Gleeds, said: “This was an autumn statement by a government that appears to have little insight into the challenges faced by those working in property and construction, having shuffled 16 housing ministers in 13 years and just cancelled HS2. Of the measures announced, full expensing is to be welcomed but is only helpful if you have projects requiring you to buy plant and machinery. It doesn’t help firms struggling to make a profit or investing in people. It’s all jam tomorrow and while planning reforms sound appealing, they take time to implement and may not be supported by any future government. Reducing business rates is helpful for a struggling retail sector and abolition of aspects of national insurance for self-employed tradespeople looks good but is worth little more than a few hundred pounds for the average plumber or electrician.
“Where was the VAT relief on the greening of housing stock when over 31 million people live in buildings that meet sub-standard EPC ratings and £50m to support apprenticeships is meagre. We were promised 110 measures to help industry but in fact there was little there to inspire confidence & stimulate investment.”
Measures announced in the Autumn Statement to speed up planning, cut taxes for small businesses, increase support for business investment, and to provide financial backing to boost apprenticeships are welcome steps to help stimulate much needed growth in the economy, says the Federation of Master Builders (FMB).
Brian Berry, chief executive of the FMB, said: “The Autumn Statement will be welcomed by small builders, with the government finally taking steps to support micro and SME businesses in a sector which has faced significant difficulty in recent years. However, this must only be the start if the government is serious about tackling the challenges we continue to face. Measures to reform the way local authorities process planning applications is good news, as are plans to help fund local authorities tackle nutrient neutrality mitigation. However, substantial increases in funding for local authority planning departments are needed if we are to see real progress.
“There were some surprising outcomes, like the changes to permitted development rights, which will bring work for house builders and the repair, maintenance, and improvement sector. Buried in the details is additional support for housing associations to deliver energy efficiency improvements. This support should also be rolled out to the owner occupier sector to help improve the UK’s leaky housing stock.”
Brian concluded: “Financial support for SMEs represents another positive step, along with other announcements to boost SME growth, such as adopting digital technology. It is good to see that skills training has received a boost, with additional funding announced to increase the number of apprenticeships undertaken.”
