Autumn ‘Giveaway’ Budget Benefits Construction

Autumn ‘Giveaway’ Budget Benefits Construction

With extra funding to stimulate the housing market, progress infrastructure projects and support the ailing High Street, national property and construction consultancy Wakemans says there’s plenty in the Autumn Budget to cheer the construction industry.

Tackling the Housing Crisis

The housing crisis is one of the biggest issues facing the UK right now and whilst there’s no quick fix, director of client services James Shelley believes the extra £500 million that the government is pumping into the Housing Infrastructure Fund is a move in the right direction, since it will help deliver 650,000 new homes.

He says: “Additional funding is important, but it’s not just a question of building more homes. We need to look at how we build. If the government acts on the recommendations of the Letwin Review, we may well see important planning system reforms that will help to speed up the construction process.”

Another boost for the housing market came in the form of an extension to Help to Buy, which will continue until March 2023.  However, the fact that there are strings attached – the latest equity loan scheme will apply to first time buyers only and there will be caps, in line with regional prices, on eligible properties – has prompted a lukewarm reception.

A Welcome Boost for Infrastructure

Wakemans welcomes the Chancellor’s decision to commit £28.8billion for road investment, including £25.3billion for Highways England’s 2020-2025 Road Investment Strategy, as it reaffirms the Treasury’s commitment to invest in UK infrastructure and will help to secure jobs over the medium-term. The cash injection for major regional projects is also good news for UK construction.

James adds: “The Treasury clearly has its eye on the bigger picture but the fact that the regions are not being ignored is encouraging. By giving local authorities access to an additional £420 million to repair potholes and bridges in the 2018/19 tax year, along with a further £150 million to carry out minor improvements, the government is finally addressing concerns that drivers up and down the UK have been voicing for a number of years.”

Although not altogether unexpected, the Budget heralds the end of an era for private finance initiatives (PFI). Whilst reaffirming the government’s commitment to public-private partnerships, the Chancellor highlighted two important provisos: schemes must deliver value for money for taxpayers and transfer risk to the private sector.

Mr Hammond is convinced that PFIs do not deliver on either front so, whilst existing deals will be honoured – managed by a new division to be set up within the Department of Health and Social Care- no new schemes under PFI or PF2 will be sanctioned.

Says James: “It will be interesting to see how public-private partnerships play out in the next few years. On the one hand public money must be put to the best use to ensure the delivery of quality hospitals, for example, yet it is unlikely that the infrastructure we need will be built without private investor development of some type.”

Aid for the Ailing High Street

There was good news for struggling retailers as the Chancellor announced a package of measures, including business rate cuts. The standout move is the creation of a new Future High Streets Fund, giving councils access to £675 million to promote town centre regeneration. This new funding stream could be linked to changes to planning regulations which would make it easier to covert empty shops into new homes or offices as well as smooth the introduction of more mixed-used developments.

SMEs and the Skills Shortage

The skills shortage remains a top priority for the construction industry so any initiative that will help businesses to develop the kind of workforce they need is likely to pique the sector’s interest. Changes to the apprenticeship levy could be a big boost for smaller builders and contractors, who will see their contribution towards training costs drop to 5%. Sensibly, to ensure there is no shortfall, the difference will be made up by an injection of £240 million funding by the government.

James concludes: “It’s as well to err on the side of caution, especially where new funding of this magnitude is promised but, overall, we consider that the Autumn Budget 2018 delivered a number of positives for the UK’s construction industry, which is especially important during this time of pre-Brexit economic uncertainty.”