CPN collects reactions to today’s highly-anticipated budget announcement by Chancellor Rishi Sunak. This post may be updated as more comments come in.
Mark Anderson, SPOA President, writes on behalf of his organisation to Chancellor Sunak regarding the proposed cut to red diesel rebates.
“It is with dismay and great disappointment that the UK Government has failed to listen or consult with the Construction Industry, which the SPOA members play a key part of, on red diesel. The only positive we can take from this is you will now enter a proper consultative approach with industry experts including the SPOA before the expiry of the two year period deadline for the rebate to be removed.
Following your announcement we would add the following points, in addition to those raised in my previous letter dated 9 March
- Why should the Construction Industry be treated differently from other industries like Farming, Fishing and Rail? You said Farmers would be exempt from these cuts, can the Government confirm if it is only Farmers (food producers) or if that exemption applies to Agriculture, Horticulture and Forestry?
- What is the cost impact on the infrastructure projects you have released, which the UK Government pay for. Those on fixed price contracts cannot be expected to hold their current contracted prices? – are you simply robbing Peter to pay Paul in an attempted to get some “green credentials”?
- How will the Government stop those involved in Farming putting their machines on to construction sites and gaining a competitive advantage? Are you aware of the cross over between Farming and the Plant Hire Industry in the UK?
- We are also unsure if you are aware of where greener technology is currently at in the Plant Hire Industry. The greener technology above 2.5T machines is in the form of Stage V diesel engines which have reduced emissions however they still require diesel. It will be some time before batteries or hydrogen can power a 40T machine.
- We also presume that this cut will eventually remove the red dye from diesel thus increasing the likelihood of diesel theft from construction sites. To add to this point how will companies stop those on site taking white diesel from construction sites – this will be a further additional cost?
- Does the Government anticipate the construction sector to use White Diesel or Red Diesel which is charged at the appropriate tax rate by the supplier?
Victoria Hills, chief executive of the Royal Town Planning Institute (RTPI), has responded to the 2020 budget:
“We welcome the spending commitments on infrastructure in this budget. There is an urgent need to upgrade much of the country’s existing infrastructure so we can reach net zero carbon, respond to growing environment risks such as flooding and overheating, accommodate population and demographic change and enable sustainable development of residential, commercial and industrial space.
“Planners are essential for ensuring timely delivery of places that meet the needs of the community. Without planners or adequate planning systems and policies, there is no realistic way to progress to zero carbon. The Government’s own advisory body, the Committee on Climate Change, recognises the role of planners in taking decisive and effective climate action. ”
“The RTPI also welcomes the £12 billion affordable housing programme announced in the budget and the 1% interest rate cut on councils borrowing to build homes.
“We also welcome the £242 million of funding for new City and Growth Deals and believe these should be used to incentivise strategic planning for housing.
Ms Hills welcomed the announcement of increased devolution for West Yorkshire which will now become a mayoral combined authority, giving it increased powers to lead on strategy for regional transport, skills training and economic development.
“The RTPI has long been calling for increased devolution and coordinated decision-making across local authorities to enable better alignment of homes, transport and other infrastructure to deliver for communities. This is also essential in meeting net-zero carbon targets,” said Ms Hills. She also welcomed the announcement of a ‘north campus’ for the civil service.
She welcomed the chancellor’s announcement that £5.2 billion would be spent on flood and coastal defences over the next six years.
“Flooding defences have to be coordinated across local authorities and must form part of the strategic planning powers at regional level. Overall this is a growth budget and the RTPI’s members look forward to supporting delivery of it.”
Hannah Vickers chief executive of the Association for Consultancy and Engineering (ACE) which represents the companies large and small who design, deliver and operate our national infrastructure, said:
“With infrastructure investment now totalling more than £600 billion over the next five years, or around 3% of GDP, the headline takeaway figures are great news for society, our members and wider industry. The numbers exceed ACE’s manifesto and the National Infrastructure Commission’s recommendations. There is no doubt that this is an historically huge commitment to investment in the future of our country and recognition of infrastructure’s vital role in driving long-term economic growth.
“In response to this, our members stand ready to work in partnership with the Government to deliver on this commitment through our pledge of £75m to scale up and invest in our capability through our Future of Consultancy programme.”
“However, the recent legal decision on Heathrow’s expansion is a timely reminder that delivery is about outcomes as much as investment. We need a clear policy direction on what this will deliver for society and the environment and hope to see more details in the upcoming National Infrastructure Strategy on how infrastructure investment will meet society’s net zero ambitions. The two simply cannot be mutually exclusive and we hold the engineering and technical expertise to unlock this challenge.”
On Coronavirus, Ms Vickers added: “All business, but especially SMEs, will be delighted to see a suite of temporary, timely and targeted responses to deal with the disruptive economic impact of Coronavirus through the tax and lending policies set out. The Chancellor’s promise that the Government would be flexible and ready to do more if required will also be welcomed by everyone.”
On devolution, Ms Vickers said: “With more funding allocated to devolved governments, announcements of a new metro-region in West Yorkshire, and more than £4.2 billion allocated to regional transport bodies to devolve both funding and decision making closer to local communities, this Government has gone a long way to matching rhetoric on “levelling up” the country with tangible action. Our members will look forward to supporting city leaders in delivering.”
On transport, Ms Vickers said: “With over 4,000 miles of strategic road and motorway schemes worth £27 billion announced, the Budget has exceeded the expectations of our own manifesto. In order to help the road network on the road to a greener future, the £500m announcement of a rapid electric vehicle charging network is also welcome. We hope that the anticipated National Infrastructure Strategy later in the year strategically links these announcements to others in the energy and housing sectors.”
On housing, Ms Vickers added: “We look forward to seeing more detail on tomorrow’s announcement by the Housing Minister on reforms to planning, however extending the affordable homes programme to £12.2 billion is welcome. The Government has done the right thing in announcing a fund to remove flammable cladding from buildings.”
On flooding risk management, Ms Vickers added: “The heavily trailed £5.2 billion for flooding, with a separate fund to help those who have been immediately affected, is welcome. We hope that the National Infrastructure Strategy will provide further definitions of the standard of protection this investment offers to the country. This is key to providing a sustainable and reassuring long term position for those at risk of flooding and the insurance industry who continue to support them.’’
On research, skills, innovation and productivity, Ms Vickers said: “We are delighted to see positive news on R&D, notably increasing investment to £22bn a year and the announcement of a new ‘blue skies’ research agency. As a result, we look forward to continuing discussions with Government on our proposals for the next phase of our Future of Consultancy campaign, the Consultancy Sector Futures Institute. This will turn cutting-edge research into applicable innovation, helping our industry and clients to prosper in a rapidly changing world.”
Paul Howells, CEO of Accumulate Capital
“From the housing crisis through to infrastructure investment and reforms to tax measures affecting landlords, the 2020 Spring Budget had a lot to live up to. While the coronavirus was a big talking point, it was refreshing to see the Government beginning to address some of the issues affecting the property market which have so far been neglected.
“Regional regeneration has the propensity to deliver many long-term benefits for the economy, so it was pleasing to see the Government committed heavily to investing in the regions. The Government’s commitment to constructing more homes is equally promising, though as someone closely involved in the construction sector, I do question whether its current objectives are achievable.”
Paul McGerrigan, CEO of Loan.co.uk
“I was happy to see property feature prominently in today’s budget. The Government is clearly keen on maintaining surging interest in bricks and mortar by reforming Stamp Duty so that first-time homebuyers in the UK are in an attractive position to buy a property.
“With interest rates at record lows, first-time buyers have a wealth of mortgage options to choose from; in this tricky economic environment, the challenge is finding a mortgage solution best tailored to their needs and circumstances.”
Jamie Johnson, CEO of FJP Investment
“When news that the £100 billion national infrastructure strategy would not be announced as part of the 2020 Spring Budget, one could not help but be sceptical about what the Chancellor would ultimately deliver in today’s speech. Fortunately, the budget provided assurances and a vision many of us in the finance sector were hoping to see.
“The Government is clearly committed to ensuring the UK remains a thriving hub for international and domestic investment. Rather than letting the immediate concerns over coronavirus overshadow the speech, Boris Johnson’s government has announced a budget that hopes to maintain the positive surge in investment activity following the 2019 General Election result. Make no mistake – this budget is not a spending spree trying to win votes. It is a budget which is laying down the long-term foundations for the UK to thrive over the coming years.”
Paresh Raja, CEO of Market Financial Solutions
“Finally, a budget to be excited about. Unlike previous Government announcements, today’s speech finally offers the assurances so many in the property market were hoping to see, particularly in terms of infrastructure investment.
“While the imposition of a Stamp Duty surcharge for overseas buyers was expected, I am hopeful that the UK’s attractiveness as a destination for investment will mean this reform will not deter international buyers of UK real estate.
“The real challenge now is for the Government to introduce and monitor the outcome of these reforms. Making bold policy statements is one thing, but following through on these is another challenge altogether.
The Construction Products Association’s Economics Director, Noble Francis
“Rishi Sunak’s first Budget rightly focused on measures to steer the UK economy through the impacts from the COVID-19 (Coronavirus) outbreak. It was nevertheless encouraging to hear the Government’s continued commitment to infrastructure and to ‘get Britain building’. As ever with such announcements, however, clear and precise detail on where specifically spending will be allocated, how it will be funded and who will do the work will be critical for industry.
Of particular note for the construction industry was the £2.5 billion pothole fund, which unlike previous pothole funds will be spent over a five-year period. In recent years pothole funds were only for the current year and so did not get spent due to lack of time and resource for local authorities. However, councils will now have time to plan properly to spend the finance where it is needed most. This sort of long-term certainty and consistency of spending should be encouraged with infrastructure delivery and this medium-term funding will be useful for construction. ”
Equally of note for our industry was the announcement of a £1 billion Building Safety Fund to cover the cost of removing unsafe materials from high rise residential buildings above 18 meters. Since the scale of the remediation efforts for the UK became clear, the CPA and colleagues across construction have encouraged government to recognise the unique role it can play by covering such costs. This new investment will be much appreciated by industry, communities and home owners alike.”
Following the budget Brendan Sharkey, Head of Construction and Real Estate at MHA MacIntyre Hudson, says the Chancellor has succeeded in spreading new work around the country
“Without question the budget is good news for construction overall; the measures to develop infrastructure, particularly new roads, flood defences and broadband will complement existing investment to ensure companies have enough work. Particularly welcome is the £1.1 billion in funding earmarked for different regions of the UK through the Housing Infrastructure Fund; this will guarantee work for owner managed businesses outside the capital.
“No change to Help to Buy is also positive news because of the support it provides to the housing market. However, the Stamp Duty surcharge on non-UK residents is very unlikely to fulfil the government’s stated aim to keep house price inflation in check; the extra cost won’t deter most foreign buyers because they can offset the small additional cost by buying when the exchange rate is favourable.
“The cloud on the horizon is labour. It’s unclear whether the industry has the workforce for all the upcoming infrastructure projects and the new immigration system creates more uncertainty. Notably the Chancellor did not announce reliefs or grants for capital investment, which would have been one obvious way to mitigate the labour issue.”
Cllr James Jamieson, Chairman of the Local Government Association
“Long-term investment in public services is desperately-needed so it is encouraging that today’s Budget signals a shift towards more spending on local priorities, such as building homes, boosting connectivity and filling potholes.
“Councils are best placed to ensure that infrastructure investment meets the needs of communities. With local control over how it is spent, councils can play a key role in providing genuinely affordable homes, fixing the nation’s roads, delivering high-speed broadband and high-quality mobile connectivity, boosting local economies, and tackling environmental challenges.
“There is clear and significant evidence that lives are improved, and the country gets better value for money when councils have the freedoms, funding, and maximum flexibility to make local decisions, so we are pleased to see further progress on new and improved devolution deals announced today.
“This should trigger renewed momentum around the devolution process to all parts of the country so councils can do more to help the Government grow local economies and improve the lives of their communities. This will require different approaches for different areas, including how they are governed.
“Councils in England faces an overall funding gap of almost £6.5 billion by 2025, just to meet inflationary and demographic pressures. We are pleased the Chancellor has signalled the start of the Spending Review process and we look forward to working with government to ensure it provides a sustainable, long-term funding settlement for councils.”
Rob Oliver, CEO of Construction Equipment Association
Rishi Sunak’s first budget statement was rightly underpinnedby action to address coronavirus crisis concerns – something that has an immediate effect on lives and livelihoods. Beyond this there were some good and bad aspects for the construction industry.
Short term measures
The estimated one million small businesses that serve the UK construction industry will receive some welcome short term relief on sick pay obligations and business interruption loans. We don’t yet know, of course, if this will in any way compensate for the possible scale of business disruption over the next few months.
Infrastructure investment
The announcement of £27 billion of investment in the country’s strategic roads network was most welcome – and we will look forward to seeing the detail of this. In his closing remarks, the Chancellor recognised that there was more work to do on the national infrastructure strategy. As recently witnessed over the legal block to the Heathrow expansion, the government refused to support a key infrastructure project.The full promised investment could get delayed or watered down by planning or court constraints unless government really commits. A good opportunity to “get it done”.
Red diesel tax concession to go in 2022
The Chancellor was entirely selective with his statistics in suggesting that off-road red diesel users were responsible for 10% of air pollutants. Ironically, motor vehicles, as the much bigger polluters, will face no tax hike and drivers will continue to pay about 10% less for their fuel compared to the start of the year. The CEA is justifiably proud that its members have reduced harmful engine emissions by over 90%, which coupled with improved fuel consumption is a “green” success.
Government has promised to consult on the application of this tax change and the CEA looks forward to being part of this process, particularly in support of plant hire companies and contractors who will be alongside us in delivering the promised infrastructure revolution.
Kevin Minton, Chief Executive of the Construction Plant-hire Association
“We are very disappointed that the Chancellor has chosen to abolish the tax relief on red diesel. This sends out totally the wrong message to the construction industry – just at the point when the Chancellor announces an increase in infrastructure spending.
“Abolishing the tax relief on red diesel will undermine the government’s own plans, add unnecessary cost to projects and create doubt for many plant-hire companies already operating in a highly competitive industry. Whilst this will not come into effect for another two years, we urge the Chancellor to engage now with the industry to understand how the subsidy is used and the efforts the plant-hire industry is making in adopting cleaner, greener engines and new technologies.
“At a time when business investment remains weak, this move will undermine the construction sector at the point when it is meant to be upskilling, investing in new technology and planning for the future,” he continued.
The abolition of the red diesel rebate will have significant financial implications for the construction sector as it will mean that users of diesel powered construction plant machinery will pay an extra 47 pence on every litre of diesel used.
