Construction industry reacts to Sunak’s coronavirus Budget

Voices from across the construction industry have reacted to the Chancellor Rishi Sunak’s ‘high-spending’ Budget, delivered as the coronavirus outbreak was declared a pandemic by the World Health Organisation.

Brian Berry, Chief Executive of the Federation of Master Builders (FMB) said: “Understandably, the Chancellor has delivered a ‘first aid Budget’ to overcome the short-term crisis caused by COVID-19. But he has missed an important opportunity to announce interventions that would support the sustainable, long-term recovery construction needs. The autumn Budget must include measures to cut VAT on repair and renovation, and a National Retrofit Strategy to promote decarbonisation and create jobs and growth.”

Berry continued: “Builders are increasingly concerned about the impact COVID-19 will have on their businesses. Today’s package of measures to support SMEs through refunding Statutory Sick Pay, making temporary loans and grants available, and support for the self-employed will provide welcome relief to small building businesses and their workers alike.”

On red diesel, he said: “It is unfair that construction should no longer be exempt while agriculture remains so. He must prioritise the development of a low-cost, low-carbon alternative to support SMEs of all sectors to tackle the climate crisis.”

Richard Donnell, director of research & insight at Zoopla criticised the lack of stamp duty reform, calling it a “southern tax”, commenting: “With SDLT lining the Treasury’s coffers to the tune of £8.3bn as of March 2019, up from £2.7bn 10 years’ ago, it was always unlikely that the Chancellor would consider a significant Stamp Duty reform – particularly without an alternative source of revenue.

Melanie Leech, Chief Executive, British Property Federation commented: “The Chancellor has rightly balanced short-term interventions in response to the global health emergency and the Government’s long-term ambitions to level up the UK’s regions. Tripling the average net investment made over the last 40 years into rail and road, affordable housing, broadband and research is a necessary and serious statement of intent – to delivering improvements in productivity, economic and social wellbeing.”

She added however that “The new Stamp Duty Land Tax surcharge for foreign buyers must not make it more expensive for responsible, long-term investors to invest in and develop more much-needed homes around the UK.”

Welcoming new allocations to the Housing Infrastructure Fund, she said “It is particularly important that we recognise different land values across the country and support the provision of infrastructure where land value may not support planning contributions.”

Tom Bill, Head of London Residential Research at Knight Frank, welcomed the surcharge for foreign buyers, saying it “will bring the UK into line with many other global property markets, as an “attempt to ease affordability pressures in the wider housing market. However it “will need to be monitored carefully to ensure there are no unintended consequences, including for the forward-funding of new-build developments.” He added that “a wider re-think of stamp duty rates is still needed to increase housing market liquidity and maximise any stimulus the government plans to provide to the UK economy.”

Cllr James Jamieson, Chairman of the Local Government Association, said: “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.”

He added: “Councils in England face an overall funding gap of almost £6.5bn 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.”

Dave Sheridan, executive chairman at ilke Homes, said: “Affordable housing provision cannot be funded by private sector contributions alone and the Chancellor’s multi-billion pound boost for the Affordable Homes Programme is a timely, positive intervention that will benefit the whole market.

“However we cannot continue to rely on traditional methods of delivery if we are to build the quality homes that Britain deserves at speed and scale and the government needs to work with the industry to encourage uptake of modern methods of construction.”

Charles Bettes, managing director of architects gpad london commented: “The Government needs to prioritise refurbishment/retrofit of existing housing over defaulting to new build. With regard to VAT, new build remains zero-rated while retrofit is still taxed, and the fact the Budget does not address urgently-needed policy change is disappointing. It’s also crucial that we plan for future adaptability and look at both new build and refurbishment as part of the bigger, long-term picture.”

“It’s reassuring to see the Budget include £400m to encourage building on brownfield as part of addressing the housing crisis. However, coupled with this needs to be a wider, holistic look at community building, not just putting up masses of housing. This means creating sustainable, healthy places where people actually want to live. This is non-negotiable to ensure the success of communities.”

Director of architects astudio Richard Hyams said: “We are extremely pleased to see the Chancellor committed to investing a further £12bn in the affordable homes programme. The concerted effort to tackle the UK’s housing crisis is commendable, though the fact that one third of local authorities failed to meet their housebuilding targets last year is a clear demonstration that more needs to be done.”

He added: “If we are going to realistically address the long-term challenges posed by the crisis, we need to see not only greater budgetary support, but also a cross-party initiative which goes above the election cycle and fosters greater partnerships with those both in the public and private sector.”

“Antony Bourne, president, Industries at IFS, said: “The levels of spending give a much-needed boost to the UK’s construction industry, as the ‘infrastructure revolution’ Sajid Javid promised begins to materialise.

“UK construction has already struggled under the weight of Brexit uncertainty, and the government’s decision to delay its promised £100 billion National Infrastructure Strategy, it appears the new Chancellor is serious in his intent to support the sector, and to “level up” Britain. Further clarity is now urgently needed on when this strategy will be progressed, and what support will be given to help meet the ambitious outcomes government wants to see in a post-Brexit Britain. While the budget has increased confidence in the sector, many firms will be wary of making major commitments until this new plan is unveiled.”

“Investment in skills,” was a “notably small element of Sunak’s budget,” but is “sorely needed” as the UK leaves the EU. He also welcomed increasing the rate of Research & Development Expenditure Credit from 12 per cent to 13 per cent, which “will enable projects to be completed to schedule, and help margins increase, making it possible for the industry to deliver on the Government’s promise of delivering at least one million new homes in England by the end of this Parliament.”

Chris Stanley, Housing Manager at the Concrete Block Association provided his take on the budget: “We welcome the government’s commitment to big infrastructure, as it provides a welcome shot in the arm for the construction industry, which is starting to resurge following a turbulent few years. We urgently need to tackle issues such as housing, connectivity and local economies. These big projects, particularly a strategic plan to address our ageing road and rail networks, offer a catalyst which will hopefully drive activity to address these.

“However, looking beyond these statements, I fear that further investment of in vogue but unproven construction techniques and lack of support for existing methods/production will continue. It’s a huge disappointment for many established housebuilders, contractors and core building product manufacturers, many of whom provide significant economic benefit and employment opportunities across the UK.

“Many of our members continuously invest in developing their production to increase output, reduce manual handling and increase efficiency, all with limited or no financial backing from the government. Some of our members have expressed caution towards investing any further, as there appears to be no guarantee that Masonry is on the government’s construction and housebuilding agendas. Fundamentally, all members would happily invest if Masonry was on the agenda alongside other construction materials. Going forward, we need parity and clarity from government on this.”