Chris Pateman: tough, but not hopeless times.

Spending review: How it will affect merchants

Published:  26 October, 2010

LONDON: The Builders' Merchants Federation recently-issued merchant guidelines following the Government's Spending Review, show a business landscape that is not all gloom and doom.

The Decent Homes programme will continue – but funds have yet to be outlined. The New Homes Bonus will proceed – but no new details were provided. Even 150 000 homes over a four-year period is insufficient, BMF argues, if the country is to tackle the housing crisis for the five million people on waiting lists – and generate work for hard-pressed builders.

In the Spending Review, the BMF pointed out, there was no mention of the definition of zero carbon homes or a clear planning policy guidance since the abolition of Regional Spatial Strategies and the housing targets.

The Renewable Heat Incentive – offering subsidies for heat generated from solar, heat pumps and biomass will introduced from April 2011 (as promised) with £860m available.

Feed-in Tariffs for electricity microgeneration will remain at current rates until 2013 and then be cut by £40m after an already-planned review in March 2013.

The Warm Front scheme – providing insulation grants for the vulnerable – will be phased out prior to the passing of new legislation 'Green Deal' as an obligation on energy suppliers.

BMF pointed out that there was no mention of extending the current 5% VAT rate for certain goods and services in order to incentivise homeowners to carry out home improvements that de-carbonise their property.

As for training, programmes like Train to Gain will be abolished, but there will be more spending on adult apprenticeships by up to £250m a year over the next four years.

"It is goodbye to the mess that was the Learning & Skills Council – and extra money for apprenticeships is welcome," said BMF's head of policy, Brett Amphlett.

"The Government has pledged to meet its commitment to rebuild/refurbish 600 schools and academies following the closure of the Building Schools for the Future Programme," Mr Amphlett said. "Essential hospital maintenance and priority new schemes will go ahead, with more money allocated to flood defence and coastal erosion projects over the four-year period. Some planned prison maintenance and essential newbuild works will go ahead."

According to Chris Pateman, the BMF's managing director: "We regard initiatives like the Renewable Heat Incentive and the forthcoming Green Deal as the best opportunity to grow the RMI market and encourage home owners to invest. Both emerge largely unscathed from the Spending Review: our task now is to ramp up our efforts to ensure improvements are carried out by professional local tradesmen, buying fit-for-purpose products from professional local merchants – not by DIY amateurs.

"It's encouraging that we're being helped by a growing awareness from politicians of all parties that taking carbon out of homes requires something a bit more imaginative than dumping low-energy light bulbs and DIY loft insulation on pensioners' doorsteps.

"This is especially true in Scotland and Wales, where a greater devolution of revenue-raising powers coupled with the run-up to next year's elections is sparking fresh interest in innovative ways of improving the voters' built environment," Mr Pateman said.

The BMF board has just approved a 25% increase in its policy resources between now and next April. "That will  to ensure we grab every opportunity to influence these policy-makers at this crucial time," he added.

"Last month, the BMF went to the Party Conferences to make the case for merchants. In his first speech as Labour leader, Ed Miliband MP referred directly to the fortunes of construction. Getting any major politician to even acknowledge construction exists is something of a triumph these days.

"Stage 2 is getting the Westminster contingent to understand the unique opportunity of using construction to rebuild the economy – creating genuine jobs in the short-term and real assets for tomorrow in the long-term. We call it Plan B of the Get Britain Building campaign.

"Our message to politicians is a thriving RMI market is the way to revitalise local economies.

"The attraction for municipal leaders is that every £1 spent in, say, Birmingham is captured in the city's economy - or, at least, within the West Midlands. Elected leaders can do this by insisting contracts contain clauses for a minimum percentage of inputs to come from the local supply chain."

The BMF is urging merchants to put the case for the industry's supply chain. "If you can host a visit by your MP, contact Brett Amphlett at BMF headquarters," said Mr Pateman.

"Last night, I wrote a letter to the Daily Telegraph to remind George Osborne how he can re-build prosperity to 'Get Britain Building'. It's going to be a tough winter, But not, I think, an entirely hopeless one."

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