Budget opportunity to stimulate energy-efficiency

Published:  04 March, 2011

LONDON: The Construction Products Association has written to the Chancellor in advance of his Budget statement next month, encouraging him to introduce a range of measures that will help deliver the government’s growth strategy and speed the country’s economic recovery.

Among the  proposals, the CPA highlighted an opportunity to stimulate domestic refurbishment as part of the Government’s carbon reduction target ahead of the Green Deal, which comes into effect after 2012. It has also called on the Government to stimulate the housing market and abandon its proposed fuel duty increase on 1 April.

Speaking about the CPA’s proposals, chief executive Michael Ankers, said: "The Green Deal will provide a framework for people to invest in certain energy efficient measures at no upfront cost to themselves. However, as the Green Deal will not come into effect until 2012 and we are currently well behind our refurbishment targets, there is an urgent need to encourage a higher level of domestic refurbishment before it becomes available. 

"The Budget could provide a real opportunity by allowing all work, up to the value of £10K on a domestic property, to be eligible for a 5% rate of VAT, as long as it improves the Energy Performance Certificate rating of the house by more than 10 points. By doing this the Chancellor could stimulate much needed refurbishment work.

"If there is no incentive, we are concerned that people will hold back on improvements while waiting for the Green Deal to come into effect. This would not only reduce the level of economic activity at a time when the government is keen to see growth, but also hold back even further the progress we need to make towards the 2050 carbon reduction target.

"We welcome the commitment of the Government to make this a ‘Budget for Growth’ as the long-term economic recovery of this country depends in equal measure on a strategy to reduce public spending and stimulate balanced private sector economic growth. However, this will require a commitment from all government departments working together and although each department has its own specialised agenda, an individual objective from one department must not undermine the overarching growth objective for the country, but be complementary towards it."

Mr Ankers went on to say that the Budget also needed to do more to stimulate the housing market as, according to DCLG, the number of houses being built is still less than half the annual growth in the number of new households. First-time buyers in particular are struggling to access the necessary finance and this is having a serious detrimental effect across the housing market.

"The Government needs to continue to put pressure on the mortgage financiers to make more money available for house purchase and introduce some form of mortgage indemnity scheme for first time purchasers which will encourage the banks and building societies to lend to a greater number of first time buyers so as to help rejuvenate this very important sector of the housing market.

"Both the construction industry and manufacturing sectors have key parts to play in the economic recovery," he added.

Construction is labour intensive and employs people in every part of the country. With 90% of products used in construction produced in the UK, the output from construction provides a lasting and beneficial legacy – new schools, better transport networks and more energy efficient homes.

Independent research has shown that construction has one of the highest multipliers for any investment and therefore a sector where increased investment really will generate widespread economic benefits.

"We are very hopeful that the Chancellor will use his Budget to encourage these opportunities and deliver a lasting recovery."

Other key proposals for the budget include:

· Taking the first step to reduce Corporation Tax.

· Delaying establishing a carbon floor price prior to 2017, the earliest date when new nuclear capacity will come on stream as to bring it in before that date would impose an unnecessary and expensive burden on many of the energy intensive businesses in the sector.

· Committing government to a review of the considerable regulatory and tax burden associated with the operation of, and interrelationship between, the Carbon Reduction Commitment, Climate Change Agreements, and the EU Emissions Trading Scheme.

· Modifying the R&D tax credit scheme to extend eligible costs to cover both the full employment costs and a wider range of site costs associated with running a programme. They also need to simplify the administration associated with running the scheme for SMEs, many of which are discouraged because of the administrative burden associated with this.

· Ensuring there is a long-term supply of energy at competitive rates. A clear programme for the construction and completion of new nuclear capacity is urgently needed.

· Removing unnecessary regulation and simplifying the way in which other regulations are implemented.

· Creating a planning system that does all it can to encourage investments to generate economic growth. In many parts of the country the focus of planning seems to be to stop beneficial economic development rather than to encourage it and it is essential that the Government ensures that localism does not further restrain the opportunity for beneficial economic development.

· Building on the steps the Government has taken so far to increase the number of apprenticeships and making a commitment to support even greater numbers of apprenticeships in the future.

· Ensuring the school system develops a much higher level of literacy and numeracy amongst young people and that more students in higher education are qualified in the STEM subjects.

· Urgently announce the nature and scope of the proposed Green Investment Bank. This will help set a framework for drawing in investment to public sector projects that will otherwise be delayed, along with the benefits that stem from these.

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