The Budget: what the industry had to say...
Published: 23 March, 2011
LONDON: Local economies are among the big beneficiaries of today's Budget announcements, with Chancellor George Osborne promoting growth through tax cuts, support for first-time buyers, new enterprise zones and a £3bn 'green investment bank'.
Following the Chancellor's Budget announcements earlier today, comments continued to pour in to Builders' Merchants News from construction industry bodies and observers. Here's what they had to say...
CBI director-general John Cridland said the Budget will help businesses grow and create jobs. "The Chancellor has made it clear the UK is open for business."
He added that the extra 1p cut in corporation tax will help firms increase investment. "Meanwhile, significant changes to entrepreneurs' taxation will rightly focus much-needed support on businesses with growth potential.
"Reductions in regulations on businesses and the promise of a faster planning system will provide relief to companies trying to take on staff and invest.
"Support for manufacturers through the Climate Change Agreements will help them manage energy costs, which is particularly important given that the Government is pushing ahead with a carbon price floor.
"Businesses and consumers will benefit from reduced fuel taxes, but the increased tax on North Sea oil and gas could be counterproductive, and will create uncertainty for future investment."
On housing: "Support for first-time buyers will inject confidence into the housing market and could create thousands of construction jobs. This is only a short-term solution as the scheme only runs until the end of next year. We need a longer-term approach to meet our growing housing needs."
On the low carbon economy: "Support for manufacturers through the Climate Change Agreements will help them manage energy costs, which is particularly important given that the Government is pushing ahead with a carbon price floor.
"The Green Investment Bank will play an important role in mitigating some of the risks for companies planning major low-carbon investments. The additional £2bn is welcome, but the bank should have powers to borrow from the outset to give investors confidence."
On planning: "The Chancellor is right to make the link between an effective planning regime and economic growth. This sends the right signals to attract the £200bn needed for the UK's national infrastructure upgrade."
On enterprise zones: "The new Enterprise Zones could provide positive incentives for local authorities to promote development, allowing the Government to carry out a real-time experiment on what actually works as a spur to economic activity."
Research agency Glenigan said the Chancellor's 'Budget for Growth' will be welcomed by the construction industry, but warned that UK economic growth will be weaker this year than previously forecast and the Budget deficit somewhat larger. Stronger economic growth is forecast for towards the end of the current Parliament, it added.
The British Property Federation welcomed details of the First buy scheme. Ian Fletcher, director of policy at BPF, said: "This package broadly makes sense, because it targets home deposits, and is about as much as the Government could realistically do in current circumstances. It is important that any government spending at this juncture is also supporting growth and jobs and we would like to have a seen a refined policy which targets such aid at homes yet to built or completed, rather than a means of housebuilders selling unsold stock."
BPF chief executive Liz Peace added that by introducing measures to streamline the planning applications and related consents regimes from thew planning system, and speeding it up was welcome. "But we are concerned that this additional pressure could result in unnecessary rejections."
Regarding consultation on proposals to make it easier to convert commercial premises to residential, Ms Pearce said BPF hoped local authorities will view this very positively.
"Supporting office to residential conversions will provide them with a double boost to their income, via the New Homes Bonus and the fact that there are replacing a central government tax - business rates, with local council tax receipts. If that were not enough, conversion work will provide a much needed boost to jobs and growth and revitalise some rather shabby looking blots on our townscapes."
Ms Pearce added that: "BPF supports the setting up of new enterprise zones. Previous EZs in the UK served to kick start a process of regeneration which would not otherwise have been possible with new factories, offices and other commercial development being delivered in some very challenging areas and times. The long-term transformation of London Docklands bears testament to this."
Nathan Goode, head of energy, environment and sustainability at Grant Thornton UK believes today was a good day for green energy.
"Confirmation that the green investment bank (GIB) is to be funded with £3bn rather than the £1bn announced earlier and will start operations a year earlier is very encouraging," he said.
"The power to borrow from 2015-16 also means that in time it will be able to contribute on a bigger scale. For the bank to be a success its purpose needs to be clear. In broad terms, GIB should accelerate the transition to a low carbon economy, particularly in the energy sector by focusing on areas of market failure.
"I am pleased that the Government has carefully considered timelines and how the bank will run. However, industry is now keen to see more concrete decisions.
"The location of the bank's headquarters provides a unique opportunity to secure effective collaboration between industry and finance and accelerate the path to commercialisation. For this reason, although London may be the assumed location, Edinburgh, with its clean energy 'industrial hinterland', specialist support services and significant critical mass experience in the renewables sector, looks like a strong candidate."
This was also a good Budget for green energy in line with the Government's aspiration to be a world centre for green energy.
"Other positives include a carbon floor price that now starts at £16/tonne CO2 (a little above the current market price) and will increase to £30/tonne of CO2 in 2020. This will incentivise investment in low carbon generation," said Mr Goode.