The Budget: BMF crunches the numbers

Published:  25 March, 2011

LONDON: The Builders' Merchants Federation's post-Budget analysis itemised the issues that will have the most impact on the merchant industry


The Chancellor announced £250m to help homebuyers. Around 10 000 can expect to receive 20% of the cost from the Government and the builder (in low interest loans) to put towards a deposit. Those who jointly earn less than £60 000 will be eligible. The chancellor hopes to help to support 40 000 construction jobs.

Planning permission

The Chancellor announced reforms to the planning system he believes will help tackle the chronic undersupply of new homes. His measures include:

  • Putting sustainable development at the heart of the planning system.
  • Introducing a 12-month guarantee for the processing of all planning applications.
  • Encouraging councils to renegotiate developments that stalled due to planning obligations.
  • Consulting on proposals to make it easier to obtain permission to convert commercial premises into residential ones.

"All this is welcome at a time when Parliament has just criticised the Government about its decision to abolish Regional Spatial Strategies," commented Peter Matthews, the BMF's secretary.

In a report issued last week, MPs of all parties said it is unacceptable for ministers to abdicate their responsibilities by leaving it all with under-resourced and under-skilled local planning authorities. MPs warned the hiatus created by abolishing Regional Spatial Strategies will hamper economic recovery and delay new homebuilding.


Protection surrounding the Green Belts other environmental designations will remain in force.

Land for development

The Government will speed up the release of surplus publicly-owned land to allow homebuilding. A 'build now, pay later' scheme will be introduced. Homebuilders will be given land which they will only pay for once properties built on it are sold. The aim is to assist builders' cashflow.



The Government also wants to run pilots of land auctions to overcome the shortage of land for homebuilding. Parcels of land with planning permission will be auctioned to make more available.

Enterprise Zones

The Chancellor announced the establishment of 10 new urban Enterprise Zones, mostly in the cities of Northern England and the Midlands. Local authorities can keep all business rates' growth for 25 years. "The BMF is not yet sure how it will work - but we urge Local Enterprise Partnerships to use this new funding to invest in housing - especially Housing Market Renewal Areas," said Mr Matthews.

Low carbon Britain - Zero-Carbon Standard

The Government changed this policy slightly - though it confirmed that recommendations on the appropriate levels of on-site carbon compliance will form the basis for future changes to the Building Regulations - up to and including those in 2016.



Only emissions covered by Building Regulations - heating, fixed lighting, hot water and building services - will now be covered by the 2016 policy. Emissions from cooking or plug-in appliances like computers and televisions will not be addressed. "The BMF imagines more detail will follow so builders know what costs are likely to result from this," said Mr Matthews.

Carbon floor price

The UK is to become the first country to introduce a floor price for carbon. This means utilities burning fossil fuels will pay a fixed sum for permits to emit CO2 under the EU Emissions Trading Scheme. The Chancellor announced a UK starting price of £16 a tonne in 2013 - rising to £30 by 2020. Your average yearly bill will increase by approx £17 by 2015. The aim is to make carbon-based energy more expensive, so that low- and zero-carbon systems become more competitive over time.


The Chancellor did not change VAT rates. "This is a set-back as we believe there is a compelling case to review the rules and rates. Existing arrangements are complex, confusing, and do not serve their original purpose. We campaigned for 5% VAT on RMI projects that include energy-efficiency," said Mr Matthews.

The Green Deal

"There was no mention of incentives like VAT or discounts in Council Tax and stamp duty to entice owner-occupiers to bring properties up to modern standards," said Mr Matthews.



The BMF, he added, is disappointed that no money was found for another Boiler Scrappage Scheme.

Transport - fuel

The Chancellor announced a cut in fuel duty of 1p a litre - and the inflation-linked rise due next week will be delayed until 2012. He also said the fuel duty escalator - that adds 1p to fuel duty on top of inflation each year - will be cancelled for the rest of this Parliament -approximately in March 2015.


"The BMF welcomes this move to help merchants. It vindicates our decision to campaign on this with the Freight Transport Association and the Road Haulage Association.


"We wrote to Mr Osborne in January to urge him to scrap the automatic rise scheduled for 1 April 2011. The BMF reminded him that the Conservatives advocated a fair fuel stabiliser in last year's General Election manifesto. We are pleased he has given us more than we asked for, when energy costs are rising."


Vehicle excise duty increases 5.5% in line with the Retail Price Index - but is frozen for HGVs.

Company car tax

From April 2011, the fuel benefit charge multiplier used to calculate the tax payable on free fuel will increase by indexation from £18 000 to £18 800. From April 2013, the appropriate percentages will increase by 1% for all vehicles with CO2 emissions between 95g and 220g/kilometre.


The Chancellor announced £100m from central funds to help local councils repair potholes.

Merchants' business

The Chancellor announced:

  • A consultation on merging income tax and National Insurance contributions.
  • Corporation tax will be cut by 2% from 28 March 2011 - rather than the 1% previously announced - and will fall by a further 1% in each of the next three years until it reaches 23% in 2014.
  • Entrepreneurs' relief scheme to be doubled to £10m from 6 April.
  • The small business rate relief holiday will be extended by one year to October 2012.
  • Places on new work experience scheme to increase by 80 000 (totalling 100 000 over two years).
  • Funding for 40 000 new apprenticeships specifically for the young unemployed (NEETS).

Further de-regulation was promised. Lord Young's review into health and safety will be implemented - with some existing regulation proposals dropped all together.

Right to request time off to train

The right to request time off for training will not now be extended to employers with fewer than 250 employees. Such a right has been available to employees of large organisations with 250 or more employees since April 2010 and the original phased implementation plan would have seen it extended to employers with fewer than 250 staff in April 2011. It seems that implementation has been delayed rather than cancelled altogether.

Sign Up

For the Builders' Merchants News enewsletter.

In the spotlight

We have vacancies all over the UK for those who work within the Building Supplies sector.

Events Diary