Autumn Statement 2014: Construction industry responds
Published: 04 December, 2014
The Chancellor George Osborne’s Autumn Statement has been met with mixed reaction from the construction industry.
After the infrastructure, flood defence and road announcements earlier this week, Mr Osborne announced a number of other measures, and one which has been met positively is the overhaul of stamp duty.
“We are especially pleased with the Chancellor’s action on stamp duty, which comes into effect immediately,” said John Newcomb, managing director of the Builders Merchants Federation (BMF). “Moving away from the current slab system which punishes anyone buying a property for one penny over the tax threshold, to a system of marginal rates that will operate in a similar way to income tax is much fairer. This will undoubtedly benefit the vast majority of home-buyers and those supplying the house-building and home-improvement markets,” he added.
The BMF also believes that there was a great deal for small and medium sized enterprises (SME) to cheer about in the Autumn Statement, as Mr Newcomb explained: “We were pleased to see the Chancellor committing to double Small Business Rate Relief for another year, with the promise of a full review, and to cap the annual increase in business rates at 2% for the 2015/16 financial year.
“The retention and extension of several business support schemes will also help our industry as firms take long term investment decisions, for example no Employer’s National Insurance contributions on apprentices aged under 25, and no rises in fuel duty.”
Mr Newcomb added: “The guarantee of up to £500m of new bank lending to SMEs via the British Business Bank, and the extension of the Funding for Lending Scheme for another year with a fresh focus on smaller firms are also welcome initiatives that should benefit builders’ merchants and their customers.”
The Federation of Master Builders (FMB) has also welcomed the extension of the Funding for Lending Scheme, as Brian Berry, chief executive of the FMB, said: “Acquiring appropriate levels of finance remains the single biggest barrier to construction SMEs which are trying to grow and prosper and government must pull as many levers as possible to address this issue.”
Meanwhile, the BMF has expressed its disappointment that the Chancellor failed to introduce a reduced 5% rate on all building RMI work, which according to Mr Newcomb “would have a major impact on releasing pent up consumer demand in the sector”.
On the topic of apprenticeships, the FMB says that the government has offered no clarity on its plans for the apprenticeship funding reform. Mr Berry said: “Apprenticeship funding still hangs in the balance with no clarity offered by the Chancellor in the Autumn Statement. We had hoped government would publish its response to the May 2014 consultation on funding reforms for apprenticeships, but as things stand, we are no closer to understanding if ministers have taken heed of our advice and decided to review their ill-conceived proposals.”
Mr Berry continued: “Like many organisations which represent SMEs, we have warned the government that if it implements its apprenticeship funding reforms as proposed, they will greatly detract from the ability and desire of small firms to train apprentices. As two-thirds of all construction apprentices are trained by micro-businesses, this is extremely concerning.
“Although we welcome the abolition of employers’ National Insurance contributions on earnings up to the upper earnings limit for apprentices aged under 25, what we really need to hear is an alternative way forward for SME apprenticeship funding. Perhaps government has decided to kick the issue into the long grass, in which case, I urge ministers to respond as soon as possible. Uncertainty around apprenticeship policy is the last thing our industry needs when facing an ever-growing skills gap.”
On a more positive note, Andrew Carpenter, chief executive of the Structural Timber Association, has welcomed the news that the government is continuing to support the housing industry through the provision of finance for large scale projects, and that it is continuing with initiatives such as the Affordable Homes Programme for another two years.
Mr Carpenter said: “Significant funding for large scale housing schemes offers the UK government the chance to set standards for the future and further commit to off-site construction as the way forward. Developments such as the 10,000 homes in Northstowe, would give the government the chance to demonstrate how mass market sustainable and energy efficient homes can be built quickly and efficiently, through the use of off-site timber construction methods.”