Wednesday’s Budget was a “bitter disappointment”, according to the Builders Merchants Federation.
The Chancellor failed to do the one thing which could have made a real difference to consumer confidence, to construction output, and to the long-term condition of our housing stock,” managing director Chris Pateman told buildersmerchantsjournal.net.
” He could have listened to BMF members – not to mention the Scottish Parliament and the Welsh Assembly – and selectively cut the rate of VAT to 5% on home improvements. It is a bitter disappointment and a major opportunity lost.
“Mr Darling could have created a climate in which home improvements were more affordable and in which healthy free-market mechanisms could have encouraged homeowners to invest in their property and ‘Get Britain Building’. He chose not to. In fact, his whole two-dimensional cash-for-council-houses approach to the housing market suggests ‘old Labour’ thinking is still the only show in town.
“In the past, the Government’s reason for not cutting VAT was due to Europe failing to agree. But this barrier was removed in March – there was no reason why the Government could not have announced a lower VAT rate. Europe’s politicians gave Gordon Brown and Alistair Darling the freedom to act – but they let us down”.
Pateman says that the Chancellor’s announcements on house building will go some way towards encouraging stability and liquidity. But he points out that the cost of borrowing does not mirror the Bank of England base rate of 0.5%. “In fact, for everything from personal mortgages to short-term business finance, rates are still verging on the punitive.”
The fact that the £175,000 Stamp Duty threshold ‘holiday’ has been extended to the end of December 2009 is to be welcomed in part, Pateman continues, but he adds that Stamp Duty remains an all-or-nothing tax which will continue to act as a disincentive to move home.
The BMF’s conclusion is the Chancellor offered some hope to the beleaguered construction industry with his half measures – though there was no mention of: re-introducing Mortgage Interest Tax Relief (MIRAS), a ‘holiday’ for Section 106 agreements or abandoning the Community Infrastructure Levy nor an implementation plan – with timings, locations & funds – to ensure the delivery of hospitals, prisons, schools, colleges and air, road & rail transport projects.
These policy proposals are all core elements of the ‘Get Britain Building campaign.