The Construction Products Association is concerned that the reduction in capital spending to just 1.25% of GDP will hold back the pace of the economic recovery.
In total capital investment will be cut by £100bn over the next five years, according to today’s Emergency Budget, announced by the Chancellor of the Exchequer earlier today.
Michael Ankers, chief executive of the Construction Products Association said; “Whilst there may be some relief that the Chancellor did not make further cuts in capital spending, the impact of what is set out in this Budget should not be underestimated.
“In 2014/15, capital spending will have fallen by a third since 2009/10. At this level it will be very difficult to maintain the built environment of this country in its current condition. The government will need to be very careful in choosing how this capital is spent in order to make sure that it is focused on those projects, such as transport and energy, that will most effectively contribute to the economic recovery.”
Some measures have been welcomed by the association, such as the plan to reduce Corporation Tax and measures to help small businesses.
However, the CPA has expressed its “major disappointment” that the Chancellor has done little to stimulate the low carbon agenda. “A VAT increase was widely anticipated but we hoped that he might have tempered this by updating and expanding the list of those products and solutions that will improve energy efficiency in people’s homes such as more efficient heating systems and double glazing,” Ankers said.
” It seems perverse that at a time when government wants to be seen as ‘the greenest ever, it should continue to set a VAT rate of 5% on the energy that we consume, but an increased rate of VAT on the means by which people can reduce their energy usage.”