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Lame Budget misses opportunities

There was some disappointment in the construction industry that Chancellor Darling’s 2009 Budget did not go far enough in helping the beleaguered industry.

Lame Budget misses opportunities

The Chancellor announced:

· guarantee for mortgage-backed securities to encourage responsible lending

· £175,000 Stamp Duty threshold ‘holiday’ extended to end of December 2009

· £80 million extra for HomeBuyDirect shared equity scheme for first-time buyers

· £500 million extra to kick-start stalled or incomplete housing development

· £100 million extra for local authorities to build new energy efficient houses

· £50 million extra to accelerate modernisation of armed forces’ housing

· £750 million investment fund to provide financial support to emerging technologies

· £435 million extra to save energy in homes, businesses & public buildings

· £405 million new funding for low-carbon technology & manufacturing projects

· £2,000 discount in buying new cars when trading in vehicles over 10 years old

· additional funds for universal digital & broadband coverage for whole country.

Whilst the £500m boost for housebuilding was welcomed, it fell short of the rumoured £1bn rescue package and it focuses on new housebuilding rather than doing anything to help the RMI market.

The BMF, for example, are disappointed that the Budget did not include provision to lower the VAT rate of 5% for all building RMI work nor to reintroduce of the 50% Empty Property Rate Relief, nor announce a proper implementation plan to ensure the delivery of hospitals, prisons, schools, colleges and air, road & rail transport projects, all of which are included in the Get Britain Building manifesto.

At the Modern Masonry Alliance, one of the partners behind the Get Britain Building campaign, director Mike Leonard says the measures are “too little, too late”.

He said: “We will work with the Home Builders Federation and the Homes and Communities Agency to do what we can to open up sites and the fact that brick and block is available and ready to go will be crucial given the tight timescales and the need to spend the money this year.”

However, despite calls from the Get Britain Building campaign and others in the industry, the Chancellor did not introduce a reduction on VAT to five per cent for home repairs and refurbishments.

This is a “massive missed opportunity” according to Leonard, who added that the decision “underlines just how out of touch this Government has become with what is needed to fuel a long-term recovery.

“What we have seen in this, the most important Budget for many years, is not the answer and will cost many more thousands of skilled workers to lose their jobs,” he warned.

Another GBB coalition member, the Federation of Master Builders, called the Budget a “timid response”. Director of external affairs Brian Berry said: “The Chancellor had an opportunity to invest in our housing but instead has offered a lukewarm package of financial measures that will do little to increase the housing supply or to make our homes more energy efficient. The amounts on offer are a drop in the ocean.

“The Chancellor has missed a golden opportunity to help build Britain out of the recession. A £5 billion package would have created 55,000 new jobs as well as help increase the supply of much needed homes. A cut in VAT to 5% would have helped to bring 300,000 empty homes back into use.”

He concluded: “The decision to extend the Stamp Duty holiday on properties sold for less than £175,000 until the end of the year merely reflects the Chancellor’s timidity to take decisive action. A bolder step would have been to raise the threshold on a permanent basis to £205,000, representing the average price of a house in the UK, if the Chancellor was serious about helping kick start the housing market. Instead the Chancellor lacked the courage and conviction to do what is needed to get the housing market back on its feet and a result we are not going to see a marked increase in market activity.”

Michael Ankers, Chief Executive of the Construction Products Association, said: “Whilst welcoming the additional measures to stimulate the private housing market and improve the condition of the public sector housing stock, there is little else in the Budget to comfort a construction industry that is facing a decline in output this year in excess of 12. The additional £300m for the Building Colleges programme will support only about 10% of the projects that the Learning and Skills Council have indicated are up and ready to go.

“More disappointing still is the failure to include any measures that will encourage improvement to the existing private sector housing stock, and yet again the government has ignored the united voice of the construction industry to reduce VAT to 5% on domestic repair and maintenance. This really is a missed opportunity, particularly given the very strong encouragement last month to Member States from the European Council to take this step. This failure to act is even more surprising given the announcement in parallel to the Budget that the government will be seeking to reduce carbon emissions by 34% by 2020 – a target that critically depends on making our existing housing stock more energy efficient.”

The announcement of a top up scheme to support credit insurance is welcome, Ankers adds. “However, we have been pressing for this since before Christmas and it will only help companies who have found credit withdrawn since April 1. The real damage was done before then and for those many companies that have had credit insurance reduced in the early part of the year, it is of no value at all.

“Despite widespread calls from across the whole of manufacturing, the Chancellor has failed to do anything further to reduce the burden of empty property rates on manufacturing companies that have been forced to mothball operations because of the recession. This will do nothing to help these companies through these difficult times and ensure that UK product manufacturers are in a strong position to take advantage of the upturn which the government is so confident is just around the corner.”

About Fiona Russell-Horne

Fiona Russell-Horne
Group Managing Editor across the BMJ portfolio.

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