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The anticipation is killing

Things may come to those who wait…but only the things left by those who hustle

I don’t think I’ve ever known a run-up to the Budget like it. We’ve always had leaks and speculation about what will or won’t be contained in the Chancellor’s battered red briefcase, but this year, it seems there’s more hanging on it than before.

Never before has a Chancellor had so much opportunity to do so much to help a beleaguered industry – and I’m talking about this beleaguered industry, not cars, or brewing or technology or banking or any other sector with its hands held out.

The construction industry is united in a way I certainly can’t remember it being before. Organisations and companies across the sector have come together to call upon our darling Chancellor to stop tinkering and throwing good money after bad in the direction of the banks and actually do something that might help stimulate the building market.

The experiments with VAT reduction in other European countries showed that it works, that it does stimulate activity and, especially in France, it turned out to bring in more money to the government’s offers, rather than less.

The rumours this morning are that we will see a £1bn boost for new housebuilding. But new housebuilding – social and private- is only a part of the building industry. By giving a boost to the R&M market with a VAT rate cut, the Chancellor would be encouraging homeowners to spend on their homes, probably in ways which will increase their energy efficiency. It would also mean more work for builders, plumbers, electricians, decorators, insulation installers….etc. And more sales for merchants and manufacturers.

The industry has already lost thousands of jobs. Cutting VAT to 5% on R&M work won’t mean that Hanson and Wienerberger, for example, can re-open their closed factories, but it will help to get things moving again, slowly. Then again, property spend is linked to housing transaction levels, so while they are still low we can’t expect miracles, VAT cut or not. But then isn’t moving forward slowly better than not moving at all?

I’m fairly sure that this government has lost whatever fragile grasp it ever had of the plot. If, tomorrow afternoon, we get fiscal encouragement for people to trade in their old bangers for a ‘greener’ new car and nothing for building, then I’ll know it for sure.

About Fiona Russell-Horne

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

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