Change and Coronavirus were the main themes of the Budget. It was a Budget warning of short term pain, but long term gain and the catchphrase was “Getting it Done”. The good news for the construction sector was that this included “Getting Britain Building”. The Chancellor confirmed that Coronavirus will create some short term pain, but Government announced some practical methods to help businesses and individuals through it. Growth this year still predicted at 1.1%, accelerating to 1.8% next year.
A quick run down of key announcements (including measures to support people and businesses through a period of uncertainty created by the Coronavirus).
For the Sector:
The Construction sector as a whole will benefit from the £175 billion additional expenditure in infrastructure expenditure. The Chancellor advised that the Office of Budget Responsibility has greeted this positively predicting that it will boost growth by 0.5% pa. A big focus of this is devolution and the Budget included the announcement of a new Metro Mayoral authority in West Yorkshire and emphasized the importance of unlocking the potential of all of the UK through this investment.
• Affordable Homes Settlement extended
• Cutting Interest Rates on Social Housing by 1% should unlock investment from this sector
• Confirming £1.1 bn towards the Housing Infrastructure Fund to build c 70,000 houses
• Additional £400 m fund for mayoral authorities to build housing on brownfield sites
• A “Building Safety Fund” worth £1 billion announced to extend the ACM Remediation Fund.
For the workers:
• Confirmed Statutory Sick Pay starting from day one
• NICS threshold raise to £9,500
• The national living wage to increase to two-thirds of median earnings by 2024 (it will increase to £10.50 / hr)
• Self Employed benefitting quicker and easier access to Universal Benefit (from day one) as a direct response to the Coronavirus. Minimum income level will be removed.
• For the employers:
• Statutory Sick Pay – as a temporary measure, businesses with less than 250 employees will be eligible to claim this with up to 14 days refunded in full
• New Temporary Business interruption loan scheme up to £1.2 million to support SMEs announced (underpinned by with 80% gov backed guarantees)
• Fuel Duty Frozen
• £130 million of new startup loans
• £200 million British Business Bank to invest in scale up
• Fair Tax – review and reform entrepreneurs tax relief, not to fully abolish, but reduce lifetime limit to £1 million
• R&D Expenditure Credit to increase from 12% to 13%
• Structured Building Fund increased from 2% to 3% to support investment
• Cut taxes on employment
• Whilst our members won’t benefit from the extension of the retail business rate relief to cover the hospitality sector, some may be eligible for the £3,000 cash grant available to companies who benefit from the small business rate relief. You can check the ‘rateable value’ of your property – this is set by the Valuation Office Agency (VOA) and used by your local council to calculate your business rates bill. www.gov.uk/correct-your-business-rates. FIS will be reinforcing our messages around Asset Management in the announced longer term Business Rate Review.
• Introduce new plastic packaging tax, £200 per tonne tax on packaging made of <30% recycled
• Red Diesel Relief Scheme abolished for most sectors delayed for two years (agriculture exempted and discussions with other industries over the summer).
• Doubling Expenditure
• £1.5 bn new funding to dramatically improve the Further Education College estate
FIS CEO, Iain McIlwee summed the speech up:
“I think we have to tip our hat at the Chancellor, he is getting things done – this was a Budget for business and the people, the tone was optimistic and inspired hope. The £175 billion investment in infrastructure is tangible and, at least in part, it has allayed some of the concerns that the Coronavirus creates. Particularly announcements on SSP are encouraging and ensure support is quantifiable and helpful. Access to credit will no doubt help allay some fears too.
Having been calling for a Building Safety Fund for some two years now, it is encouraging to hear that the ACM Cladding fund is being extended to look more holistically at this. We look forward to learning more about how this will work. My concern is that on the surface it doesn’t go quite as far as ideally we’d like, but will respond more fully on this once the detail is available”.
Find out about the FIS Three Steps to Rebuilding Construction campaign here.