In a mixed Budget for the construction sector, the chancellor left some conspicuous gaps
Despite George Osborne peppering his Budget speech this week with the slogan “Backing a Britain that Builds”, it was the three days leading up to Wednesday’s set piece announcement that contained the most substantial policy developments for construction.
A clear win was Whitehall’s response to David Higgins’ much anticipated review of HS2, published on Monday, which resisted pressure to cut costs but recommended measures to speed up overall delivery by three years. Higgins’ proposals were immediately endorsed by the Department for Transport, giving a boost to an infrastructure sector which, despite much rhetoric and grandstanding, saw output fall more than 3% in January compared with a year earlier.
Meanwhile, the announcement on Sunday that the equity loan aspect of the government’s Help to Buy initiative will be extended to 2020 will continue to build confidence in the rapidly growing housing market, which remains the central pillar supporting construction’s move into recovery. Both announcements paved the way for a series of smaller wins for their respective sectors on Wednesday. Infrastructure spending was boosted by £140m of flood defence schemes over the next two years. The housing sector benefited from a series of additional announcements, including a £500m finance package for small housebuilders and a promise that a prospectus on garden cities will be unveiled over the next few weeks. This builds on the announcement of a £200m garden city scheme at Ebbsfleet, trailed alongside the Help to Buy extension.
There has to be concern that the government is focusing too much on a sector which is building momentum at the expense of policy intervention elsewhere
But while the undoubted focus on construction’s ability to help the economy bodes well for the sector as the parties enter their pre-election politicking, there is concern at the lack of breadth to the government’s approach to the industry.
The housing sector is the only sector of the industry which is in any meaningful way contributing to the current growth in output. While any move which can contribute to the longevity and stability of that recovery is welcome, there has to be concern that the government is focusing too much on a sector which is building momentum at the expense of policy intervention elsewhere - particularly given rumbles about a housing bubble.
Where, for example, were the moves to promote school building and refurbishment, or green retrofit? These are both areas that would provide a tangible boost to construction and in particular SMEs. They would also address stated government targets (for addressing shortfalls in provision and for carbon reduction).
The downside for Osborne, of course, is that neither would have particularly obvious appeal amongst the pensioner demographic that was the focus of the government’s greatest generosity on Wednesday in terms of savings rates - and the group most likely to turn out for the polls next May.
This week’s announcements, as a package, are undoubtedly positive. But in a Budget in which Osborne also halved the tax duty on bingo - another move which may attract smiles from the older generation - his repeated cry of “house” is unlikely to prove the winner that the industry as a whole was hoping for.
Sarah Richardson, Building editor