Responses to the budget from across the construction and property industry
Richard Steer, senior partner, Gleeds
As expected today’s budget was the fiscal equivalent of a Paul Daniels magic show – now you see it now you don’t. We saw help for the residential sector with a stamp duty cut but actually it will only affect very few, we saw so-called investment incentives to get the banks lending again in the high street but next to nothing to help stimulate construction in the commercial sector and the announcement of infrastructure projects in rail sector but with no clue of who will pay for it – a short-term Budget by a short-term chancellor.
David Flanders, managing director at contractor Coniston
For those of us working in construction this budget promised little and delivered less. The cut in stamp duty has the potential to be helpful for those of us in housebuilding but as a contractor with a wide range of housing projects this will only help stimulate demand in a small sector of the market but it is better than nothing.
But cashflow is the lifeblood of all contractors and the measures to stimulate the high street lenders will do little to get them to loosen the stranglehold that they have on the windpipe of the average contractor. A first time buyer can do nothing if the banks will not lend money."
Richard Diment, director General of the FMB
Helping first time buyers get on the property ladder is an important step but most people will still struggle to get the funding they need to secure a mortgage despite the Chancellors promise of further lending from state owned banks. The Chancellor could also have taken the opportunity to reform the stamp duty to abolish the slab structure and replace it with a fairer marginal system similar to income tax.
James Thomas, head of residential investment and development at Jones Lang LaSalle
The extension to the stamp duty threshold is positive news for the UK housing market. This incentive will provide a much needed stimulus to the market at a time when first time buyers are struggling to raise deposit monies.
The underlying economic conditions, in conjunction with a predicted rise in unemployment, is likely to dampen price growth and the concern of rising interest rates later in the year will continue to weigh on the market. The extension to the stamp duty threshold should motivate and support other buyers looking to upscale through the market.
However, the 50% tax rate on high earners which comes into force next month and the one off bonus tax windfall is likely to feed through and impact the prime central London residential market, as is the increase in stamp to duty to 5% on properties purchased over £1 million.
Brian Berry, director of external affairs at the Federation of Master Builders
The big thing was the stamp duty for the first time buyers, although the budget failed to address the key point of mortgage liquidity.
The £2.5bn SME growth package for skills and innovation was also a big boost, and will help stimulate the beleaguered SME sector.
They talk of 15% worth of government contracts going to the SME sector is a great headline grabbing figure. The principle should be lauded, but its success will be seen in how the SMEs are able to tap into that market.
At the moment, many building firms are finding it difficult to get involved at the moment because of the procurement regime. This needs to be simplified first. Many SMEs are currently excluded because of the many frameworks in place that they weren’t able to bid for because of their size.
The prompt payment measures again ticked all the right boxes, but we need to make sure this is carried through.
Paul King, chief executive of the UK Green Building Council
The green investment bank is sending out the right signals, and could lead to a carbon revolution. But the £2bn is a mere drop in the ocean, and the government needs to start leveraging more from the private sector.
David Symons, director at global environmental consultancy WSP Environment & Energy
The green investment bank is welcome, and mirrors programmes already in place in France and Germany. But the Government estimates that it will cost between £324 and £404 billion to deliver a low carbon economy by 2050, and a £2bn fund would therefore provide just 0.5% of this total cost.
Stewart Baseley, executive chairman of the HBF
This Budget is a huge boost to both home buyers and the house building industry. I am pleased the Government has recognised the importance of ensuring that people are able to buy homes.
Michael Ankers, chief executive of the Construction Products Association
Really a phoney Budget because the real budget will come after the Election. What we have now is electioneering by the two main parties. Positives are the infrastructure bank which we have been pressing for, a range of measures for small businesses including improvement payment and certain tax benefits, and a recognition of the importance of supporting renewable etc, although the measures are fairly modest and we are disappointed that the government have not decided to extend the boiler scrappage scheme or reduce VAT on energy efficient products.
Still a real concern that public sector investment in construction will be withdrawn after election faster than the private sector investment increases.
Stuart Morley, head of research at leading UK property consultant GVA Grimley
The Treasury’s economic growth forecasts of 3 – 3.75% pa from 2011 onwards remain far too optimistic and compare to a more realistic consensus view of 2 - 2.5%pa. Lower economic growth will mean lower revenue received by the Treasury, an even greater borrowing requirement, leading to more expenditure cuts and tax increases, and higher gilt yields/borrowing costs. Property occupier demand will therefore remain below trend, rental growth will be low while pressure on property investment yields will increase.
Paul Flatt, group chairman, hurleypalmerflatt
The engineering, property and construction sectors have recently had to contend with continuing planning reform and new environmental legislation, all of which add cost to the development process. Entrepreneurial companies in the sector need the financial flexibility to innovate and grow; further cost in the shape of new taxes will only stifle this.
Tom Foulkes, Institution of Civil Engineers (ICE) director general
A £2bn Green Investment Bank (GIB) is certainly a good start – we have been calling for new thinking on how to unlock the long term sources of funding needed to finance infrastructure for some time. However, as Infrastructure UK has acknowledged, the UK will need to invest £40-50bn per annum in infrastructure, so with a starting fund of only £2bn clearly there is some way to go.
Rosemary Beales, national director at the Civil Engineering Contractors Association
This has all the outward signs of being a budget for infrastructure.
Having fought for so long to see a credible plan for the future of the UK’s transport and utility infrastructure, today’s Budget announcement on the National Infrastructure Framework is something for the whole industry to celebrate. But with a General Election on the horizon, it is vital that politicians of all political persuasions maintain this momentum, committing both to production of the framework and the investment proposals that will be contained within it.
Sarah Whitney, managing director regeneration and development, CB Richard Ellis
Any progress on the introduction of tax increment financing (TIF) is welcome news, but the need is acute and introduction is still a long way off. These pilots appear, on the face of them, to be very limited. How will we monitor and measure their success? The Government has already said they need legislation to introduce TIF. What further evidence do they need before moving to pass the legislation? There’s a long lead time in getting the required Act in place and another long lead time inherent in putting infrastructure in. Meanwhile, major developments that promise real economic growth are stalled. There is no time to waste in cracking on with this.
Liz Peace, chief executive of the BPF
Tax increment financing (TIF) is widely used across the USA and now Scotland is introducing three of its own, defying the government’s claim that this requires primary legislation. Clearly we need action rather endless assessment if we want to usher in new investment and many will question why Scotland can TIFs and the rest of the UK cannot. Obviously the whole point of TIF is to unlock otherwise unviable schemes, so it is essential any trials examine this fundamental premise.
Ruth Reed, RIBA president
Architects will be anxious to ensure that the construction sector is thriving, and continued support for small and medium businesses is very welcome. In particular, the pledge to widen access to government contracts for small businesses will be particularly welcomed by smaller practices, which are so often frustrated by the procurement process.
Imtiaz Farookhi, chief executive of NHBC
We cautiously welcome the measures announced in today's budget. However, nobody should underestimate the challenge in providing the UK with the number of new homes it requires. Even at its peak the UK was not producing enough homes and despite a recent upturn, our figures show that we are still today producing 40% fewer homes than we were three years ago.
In this context, the budget measures announced on stamp duty and local authority planning are welcome boosts to house building in the UK.
Read here for More responses to the change in stamp duty