Gordon Brown's Budget leaves construction unscathed
The construction industry broadly welcomed Gordon Brown's Budget – primarily because of measures it didn't contain.

Fears that investment in schools, hospitals and other public facilities would be cut proved unfounded. Instead Brown upped borrowing to £27bn to cover the shortfall in public finances caused by his overoptimistic economic growth forecasts.

Tax and public expenditure remained practically untouched. "A standstill budget," is how Construction Industry Council chief executive Graham Watts described it. This Budget was largely bereft of tax increases because Brown had already raised National Insurance contributions last year for both companies and their employees.

Not surprisingly, industry chiefs welcomed Brown's commitment to public expenditure. Chief executive of the Construction Products Association Michael Ankers hailed Brown's "firm stance on public expenditure", while the National Federation of Builders' chief executive Barry Stephens welcomed the chancellor's commitment to sustained investment in public services."

There were even a few sweeteners for construction firms. The expansion of the work permit eligibility in construction, which will enable more skilled immigrants to come to Britain, was welcomed by the CIC.

The government also extended the capital allowance on IT and communication technology in a bid to encourage innovation. This move was applauded by the National Federation of Builders, which also appreciated Brown's measures to tackle red tape. These included making more small companies eligible for less onerous accounting and reporting arrangements.

Brown also announced that he would invite experts from the CBI and Institute of Directors to look at removing unnecessary bureaucracy. The CIC approved of the initiative but said that views of experts from across the construction industry should also be sought.

A proposed report on reducing barriers to increased housing supply was also announced by Brown, who said that he would tackle intransigent planners. In the meantime, Brown warned that John Prescott would call in proposed major housing developments if they failed to provide enough homes. He also threatened to introduce binding plans for local planning authorities to increase certainty in the housing market.

The announcement pleased the House Builders Federation, which said that more planning consents would increase the supply of housing and make prices more affordable, reducing the need for publicly subsidised housing.

There were some omissions according to some construction groups. The CPA and NFB were both upset that Brown has once again failed to reduce VAT on either repair maintenance and improvement activity. The NFB's Stephens called it a "missed opportunity" in tackling the shortage of affordable homes and the on-going problem of rogue traders.

Generally, though, this was a benign budget, and the construction industry can count on an expanding public building sector for at least another year. Whether that will be the case in the medium term remains to be seen. This will depend on whether Brown's optimistic economic growth forecasts of over 3% a year are a figment of his imagination or grounded in reality.