All the Budget news and reaction as it happens
Richard Steer, chairman of Gleeds Worldwide, argues that the real story is rising inflation and unemployment, which dwarf in importance any announcements made by the Chancellor.
He says: “It was a mixed budget with a lot in it. The headline grabbers were the fuel duty decrease and corporation tax reductions which are both helpful but sadly the most important data came before the budget showing rising inflation and increasing unemployment. Most of the measures announced today will not have an immediate impact on these growth inhibitors.
“For instance, for first time house buyers a new scheme is great but if you don’t have a job you can’t get a mortgage and the unemployment figures show that employers, including those in construction, are not yet convinced that an upturn is around the corner and are simply not hiring.
“Likewise, new Enterprise zones are to be welcomed but are only helpful if you can borrow to invest and we are still not seeing a change in attitude by risk averse banks.
“Although we welcome commercial property sector investment initiatives we needed less carrot and more stick applied to the banks who need to see construction as a customer not a cost.”
Nicholas Thompson, chief executive of Aukett Fitzroy Robinson, thinks the Budget could help architects by stimulating regional growth.
He says:“For the architectural industry and construction generally the proposed reforms to planning laws should be a welcome stimulus to regional activity - of which there has been a dearth over the past two years. Also small firms (like architectural practices) should benefit from one or more of the proposed changes to corporation tax, business rate relief or the enterprise zone initiative, and all should benefit from the moratorium on new regulations.
Dan Phillips, director of sustainability at Buro Happold, echoes many others when he criticises the lack of borrowing powers for the Green Bank.
He says: “The increased funding for the green investment bank is great news but it will be shackled until it has borrowing powers. The Bank shouldn’t be used simply to invest in risky projects that end up failing to deliver the expected carbon savings. It should provide support for a mixed portfolio of products and ensure that it measure its results in real time so that it can learn and realign its priorities based on real world performance improvements.”
Brian Green has calculated that real earnings will fall a lot more than previously forecast by the end of 2012.
He says: “If we start from a base of 100 in 2009 and use the use the RPI measure of inflation, real earnings fall are expected to fall to about 93.1 by the end of 2012. This compares with a figure of 96.4, if you do the same calculation with last year’s forecast. What was expected to be a nasty squeeze now looks a lot nastier.
The UK Green Building Council has slammed the budget for a U-turn on zero carbon homes. Here’s a comment from Paul King: “In the space of two weeks, this government has gone from a firm commitment on zero carbon homes, to a watered down policy. A zero carbon home will no longer do what it says on the tin. The world leading commitment that new homes would not add to the carbon footprint of our housing stock from 2016 has been scrapped despite a remarkable consensus between industry and NGOs in support of it.”
There is more on the UK-GBC blog here. It has scoured the supplmentary Budget document called Plan for Growth for the details. Thomas Lane (@tlanebuilding) is currently writing a blog to explain all.
Boris Johnson has revealed that the Royal Docks will be the Enterprise Zone in London.
The Budget has now finished. Here are some more thoughts from EC Harris’ head of public sector Graham Kean.
“I wonder if the raft of initiatives to channel money to charities signals the reliance that this Government will place on the 3rd sector delivering public services…and competing against traditional ‘outsourcers’?”
“The Chancellor’s re-stated commitment to education sounds like it has a very heavy emphasis on vocational training to me…a true skills based economy will need more than this to drive the sort of recovery outlined earlier.”
From Alan Kemp at EC Harris: “Increases in carbon tax mean that commercial office users, and in particular government departments in Whitehall, need to get serious about new ways of working and rationalising their office portfolios – following the excellent examples set by DfE and BIS”
In summary, oil companies are subsidising the removal of the fuel duty escalator unless oil price gets very low.
Fuel duty now: It’s expensive to fill up a Ford Focus according to Osborne - I don’t think he’s got one.
The North Sea tax hasn’t been changed since 2006. A fair fuel stabiliser - 20% to 32% increase on production of oil and gas in North Sea. This will raise additional £2bn in revenue according to Osborne
Revenues will be used to delay raise in fuel duty. The fuel duty escalator will be cancelled for rest of Parliament.
If oil price falls below $75 the escalator will come back. This is the “fare fuel stabiliser”. Dave Lowery is very doubtful about how this will work.
Moves will take affect from 6pm tonight. Petrol will be 1p less at the pump.
Construction bosses watch out. Private jets will not be exempt from tax.
From April next year 0% tax band will rise to £8,105. Nobody will be ’pulled into higher tax bands’ in this budget according to the Chancellor.
1:19 Tax avoidance measures will raise £1bn a year. He’s looking at closing tax loopholes including three on Stamp duty land tax
Will be cheaper to employ people earning less than £21,000.
Kean: The Chancellor unveiled a £250 million shared equity fund (very similar to the previous government’s Homebuy Direct initiative) and underpinned by the Bank Levy; targeted at the first time buyer market. This fund is only for new build homes also providing support to house builders. It is believed that the Government will contribute 10%, house builder 10% and the purchaser only 5% of the cost of a newly built home; making a 25% deposit of considerable interest to the mortgage market. This is most welcomed, but does not address the crisis in the second hand housing market, which is suffering hugely from an inability to sell houses and for families to move as their needs change.
Kean: Extension of the capital allowances from 4 years to 8 years will be welcomed by developers as this will have an immediate and direct impact on viability and margins. Remodelling in the light of this change may unlock many stalled schemes.
Kean: An incentive to promote renovation of business premises should create a stream of opportunity. Let’s hope business owners pick up on the business benefits of greening their estate too.
40,000 new apprentics announced for this year, including 10,000 higher value apprentices. 24 new technical universities. That’s double the previously announced figure.
Kean on planning: The approach to reforming the planning system is seeking to create jobs, promote sustainability to ensure that applications are successful and green belt is sustained. The Regional Growth Fund will should underpin this, helping make applications fundamentally viable (while house and land prices remain suppressed).
Introducing a new carbon floor price. £16/tonne in 2013, target price £30/tonne by 2020. Creation of Green Investment Bank. Osborne commits £2bn more funded by asset sales. Bank will start operation in 2012, one year early. Will leverage extra £15bn investment from private sector. Will start borrowing from 2015/16.
Osborne announces 21 new enterprise zones in Birmingham and Solihull, Leeds, Liverpool, Tyneside, Tees, Greater Manchester, Derbyshire, Nottingshire, Sheffield. Also in London: Boris will choose one.
Enterprise zones will get reduction in business rates, broadband, and radically reduced limited planning policies.
£200m additional investment in railways because of savings in Department of Transport - scheme to link Manchster Picdally and Victoria will get funding. £100m to spend on winter pot holes.
From April small company R&D tax credit will rise to 200% next year, and 230% year after that.
Stamp duty will be levied on mean value not bulk. “Important to promote institutional investment in the private rented sector,” says Gardiner.
£250m commitment to first time buyers, as touted this morning. Fund will be available to enable 10,000 families to get on housing ladder.
Osborne: “50% tax rate is a temporary measure, but now is not the right time to remove it.” Osborne will see how much revenue it actually raises. Osborne will also ensure that owners of high valuable property pay their ’fair share’.
Graham Kean: Planning covered 22 mins into the speech - must be a record!
Regulations: £350m of regs will go - dual discremin. Lord Youngs health and safety proposals will be implemented.
On planning: councils spending 13% more on planning despite applications falling by a third. From today all bodies involved in planning should be geared up for growth. Default answer to development is ’yes’. Presumption in favour of sustainable development, but green belt will be kept. Osborne will allow more usage change. Coalition will keep green belt. Remove national targets on previously developed land. People won’t have to just develop on brown field land.
According to Joey Gardiner, all expected announcements.
Corporate tax relate down by 2% this year. Ultimately down to 23%. “Britain is open for business”. “It’s not a net tax cut for banks. Will adjust bank levy rate next year to offset its effects.”
Osborne now on taxes: Currently 6th highest corporation tax rate in Europe (used to be 3rd lowest). “Taxes should be efficient and support growth.”
Won’t be abolishing community investment relief.
Income Tax and National Insurance - Osborne will consult on merging the two. Osborne’s not proposing extending NI to pensioners. “Purpose is not to raise taxes, but to simplify,” says Osborne. “Fit for the modern age”.
Kean: Simplify taxation, not increase. Hmmm. Harmonisation of tax and NI will have a big impact on the large number of self employed people working in construction…
Between 4-5% inflation forecast for 2011.
Borrowing: £146bn 2011 from £149bn earlier forecast, will be £122 in 2012 and £29bn by 2015/16. Objectives on debt reduction will be met one year earlier.
Graham Kean, EC Harris: The Chancellor has based his overall strategy for recovery on a private sector led recovery. No surprise then that the first words out of his mouth today were about jobs and growth.
It will be very interesting to see how much thought has gone into our sector and the contribution we can all make…
Awaiting forecasts from OBR…
Growth forecast: The annual forecast has been revised to 1.7% from 2.1%. OBR blames final quarter, rise in world commodities prices, and higher than expected inflation. But OBR says 2012 2.5%, rise to 2.9% in 2013, 2.9% in 2014%, 2.8% in 2015.
’Budget will be fiscally neutral across period. Supports exports, manufacturing. Budget for making things, not making things up.’
Stability is not enough, says Osborne. He is publishing the ’plan for growth’ today. ’Britain has lost ground in the world economy. We gambled on a debt-fuelled model of growth that failed.’
Osborne’s off. It’s ’About reforming the economy… From rescue to reform, from reform to recovery. Decisions made have already bought economic stability.’
12:32 Cameron still on in Parliament. Osborne expected to stand very soon.
Latest rumours are that a number of measures will add up to a reasonable package for construction in today’s budget, Building’s Joey Gardiner reports here. So a ’build now pay later’ scheme for developers and a trial of land auctions will be unveiled in addition to the widely-trailed £250m first time buyer package. Further planning reforms also on the way, but for those already following the localism bill, there might not be that much new.
Welcome to Building’s coverage of the Spring Budget. There’s already plenty of speculation about what it might contain, including proposals to help 10,000 new home starts through an equity loan subsidy and £3bn of funding for the Green Bank
Building journalists will be Tweeting throughout the afternoon - if you’ve got anything to say on the big topics Tweet me at @alexsmith68 and for specific sectors look out for:
@joeygardiner Joey Gardiner: housing & regeneration
@mcleodluke Luke McLeod: economic forecasts
@Loweryfinance Dave Lowery: tax and spending
@SarahR100 Sarah Richardson: education
@davidMbuilding David Matthews: Climate change and energy
@iainwithers Iain Withers: Health
@barryjosullivan Barry O’Sullivan: Transport
And don’t forget to add your comments on the Budget at the bottom of this live blog.