Chancellor cuts £340m of regeneration spending and announces boiler scrappage scheme

In his final pre-Budget report before the election the chancellor, Alistair Darling, said the economy would shrink 4.75% in 2009 while announcing cuts to regeneration spending and the launch of a boiler scrappage scheme.

The key points for the construction industry in his report were:

  • Cut of £340m in spending on regeneration and housing growth to pay for health and education spending commitments
  • New UK infrastructure unit set up to co-ordinate and help fund all infrastructure projects in the UK
  • A commitment to introduce four pilot carbon capture coal-fired power stations
  • The end of stamp-duty relief on homes costing less than £175,000
  • A £500m capital growth fund to support small businesses
  • A commitment to help replace 125,000 inefficient household boilers with a scheme based on the car scrappage scheme for the automobile industry
  • A commitment to fund Crossrail and continue with the rail electrification programme, including a new scheme to electrify lines between Liverpool and Manchester
  • Tax rebates for electric cars and wind turbines
  • Household boiler scrappage scheme, similar to the car scrappage scheme
  • No change to VAT for residential refurbishment
  • More help for young unemployed: no-one under 24 needs to be unemployed for longer than six months - it is 12 months at the moment - before being guaranteed work or training.

In response to the boiler scrappage scheme a spokesperson for Construction Products Association said: "We welcome measures to help improve the energy efficiency of the built environment and in particular the widely trailed Boiler Scrappage Scheme, which is a small step in the right direction.

"Although tackling 125,000 boilers is a welcome start, there are nearly five million boilers currently in use with a permanent pilot light. So if the government is to live up to its ambition to maintain leadership in the low-carbon sector, the scale of the problem that needs to be addressed remains considerable."

Graham Kean, EC Harris partner and head of public, said: “Support for tackling fuel poverty continued and will be welcomed by low income families. The new boiler scrappage scheme and tax free selling of energy back to the grid sound like the type of initiatives that will pave the way to consumer acceptance of greening measures. This is no bad thing if we are to achieve residential market recovery prior to 2016!

“No change to VAT for residential refurbishment is a huge missed opportunity to soften the blow of redirected budgets within the HCA from housing improvement programmes. At a domestic level, this could have been a major coup – I wonder if the Conservatives will pick up this as an area of opportunity.

“No continuation of the stamp duty holiday up to £175,000. This is a false economy – we’ve not seen the shift in the housing market to justify this – if anything it should have been increased to £250,000 indefinitely!”