Budget: missed opportunity for construction

Aaron Morby 10 years ago

Construction leaders said the Chancellor has failed to deliver a desperately needed short-term boost to work as the industry faces a 5% fall in output.

The Chancellor’s measures to ease the burden on business and reduce taxation were welcomed.

But there is growing concern that the Government has failed to appreciate the serious immediate problems contractors face from dwindling orders.

Public spending cuts will be deeper this year and industry leaders say the Budget’s limited extra road and rail spending measures fall a long way short of what is needed.

CPA chief executive Michael Ankers, said: ‘The government clearly recognises the constraints on our economic growth imposed by the poor quality of our infrastructure and a planning system that is not fit for purpose.

“But we are still some way from seeing any benefit from the steps being taken to bring private finance into future road building and we await the details of the revolutionary planning reforms that the Chancellor referred to.

“Construction is facing a very difficult 12 to 18 months and these will not do much to change this.”

He added: “What we would have liked to see is some of the additional savings made on current spending reinvested in capital projects.”

Dan Labbad, chief executive of Lend Lease in Britain, said: “The Government clearly understands that investing in major infrastructure projects creates more jobs and more growth.”

“The priority now should be to bring more of the schemes in the National Infrastructure Plan forward as quickly as possible.

“Progress on delivering the pipeline is still too slow and there is not enough visibility on what schemes will be going out to tender and when.”

“It is also essential that a successor to PFI is formulated quickly.”

Institution of Civil Engineers director general Nick Baveystock, welcomed progress developing new funding models such as Tax Increment Financing and the pilot for a new Earn Back Model.

He said:”But Government should do more to improve the credibility of its aspirations by publishing an assessment of the level of funding it believes it can realistically secure from all categories of investors and a clear programme of work that will unlock these funds.

“This would boost investor confidence and encourage further investment.”

Julia Evans, chief executive of the National Federation of Builders, echoed concerns that the Government was losing interest in the green agenda.

She said: “It is particularly disappointing that an opportunity was missed to harmonise VAT rates on the domestic energy efficiency installation, ahead of the Green Deal launch later this year.”

The Federation welcomed the new £20bn National Loan Guarantee Scheme fund but questioned whether it will simply enable SMEs already at the front of the queue to get cheaper loans, or whether it will also support otherwise perfectly viable SMEs in sectors like construction, deemed toxic by the banks.

She said: “Lending to the construction sector remains depressed and construction SMEs find themselves at the back even of the SME queue. We hope that the scheme succeeds in its aims, but see no indication that it will.

“It also amounts to a significant admission of failure on the government’s part as it has already introduced mechanisms such as Project Merlin and the Enterprise Finance Guarantee scheme, designed to encourage the banks to lend to viable businesses.

“These schemes should have met the needs of businesses had the banks delivered on them, but they failed.”

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