Image: Edward Hill
Thanks to a cautious OBR forecast in the Spring, the Chancellor was given more room to manoeuvre in this years’ budget than he anticipated, with £13 billion more in the public purse and public borrowing of £25 billion, the lowest this century. But ahead of the final Brexit negotiations “it’s difficult to see what tangible impact this budget can deliver given the backdrop of Brexit uncertainty” comments Martin Feakes, Ramboll Director of Buildings in London. If the PM can however secure the ‘good deal’ she has been adamant she can get, then the budget did build on previously announced programmes. Chris Fry, Director for Infrastructure and Regeneration said, “The Budget does not present radical proposals for new infrastructure or housing but does build upon a series of mechanisms and projects that are perceived to be working or are at least on the right track”.
A strategic roads investment package worth £28.8 billion was announced that will form part of a programme running from 2020 to 2025 and will be part funded by revenue from vehicle excise duty. Reacting to the announcement, Alan Pauling, Ramboll Senior Transport Market Director said “As suggested in late 2017 with the announcement of the Major Roads Network, the Chancellor has come good on his intent to hypothecate vehicle excise revenue. This is welcome news and a potential boost to Highways England. The challenge will be to ensure that it quickly gets onto the ground either on the strategic network or the larger, local authority controlled network”.
There was also recognition for additional funding to improve our existing infrastructure assets, Chris Fry said, "… the UK’s existing infrastructure assets, buildings and urban areas need considerable TLC. This sustainable renewal agenda is addressed by the additional funding of £420m for pothole, bridge and other minor highway repairs, cutting business rates on the high street, tax adjustments for long-life assets and £10m to clean up abandoned waste sites.” He also welcomed the £500m increase in the Housing Infrastructure Fund to unlock new housing sites and further funding to develop the cross-Pennine Northern Powerhouse Rail and extension of the Docklands Light Railway.
A raft of measures to address the plights of the high street were announced, including a new £650m fund aimed at improving infrastructure and transport links to help “transform local high streets” and keep them “at the heart of communities”. Further measures included a reduction in business rates for small business and a new fund to rejuvenate underused retail buildings into homes and offices. Commenting on the announcements Martin Feakes said “Capitalising on our town centre stock of redundant commercial and retail spaces is an obvious move. There was a clear signal that funds are available and legislation will be reviewed to help turn these into residential buildings. But it isn’t just about filling our town centres with residential assets. Putting jobs back into them through SMEs, who will benefit from a reduction in business rates, and giving local authorities the autonomy to spend on housing and infrastructure could help us make more liveable places where people choose to live, work and play.”
A package of measures was announced to reinforce the apprenticeship programme, including up to £240 million, to halve the co-investment rate for apprenticeship training to 5% and £450 million available to enable levy paying employers to transfer up to 20% of their funds to pay for apprenticeship training in the supply chain. Alex Lawrence, Talent Inclusion Director said, “The further support announced for apprenticeships and fellowships is a crucial one for the construction industry. We need to break down the barriers for young people with digital skills to enter our industry, as well as attract the greatest minds to the UK, if we are to fuel the required increase in productivity and make the UK a winner in innovation.”
Martin Feakes added, “Digital Technology and improvements in productivity remain key words in our Chancellor’s vocabulary. If we are to solve the productivity challenge, then it is crucial we exploit the wave of technological innovation – we are on the cusp of a digital revolution. The need to fuel this with a new generation of young people entering work through apprenticeships seems to have been recognised with a reduction in costs to business passed on in the budget. Investing in digital workflows and new, more productive construction technologies can meet these challenges if the government matches this ambition with spending on infrastructure and housing".
Further progress was made to support the broken housing market including an increase of £500 million for the Housing Infrastructure Fund and abolishment of the Housing Revenue Account cap that controls LA borrowing for house building. Andy Goddard, Principal and UK Site Solutions lead welcomed the announcements “Happy to see the cap on borrowing for councils in England to build new houses lifted and further funding for the Housing Infrastructure Fund. One of the key objectives of the fund is to unlock marginal viability sites, such as brownfield land. With some innovative thinking, there is a real opportunity for councils to restore brownfield land to the benefit of society, and the environment.”
Tom Shaw added “With the removal of the housing revenue cap announced again by Hammond today, the key question is whether we will we see the scale of delivery across all tenures that we need to get close to 300,000 homes a year? If the government is serious about meeting these targets, then we must hope that they have also listened to the recommendations of the recent House of Lords Science and Technology Select Committee inquiry and that a large proportion of these are to be delivered utilising modern construction techniques such as offsite manufacturing.”
Tom also commented on the much anticipated Letwin Review “We await the government’s response in the new year to the Letwin review, which highlighted that for large scale developments the median build-out period, from planning consent to last completed home, was a whopping 15.5 years! Speeding up build out is welcomed through greater differentiation of types and tenures to improve market absorption rates, but offsite manufacturing will also be a key element if we are to deliver on the ambitions of 300,000 homes a year.”
The announcement to strengthen Scotland’s offshore decommissioning Industry, was a welcome addition. Nathan Swankie, Principal and UK EIA lead commented, “Making Scotland a hub for decommissioning presents a valuable opportunity for supply chain companies and technology developers to develop the capability to meet domestic and global demand for offshore oil and gas decommissioning. Given Scotland’s global reputation as an engineering hub for the offshore oil and gas industry, the establishment of a global decommissioning hub is a logical progression to drive innovation.”
Responding to the announcements on the plastic tax and offsetting carbon emissions, Sam Deacon, Senior Manager and Ecosystems Services lead said: “A tax on plastic packaging that contains less than 30% recycled plastic is a simplistic but relatively easy tool to administer, which should have a positive impact. However, it is unlikely to fundamentally deal with the problem of single use plastics either by changing behaviours or by offering the public and businesses sustainable alternatives.”
“The commitment to offset carbon emissions and support wildlife is welcomed and supports commitments in the government’s 25-year Environment Plan. The planting of 10 million trees through a carbon credit scheme uses environmental markets, market-based mechanisms, and innovative finance to fund the conservation, restoration, or sustainable management of ecosystems. Government backing of such schemes demonstrates confidence in green finance and environmental improvement.”
Chris Halliwell, Principal Consultant and International Finance lead applauded the increase in UKEF's Direct Lending Facility by an extra £2billion. He said “By providing additional finance to overseas buyers of UK goods and services, who must comply with UKEF's policies (including those relating to sustainable development and protection of the environment and human rights), UK exports will be boosted across the globe.”
While the Budget delivered some good news stories for the industry, “it was light on big infrastructure spending”, said Martin Feakes and all heavily caveated with the UK securing a good Brexit deal. As Philip Hammond pointed out earlier in the week, if the Brexit negotiations fail to deliver a positive deal for the UK then it will be back to the drawing board.