BCIS responds to Autumn Budget

The Chancellor of the Exchequer has presented the Autumn Budget to Parliament, outlining the government’s upcoming fiscal plans. The headline measures are increases to the rate of employer National Insurance contributions and Capital Gains Tax.

The first Labour budget for 14 years was widely flagged as a tax, borrow and spend budget and the Chancellor did not disappoint. Much of the substance had already been speculated on via pre-announcements and there were few surprises on the day.

Dr David Crosthwaite, Chief Economist at BCIS, outlines the key announcements relevant to construction and reflects on their potential to provide a much-needed boost to the sector and growth in the wider economy.

• Schools – committed £1.4 billion to fund the existing school rebuilding programme, an additional £550 million.
• Social housing – committed £5 billion to fund the existing Affordable Homes Programme, an additional £500 million. Still no detail on how the government intends to hit its self-imposed target of building 1.5 million homes over the life of the Parliament.
• Prisons – commitment to accelerate the building of new prisons by reforming the planning system.
• Hospitals – committed an additional £1 billion to upgrade buildings across the NHS estate.
• Transport – the resurrection of the HS2 link from Old Oak Common to Euston, a positive move, but we need more commitment to other infrastructure projects in the pipeline (the Lower Thames Crossing for instance). Additional £500 million for roads maintenance.
• Other – £1 billion for accelerating cladding removal post-Grenfell; £3.4 billion for the Warm Homes Plan.

‘Reeves announced £100 billion in capital spending over the next five years with the mantra “invest, invest, invest”, but I’m not convinced this is a budget for growth. There are conflicting announcements, and as it stands, the investment outlined in the Budget is unlikely to make a material difference to the construction sector and ‘get Britain building again’, a stated aim of the government.

‘I was hoping for something a little more radical, but perhaps that will come in the Spending Review next spring. We really need the government to invest in fixed capital programmes that will actually ‘get Britain building again’ and drive wider economic growth. Four months in and this feels like a missed opportunity for the new government.’

There will be further commentary about the budget over the following days. Our next webinar – Construction: what does the Autumn Budget mean for the industry? – is free to attend and will feature expert insights into the government’s announcements and what they mean for the industry.

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