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Bold steps required in the spring budget for the construction industry

Published: 28/02/2024

With just a week to go until the chancellor unveils his Spring Budget, BCIS’ chief economist, Dr David Crosthwaite, calls for bold measures at a time when the construction industry urgently needs them.

From addressing the housing shortage to reigniting enthusiasm and attracting investment in our inadequate infrastructure, the government has an opportunity to be bold and produce a budget that addresses the needs of its people, while prioritising economic growth.

This is even more important in light of recent news that UK GDP was down 0.3% in 4Q 2023 and that the economy went into recession. Construction performed the worst out of all sectors. All eyes will be on the government to see what difference, if any, they could make.

We continue to call for clarity on infrastructure

Construction investment is a lever of growth, given the multiplier effect. At the end of last year construction activity went into negative territory, with a 1.3% decrease in 4Q 2023, driven by significant falls in both housing and infrastructure output. Therefore, it’s vital the chancellor introduces some measures that will stimulate the economy and give the industry renewed hope and optimism.

We have continually called for ‘clarity and consistency of policy and regulation’ in the government’s approach to overseeing infrastructure investment and its delivery. As the recent publication of the long-awaited Infrastructure Pipeline showed current plans are patchy and inadequate.

It failed to nail down the detail that would give more certainty to a sector still reeling from the repercussions of costly financing, budget erosion and super inflation.

An action plan for investment that will stimulate growth across energy, water, transport and communications is essential.

This should include the recommendations, as set out by the National Infrastructure Commission: investing in public transport; improving underperforming parts of the national road network; developing a long-term rail plan; reducing the number of properties at risk of flooding; adding low carbon technologies to the electricity system, to create a new strategic energy reserve.

It’s been a year since the Shortage Occupation List (SOL) was introduced to help resolve labour issues in construction. But we’re yet to see if the additions to the list, six months ago concerning the extra construction roles, can make a difference.

Meanwhile, the government still lacks a clear strategy for ensuring we have the additional 224,900 workers required to meet UK construction output between 2023 and 2027, especially the green-collar workforce we so desperately need to help the UK achieve its net zero targets.

The housing shortage and vital repair and maintenance

The government could give a much-needed boost to housing by investing in a significant programme of social housing as a part of a wider joined-up housing policy.

From safeguarding vulnerable residents in social housing to ensuring our schools and hospitals are habitable, we also ask that the government prioritises vital repair and maintenance (R&M) work, across the public and private sectors.

Switching the focus to embodied carbon

We continue to advocate for the mandatory reporting of whole life embodied carbon, as the missing vital step towards decarbonisation.

And although we’re encouraged to see the government invest in improving energy efficiency in homes and buildings, through the allocation of funds that include the Social Housing Decarbonisation Fund, operational carbon is just one part of the picture.

A recent report, Carbon Blind Spots, from the MMC (Modern Methods of Construction) consultant Akerlof, has found that Scope 3 emissions (embodied carbon) are responsible for an enormous 94-98% of emissions from the UK’s top contractors.

The government needs to support the industry in its efforts to reduce carbon emissions in the built environment, through incentivising data sharing and subsidising the costs that manufacturers incur to produce verified Environmental Product Declarations (EPDs) on their materials and components.

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