Reactions to Autumn Statement:
WSP | Parsons Brinckerhoff
Mark Naysmith, UK COO and MD for transportation, infrastructure and property at WSP | Parsons Brinckerhoff, said:
“Huge projects and 400,000 homes is great news for the UK’s sustained economic growth, but they do not build themselves. We can only get Britain building by urgently attracting and training a skilled workforce to deliver much needed new infrastructure. On this matter the Government is supporting our recruitment efforts through its firm commitment to apprenticeships and large transport projects including HS2, rail electrification, road building and the regional development opportunities they bring. Political certainty and stability remain our industry’s lifeblood. Where this is lacking – as remains the case with energy efficiency and airport capacity – investors cannot plan for the future with the same confidence. However, overall today’s statement is definitely a step in the right direction for the industry.”
Ian Maclean, UK managing director for energy & industry at WSP | Parsons Brinckerhoff said:
“The industry has received a number of mixed signals and we need certainty of direction. Government’s backing of nuclear and coal’s phase-out by 2025 have been welcome steps forward. Coal provides a quarter of the UK’s electricity, and the announcement that this will stop was a missed opportunity to explain in more detail how we are going to keep the lights on in 2025. The question remains whether gas alone could fill the gap. Nuclear is not a done deal and there’s still time before construction begins at Hinkley Point, Wylfa and Moorside during which there can be further delays and disruptions. With COP21 now here we need to focus on having a long term energy plan to meet our carbon emissions target. The time has passed for short-term solutions, we need to start investing in energy storage technologies to support our renewable industry. Building Britain’s future must be done in a sustainable way.”
As the Chancellor George Osborne announces the 2015 Autumn Statement and Comprehensive Spending Review, the Chartered Institute of Building (CIOB) provides its reaction to the Government’s core commitments that affect the construction industry.
David Hawkes, CIOB Policy Officer, said:
“The supply-side focus to alleviate the housing crisis is welcome and long overdue. While much of the current shortfall in UK housing supply is associated with the private home ownership market, greater consideration must be given to expand housing association, local authority and affordable build-to-rent sectors, alongside the provision of accessible, high quality homes for the disabled and elderly. The announcement of some support for these tenures is a start, but it must be recognised that increasing supply across the full range of tenures smooths out demand instabilities and provides house builders and their supply chains with the confidence to invest.
“With the £120bn commitment that has been announced for supporting infrastructure projects, the Government appears to have warmed to the importance of capital spending, which underpins both growth and productivity. However, we need to see a longer-term demand model to support even greater investment, from both the UK and abroad, going forward.
“The CIOB recognises the scale of the housing shortage and therefore supports the measures highlighted in the Spending Review and Autumn Statement 2015. However, we emphasise that new homes must not fall short on build quality and do not believe that either the desired level of housing or infrastructure will be achieved without first curtailing the skills gap that currently exists across the construction sector. There is a need for an average of 100,000 new recruits across the built environment per year between now and 2022 so greater support for Further Education institutions is needed, alongside recognition of the value of high quality apprenticeships and training.
“Although we welcome the news of a further 3 million apprenticeship starts by 2020, shifting the emphasis on firms to train their own staff, the Government must work closely alongside professional bodies and employers to design and implement high quality, robust standards that meet the needs of the construction industry. Furthermore, clarity on the role of the CITB moving forward must be made to give confidence to employers.”
Key announcements affecting the construction industry:
Public housing budget doubled to £2bn a year;
- As announced earlier this year, 200,000 ‘Starter Homes’ for first-time buyers will be built by 2020;
- 135,000 shared ownership homes for households earning less than £80,000 (less than £90,000 in London);
- 10,000 homes to be rented at a reduced rate for tenants to live in for five years, who will then have the opportunity to buy it;
- 8,000 specialist homes for people with disabilities and the elderly;
- A new ‘London Help to Buy’ with Londoners offered a 5 per cent deposit and an interest free loan of up to 40 per cent;
- Government departments to release public land with scope to build 160,000 homes;
- Extending the £1bn Builders’ Finance Fund to 2020-21;
- Stamp duty rise on second homes and buy-to-let property – a 3 per cent additional charge which will raise £3.8bn by 2020;
- Further details on the apprenticeship levy on large employers were announced. This stands at 0.5 per cent of employer’s pay bill, but accounts for a £15,000 allowance to offset against the levy which will see 98 per cent of all employers’ effectively pay no levy. The levy will raise £3bn and fund three million apprentices;
- Increased funding for the Renewable Heat Incentive (RHI) to £1.15bn by 2020-21, while also reforming the scheme to save £700m by 2020/21.
- Reforms to the Energy Company Obligation (ECO), which will be replaced from April 2017 with a new cheaper domestic energy efficiency supplier obligation which will run for five years;
- £12bn more on capital spending than previously forecast over the parliament:
- MoJ will spend £1bn on building nine new prisons, with outdated prisons to be sold for housing;
- DfE to spend £23bn on school building over the course of the parliament – £2bn more than announced in 2013;
- DfT’s capital spend will increase by 51 per cent, helping to fund roads, HS2 and other transport projects.
Simon Craven, Director at Tower8, comments:
“We are the builders’ – this was the Chancellor’s catchphrase of the day. A striking image and one which the Government is keen to rally behind and there were some striking policies to match this ambition. Spending on infrastructure, funding for the regions and a promised 400,000 new homes; if the latter number was realistic, then we will witness the biggest housebuilding programme since the 1970s.
“There is much in the Autumn Statement for the construction industry to be excited about but some of the fundamental barriers to house building and, in fact, construction of any kind, remain in place. If we are to see spades in the ground, then we need to see more of skilled workers to deliver these grand schemes. Further funding for a skilled workforce is required if the construction industry is to match the potential projects that the Chancellor is so keen to encourage. Pressure on the construction industry comes from project costs – staffing, materials inflation and other key factors that affect delivery. He has left many of the problems of supply side and skills to the private sector to resolve – a potentially exciting move. But the grey area occurs where the private sector works with local authorities, planners, education and divergent goals between these parties mean that the progress required is simply not made.
“Furthermore, we have been interested to speak with many of the firms that are looking to deliver PRS schemes in the coming years. And the reality is that the Chancellor’s announcement will make them extremely nervous despite his promise that the details have now been resolved on his increase in Stamp Duty on BTL properties. It is naive to assume that home ownership alone is the key to reducing housing costs for Britain. The rental sector must be seen as a viable alternative – as it is in so much of the rest of Europe – and placing barriers to a sector that has traditionally struggled to attract corporate investment would be a lasting mistake.”