Budget 2018 – What it Means for the UK Construction Industry
Last month saw Chancellor Philip Hammond in the House of Commons delivering the 2018 budget in an hour long address. Today we’re going to take a look at the changes confirmed by the Chancellor during his speech to parliament and find out how they are likely to affect the UK construction industry in the coming years.
HELP TO BUY – While the Chancellor did not mention an extension of the Help to Buy scheme, the Treasury’s Red Book detailed a new Help to Buy Equity Loan scheme which will run for two years from April 2021. This will be available only for first time buyers and there will be regional price caps on eligible properties. The caps are set at 1.5 times the current forecast regional average first time buyer price, up to a maximum of £600,000 in London. The government does not plan to introduce further Help to Buy schemes when this one ends in March 2023.
TAX RELIEF FOR NEW, NON-RESIDENTIAL BUILDINGS – Chancellor Hammond said the government will introduce a permanent tax break for new non-residential structures and buildings which will be partly funded by lowering the special writing down rate for long life assets from 8% to 6%.
HOUSING – The government committed an extra £500 million to the Housing Infrastructure Fund, with £291 million of that to go to London. According to Hammond, this funding will unlock 650,000 new homes
APPRENTICESHIPS – The Chancellor confirmed that smaller companies that train apprentices will have their contribution to the apprenticeship levy reduced from 10% to 5%.
PF1 AND PF2 – Hammond declared that he is only committed to PPP (public private partnerships) if it delivers value to the taxpayer and the risk is to the private sector and states that there is evidence that PFI (private finance initiatives) do neither of these. The government will honour existing contracts but there will be no more PFI for future projects, though there will be a new centre of excellence which will monitor deals.
INFRASTRUCTURE – Chancellor Hammond promised that the Infrastructure Fund would get a boost of £38 billion by 2023/24. He also revealed that the government is backing the controversial Cambridge-Oxford Arc, which will see a million new homes built between the two cities by 2050, at the recommendation of the National Infrastructure Commission. The government sees the Arc as an ideal opportunity to showcase the government’s ambitions for the 25 Year Environment Plan. A new East West Rail company has been launched to speed up the delivery of the central railway section between Cambridge and Bedford. The government will also provide an extra £20 million to develop a strategic outline business case for this route and a minister will be appointed to oversee the scheme.
HIGH STREETS – The Chancellor announced a fund of £675 million to help local authorities to support High Streets across the UK. Whether this will be enough to stem the tide of large stores like Debenhams from closure remains to be seen. However, changes to planning regulations could be more effective, especially if this results in support for more mixed use schemes that would see empty shops being converted into residential space or offices.