Spending Review & Autumn Statement - What does it Mean For the Construction Industry?

Spending Review & Autumn Statement - What does it Mean For the Construction Industry?

03rd December 2015

Last the current government’s Spending Review and Autumns Statement was released by Chancellor George Osborne and it[s provided some food for thought for all of us in the construction industry. The Autumn Statement led to a range of responses from senior figures in the industry, some reacting in a positive manner and some displaying a certain amount of criticism.

The Executive Chairman of the Home Builders Federation welcomed the government’s commitment to increase both housing supply and home ownership which should go some way towards closing the gap between supply and demand. An increase in home ownership will obviously mean an increase in building activities in the housing sector which will enable builders to invest in the people, land and materials that are necessary to accelerate supply. Much of the UK’s current shortfall in housing supply is associated with the private home ownership market but industry pundits warn that greater consideration should be given to increase housing association, local authority and affordable build to rent sectors. There’s also a desperate need for an increase in the number of accessible, high quality homes for the disabled and elderly.

There are warnings that new homes should not fall short on build quality and it’s going to be vital to close the skills gap that exists across the construction sector if this is to be achieved. News of a further 3 million apprenticeships by 2020 was welcomed and the emphasis has shifted towards companies training their own staff. However, the government will need to collaborate effectively with professional bodies and employers to designs and launch high quality robust standards that will meet the needs of the modern construction sector.

The government has also earmarked £120 billion to support infrastructure projects which should attract more investment from both the UK and overseas. Again, the skills gap is cause for concern when it comes to infrastructure projects. These projects will only become reality if we’re able to attract and train a skilled workforce to deliver the new, much needed infrastructure.

Worrying news comes in the form of a 37% proposed cut in the Department of Transport’s operating budget which will have a severe effect on the Department’s ability to drive forward its substantial array of projects. Pundits warned that while the Chancellor’s continued focus on investment in infrastructure while capital spending is maintained is a welcome development, cuts in operational budgets across department could lead to significant delivery implications.

Dr. Colin Brown, Director of Engineering for the Institution of Mechanical Engineers was disappointed that during the hour long speech, the word “engineering” was not used once. He maintains that the efficiency savings that the government is committed to deliver will not be achievable without the application of scie4nce and engineering. He worries that the proposed changes to turn more schools into academies may hamper the ability to produce enough people with Science, Engineering, Technology and Maths skills if not carefully managed.

The Apprenticeship Levy which is set at 0.5% represents a significant extra payroll tax on businesses and will apply to smaller firms as well as the larger organisations. This may result in businesses that are committed to training and development being unable to recoup their initial outlay.