The Construction industry reacts to the Budget

The Chancellor Philip Hammond has delivered his first spring Budget as the government prepare to trigger Article 50 and prepare the UK for Brexit.

The Budget was certainly slim line but there were a number of measures announced that will affect those within the construction industry.

UK Construction Online has gauged the industry’s reaction to see if they believe they will be beneficial.

Peter Vinden, Managing Director of The Vinden Partnership – a leading multi-disciplinary consultant company to the built environment, said: “This was very much a ‘diet’ budget without too many surprises from the Chancellor.

“The skills gap is clearly something that needs addressing and the reforms to technical education are a positive step. However, whether the measures will be enough in the short term to deal the shortage remains to be seen.

“The industry is unlikely to see any benefit from this until at least 2020, and with a potential exodus of skilled workers as a result of Brexit, we need to make sure we have enough home grown workers to fill the void.

“The investment to tackle road congestion in the North is welcome but isn’t the kind of large-scale infrastructure spending some may have wished for.

“The investment in new schools and regenerating existing infrastructure is another example of this.

“The economy has performed better than many were predicting following the Brexit vote but the real work for the government will begin when it comes to successfully negotiating Britain’s future beyond the European Union.”

Gordon Anderson, Construction Partner at Irwin Mitchell LLP felt the budget was very low key with no unexpected announcements. He commented: “A bit of a damp squid of a Budget for the construction sector should not have come as a surprise to many – given the lack of any real Opposition with a plan, and an economy performing better than expected (although that depends on your expectations).

Mr Anderson questioned just how far the investment in the road network and schools would stretch. He said: “Sadly £90M doesn’t buy much tarmac these days nor does £216M when it comes to the repair and maintenance of existing school stock.”

Justin Arnesen, Director: R&D Tax & Grants was disappointed that the Chancellor failed to build on his pledge to get Britain building. He said: “We are still experiencing a housing shortage and with Government borrowing costs falling, now would have been the perfect time to invest in, and prioritise, infrastructure.

“Disappointingly, the Chancellor has also failed to address how he will go about funding the construction industry post-Brexit. Investment alone is not enough and it needs to create bespoke infrastructure grants and incentives and, most importantly, remove the hurdles that companies currently face when pursuing the R&D tax incentive. The Government has committed to a policy of ‘get Britain building’ and yet HMRC is dragging its heels when it comes to approving a large percentage of R&D tax claims from the construction sector.

“As it stands, the Government is not encouraging the industry to innovate, to take on new and exciting projects, or to grow. It can no longer promote construction loudly while quietly delaying or obstructing vital funding.”

Ramboll Environ’s UK Managing Director, Mathew Riley, was critical of the Chancellor for failing to address the housing shortage: “No mention of housing, despite a lacklustre housing whitepaper, and given the desperate need for skilled workers there was no mention of any significant investment beyond T-skills – which ultimately fails to deliver any imminent relief to the skills shortage, with any impact unlikely to be felt until at 2020. Given the pressures of Brexit it’s even more crucial that skills development in the industry is prioritised.”

Brian Berry, chief executive of the Federation of Master Builders, was enthusiastic of Mr Hammond’s announcements, welcoming his attempts to address the UK’s productivity shortcomings: “The chancellor clearly understands that the UK won’t address the productivity challenge unless we rethink our approach to technical and vocational education. T-Levels could be the answer if they genuinely rival A-Levels in the eyes of parents, teachers and young people. UK society as a whole has been guilty of putting too much emphasis on the academic route – this has made it more difficult for vital sectors like construction and house building to attract the talented people we need.

“In construction, we are suffering from a severe skills shortage and this is likely to worsen once we leave the EU and no longer have easy access to European labour. This £500m funding announced today for T-Levels is therefore a welcome and much-needed boost.

“Today’s budget was an all-round strong performance from the chancellor and he had good news to report right across the piece. However, increasing tax on the self-employed is not helpful. If we want to establish a resilient, Brexit-proof economy, we must encourage and support our current and future entrepreneurs in the construction industry and beyond.

“A jump in National Insurance Contributions from 1% to 10% next year could send the wrong message to those individuals who are considering going it alone. The self-employed are the backbone of our economy and the government should tread carefully here.”

Stephen Stone, CEO of developer Crest Nicholson, was supportive of the introduction of T-Levels. He said: “The inclusion of construction as one of the fifteen occupation areas identified under the new T-Level is a welcome development and it’s heartening to see acknowledgement of the need for greater investment in skills training in the construction sector.

“The new T-Level will give 16-19 year olds routes into the construction industry, more time in the classroom, and good quality work placements – welcome news ahead of the Apprenticeship Levy in April.

“Together with the Government’s support of graduates and apprentices, this will ensure a steady supply of talent and help safeguard the future of our industry. Ultimately this means we are in a stronger position to meet the growing housing needs of the country.”

Richard Laudy, Global Head of Infrastructure at Pinsent Masons, raised concerns over how the government will cope in the short-term with the skills shortage: “The Government’s announcement regarding technical education reforms is to be welcomed, but it is a drop in the ocean and will not meet the skills crisis facing the UK infrastructure sector. The sector is still yet to recover fully from the 400,000 construction jobs lost in the recession and has an ageing workforce, 30% being over the age 50 and around 700,000 set to retire in the next 10 years.  And yet demand is only increasing. The UK needs to bring in an additional 36,000 workers every year to meet the demands created by our infrastructure programme.

“Government and industry should collaborate, map the skills required to deliver our infrastructure and prioritise them within any post-Brexit immigration system. So whilst the Chancellor’s announcement is to be welcomed, the Government needs to go further. ”

Jason Ruddle, COO, Elecosoft plc, urged the government to give enough consideration to integrating digital construction skills within the school environment. He commented: “We welcome the commitment to support increased technical training to help meet the construction skills gap which may be looming in the post-Brexit period. As the Government develops its detailed educational plans, we urge it to integrate digital construction and engineering skills and tools into schools, in addition to promoting other practical technical and building skills. It should be considering how to engage new entrants as digital change drivers, for a sector which is falling far behind others in terms of digital competitiveness and efficiency. One aspect of this must be familiarity with modern digital tools, as well as modern methods of construction.

For T-levels to be meaningful in this key industry, they must help to create a new generation of digitally-aware construction and engineering professionals with a mandate and desire to play a role in transformation, and create a more efficient and productive sector. That means that vocational software, such as sector-specialist planning and project management software, optimised for BIM and digital projects, must be brought into schools, rather than such exposure starting only at college degree level or in the workplace, as currently.”

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