Budget analysis

The construction sector eagerly anticipated this week’s budget. Touted as the ‘infrastructure budget’ by Prime Minister Boris Johnson, the 2020 budget was expected to launch the long-awaited infrastructure strategy – the government’s response to the National Infrastructure Commission’s National Infrastructure Assessment.

The Strategy has been delayed until later in the Spring and this budget can be seen as an interim response, with the new Chancellor, Rishi Sunak promising to ‘get Britain building’ – “this government” he says “will get things done!”

This was a budget of firsts; the first of a new decade, the first budget under Prime Minister Boris Johnson, the first for the new Parliament since the General Election 19, the first for Rishi Sunak following his promotion to Chancellor, the first since the net-zero legislation was introduced, the first since Britain has left the EU, and also the first time a woman was in the chair for the announcement- Eleanor Laing.

The Strategy announcement may have been delayed, but the budget did bring plenty of talking points and investment for the sector.

The major funding announcements and focus at the beginning of his speech dealt with the current Coronavirus situation. A raft of measures have been introduced to support individuals and businesses, in particular SMEs.

Keen to express that this is a government ‘who gets things done’ Mr Sunak announced some £600Bn in public investment, the most since 1955, while the construction sector listened carefully to spending allocations.

The recent winter storms and flooding were a major focus for Mr Sunak’s speech. The Chancellor promised £200M for immediate repairs to local flood resilience. This doubles the spend on flood defences to £5.2Bn. While flood measures and defences across the country will be assessed and more put into place, protecting more than half a million homes.

Meanwhile, net-zero targets were given a boost with the rollout of rapid charging points for electric vehicles, which will be supported with a £500M fund. The aim is to ensure drivers are never more than 30 miles from a public charging point.

Transport featured heavily in the speech, with both local and strategic roads receiving a boost. Some £27M has been ring fenced for strategic road improvements, plus a further £2.5Bn towards Theresa May’s ‘pothole fund’ over the next five years.

One of the few projects confirmed in his speech was the A303, Stonehenge tunnel project. Following delays and extensions to the project, Mr Sunak promised to ‘get it done’.

In terms of rail travel, the Chancellor reiterated the election manifesto promises of levelling up the country, with more connections and improvements to accessibility. While the Manchester to Leeds leg for Northern Powerhouse Rail will continue to be supported by the government. However, industry members are left wanting more on stock improvements and repairs.

Turning to housing, the Chancellor promised the largest investment in a decade. Addressing the housing crisis and the government’s promise to deliver, Mr Sunak committed to extending the Affordable Homes Programme with some £9.5Bn in funding.

And a further £1.1Bn towards the housing infrastructure fund, which has been crucial in seeing brownfield housing developments, aiming to deliver some 70,000 new homes. The commitment to see some £600Bn spent on infrastructure over the next five years can only boost the prospects of new housing, and the target of 300,000 new homes a year will be be unlocked through the Housing Infrastructure Fund.

Overall, even without the go-ahead for specific projects, the mood for builders is positive, with Mr Sunak reassuring the country:

“we’re going to build broadband, railway, roads – if the country needs it, we will build it.”

Despite saying relatively little about the detail of the promised infrastructure revolution, the Chancellor has delivered a further confidence boost to investors and the construction sector with this budget.

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