Whilst acknowledging the need for a tough Budget to establish a credible path to restore the country’s public finances, the Construction Products Association has expressed concern that the reduction in capital spending, which will fall to just 1.25% of GDP, will hold back the pace of the economic recovery. In total Capital investment will be cut by £100bn over the next five years.
Commenting on the Chancellor’s Statement, Michael Ankers, Chief Executive of the Construction Products Association said; ‘ Whilst there may be some relief that the Chancellor did not make further cuts in capital spending from those already announced by the last government, the impact of what is set out in this Budget should not be underestimated. In 2014/15, capital spending will have fallen by a third since 2009/10. At this level it will be very difficult to maintain the built environment of this country in its current condition. As the Chancellor acknowledges the government will need to be very careful in making choices as to how this capital is spent in order to make sure that it is focused on those projects, such as transport and energy, that will most effectively contribute to the economic recovery.’
In other Budget measures, the Association welcomed measures to create an environment in the UK that helped business succeed. ‘We welcome the plan to reduce Corporation Tax as well as measures to help small businesses at a time when they are facing enormous pressures. We had, however, hoped for positive steps to ensure credit is more widely available at competitive rates, especially from those banks that are substantially in public ownership.’
‘One of our major disappointments is that the Chancellor has done little to stimulate the low carbon agenda. A VAT increase was widely anticipated but we hoped that he might have tempered this by updating and expanding the list of those products and solutions that will improve energy efficiency in people’s homes such as more efficient heating systems and double glazing. It seems perverse that at a time when government wants to be seen as ‘the greenest ever, it should continue to set a VAT rate of 5% on the energy that we consume, but an increased rate of VAT on the means by which people can reduce their energy usage.’
