Chancellor sounds an optimistic rallying cry on economy

Latest News Tue, Mar 13, 2018 3:27 PM

Chancellor Philip Hammond has unveiled upgraded projections for growth and predicted falling inflation and borrowing in his Spring Statement.

He claimed the UK economy had reached a turning point and there was "light at the end of the tunnel" and ruled out an immediate end to austerity but hinted at possible spending rises in the future.

The chancellor told the House of Commons growth was forecast to be 1.5% this year, 0.1% higher than forecast by the Office for Budget Responsibility in November, with the forecast for 2019 and 2020 unchanged at 1.3%.

He also said debt would fall as a share of GDP from 2018-19, which would be the start of "the first sustained fall in debt for 17 years, a turning point in the nation's recovery from the financial crisis of a decade ago".

The chancellor resisted calls from Labour and some Tories to use the extra cash from an unexpected boost in tax receipts to ease the spending squeeze. But he hinted at possible spending increases to come, in his autumn Budget, when he will "set an overall path for public spending for 2020 and beyond" with a detailed spending review in 2019.

On skills, Hammond pledged £500 million for the rolling out of T-levels and another £50 million to ensure T-level work placements. In addition, the Government will also make £80 million available for those SMEs “engaging an apprentice”.

On housing and planning, the chancellor announced the Government’s pledge to make £44 billion available to bring housing supply to 300,000 units per year by the mid-2020s, as well as £1.7 billion to build 26,000 new affordable homes in London.

RIBA President Ben Derbyshire said: “We welcome positive news on the British economy, but to restore business confidence and secure long-term investment we urgently need the Government to address growing uncertainty about what Brexit will mean for architects and architecture in the UK.

"Despite much discussion in the right direction, the Government has yet again failed to address many of the questions that remain unanswered. Will our immigration system make it easy for the UK to attract and retain skilled architects from around the world? Will our world-class universities remain attractive to international students? Will the UK prioritise developing new mutual recognition arrangements with target markets? Will the UK continue to play a leading role in setting the standards for our industry by maintaining our membership of CEN and CENELEC?

“Businesses need time to plan for the future, and without immediate clarity, we risk causing irreversible harm to the UK’s reputation as a global hub for architecture and a great place to live and work. Time is running out, architects and our partners in the construction sector need urgent answers from the Government.

"Looking to the future, the Government needs to do much more to address the structural challenges to our economy. In particular we need to continue increasing investment in housing and ensure that this money is well spent. It beggars belief that over £800 million designated for affordable housing was returned to the government unspent. There is a huge shortage of affordable, high quality homes and the system is clearly not working if we find ourselves unable to spend even the limited amounts of money that are allocated.”

Iain McIlwee, CEO British Woodworking Federation, said: “While it’s encouraging to hear the Chancellor commit to investment for raising housing supply in today’s spring statement, the question should be asked why an allocation of this budget is not being diverted to fund the vital safety works that are needed on existing buildings?

"Fire safety concerns have been building up for a number of years, either through ineffective maintenance or fundamental design, specification and installation problems. Grenfell has shone a spotlight on this, yet still financial and political barriers are preventing essential works from taking place and leaving vulnerable people sleeping in buildings that are potentially unsafe. As the collateral costs of Grenfell become more apparent and reports that only three council owned high rises out of the 160 that failed the government’s fire safety tests have yet been reclad it is imperative that we see the Treasury making an allocation for such potentially life-critical work.

“We believe that the solution is to establish a Building Safety Fund, similar to the Pension Protection Fund. The fund would allow Housing Associations and Local Authorities to focus on what needed to be done whilst applying to the scheme to fund the works (a defined percentage of the likely costs). The Building Safety Fund could also manage litigation should it be deemed a third-party is liable. The fund would help to speed up work on existing buildings and would centralise legal matters through controlled precedence. We would recommend looking at Insurance Premium Tax as a way to levy the fund. The much-needed corrective works in social housing should be high on the government’s priority list and we urge the Chancellor to consider this option when reviewing the forthcoming budget.”

Brian Berry Chief Executive of the FMB said: “The Chancellor’s announcement of a consultation to tackle the scourge of late payment today should mark a turning point on this issue. We should use this opportunity to bring about a spring clean of payment practices which negatively impact on small business.

"Construction giant Carillion’s collapse at the start of the year brought to light once again the need to eliminate poor payment practises that plague the construction sector particularly. Indeed, one London based small building firm was once paid more than 270 days late by a construction giant. Now is the time to move away from these unsustainable business models which threaten the existence of many firms and their supply chains. This announcement today should be followed by a fundamental rethink ending in the permanent abolition of late payment terms and the exploitative use of retention payments.

“At first glance the Spring Statement has brought some other positive announcements for the UK’s small construction firms. The announcement of a doubling of funding to the Lloyd’s Housing Growth Partnership and an additional £80 million funding to support SME firms looking to engage an apprentice is welcome news. With Brexit looming large on the horizon and the construction industry facing a chronic skills crisis, it’s of the utmost importance that more skilled workers begin to join the sector. An additional £50 million to support T level training will further aid this aim.”

Richard Beresford, chief executive of the NFB, said: “If the chancellor is serious about reaching 300,000 housing units per year, supporting apprenticeships and diversifying educational achievement through T-levels, then he will need SME house builders and constructors.

SMEs not only train and retain two thirds of construction apprentices but they are our predominant private sector and rural employer. Government must deliver bolder planning reform, fairer procurement and a better understanding of the entire development process if it has any hope of making a success of today’s announcements.”

John Newcomb, Chief Executive of the Builders Merchants Federation said: “The BMF is pleased to see the government focus attention on tackling the issue of late payments which is a big issue for our members, particularly for smaller builders merchants. The collapse of Carillion gave a clear indication of how vulnerable suppliers can be to their customers and we support measures that minimise these risks to our members in the future. In order to keep Britain building and delivering the building blocks for growth, it is vital that merchants are paid quickly.

“The Spring Statement has also re-iterated other positive changes for the building materials supply industry including funding to stimulate housing growth, £80 million funding to support apprenticeships in SME firms and an additional £50 million to support T level training. Encouraging new apprentices into the sector is a key aim of the BMF and we hope that this funding will help to drive this forward.”

Melanie Rees, head of policy at the Chartered Institute of Housing, said: "This is another missed opportunity to get us closer to building the homes that we need.

"In his statement the chancellor said that the government’s focus on reducing the national debt is to give the next generation a chance, but unless we quickly start to build more of the right homes in the right places then the next generation will have absolutely no chance of getting access to a home that they can afford.

"There are measures that could be taken now to address this critical situation that would not require additional borrowing, including redressing the imbalance in the current housing budget.

"At present just 21% of funding earmarked for housing until 2021 will directly fund affordable housing. This simply does not reflect the balance of housing need across the country and the government must seriously address this imbalance if it is to meet its ambition to solve the housing crisis."

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