Chancellor Rishi Sunak has laid out his Budget, claiming he will do his utmost to repair the “acute damage to the economy” as a result of the Covid-19 pandemic.
More than 700,000 people have lost their jobs and the UK economy has shrunk by 10% – the largest fall in 300 years – with borrowing at its highest outside of wartime since the pandemic first struck.
“It’s going to take this country, and the whole world, a long time to recover from this extraordinary situation,” the Chancellor told the House of the Commons.
Among the key features he unveiled were:
- Furlough to be extended until the end of September, with the Government to continue paying 80% of employees' wages for hours they cannot work
- Support for the self-employed also to be extended until September as 600,000 more self-employed people will be eligible for help as access to grants is widened
- Corporation tax on company profits to rise from 19% to 25% in April 2023. The rate to be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000
- Stamp duty holiday on house purchases in England and Northern Ireland extended to June, with no tax liability on sales of less than £500,000
- Tax breaks for firms to "unlock" £20bn worth of business investment. Firms will be able "deduct" investment costs from tax bills, reducing taxable profits by 130%
- New UK Infrastructure Bank to be set up in Leeds. It will have £12bn in capital, with aim of funding £40bn worth of public and private projects
- £1bn Towns Fund fund to promote regeneration in 45 English towns
Stephen Phipson, Chief Executive of Make UK, said: “Given the difficult circumstances facing the Chancellor Industry will welcome the certainty and clarity he has provided about the route forward. This statement pursues a fair middle road which balances the short-term need to avoid squeezing the recovery before it has started, whilst avoiding any artificial boost given the inevitable strong bounceback once the economy begins to open up.
“In particular Industry will welcome the extension of the furlough scheme and a clear recognition that we urgently need an investment-led recovery. The promise to consult on further changes to R&D is also welcome and Government must now move urgently to implement this so further moves to boost levels can be implemented.
“We must now seize the opportunity provided by new technologies and the drive towards net zero to set out a longer term vision for the economy. This must include a long-term Industrial Strategy which looks ahead twenty years and involves a laser like focus on innovation based on a partnership between the public and private sectors, together with our world class science base.”
The Chartered Institute of Building responded in detail and Eddie Tuttle, Director for Policy, External Affairs & Research at the CIOB, said: “The construction sector has relied upon Covid-19 support schemes over the past year in order to keep building.
“We are pleased to see that the Chancellor has extended the self-employment scheme to the end of September to offer certainty to businesses in the sector as well as protect the large numbers of newly self-employed construction workers. However, we are concerned that the Government has missed an opportunity to truly support the industry by failing to suspend the implementation of the VAT reverse charge, which will have potentially severe consequences for the cash flow of firms that have been hit hardest by lockdown.
“Perhaps most disappointing is the complete lack of mention of decarbonisation of the built environment and absence of any reference in the Budget to the struggling Green Homes Grant scheme.
“The UK’s built environment accounts for approximately 40 per cent of our total carbon emissions, and any attempt to forge a green industrial revolution must address the energy efficiency of buildings as a matter of priority if it is to succeed.”
RIBA President, Alan Jones, said: “Whilst the Chancellor’s focus is understandably on mitigating the impact of the pandemic, the measures announced today do little to reassure me of the Government’s commitment to reach net zero or drive a green economic recovery.
“Some of today’s announcements – such as the UK Infrastructure Bank and green gilts – could help our economy grow back more sustainably, but that depends entirely on future investment decisions. The money pledged must be used to create green jobs and fund energy efficiency programmes such as a National Retrofit Strategy.
“Taken alongside the personal allowance freeze, the corporation tax rise will have a significant impact on RIBA members and hints at wider tax changes to come. It’s therefore vital that the Government looks at how the tax system could also help tackle the climate emergency. By reforming mechanisms to incentivise sustainability the Government could successfully drive the green economic recovery that is desperately needed.”
Julie Hirigoyen, Chief Executive at UKGBC, said ‘build back business as usual’ would be a more fitting description for the Government’s plans to build back better.
“We are still none the wiser about the fate of the Green Homes Grant scheme, which just a few short months ago the Chancellor told us would support over 100,000 jobs in green construction up and down the country,” she said. “UKGBC, together with many others in our industry, have strongly advocated that the £1.4bn of unspent funding be rolled over to 2021/22, but today’s Budget leaves both industry and householders still in the dark.
“Beyond the opportunities for green investment offered by the Infrastructure Bank and new green gilt and retail savings product, this Budget appears to ignore the huge part that greening our buildings can play in delivering our post-Covid economic recovery. Tackling carbon emissions from buildings – particularly the existing housing stock – is not easy, but we cannot afford to duck the challenge any longer.
“The chancellor’s emphasis on local growth is also welcome, as we recognise that local authorities have a vital role to play in seizing local green growth opportunities. However, local authorities alone cannot deliver the change we need without central government leading from the front. The Chancellor’s ‘investment-led’ green recovery should not ignore the voice of the industry calling for a national retrofit strategy to unlock vital green jobs across the whole country.”
Brian Berry, Chief Executive of the
FMB, said the Chancellor presents a mixed picture for
Britain’s builders, with the glaring omission of a long-term plan to make our
homes greener, but welcome extensions to coronavirus recovery support.
“In the year of COP26, the Chancellor missed an opportunity in today’s
Budget to show global leadership with a long-term plan to make our homes
greener, healthier, and more affordable to run,” he said. “The Government’s
commitment to green growth must include backing for a National Retrofit
Strategy – an oven-ready infrastructure plan that will tackle climate change,
level up and create jobs. While we welcome the funding announced for the UK
Infrastructure Bank, we expect to see it use its focus on climate change and
regional growth to back Britain’s army of small builders who stand ready to
help build back better, and greener.
“In better news, builders who are struggling to recover from the pandemic
will welcome the extension of support set out by the Government today,
particularly those in Scotland who are still unable to work inside people’s
homes.
“I am glad the Chancellor listened to the FMB's calls to extend the Stamp
Duty holiday. New Government guarantees on 95% mortgages will also boost
confidence and protect jobs. What’s needed now is increased investment in local
authority planning departments so that we can get shovels in the ground on
small sites.
“The doubling of support for businesses who hire an apprentice is also a win
for the FMB. 71% of construction apprentices are trained by small to
medium-sized (SME) firms, and the extra support for my members is welcome.”
