Spring Budget 2021
A professional in construction?
Here is what the budget means (or misses) for you
The 2021 Spring Budget is Government’s most recent financial statement on how to booster the economy and battle the Covid-19 pandemic. As one of the UK’s biggest industries, what does the budget have in store for specification and construction?
The 2021 Spring Budget has been announced by the Chancellor of the Exchequer, Rishi Sunak.
Nearly a year after the 2020 budget was urgently revised due to Covid-19, battling the pandemic is still the top priority for the financial statement, including extending the furlough scheme and a 6% corporation tax increase set for the top 10% of companies from 2023 to help support treasury funds.
As one of the UK’s biggest sectors, the budget has also focussed on supporting construction and encouraging Boris Johnson’s green revolution.
For a professional in construction, here is what the budget means (or misses) for you.
The housing market
The 2021 budget has housing sales in its sight. From announcing the ‘Help to Buy’ scheme is back to extending initiatives announced in 2020, the government is keen not to let the housing boom fall away.
In order to do this, two key initiatives were announced:
- A mortgage guarantee, where homes buyers with only a 5% deposit will have a mortgage guarantee and be able to buy. These 95% mortgages will be available from April, and are offered by the majority of the major lenders for properties worth up to £600,000.
- The freeze on stamp duty, driven by the sheer volume of applications, will be extended to the 30th June, before moving to a lower cap of 250k until end of September. The freeze will then be extended until the end of October for properties up to £125k.
The aim was announced to ‘turn generation rent into generation own’, and if successful, this would mean consistent demand across the period of uncertainty that the pandemic is predicted to create.
The government has been a clear supporter of modern methods of construction to increase build rates in the UK. In the budget, they have announced the creation on the Modern Methods of Construction (MMC) taskforce led by MHCLG and backed by £10 million of seed funding to accelerate the delivery of MMC homes.
The Taskforce will be based in Wolverhampton and work closely with local authorities to bring MMC initiatives to construction. West Midlands Combined Authority and the Liverpool City Regions have already suggested ambitious proposals for suing MMC in their regions.
Sunak’s investment plan looks to increase construction projects within eight freeports located across England. His aim is to encourage construction and investment within these sites by offering:
- An enhanced 10% of Structures and Building Allowance for new or renovated non-residential projects for buildings in use by 30th September 2026.
- Full relief from Stamp Duty Land Tax on purchased land or property, available until 30th September 2026.
Freeports will be located in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside and Thames
The UK is already a world leader in off shore wind technologies, and new infrastructure at Humberside and Teesside will continue to advance this position, bringing with it the benefit of continually decarbonising energy on our electricity grid.
Alongside offshore wind, there will be continued investment in other green industries, including from a new UK infrastructure bank which will invest in public and private projects as part of the green industrial revolution.
The full investment list is summarised below, which will lead to a variety of construction opportunities; from infrastructure and commercial to new residential developments.
Taken Government’s from the full budget report
A public choice
As the public's interest in supporting action against climate change grows, they will be looking for increasing ways to make their voices heard. To do this, government is pairing with NS&A to offer the chance to invest in the world’s first sovereign green saving bond.
This gives the public the opportunity to put their savings in a place which will aid green projects, such as investment in wind energy, to show that they support green growth whilst aiding industry to develop low carbon infrastructure and other assets.
It will also raise awareness of green practices in the UK and help to increase the demand for homes that take advantage of low carbon energy sources such as electricity.
What about the rest?
After a year of press releases pushing Boris Johnson’s plan for a green revolution, many across construction were expecting a lot more from Sunak’s speech.
Many were hoping to hear on the Treasury's commitment to re-balance levies on energy, following Government’s recent publication of their Future Homes Standard response, beyond the freezing on Carbon Price Support rates in 2022-21.
As regulations move construction to the electrification of heat, it would have been the opportune moment to reinforce a move away from gas by addressing the cost imbalance currently seen with electricity. This would have also helped to address fuel costs as homes are built to electrical specifications, something highlighted in England’s Sustainable Warmth Strategy just a few weeks ago.
There was also noticed silence on the future of the Green Homes Grant. The scheme has been fraught with negative media attention and many were expecting an announcement to be made on the future of the grant, especially with the Clean Heat Grant currently being consulted on.
As focus switches to greener practices across the UK economy, we are likely to see regular change which impacts construction and fixed building services. This is why we make it part of our service to offer our customers advice and solutions that reflect the changing landscape.
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