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Industry reacts to 2013 Budget

The industry’s reaction to announcements on housing and infrastructure in today’s 2013 Budget.

Housing:

Richard Threlfall, head of infrastructure, building and construction, KPMG: :“The chancellor’s ‘Help to Buy’ scheme looks like the perfect “get out of jail” card. It’s a bold move, perhaps a desperate one, but one that will be undeniably welcome by the beleaguered construction industry.

“The government has finally recognised that housing might offer the fastest acting pain relief for our economic woes and, perhaps despairing of local authorities to be proactive in supporting new house building, has decided to focus stimulus on demand.

“By opening the scheme to all buyers of new-build houses up to £600,000 in value, the chancellor has thrown the UK house building industry a new lifeline. Ultimately, the construction industry and all trades that support construction of new houses in the UK will benefit from the new scheme.”

Richard Steer, chairman, Gleeds Worldwide: “My overriding feeling is one of great pessimism, I am afraid this budget has as much credibility as the ingredients list on supermarket Beef Lasagne.

“So many previous targets missed, so many previous incorrect forecasts and a limited infrastructure boost that looks good on paper but so did the £4.7 billion of capital expenditure promised in 2011 and the £5.5bn promised the year after that has yet to make an impact.

Brian Berry, chief executive, FMB: “We needed a ‘Budget for Housing’ to address the acute shortage of affordable, energy-efficient homes in the UK.

“The Help to Buy package is aimed at stimulating the underperforming mortgage market, which could provide a boost to all firms involved in housebuilding, renovation and repair.

“But changes to the FirstBuy scheme will be of limited assistance if it remains too costly and complex for smaller developers, who deliver a third of all new homes.”

Richard Hutchings, UK director, WSP: “The incentives contained in today’s Budget for housing are a welcome boost to what is currently a dysfunctional market, and will hopefully give confidence to investors to build.

“The extension of the First Buy scheme, the money for build to rent and the Help to Buy initiative from 2014 will underpin the weak signs of recovery as repossessions are at a five-year low, the number of first time buyers is rising for the first time in four years and affordability is improving.” 

Ben de Waal, head of residential, AECOM: “The flip side [of Help to Buy] is the implication that the private rental sector is unlikely to receive significant political support.

“Is the government in danger of setting a dangerous precedent of subsidy to fund home ownership. This is not sustainable in the long run so we come back to the need for a more diversified housing supply that embraces renting as acceptable rather than simply for the “can’t affords’.

“This budget has in many ways reinforced the negative stigma associated with renting at a time when the market for institutional grade, high-quality service orientated housing is just beginning to take off. Poor timing.

“Disappointing that there was no mention of Local Authority debt caps being raised to help them fund new homes.

“Clearly the impact on the UK balance sheet is considered to be too great but it ignores that from a delivery point of view the local authorities are very well placed to fund a major programme of new housing on land already within their ownership.”

“We’re particularly pleased our call for a focus on the short-term boost of housing has been heeded, alongside an increase in longer-term big ticket infrastructure spending”

CBI Director-General, John Cridland

Rob Oliver, chief executive, Construction Equipment Association: “The “Help to Buy” move is an imaginative one, but will take some time to stimulate the new build market.

“An allocation of resource to social housing may have been a better shorter term bet to help the housing sector, but that was politically something that was unlikely to happen.”

Paula Higgins, HomeOwners Alliance: “While the equity loan scheme announced today will get some houses built, it won’t be enough.

“The government should have considered a targeted Help to Build scheme, getting more houses in the right places and at the right price available on the open market, if they want to make a dent on the decades of chronic lack of house building.”

Rates relief:

Peter Chapman, head of rating and compensation for Cluttons, expressed his disappointment that today’s Budget announcement did not address the pressing issue of business rates.

“This Budget provided the chancellor with a golden opportunity to demonstrate that the government was listening to the retail industry’s pleas and it is disappointing business rates were not addressed.

“Instead, the government has refused to listen to the concerns of the retail industry which called for no increase to business rates next year.

“It has also stood by the annual uplift in the Uniform Business Rate (UBR) multiplier at the Retail Price Index figure of 2.6 per cent for 2013/14.

“It is unfortunate the government did not increase future years’ rates bills by no more than the Bank of England’s lower Consumer Price Index (CPI).

“Secondly, we are disappointed the government did not take the opportunity to expand the empty rates relief.

Stephen Ratcliffe, director, UKCG: “There is some good news for the industry notably, the increases announced in public sector infrastructure investment, new help and guarantees on mortgages and a commitment to publish a longer term investment pipeline (to 2021) covering the most economically valuable areas of the economy.

“But the extra spending on infrastructure will not start to bite until 2015. What the construction industry wanted most of all was more assurance that government is focussing on delivery of projects but there is little detail about for example what the Treasury guarantees (announced last summer) have achieved and how deal flow in the public sector pipeline will be speeded up.

“The promised review of Whitehall’s capability to deliver projects will bring no immediate changes.”

David Tonkin, chief executive, Atkins UK: “The news that capital spending will now increase rather than fall as was planned is obviously extremely welcome.

“The pledge of up to £3bn a year being found from 2015/16 can be used to deliver real economic and social benefit through the building of new projects to support areas such schools, road building, rail and energy infrastructure.”

Jonathan Hook, engineering & construction leader, PwC: “For construction, the big news for the sector is the chancellor’s bet on the housing market with the Help to Buy scheme. The commitment of £3.5bn to shared equity loans up to 20 per cent coupled with £130bn of mortgage guarantees is a big boost to the residential market.”

Mark Naysmith, deputy managing director, WSP: “I don’t think anyone in the industry was expecting any major announcements but on a positive note, the measures announced for house buyers will be a major boost for the sector and will hopefully give confidence to investors to build.

“However, it’s disappointing to see the lack of detail behind the chancellor’s commitments to infrastructure today and the delay with which it will materialise. What industry needs more than ever is clarity and assurance that the government’s plans are being progressed.”

Nick Prior, head of infrastructure, Deloitte said: “Today’s commitment needs to be backed up by action and delivery.

“The fact remains that the construction sector has contracted in each month since October last year and new orders are down by nearly 40 per cent from their peak in 2007.

“This is despite many announcements and initiatives that have not been able to arrest this decline.

“If infrastructure is to be the silver bullet for economic recovery, we need to see shovels hitting the ground on projects that have a real impact in driving growth sooner rather than later.”

Jon Poore, public sector director, Turner & Townsend: “The script is well worn – improving Britain’s infrastructure will make us more competitive and give the economy a welcome stimulus.

“Mr Osborne’s promise of an extra £3bn of public sector infrastructure investment per year from 2015/16 is eye-catching, but also an acknowledgement that his plan for the private sector to step into the breach is struggling.

“In the past year total infrastructure spending shrank by 12 per cent as the private sector steadfastly refused to take on the role of white knight. Progress on the chancellor’s wishlist of infrastructure projects has been underwhelming.”

Dr Nelson Ogunshakin OBE, industry co-chair, NIPSEF: “It has been a remarkable achievement to bring together all areas of the infrastructure industry.

“Delivering the National Infrastructure Plan requires the insight of both government and industry, from the delivery supply chain to the financiers of infrastructure, and from asset owners and managers to the representatives of business users of infrastructure.

“Industry is delighted to see this collective insight being formally recognised by the chancellor and is keen to assist government further in delivering the infrastructure so vital to the UK’s economic growth.”