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Spending review reveals mixed implications

The spending review, which George Osborne stated was designed to make Britain “the most prosperous and secure of all the major nations of the world”, contained both good and bad news for the construction industry.

Revealing plans to pay private developers billions of pounds to build 400,000 starter homes in England, the Chancellor also announced the introduction of 0.5% apprenticeship levy on company payrolls.

Emphasising that solving the housing “crisis” was his top priority, the Chancellor announced plans to provide £2.3bn to developers to build “starter homes” for first-time buyers in another push to reverse the long term decline in house building.

Mr Osborne has also vowed to channel £4bn into shared ownership schemes to provide more properties for those earning less than £80,000 (or £90,000 in London) who want to get on the housing ladder.

Another announcement significant to the construction industry was news of the introduction of a new 0.5% apprenticeship levy on large company payrolls, raising £3bn a year and funding three million apprenticeships.

APHC chief executive John Thompson commented “While we welcome the news of the Chancellor’s plans to make significant investments in the construction industry and correct the decline in housebuilding, it is disappointing that his efforts are focused solely on the private sector.”

Mr Thompson said it is essential that the chancellor addresses the costs incurred by renters, especially in the capital, to make “generation rent” a thing of the past and give every young person the chance to get on the housing ladder.

Chartered Institute of Plumbing and Heating Engineering (CIPHE) chief executive Kevin Wellman said: “It is good news to hear that the Chancellor plans to hand £2.3bn to private developers to build 400,000 new homes in England. However, there is already a skills shortage in this country so there is a real worry that there will not be enough skilled workers to bring this to fruition.”

Although Mr Osborne has given assurances that funding for Further Education colleges is to be ‘protected in cash terms’, Mr Wellman said there is going be heavy demand on the education system in the future.

Daikin director of renewables and heating Nancy Jonsson said: “At Daikin UK, we’re hopeful that the Government announcement yesterday to maintain funding for the Renewable Heat Incentive will help provide warmth from renewable heating technology, such as air-to-water heat pumps to those in fuel poverty. However, we await clarity from DECC about how they will implement the required savings of £700M.

“We treat the news of the reform of the RHI with caution and encourage DECC to consult with the heat pump industry to ensure that any amended scheme properly addresses upfront barriers and eliminates the cost burden on renewable installers.”

Commenting on the apprenticeship levy, B&ES head of employment affairs and skills Peter Rimmer said there are still aspects of the arrangements which the Government has in mind which remain unclear.

“For example, how SMEs might be able to access the funding the levy makes available; what Government support they might otherwise be able to access for apprentice training; how a larger employer’s unused funding might be used; and whether the funding generated by a given sector of industry would remain in that sector,” Mr Rimmer added.

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