CIOB responds to Spring 2021 Budget

5 min read03 March 2021 Partner content

The Chartered Institute of Building (CIOB) has responded to the Government’s latest budget announcement.

Firstly, the Institute welcomes the business support measures announced earlier today.

The construction sector has relied upon Covid-19 support schemes over the past year in order to keep sites open and operational. Given that 244,100 construction workers are currently furloughed and the top 50 contractors claimed up to £1.1 million in furlough in December alone, CIOB is pleased that the Chancellor has extended the scheme until the end of September.

The extension of this support and the introduction of a new Recovery Loan Scheme will provide certainty to businesses and workers that they will not have to face any kind of cliff edge.

It also welcomes the extension of the self-employment scheme to the end of September, and its extension to include those who are newly self-employed.

High numbers of construction industry professionals are self-employed and since the initial lockdown, 747,000 have made a claim for the self-employment income support scheme (SEISS). Compared to other industries, construction has had the highest number of claims (34 per cent) and on average one of the highest value of claims (£3,500), showing just how important this form of support has been for the industry.

CIOB recognises that these schemes should not be a long-term solution. However, support mechanisms for businesses will be essential to their survival during a time of financial uncertainty. It is hopeful that the ‘super-deduction’ tax incentive for companies investing in plant and machinery will provide a valuable boost for struggling construction firms.

CIOB is pleased to see the Chancellor’s announcement that the Stamp Duty Land Tax holiday will be extended to 30 June for homes under £500k, and the nil-rate band extended to homes under £250,000 until 30 September 2021.

The Stamp Duty holiday has provided essential support to housebuilders and propped up the housing market throughout the pandemic and comes after CIOB joined the Construction Leadership Council in calling for the holiday to be extended, to give industry the confidence it needs to keep building.

However, CIOB is concerned that the Government has missed an important opportunity to strengthen the impact of its investment in Covid-19 support measures by failing to suspend the implementation of the Construction Services Domestic Reverse Charge (more commonly referred to as the VAT reverse charge). Coupled with changes to IR35 which will significantly increase the administrative burden placed on construction businesses, this charge threatens to severely restrict cash flow to those lower in the supply chain, hitting small and medium sized firms the hardest at a time when many are already at risk of insolvency.

CIOB, in conjunction with leading built environment organisations, is calling on the Government to withdraw the charge as a matter of urgency, to support construction businesses and protect jobs.

CIOB is also concerned by the lack of any measures to address the environmental impact of the built environment within the Budget. Significant and urgent action must be taken to decarbonise the built environment if we are to meet net zero by 2050, yet recurring failed policies continue to deplete the time we have left to address the climate emergency. It is therefore vital that any measures to address built environment emissions are designed in conjunction with the sector to ensure their successful delivery.

CIOB has long called for an ambitious national retrofit strategy to provide a clear direction of travel for the construction industry and the certainty that businesses need to create stable, green jobs beyond 2022.

The construction sector is united in its message that we must move away from a piecemeal approach and towards a coherent and sustained programme of activity if we are to improve the energy efficiency of our buildings.

CIOB welcomes the allocation within the Budget of £12 billion initial capitalisation for a new National Infrastructure Bank and urge the Government to use this bank to prioritise funding for a national retrofit strategy, to demonstrate global leadership on climate change as it prepares to host COP26.

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.”