NFB: How the October 2024 budget can deliver for construction
As the Labour Party get ready to deliver their first UK budget for fifteen years, the nation has been briefed that there is a £22 billion black hole it needs to fill.
The October 2024 budget must recognise that business will deliver the Government’s growth agenda and so any dampening of investment potential, for example, higher taxation on employment or increased businesses costs, risks further shrinking the construction industry.
With almost 50% of the construction industry being self-employed, SMEs training 8 in 10 construction apprentices but building less than 10% of new homes, late payment enduring and the procurement process still favouring the biggest contractors, even the smallest changes to tax and regulation can have enormous impacts.
While the Government may be comfortable that their planning reforms will deliver much needed certainty, even if many are tweaks or policy reversals, most will not be implemented and in place for two to three years, which means we are unlikely to see a marked decrease in construction company insolvency, which stands at 4,690 in 2024, a 53% increase on the last five years.
To help meet their own ambitions, the Government must ensure there is a healthier construction industry backing them up, The following asks would deliver an environment of confidence which could help absorb the prospect of higher taxation, while offering a clear pipeline of opportunity to draw in investment.
- Stamp Duty Land Tax (SDLT) rebate on homes which jump two EPC levels (minimum of C) and zero rating on new build delivering EPC A rates homes.
- VAT reduced to 5% on Heritage and Traditional buildings, covering qualifying works and material, decided by Historic England, English Heritage and the Heritage Alliance.
- A strategic Help to Buy scheme based on site size, housing type or buyer need
- Reform Right to Buy discounts to cover build costs, while implementing a Social Rent. Covenant so that these homes can only be bought at social rent levels.
- Implement onsite habitat solutions in the Biodiversity Net Gain (BNG) metric
- Full expensing on brownfield developments.
- Fund more social housing and affordable housing but funding councils of Homes England to purchase Section 106 homes, or developers sell them off when no Registered Provider can be found.
- Pump prime local infrastructure investment projects so that ‘infrastructure first’ can be practicably delivered.
- Increase funding for planning departments but tie them to KPI’s.
- Disqualifying persistent late payers from winning public sector contracts, while setting up an anonymous reporting taskforce to identify whether ‘agreed terms’ payment practices are late payment by the backdoor.
- Review whether Most Economically Advantageous Tenders (MEAT) remain prevalent.
Richard Beresford, Chief Executive of the National Federation of Builders, said:
“The Government is walking a tightrope of balancing its books, while not unbalancing industry. It must create regulatory and pipeline certainty, while ensuring fair and proportionate processes.
Our manifesto and Budget asks focus on these needs and will ensure any tax rises can be absorbed. If we fail to think about what business needs, we will not build 1.5million homes, growth will be restricted and national renewal will be another period of treading water.”
