Construction Industry Reacts Budget 2017

The construction industry reacted strongly to Chancellor Philip Hammond’s first Spring Budget, with his pledge to invest £500 million per year in T Levels and the construction of new schools being the main talking points.

Here is a selection of what some of the industry’s most prominent figures had to say…

According to Martin Vella, managing director of Pexhurst, the introduction of technical skills qualifications “could be one of the biggest boosts to the future of the construction industry that we have seen for some time,”

“It is no secret that there is a skilled labour shortage, and as construction methods continue to advance, even the existing workforce is becoming unskilled in many areas.

“We need to see committed, engaged and technically qualified people bringing new vigour to the construction industry, along with an ingrained understanding of new technologies and working practises; T-Levels could just do that.”

And the £500 million annual fund for education reform is “recognition the UK’s productivity gap is fast becoming a chasm” according to Owen Goodhead, managing director of Randstad Construction, Property & Engineering.

“This allocation of funds is about more than just future-proofing our workforce; it is about undoing the effects of years of prioritising academia over technical vocations and practical trades.

“Because of an already crippling skills shortage in some industries, today’s job market is candidate driven, putting additional pressure on companies to find, attract, and retain talent. For example, the housing crisis is also a STEM skills crisis.

“We estimate that the UK will face a 3.1 million-person workforce shortfall by 2050 as a result of a combination of skills shortages, an ageing workforce, and restrictive migration policy.

“Money should be directed toward school leavers, but students should begin thinking about technical skills at a much younger age. Change must begin at the grassroots level.”

T-Levels must match A-Levels if we are to ensure that technical education has ‘parity of esteem’ with the more academic route, according to Brian Berry, chief executive of the Federation of Master Builders (FMB), who was encouraged to learn that the chancellor understands the UK will not address the productivity challenge unless “we rethink our approach to technical and vocational education”

“T-Levels could be the answer if they genuinely rival A-Levels in the eyes of parents, teachers and young people,” he says.

“The UK society as a whole has been guilty of overemphasising the academic route, making it more difficult for vital sectors like construction and house building to attract the talented people they require.

“We have a severe skills shortage in construction, which is likely to worsen once we leave the EU and no longer have easy access to European labour. This £500 million funding for T-Levels announced today is thus a welcome and much-needed boost.”

Stephen Stone, CEO of Crest Nicholson, was also encouraged to see the chancellor recognise the need for increased investment in skills training, which is especially timely given National Apprenticeship Week.

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“The inclusion of construction as one of the fifteen occupation areas identified under the new T-Level is a welcome development, and it’s heartening to see recognition of the need for greater investment in construction skills training.”

“The new T-Level will provide 16-19 year olds with routes into the construction industry, more classroom time, and high-quality work placements – welcome news ahead of the Apprenticeship Levy in April.

“This, along with the government’s support for graduates and apprentices, will ensure a steady supply of talent and help safeguard our industry’s future.” Ultimately, this means that we are in a better position to meet the country’s growing housing needs.”

However, many were disappointed by Hammond’s failure to address the housing crisis, with Ramboll’s Tom Shaw and Mathew Riley both criticising a lack of necessary investment.

“The recent Housing White Paper expressed positive intentions for resolving the housing crisis, but did not go far enough in providing detail.” “Shaw, Ramboll’s building director, explained.

“It was disappointing that the Budget did not even mention housing or provide the meat on the bones we were hoping for, such as stamp duty reform, incentives for SMEs, or moves toward offsite construction.”

“Ahead of the Budget, the Chancellor declared borrowing to fund infrastructure investment as’reckless’ in terms of the legacy it would leave the next generation,” Riley, UK managing director at Ramboll, added. Even more reckless is this government’s failure to invest in order to meet the needs of a growing and ageing population.

“Despite an utterly lacklustre housing whitepaper, there was no mention of housing, and given the desperate need for skilled workers, there was no mention of any significant investment beyond T-skills – which ultimately fails to deliver any immediate relief to industry pressure.

“This skills development initiative will not have a significant impact until at least 2020. Given the pressures of Brexit, it is critical that the Government prioritises skills development in the construction and engineering industries with greater urgency.”

Justin Arnesen, director at R&D Tax & Grants, is also dissatisfied with the chancellor’s inability to get Britain building.

“We are still experiencing a housing shortage and with Government borrowing costs falling, now would have been the perfect time to invest in, and prioritise, infrastructure,” he says.

“Disappointingly, the chancellor has not addressed how he intends to fund the construction industry post-Brexit. Investment alone is insufficient; it must also create bespoke infrastructure grants and incentives, as well as, most importantly, remove the barriers that businesses currently face when pursuing the R&D tax incentive. The Government has committed to a “Get Britain Building” policy, but HMRC is taking its time in approving a large percentage of R&D tax claims from the construction sector.

“As things currently stand, the government is not encouraging the industry to innovate, take on new and exciting projects, or grow. It can no longer shout about construction while quietly delaying or obstructing critical funding.”

Improving connectivity across the UK will boost productivity and balanced economic growth, according to Nick Baveystock, director general of the Institution of Civil Engineers (ICE), who calls the transport spending announcements of £90 million for the North and £23 million for the Midlands “very positive developments”

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“When viewed in conjunction with the Modern Industrial Strategy and Digital Strategy, this Budget demonstrates a strong desire to position the UK as a leading global economy, both now and in the post-Brexit era.

“The Chancellor is correct in focusing on productivity in the UK and in recognising the critical role of infrastructure in meeting that challenge. While the Autumn Statement outlined infrastructure investment priorities, the Spring Budget now focuses on developing the skills and technology required to carry them out.

“We are pleased to see additional details on the allocation of the National Productivity Investment Fund, including commitments to emerging technologies such as 5G and fibre broadband, which are critical to the UK’s economic growth and future prosperity.

“We also look forward to more detail on technical education reform, including the new T-Levels.”

Despite Hammond’s “all-round strong performance” “increasing tax on the self-employed is not helpful,” Berry says.

“We must encourage and support current and future entrepreneurs in the construction industry and beyond if we are to build a resilient, Brexit-proof economy.

“An increase in National Insurance Contributions from 1% to 10% next year may send the wrong message to those considering going it alone.

“The self-employed are the lifeblood of our economy, and the government must tread carefully in this area.”

Last Updated on December 29, 2021


Author: Indra Gupta

Indra is an in-house writer with a love of Newcastle United and all things sustainable.

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