Construction Industry Reacts Budget 2017

There was plenty of reaction from the construction industry to chancellor Philip Hammond’s first Spring Budget with his pledge to plough £500 million a year into T Levels and building new schools the main talking points.

Here is a selection of what some of the sector’s leading figures had to say…

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

“A shortage of skilled labour is no secret and with advances in construction methods continually developing, even the existing work force 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 practices; T-Levels could just do that.”

And the £500 million year pot for overhauling the education system is “recognition the UK’s productivity gap is fast becoming a chasm”, says Owen Goodhead, managing director of Randstad Construction, Property & Engineering.

“This allocation of funds is not just about future-proofing our workforce, it’s about reversing the effects of years of putting academia over and above technical vocations and practical trades.

“Today’s jobs market is candidate driven because of an already crippling skills shortage in some industries, putting more pressure on companies to find, attract and retain talent. The housing crisis, for example, is also a STEM skills crisis.

“We estimate the UK is facing a workforce shortfall of 3.1m people by 2050 due to a combination of skills shortages, an ageing workforce and restrictive migration policy.

“Funnelling money towards school leavers is the right tactic but pupils need to start thinking about technical skills from an even younger age. Change must start from the grassroots.”

T-Levels must match A-Levels if we are to ensure that technical education has ‘parity of esteem’ with the more academic route, says Brian Berry, chief executive of the Federation of Master Builders (FMB), who was encouraged to learn the chancellor understands the UK won’t 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.

“UK society as a whole has been guilty of putting too much emphasis on the academic route – this has made it more difficult for vital sectors like construction and house building to attract the talented people we need.

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

Stephen Stone, CEO of developer Crest Nicholson was also encouraged to see the chancellor acknowledge the need for greater investment in skills training; especially fitting during National Apprenticeship Week.

“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 acknowledgement of the need for greater investment in skills training in the construction sector.

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

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

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

“The recent Housing White Paper set out positive intent for solving the housing crisis but did not go far enough in providing detail,” said Shaw, buildings director at Ramboll.

“It was disappointing that the Budget did not even mention housing or provide the meat on the bones we are desperate to hear; whether that is stamp duty reform, incentives for SMEs or for moves towards offsite construction.”

Riley, UK managing director at Ramboll, added: “Ahead of the Budget the Chancellor declared borrowing to fund infrastructure investment as ‘reckless’ in the legacy it would leave the next generation. However even more reckless is this Governments failure to deliver the investment needed to meet the needs of a growing and ageing population.

“There was no mention of housing, despite an utterly lacklustre housing whitepaper, 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 imminent relief to industry pressure.

“We will not see any meaningful impact from this skills development initiative until at least 2020 onwards. Given the pressures of Brexit it is crucial that skills development in the construction and engineering industry is prioritised with more urgency by the Government.”

Justin Arnesen, director at R&D Tax & Grants, is also discouraged by the chancellor’s failure 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 also failed to address how he will go about funding the construction industry post-Brexit. Investment alone is not enough and it needs to create bespoke infrastructure grants and incentives and, most importantly, remove the hurdles that companies currently face when pursuing the R&D tax incentive. The Government has committed to a policy of ‘get Britain building’ and yet HMRC is dragging its heels when it comes to approving a large percentage of R&D tax claims from the construction sector.

“As it stands, the Government is not encouraging the industry to innovate, to take on new and exciting projects, or to grow. It can no longer promote construction loudly while quietly delaying or obstructing vital funding.”

Improving connectivity throughout the UK will drive productivity and balanced economic growth, explains Nick Baveystock, director general at Institution of Civil Engineers (ICE), who says the transport spending announcements of £90m for the North and £23m for the Midlands are “very positive developments”.

“Considered alongside the Modern Industrial Strategy and Digital Strategy, this Budget shows a strong desire to position the UK as a leading global economy, now and in the post-Brexit future.

“The Chancellor is right to focus on the UK’s productivity and in recognising the critical role of infrastructure to meet that challenge. While the Autumn Statement outlined infrastructure investment priorities, the Spring Budget now focuses on building the necessary skills and technology to deliver them.

“We are pleased to see further detail on the allocation of the National Productivity Investment Fund with commitments to emerging technologies, 5G and fibre broadband, critical for 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 an “all-round strong performance” from Hammond, “increasing tax on the self-employed is not helpful,” says Berry.

“If we want to establish a resilient, Brexit-proof economy, we must encourage and support our current and future entrepreneurs in the construction industry and beyond.

“A jump in National Insurance Contributions from 1% to 10% next year could send the wrong message to those individuals who are considering going it alone.

“The self-employed are the backbone of our economy and the Government should tread carefully here.”

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