NuGen Properties

2023 autumn statement: the construction industry responds

Chancellor of the exchequer Jeremy Hunt on his way to deliver his 2023 autumn statement at the House of Commons

Among measures welcomed by the construction industry were the extension of full expensing and the allocation of £110m to the local nutrient mitigation fund to support local planning authorities affected by nutrient neutrality rules to deliver local offsetting schemes.

The chancellor also announced additional funding to tackle planning backlogs in Local Planning Authorities (LPA), alongside a consultation on further reforms to streamline the planning system and a new permitted development right to enable one house to be converted into two homes.

Civil Engineering Contractors Association director of operations Marie-Claude Hemming said: “After a few months of doom and gloom news in the infrastructure sector, today’s announcements are pleasantly surprising and we recognise that our members’ concerns have been taken on board.

 “Alongside the publication of the autumn statement document, is a policy paper focusing on speeding up infrastructure delivery, a key component is the creation of a star chamber.  In our recent policy document, CECA called for construction to be put at the heart of policy  making, with the establishment of a  cabinet committee for infrastructure, and we welcome that this suggestion has been adopted by government.

 “We also welcome moves to make full expensing permanent, allowing companies to claim 100% capital allowances on qualifying plant and machinery investment. However, as much of our industry hires its plant and machinery, we welcome the opportunity to continue to work with the government to develop the policy to include assets for leasing within this allowance.

 “Yet we express substantial concern over the merger of R&D expenditure and SME schemes. The associated guidance published today suggests that contractors may still be able to claim tax credits for some R&D, but we need to see more detail as industry has been worried that proposed changes might make this hard in reality, potentially reversing recent strong growth in innovation in the sector.”

Construction Products Association economics director Noble Francis said: “With one eye on the general election next year, this was always likely to be an autumn statement primarily aimed at helping working households and businesses. Jeremy Hunt highlighted that lower personal and business taxation will play a central role in the Conservative party’s approach for next year’s election and gave more clarity to the government’s updated approach to boosting growth. A cut in the National Insurance rate from 12% to 10% and ‘full expensing’ for business investment were the two key headlines from the chancellor’s speech.

“For UK construction product manufacturers, it is the ‘full expensing’ announcement that will resonate most with them. CPA was a key part of the letter calling for this measure to be made permanent and is pleased to see this confirmed today. This will allow companies to invest in the UK to reduce their tax by up to 25p for every £1 they spend on plant and machinery.”

He added: “It is disappointing, however, that government hasn’t published an updated national infrastructure and government construction pipeline since September 2021 and announced in the autumn statement that there also won’t be a revised national infrastructure strategy until next year. This lack of certainty over the project pipeline means that it is difficult for all firms in the construction supply chain to justify signing-off significant new investments in skills and capacity, especially after all the government announcements of infrastructure projects being paused, delayed and cancelled this year.

“This autumn statement marks a step in the right direction from government for the construction industry, but how much of it is electioneering as opposed to real action is not yet clear.”

British Property Federation chief executive Melanie Leech said: “We know that two of the biggest blockers to delivering the homes, workplaces and vibrant communities needed across the country are an inefficient planning system and delivery of the right infrastructure, and the chancellor is right to focus on these as part of a wider plan to boost business investment and stimulate growth. 

“However, the planning system can only work more effectively, and be held to account for delivering swifter outcomes, if it is resourced properly. The planning system has been under-funded for at least a decade and its expertise in handling major projects hollowed out. We need a long-term planning skills strategy for local authorities to enable them to determine applications more quickly and make increasingly complex decisions that balance sustainability, heritage and local need.”

 She added: “Confirmation that full expensing will continue is welcome but the chancellor missed an opportunity to go further and incentivise investment to upgrade older commercial and residential buildings to make them more energy efficient. Tax relief on future profits will not impact the viability of complex retrofit projects and the chancellor should have delivered ‘above the line’ measures such as tax credits for green plant and a zero VAT-rating for residential refurbishments.”

Chartered Institute of Building director of policy Eddie Tuttle said: “We are pleased to hear the Office for Budget Responsibility (OBR) forecast shows strong economic growth across the UK. However, to truly capitalise on this success, issues within key sectors such as the construction industry must be addressed.

“One of the biggest issues facing the construction industry is the skills shortage. In fact, Construction Industry Training Board (CITB) research recently revealed nearly 45,000 extra workers are required each year just to meet construction demand by 2027.

“While CIOB welcomes the government’s commitment to invest £50m in apprenticeships for key sectors like engineering, it is unclear whether the construction sector more generally, which has traditionally been reliant on apprentices as one way of generating new employment, is included in this investment, particularly when shortages are prevalent and have been highlighted across the industry.

“We were also interested to hear the chancellor’s plans to extend National Insurance relief for employers who take veterans on their payroll. While we support the importance of this scheme, we would also be keen to understand if it could be extended to include relief for organisations which take on ex-prisoners as employees for example.

“Ministry of Justice figures state just 17% of people with criminal convictions get a job within a year of release from prison and CIOB believes relieving National Insurance for employers recruiting ex-offenders could go a long way in increasing this figure.

 “The chancellor also discussed further changes to permitted development rights (PDR) to increase the number of new homes. We have long argued that delivering new homes should not be solely a numbers game and it is vital to ensure any new home delivered is of the highest standard, including quality. CIOB is particularly keen to understand further details behind the chancellor’s comments on PDR and we would like to know how this will impact the quality of new homes.”

Peter Hogg, UK cities director at construction consultant Arcadis, said: “Freezing spending gave the chancellor a ‘small government dividend’ of £27bn to spend. By cutting that dividend into 110 slices meant that many of them were pretty thin.

“National Insurance cuts, a duty freeze on alcohol, the pensions triple lock and benefits increases will be the headline-grabbing crowd pleasers but was this a statement for business?

“£4.5bn for manufacturing and clean energy is certainly worthwhile, albeit sliced and diced into a wide range of individually small measures rather than betting the farm on fewer, more transformative initiatives.

“Making expensing permanent will be welcomed by business and will certainly benefit the economy as a whole – though services firms will benefit less than more capital-intensive businesses.

“Equally, measures on devolution were welcome and highly targeted, and it was positive to see at least some new Investment Zones. The extension of the freeport tax free extension was an interesting reminder of the lack of pace that has affected at least some freeports and a reminder that progress needs to be made.

“The chancellor made a big play of his ‘planning reform’ but, cynically, his proposal is little more than applicants paying more to get the service they should have got anyway; to think that this is going to turn the dial on housing delivery and development is fanciful.

“Overall, little that the chancellor did was wrong but, in attempting too much he diluted the impact of his £27bn dividend.”

Richard Beresford, chief executive of the National Federation of Builders, said: “It has been some time that a chancellor played prime minister by linking the importance of regulatory reforms with growth, and it is hugely welcomed. For decades, business has felt increasingly dictated to, rather than enabled and we hope this is a sign of much needed direction change where business is enabled to innovate and invest, rather than placated with tax cuts.

“The announcements to cut to self-employment taxes, increase investment in housing, regulatory reforms on the grid and permitted development, funding for nutrient neutrality and an acknowledgement that commercial premises should not be stifled by planning permissions all showed that the government is taking the environment for growth seriously. 

“Additionally, investments in electric vehicle charging infrastructure, the expansion of technical skills, an increase in minimum living wages, the permanency of full expensing, and back to work plans also make for an interesting mix of strategies that will please many.

“Even housebuilders were given a glimmer of hope, signalling that the Government is taking their challenges seriously.”

Rico Wojtulewicz, head of policy and market insights at the same federation, added: “We would like to thank the chancellor for listening to the NFB regarding nutrient neutrality and grid connections, which both disproportionately harm the construction industry the most, especially SME housebuilders. Reforms and investments in planning were long overdue, and our long running campaign to support increased use of local development orders, plus ensure planning supports heat pumps has finally gained traction. We are hopeful this is the start of a future where the government realises that construction needs enabling and supporting, rather than being the cash cow for underinvestment.”

Federation of Master Builders chief executive Brian Berry said: “The autumn statement will be welcomed by small builders, with the government finally taking steps to support micro and SME businesses in a sector which has faced significant difficulty in recent years. However, this must only be the start if the government is serious about tackling the challenges we continue to face. Measures to reform the way local authorities process planning applications is good news, as are plans to help fund local authorities tackle nutrient neutrality mitigation. However, substantial increases in funding for local authority planning departments are needed if we are to see real progress.

“There were some surprising outcomes, like the changes to permitted development rights, which will bring work for house builders and the repair, maintenance and improvement sector. Buried in the details is additional support for housing associations to deliver energy efficiency improvements. This support should also be rolled out to the owner occupier sector to help improve the UK’s leaky housing stock.

“Financial support for SMEs represents another positive step, along with other announcements to boost SME growth, such as adopting digital technology. It is good to see that skills training has received a boost, with additional funding announced to increase the number of apprenticeships undertaken.”

Construction Equipment Association chief executive Suneeta Johal said: “This statement marks a positive development, especially for the manufacturing sector, which values the emphasis on resolving enduring economic issues. The decision to make full expensing permanent provides the clarity and stability businesses require for their investment decisions.

“Additionally, the new initiatives to improve engineering apprenticeships and advance manufacturing signify a proactive effort to develop high-value growth and skilled employment, shaping a robust future economy.

“The chancellor’s commitment to making the full expensing policy a permanent fixture is a landmark achievement. The ability for companies to claim 100% capital allowances on qualifying plant and machinery investments, and write off the cost of investment in one go is not just a financial boon; it’s a catalyst for accelerated growth and modernisation.

 “This significant policy change, a result of concerted efforts by Make UK, CBI and the Construction Equipment Association alongside over 200 organisations, stands as an example of the powerful outcomes that can be achieved through collaborative industry-government engagement.  

“However, the absence of discussion on fuel duty is particularly disappointing. In an industry where fuel costs substantially impact operations, this oversight is a missed opportunity.”

Mineral Products Association (MPA) chief executive Jon Prichard said: “Overall it is a good autumn statement that focuses on several of the key issues for MPA members. Making full expensing permanent will be widely welcomed, especially in capital-intensive industries such as ours that rely on investment in land and equipment to deliver our product.

 “The chancellor’s announcement on accelerating planning for major applications has a lot of potential but we look forward to seeing the detail to fully understand the benefits it may bring. It’s vital the mineral products industry can secure planning permissions at a reasonable pace and fair value for money. Local authority planning teams have long been over-stretched and we welcome incentives to invest in more capacity to support more effective delivery.

“We were disappointed not to have an announcement on a carbon border adjustment mechanism and note in the documents that we should be hearing more soon. This is essential to ensure a level playing field for UK cement producers ahead of the EU CBAM starting to charge from 2026. We note the increases in the aggregates levy in 2024 and 2025. MPA has always challenged the environmental case for this tax which does not recognise the positive contribution made by the sector in areas like  biodiversity gain and responsible site management.”

Stephen Marcos Jones, chief executive of the Association for Consultancy & Engineering and the Environmental Industries Commission, said:  “While much of the chancellor’s speech focused on taxes and the cost of living, we welcome announcements on engineering apprenticeships, ambitions to speed up delivery of infrastructure projects, funding for green industries accelerators, and late payments. Further detail will be needed to fully understand the potential opportunities and a clear strategy for implementation.

“However, the political backdrop means that industry still has more questions than answers. The promise of an updated national infrastructure strategy next year highlights the urgent need for a national infrastructure and construction pipeline to provide certainty on what is required and will be spent by the government over the next ten years. This will foster an environment where industry can meet the nation’s infrastructure needs”.

Chris Richards, director of policy at the Institution of Civil Engineers, said: “In its infrastructure assessment (NIA2) the National Infrastructure Commission emphasised the need for ‘pace over perfection’ because the UK urgently needs to make progress on its long-term goals like decarbonising the infrastructure system. But for those looking for direction from the chancellor on how the UK will pick up the pace, today’s autumn statement was disappointing.

“Infrastructure will play a big role in the challenges the UK needs to overcome, but to make progress, clarity and investment are necessary. While the commitments on grid infrastructure are a welcome step, the statement provided little additional clarity on key pledges like Network North, and the choice to maintain capital budgets in cash terms again, effectively means another cut in infrastructure spending.

“With a spending review imminent, further uncertainty about whether infrastructure promises will be met could be around the corner. The British public want to see networks and services transformed for their benefit. Reducing uncertainty must be a priority going forward.”

James Corrigan, Turner & Townsend’s UK managing director for infrastructure, said: “Industry, decarbonisation and infrastructure are inextricably intertwined in this year’s autumn statement – and government has been listening to concerns around barriers to investment in all three areas.

“The chancellor has today signalled a much-needed long term strategy and funding support for advance manufacturing – bolstering the green investment in skills and expertise needed to support the UK’s own clean energy transition, while also eyeing export opportunities abroad.  There is a welcome focus on both physical geography – through investment zones – as well as freeing up finance from private avenues such as pension funds.

“Targeted investment in these potentially high-growth, net zero sectors is vital, as are the planning reforms to reduce uncertainty and delay that will reassure these industries that they will be able to access the infrastructure they need to succeed.

“What is currently unclear is how all this will be delivered in practice.  The government writes about the need for greater spatial planning of infrastructure, and the sector and ministers need to collaborate closely to assess the available resource to ensure realistic sequencing of investment and development.  Without this we risk setting unattainable goals and hitting capacity bottlenecks in delivery.”

Gleeds chief executive Graham Harle said: “This was an autumn statement by a government that appears to have little insight into the challenges faced by those working in property and construction, having shuffled 16 housing ministers in 13 years and just cancelled HS2. Of the measures announced, full expensing is to be welcomed but is only helpful if you have projects requiring you to buy plant and machinery. It doesn’t help firms struggling to make a profit or investing in people. It’s all jam tomorrow and while planning reforms sound appealing they take time to implement and may not be supported by any future government. Reducing business rates is helpful for a struggling retail sector and abolition of aspects of national insurance for self-employed tradespeople looks good but is worth little more than a few hundred pounds for the average plumber or electrician.

“Where was the VAT relief on the greening of housing stock when over 31 million people live in buildings that meet sub-standard EPC ratings, and £50m to support apprenticeships is meagre. We were promised 110 measures to help industry but in fact there was little there to inspire confidence and stimulate investment.“

Andrew Baldwin, head of policy and public affairs at the Association for Project Management, said: “There are reasons to be optimistic about some of the measures announced. We welcome the chancellor’s nod to stability through plans to support investment, boost skills and improve efficiency in many of the key areas where projects take place, such as technology, house-building and advanced manufacturing.

“Importantly, ensuring successful delivery needs to remain a focus in light of planning reforms announced by the chancellor. We acknowledge that bureaucracy around infrastructure projects can be a source of frustration for those tasked with delivering these projects. Whilst measures announced in the autumn statement to speed up this process have the potential to quicken project delivery, it is important to remember that projects must be delivered with a sustainable and sustained approach in mind.

“While speed of completion is always a consideration, this must not be at the expense of successful delivery. Infrastructure projects must not become ‘hurried’, as this could jeopardise its ability to deliver intended benefits over the long-term.

“Meanwhile, the focus on delivering so many new projects is a positive step although the proximity to an election may impact on the ability to deliver all of them in such a short period. It must be remembered however that delivering project success means investing in people.

“It is concerning to hear the government is focused on reducing the civil service at a time when its own centre for project expertise – the Infrastructure & Projects Authority (IPA) – is supporting more government projects than ever before. We believe the IPA should be given more resource, not less. We therefore call on the government to ensure the IPA has the resources it requires to deliver projects successfully, so that projects succeed for the benefit of society.”

Simon McWhirter, deputy chief executive of the UK Green Building Council, said: “The government heard the furious backlash to its green policy rollback last month; and this was a chance to realise scale of their error by shoring up protections for struggling households and small businesses and get energy bills and carbon emissions under control.

“It’s not that the government hasn’t been presented with the ideas to address the problem. Industry has been offering oven-ready policy proposals such as modernising stamp duty with a ‘rebate to renovate’ incentive for households that would accelerate home insulation, cut our reliance on polluting fossil fuels, and motivate people to switch to low carbon heating and install solar panels – all while also ‘backing British businesses’ by creating a large-scale, long-term retrofit market to support industry and deliver skilled jobs throughout the country. We hope it will be announced in the spring budget.”

Ben Harwood, managing director of real estate consultant Naismiths, said: “This statement is okay for business, but in terms of benefits to the construction industry specifically there isn’t much in it – albeit glimmers of potential.

“Mr Hunt states that the economy has outperformed expectations since last autumn. This paints a picture of somewhat improvement, and while inflation and interest rates have reduced and this is positive, it is as expected for property and construction stakeholders.

“The industry has been riding this wave for some time, and as rates have been stabilising this has naturally meant an uptick in construction activity. But this does not negate the fact that all sectors of construction have and continue to feel the brunt of a still uncertain and turbulent market, especially the residential development sector, which I would have liked to have seen more support in the autumn announcement by way of more certainty for homebuyers.

“More measures for first time buyers if announced, would have had a trickle-down effect on the private open sales market – providing more assurance to new build residential property developers and in-turn financers of large residential schemes.

“For large residential portfolio holders and residential retrofitting contractors, the announcement regarding a new permitted development rights consultation, which would allow any house to be divided into two flats, provided the exterior remains unaffected, is welcome. This will help to open up more property investment and development opportunities and increase affordability for buyers or renters of such schemes for cheaper flat properties when compared to a house.”

Anthony Payne, president of the Association of Directors of Environment, Economy, Planning & Transport (ADEPT) – which represents local government officials – said: “The autumn statement is disappointing for public services.

“Many local authorities have reached the end of the line when it comes to their capacity to absorb spending cuts without impacting on essential services. The public and the most vulnerable in our communities can see that many of the services they rely on just aren’t working. All the innovation and new practices we introduce are no longer enough to bridge the gap between resource and delivery.

“Local government works in partnership with national government. We are responsible for maintaining and delivering infrastructure, local roads, recycling and waste services on which each and every one of us and our families depend; as well as delivering regeneration and economic growth thereby increasing prosperity. We work with government to ensure national priorities are delivered locally and we will continue to deliver for the communities we serve, but there is no hiding the fact we are under intense pressure and the continuing impact on services will be felt by everyone.”

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