News
Budget mixed for construction
22/06/2010
The first Coalition budget has provided mixed news for the construction sector, with ups including a reduction in corporation tax, and incentives aimed at the small companies in which our industry is so rich, and the confirmation of no further capital spend reduction - meaning planned transport improvements, and BSF for example, can continue.
The big down was the VAT rise, with no concession to energy efficiency enhancing refurbishment. This will hit consumer demand for home imporvement, and therefore demand for building materials.
The CIC released a comment: "The budget concentrates its impact on reducing the bill for welfare payments and tackling the size of public sector operational/revenue expenditure. It provides some comfort for employers in the private sector with a downward movment of Corporation Tax and gives some incentives to new employers outside of London and the S-E.
There is no cutting of capital expenditure over and above the savings already announced and some regional transport projects have been given the green light. However, the impact of further cuts in capital expenditure will be made known in the Spending Review, now to take place on 20 October.
The initial reaction is that the budget is unlikely to worsen the economic indicators for the construction industry in 2010/11 or 2011/12, despite the downward revision of overall growth forecasts by the OBR.
The "achiles heel" for construction might be the impact that an incresae in VAT will have on retrofitting existing buildings for greater energy efficiency and to reduce carbon emissions - the additional increase is likely to deter some owners from going ahead with retrofitting work and has the potential for taking more such work in the domestic sector into the black economy. It is unlikely to make the achievement of climate change targets any easier.
The commitment to the Green Investment Bank and to Regional growth being enhanced through the investment of transport and construction projects is welcome."
