Chancellor of the Exchequer Jeremy Hunt has unveiled his 2023 Spring Budget, announcing ‘the biggest ever’ employment package, and an extension of the Energy Price Guarantee to help households ease the cost of living crisis. Here, the construction industry shares their thoughts
Jeremy Hunt announced in the 2023 Spring Budget that the UK economy is on the right track, despite a backdrop of inflation and a cost of living crisis.
Hunt’s 2023 Spring Budget includes a £27bn tax cut for businesses to drive investment and growth, and a trio of freezes to aid low-income households with cost of living and soaring energy costs.
The UK will no longer enter a recession this year
To kick off the speech, Hunt announced the latest predictions by the Office for Budget Responsibility, confirming that the improving international forecast and actions taken by the government following Truss’ catastrophic mini-budget in September mean that the UK will no longer enter a recession this year.
Hunt also announced that the UK economy is on track for growth, with inflation halved this year and debt falling. Furthermore, he confirmed that there will be no new tax rises within the 2023 Spring Budget.
A new migration package hopes to attract skilled construction workers
Hunt outlined his employment objectives in the 2023 Spring Budget, which include abolishing the lifetime allowance, which will remove barriers to remaining in work, and increasing the Annual Allowance from £40,000 to £60,000 as an incentive to keep highly-skilled workers in the labour market.
Alongside this, Hunt also unveiled a new ‘Returnerships’ apprenticeship, targeted at older workers, and plans to attract new skills and talent through a new migration package that includes adding five construction occupations to the Shortage Occupation List and expanding the range of short-term business activities that are covered under the UK’s six-month business visit visa offer.
The Energy Price Guarantee has been extended for a further three months
Ahead of the budget today (15 March 2023), an extension to the Energy Price Guarantee was also unveiled for a further three months until June to see homeowners through until the summer months.
Hunt confirmed that this extension will save the average family around £160 on their energy bills and cost the Treasury around £3bn.
To further help with the cost of living crisis, Hunt announced that the planned 11 pence rise in fuel duty will also be cancelled, maintaining last year’s 5p cut for another twelve months, saving a typical driver another £100 on top of the £100 saved so far since last year’s cut.
How do construction industry professionals feel about the 2023 Spring Budget statement?
Donal O’Riain, founder and director of Ecocem, comments: “All investment in reducing global carbon emissions is welcome, but today’s announcement by the UK Government that it will invest £20 billion in carbon capture technology is another example of how focussing exclusively on carbon capture is at the expense of broader, less costly, and more readily available innovation.
“Within the cement industry, which represents 7% of all global carbon emissions, the market is ripe with innovation. While Carbon Capture technology will have a role to play to decarbonise cement when it is ready, new technologies already exist that can halve emissions from cement by 2030, at very little extra cost compared to traditional cement products. It is currently predicted that Carbon Capture technology won’t be operational until at least 2035 and then only at huge expense and requiring massive infrastructure changes.
“By focussing investment solely on Carbon Capture technology, the Government is slowing down critical industry innovation. It would do well to think shorter term and move to reduce emissions now – not in 10 years when CCS may finally be deployable.”
The Chancellor’s focus on energy strategy is a welcome statement of intent, but miss the mark
UK100’s interim chief executive, Jason Torrance, said: “The Chancellor’s focus on energy security, energy bill support, and devolution is a welcome statement of intent — but we’re worried the measures themselves miss the mark.
“Extending the Energy Price Guarantee for a further three months offers consumers a vital but brief reprieve from sky-high energy bills. However, Jeremy Hunt has let slip another golden opportunity to embrace a targeted, long-term solution.
“For too long, the Government has overlooked the importance of energy efficiency. Our End the wait. Insulate. report sets out an oven-ready, cost-neutral plan for a local-led energy efficiency drive to alleviate pressure on the most vulnerable – and it won’t cost the earth.
Energy security plans ignore the cheapest way to boost UK energy production while accelerating net zero
Noting the lack of renewable energy support in the Chancellor’s £20bn energy security announcement, which focuses on nuclear power and carbon capture, Jason continues: “At the same time, the Chancellor’s energy security plans ignore the cheapest and quickest way to boost UK energy production while accelerating Net Zero action; investment in renewables, including making good on the promise to lift the de facto ban on onshore wind.”
Jason concludes by welcoming the “beefed up,” multi-year devolution settlements for Greater Manchester and the West Midlands and support for investment zones:
“Finally, the move to shift control from Whitehall to regional mayors should be celebrated as a big step in the right direction — but we need to see more detail. The same with investment zones.
“Today’s announcement has a huge potential to unlock the power of local. But it musn’t come at the expense of vital environmental and climate protections. To ensure the UK can fulfill its Net Zero goals, local and regional leaders need the power — and resources — to take the lead on ensuring their residents’ homes are warm and comfortable and shaping local energy networks to be more responsive to community needs.”
‘The Chancellor needs to prioritise inward investment by incentivising skills training and education’
NBS CEO Russell Haworth added: “The increase in corporation tax to 25% will no doubt be unpopular in a number of sectors, however, this could be an opportunity to boost UK investment if the government thinks strategically when it comes to capital allowances.
“Targeted incentives are needed to tackle chronic skills shortages in the labour market, starting with substantial tax breaks for the technology sector. While the priority is to fill job vacancies and attract new talent by opening the UK’s doors to more foreign workers, longer term the Chancellor needs to prioritise inward investment by incentivising skills training and education.
“Offering tax breaks for tech businesses looking to upskill their workforce in deprived areas will help tackle UK productivity and competitiveness, delivering a boost to the economy. This could see innovation continue to accelerate right across the construction sector as firms commit to investing in new technologies and sustainable solutions.”
‘Changes to capital allowances are needed as a counter-balance to the increase in corporation tax and the ending of the super-deduction’
Melanie Leech, chief executive, British Property Federation, said: “The Chancellor is right to have used today’s Budget to remove obstacles that prevent businesses investing and to set out a plan to deliver on growth.
“The announcement of ‘trailblazer’ deals with Greater Manchester and the West Midlands is welcome, both regions understand the critical importance of real estate to delivering better outcomes for communities and we look forward to working with them to unlock new opportunities for investment.
“Taken together with the Chancellor’s announcement for 12 new ‘Canary Wharf’ inspired investment zones and further levelling-up funding, towns and cities across the country will move towards a more strategic and targeted framework of interventions.
“The changes to capital allowances are much needed as a counter-balance to the increase in corporation tax and the ending of the super-deduction. By providing full tax relief in one year, called for the by the British Property Federation, it will better support businesses and encourage long-term investment into carbon reduction and energy efficiency measures.”
Schemes to get retired and disabled people back into work are not enough
Eddie Tuttle, director of policy, external affairs, and research at CIOB, commented: “A number of the proposals in the budget statement will rely heavily on the construction sector, including the creation of new investment zones, growing renewable energy generation and local schemes to improve roads. The prospect of investment in local infrastructure will be welcome news to construction companies across the country.
“Our concern however is that construction is already battling a huge skills gap, and this has to be addressed if the industry can play its vital part in delivering the Government’s growth plans. Schemes to get retired and disabled people back into work are unlikely to help fill many of the more physically demanding vacant roles, however we’re keen to hear more about the proposed “Returnerships” which could be a good opportunity for older workers to retrain for less physical roles of which there are a growing number in the sector.
“At a time when we’re looking to dramatically improve the diversity of the built environment workforce we were also pleased to hear the Chancellor’s plans on childcare costs which could help more women get into work. It’s important the construction sector now seizes this opportunity and works together with Government to promote the vast range of roles available and the value women can bring to what is typically a male dominated working environment.”
