BCIS reacts to construction updates in the Autumn Statement

The Chancellor of the Exchequer presented his Autumn Statement to Parliament, outlining 110 measures he claimed were designed to boost business investment by £20 billion a year over the next decade.

Key announcements that will impact construction firms include:

• Full expensing – deducting spending on plant and machinery from taxable profits – to become permanent.
• £50 million investment in apprenticeship pilot schemes over two years for engineering and ‘other key growth sectors’.
• Abolition of Class 2 national insurance contributions for the self-employed.
• £150 million support fund for Investment Zones and Freeports over five years.
• Streamlined planning processes, including the ability for local authorities to recover the full costs of major business applications if they meet faster deadlines. If they fail, fees refunded automatically and application processed free of charge.
• £32 million across housing and planning, including tackling planning backlogs and a new Permitted Development Right to allow one house to become two flats.
• £110 million in Local Nutrient Mitigation Fund to deliver ‘high quality local nutrient offsetting schemes, unlocking up to 40,000 homes over the next five years’.
• £3 billion extension to Affordable Homes Guarantee Scheme, including 20,000 new homes and ‘improving the quality and efficiency of thousands more’.
• An additional 2,400 homes by allocating £450 million to a third round of the Local Authority Housing Fund.
• £960m support for clean energy sectors with the Green Industries Growth Accelerator, focusing on hydrogen, offshore wind, electricity networks and nuclear.

Meanwhile, in its economic and fiscal outlook, also published yesterday, the Office for Budget Responsibility revised down its estimate of the medium-term potential growth rate of the economy to 1.6%, from 1.8% in March.

BCIS Chief Economist, Dr David Crosthwaite, said: ‘In light of the OBR’s central forecast being downgraded, the Autumn Statement was really quite underwhelming for the construction industry, which has been crying out for some clarity, commitment and consistency in policies.

‘Crucially, the already delayed National Infrastructure and Construction Pipeline is still nowhere to be seen, with the government saying it will publish a National Infrastructure Strategy next year.

‘Investment in infrastructure, and removing barriers to private sector investment, is hugely important to driving economic growth. With the Autumn Statement, construction firms operating in an uncertain market have simply had that uncertainty prolonged yet again.

‘We welcome full expensing of plant and machinery becoming permanent, for those firms who qualify. Having the ability to plan capital investment more effectively will be a huge benefit for firms looking to invest now and in the future, and maybe even a lifeline for some.

‘For house builders, the promise of more streamlined planning processes and investment in new schemes may be welcomed, but we can’t forget that the significant slowdown in the housing market has been primarily caused by high interest rates creating a lack of demand. The housing sector would benefit more from tangible growth in the economy, which could in part have been boosted now by transparency around and commitment to infrastructure plans.

‘Other measures, which will be welcomed by the industry, include a slice of a £50 million investment pot for engineering apprenticeships, but this doesn’t address a much wider skills gap we have across construction. The abolition of class 2 NI contributions for the self-employed, a growing demographic in our industry, is a saving of just £3.45 a week, and so a drop in the ocean considering the considerable costs construction trades have faced and continue to face.

‘As BCIS recently launched the Built Environment Carbon Database, to unite the industry in making the measurement and reporting of whole life carbon assessments consistent, and as we approach COP28 next week, it’s hugely disappointing that the government hasn’t addressed the built environment and other sectors’ significant contribution to carbon emissions. Ambitions to reach net zero continue to be hampered by a lack of mandate for reporting from government level.’

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