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Construction sector responds to Spending Review

by Jennie Ward

Whilst there’s much to welcome in the Chancellor’s announcement, the overall feeling is he’s ‘missed a trick’ by not broadening the scope of the Green Homes Grant, should have addressed the damaging issue of Reverse Charge VAT, and fell short with regard to supporting the construction sector when it comes to skills and training

Delivering the Spending Review, the Chancellor Rishi Sunak said his immediate priority was to protect people’s lives and livelihoods as the country continues to battle the outbreak – allocating £55 billion to tackle the virus next year.

Within the announcement, the Chancellor explained “how the government would deliver the next stages of its record investment plans in infrastructure to drive the UK’s recovery and level up for a greener, stronger future with £100 billion of capital spending next year and a £4 billion Levelling Up Fund.”

He explained: “Today’s Spending Review delivers on the priorities of the British people. Our health emergency is not yet over, and the economic emergency has only just begun; so our immediate priority is to protect people’s lives and livelihoods.

“But today’s Spending Review also delivers stronger public services – paying for new hospitals, better schools and safer streets. And it delivers a once-in-a-generation investment in infrastructure. Creating jobs, growing the economy, and increasing pride in the places people call home.”

Commenting on the Spending Review, NFRC’s Chief Executive, James Talman, pointed to the missed opportunity of not broadening the scope of the Green Homes Grant scheme to include further measures such as solar pv, and not addressing the issue of Reverse Charge VAT which “will have a detrimental impact on the very companies the government expect to deliver on their infrastructure investments.”

Mr Talman explained: “It is very welcome that a further £320 million of funding has been committed to the Green Homes Grant for the next year, but the government has missed a trick by not extending this to have a broader scope. We do not see why the Scheme could not be extended to include solar PV, for example, which could play a big contribution in helping the UK reach its net-zero target.

He added: “We were also pleased to see the National Infrastructure Strategy announced, committing to £27 billion more capital spending over the next year, alongside a new National Infrastructure Bank. The government should follow this strategy up as soon as possible with a detailed pipeline of work, and engage with the supply chain in good time.

He concluded: “The Treasury is giving with one hand to the industry and taking with the other by going ahead with Reverse Charge VAT next March. We have members who will lose hundreds of thousands of pounds in cash flow when this policy is introduced, and this will have a detrimental impact on the very companies the government expect to deliver on their infrastructure investments. The Chancellor should urgently rethink this policy.”

Likewise, Brian Berry, Chief Executive of the FMB, pointed to the lack of mention of low carbon homes or green jobs “given the challenges we face.” Mr Berry explained: “Local builders stand ready to support a strong and green economic recovery, but the statement from the Chancellor today fell far short. We look to the National Infrastructure Strategy for more detail, but no mention in the Chancellor’s speech of low carbon homes or green jobs is unacceptable given the challenges we face. Confirmation of investment in further education and skills is welcome, as is the announcement of the National Infrastructure Bank. It’s important that local builders have access to both if they are to provide the jobs, homes and growth the country needs coming out of the pandemic.”

Regarding the push for Net Zero, Berry explained: “We cannot meet our Net Zero carbon targets without improving the energy efficiency of our homes and moving to low carbon heat sources. Failure in this Spending Review to commit to a long-term retrofit strategy or to bring forward the £9.2bn promised in the Conservative manifesto will set the country back. Acknowledgement of the need to retrofit is one thing; but a plan must follow.”

On new build housing, Berry continued: “This year more than ever we have all appreciated how important it is to have a decent place to live. SME house builders stand ready to deliver more sustainable and beautiful homes, in each community and on small brownfield sites. I welcome the extra support from the Chancellor with the announcement of the National Home Building Fund and confirmation of Help to Build. Extra funding is welcome, but without urgent investment in our local authority planning departments to speed up decisions, projects are struggling to get off the ground.”

With regards to apprenticeships and training, Berry contcluded: “SMEs train 71% of apprentices in construction and are ready to help support new jobs in the sector. While the confirmation of funding for further education, £375m through the life time skills guarantee, and a particular reference to apprenticeship changes to help SMEs are all steps in the right direction, colleges will need more support if we are to cover the existing gaps in traditional construction skills like bricklaying, let alone train people in much needed green construction techniques.”

Similarly, Steve Radley, CITB Policy Director, pointed to the need for the right measures to be put in place to “give the industry the skills it needs” to meet demand. He explained: “The Chancellor’s commitment to a large increase in infrastructure spending next year and publication of the National Infrastructure Strategy give the construction industry greater confidence about the future work pipeline. It is now critical that the right skills and training interventions are put in place to help people benefit as a result of this investment and give the industry the skills it needs.

“A new route from FE into industry, through the expanded construction Traineeship, reform of the Apprenticeship Levy and the prioritisation of construction skills in the Government’s National Skills Fund and new Levelling Up Fund will be essential in doing this.”

View the full Spending Review announcement here

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