In the 2018 budget speech Chancellor Phillip Hammond stated that the era of austerity is coming to an end and promised a budget for “the strivers, the grafters and the carers”. But what does this budget mean for construction? Here are the main takeaways for the industry.
It was announced that the government will add a further £500m to its Housing Infrastructure Fund that currently stands at £5.5bn. Launched in July 2017, the fund is designed to help Local Authorities build new physical infrastructure to support local communities and make more land available for housing in high demand areas. It is estimated that this could unlock the development of up to 650,000 homes.
To help meet housebuilding targets, a new scheme was announced whereby the British Business Bank will provide guarantees to support up to £1 billion of lending to SME house builders. The budget also announced that £653m will be invested up until 2021-22 in strategic partnerships with nine housing associations, with the aim of delivering over 13,000 new homes.
As part of a £695m package to support apprenticeships, from April 2019 the amount SMEs need to contribute towards apprenticeships will be halved from 10% to 5%. This follows on from the announcement made at the Conservative Party conference that from April 2019 large employers would be able to transfer up to 25% of their apprenticeship levy to their supply chain – an increase from the previous 10%.
The budget also contains a number of measures to boost infrastructure. This includes a £28.8bn National Roads Fund that will be invested between 2020 and 2025. Paid for by road tax, this represents the largest ever investment of its kind.
Local councils in England will also immediately gain access to an additional £420m to tackle the issue of potholes and £150m to improve road junctions on local roads. An extra £240m will be allocated to the six metro mayors to help them make significant investments in transport.
Also included in the budget was a further £37 million to support the development of Northern Powerhouse Rail alongside an announcement that there would be new Northern Powerhouse and Midlands Engine Strategies published in 2019.
A Future High Streets Fund will be established to invest £675 million in England to help improve town centre infrastructure and support redevelopment. This includes £55 million for heritage-based regeneration to restore historic high streets, boost retail and bring properties back into use as homes, offices and cultural venues.
End of PFI
Finally, despite stating a commitment to public-private partnerships “where it delivers value for the taxpayer and genuinely transfers risk to the private sector”, Phillip Hammond announced an end to Private Finance Initiatives (PFI). The government will continue with existing PFI and PF2 contracts but will not sign any new agreements.