Autumn Budget: Impact on the construction sector

Following the autumn budget today, Brendan Sharkey, partner at MHA, says the significant investment in infrastructure and training is what the construction sector hoped for but the immediate problem is actually the labour shortage and nothing was done to solve this.

The money earmarked for roads, railways, schools and hospitals is what the construction industry hoped for. It is especially encouraging that the levelling up programme spreads the benefit around the UK. The extension of the annual investment allowance (AIA) relief of 100% on capital expenditure of £1m will also be a big boost to construction firms.

However, most of this – aside from the AIA extension – serves to boost demand but does nothing about supply, which remains a major issue. The Chancellor can’t do much about the cost of materials but he can do something about labour. He recognised the value of people with certain skills coming to the UK but it is unclear (and unlikely) the new visa system will do much for the construction sector.

Two-year visas for key construction workers would have been the single best thing he could have done to address the shortage of labour in the industry. The fear must be that all of his investment promises won’t go as far as he would like but will instead just push up costs because business can’t source the labour.

Over the long term the funding promised for T-levels and other programmes should help. Here construction has an opportunity to secure a workforce of the future. The industry needs to support these initiatives by sponsoring training with visits to construction sites, open days and work experience. Construction needs to assert itself as a career destination for young people because, for political reasons, labour from overseas looks less of an option.

Commercial property agency Bromwich Hardy gave a cautious welcome to today’s Budget – but warned that the economic recovery from the pandemic was still extremely vulnerable. Founding partner of the Coventry-based firm Tom Bromwich said Chancellor Rishi Sunak’s £3billion plans to invest in education, skills and training and boost housing construction on brownfield sites with a £1.8billion investment were welcome. Tom said he was pleased that the Chancellor had taken steps to overhaul the business rates system by moving to a three-year valuation cycle and giving a 50 per cent rate relief to the retail, hospitality and leisure sector.

There is much that we would welcome in what the Chancellor announced today including the focus on skills, the investment in regional transport infrastructure and the help to meet our housing shortage by bringing old industrial land back into use.

We are pleased to finally see some clarity on the long-awaited review of the business rates system and will study the implications for our clients in detail. But the headline figure of a £7billion cut in overall rates looks very welcome.

The recovery, whilst stronger than expected, is still fragile and could easily be blown off course by rising inflation, changes to interest rates and issues such as the current recruitment crisis extending into the long term.

The Government must ensure that businesses have the freedom to invest in their growth and their workforce.

The Construction Industry Training Board (CITB) supports the skills needs of British construction – in England, Scotland and Wales. It attracts talent to the construction sector so employers have an adequate recruitment pool, and encourages employers of all sizes to access the skills training necessary to grow their businesses. Responding to the Budget statement CITB Policy Director Steve Radley shared his thoughts.

Today’s announcement on infrastructure spending, on top of government plans to meet its net zero commitments, show it’s critical to invest in construction skills.

With employers already facing significant skills pressures, we must attract new talent from all areas and upskill the existing workforce.

Today’s large-scale investments in T levels, maths, Skills Bootcamps and modernising Further Education will provide crucial support on skills and should help to ease pressure on employers looking to recruit and train. Building better pathways into work through traineeships and bootcamps and helping colleges to modernise are key investments. We look forward to building on our work so far to shape these programmes to deliver the skills the industry needs.

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