Mixed reaction to Budget from construction sector

Industry bodies have been reacting to Wednesday’s Budget from the Chancellor Alistair Darling.

Michael Ankers, chief executive of the Construction Products Association
Commenting on the Budget, Michael Ankers, chief executive of the Construction Products Association, said: ‘Whilst welcoming the additional measures to stimulate the private housing market and improve the condition of the public sector housing stock, there is little else in the Budget to comfort a construction industry that is facing a decline in output this year in excess of 12% - the largest fall the industry has experienced in a single year since the Second World War. The additional £300m for the Building Colleges programme will support only about 10% of the projects that the Learning and Skills Council have indicated are up and ready to go.

“More disappointing still is the failure to include any measures that will encourage improvement to the existing private sector housing stock, and yet again the government has ignored the united voice of the construction industry to reduce VAT to 5% on domestic repair and maintenance. This really is a missed opportunity, particularly given the very strong encouragement last month to Member States from the European Council to take this step. This failure to act is even more surprising given the announcement in parallel to the Budget that the government will be seeking to reduce carbon emissions by 34% by 2020 – a target that critically depends on making our existing housing stock more energy efficient.

“Product manufacturers and suppliers do welcome the announcement of a top up scheme to support credit insurance. However, we have been pressing for this since before Christmas and it will only help companies who have found credit withdrawn since 1 April. The real damage was done before then and for those many companies that have had credit insurance reduced in the early part of the year, it is of no value at all.

“Looking to the future, the Chancellor confirmed the dramatic scale of public borrowing that will take years to bring back into balance. Beyond the current year and the next Election, net investment is set to fall very significantly to1.25% of GDP and this will have significant implications for the construction industry, particularly if private sector investment has not recovered sufficiently to take up the inevitable slack.”

Noel Guilford, national chairman of The Forum of Private Business
The Forum of Private Business (FPB) is concerned that the 2009 Budget has failed to address the main issues threatening the UK’s struggling small businesses. Proposals to improve access to finance, ease the burden of costs and stimulate economic activity were absent from yesterday’s announcement. In addition, although the Government has unveiled a new £1.7 billion job creation fund, nothing has been done to help smaller employers hold on to their key staff.

“We are experiencing the worst economic conditions that most business owners have ever seen. We needed a bold strategy for business recovery, which the Chancellor has failed to deliver at all levels,” said Noel Guilford, the FPB’s national chairman. “The FPB made numerous and significant proposals which would have had the effect of providing immediate help to struggling businesses, nearly all of which appear to have been ignored.”

Paul Jackson, chief executive of the Engineering and Technology Board
The Engineering and Technology Board (ETB) welcomed the Budget proposals for a green economy and growth technologies but has emphasised the need to train, re-train and upskill a large proportion of the UK workforce in order to achieve them.

Paul Jackson, chief executive of the ETB, said: “The Chancellor’s low carbon strategy is a step forward but the UK will need thousands more trained engineers to achieve the 34% cut in CO2 emissions by 2020 - including 262 000 in solar power and 127 000 in wind and hydro power alone. Specialist training in these sectors is absolutely crucial if Britain is to keep pace with the rest of the world.

“The vast majority of the £260 million allocated to education and training must be ring-fenced for wealth-creating disciplines such as engineering, particularly if Government wants enough skilled professionals to use the new ‘emerging technologies’ fund to maximum effect.

“As part of the £1.7m for job centres, priority must also be given to retraining skilled professionals from declining sectors. Only with the right mix of technical and professional engineering skills can the UK recover from this recession and lay firm foundations for the future.”

Edward Rimmer, chief executive of Bibby Financial Services
Edward Rimmer, chief executive of Bibby Financial Services in the UK & Ireland, made the following statement: "The measures announced in the Budget should go some way to giving small and medium-sized businesses in the UK financial respite during what Darling has described as 'the most serious global economic turmoil for over 60 years'.

"While Darling's measures seek to ease the burden of ongoing cashflow problems for the UK business community - something we know to be a primary concern from our own market research - the issue of late payment was not addressed and remains a major concern for struggling businesses across the country.

"The existing credit insurance scheme which the Government has pledged to assist, will certainly benefit businesses. However, as claims in the credit insurance market last year reached record levels, there is a danger that these claims will exceed premiums paid, leaving insurers in a vulnerable position. Should this trend continue through 2009, the Government could well have another black hole on their hands which has to be filled by the taxpayer.

"As with any Government intervention for small and medium-sized businesses, Darling needs to ensure these measures are more easily accessible and understandable. Otherwise, as with many other initiatives to date, there will be considerable confusion and most importantly a barrier to access for SMEs. The feedback we receive from the small and medium-sized businesses we work with, is that they have a basic awareness of such initiatives but no idea how to go about getting benefit, and therefore don’t bother."