Budget reaction

Following Rishi Sunak’s first budget as Chancellor, we take a look at the industry reaction to the ‘infrastructure budget’.

With numerous promises to spend, invest, and get Britain building, there were plenty of talking points within this year’s budget for the industry, although the lack of detail and accompanying National Infrastructure Strategy has raised some eyebrows.

The first budget of the decade, and first since Britain left the EU, the Chancellor announced £640Bn of capital investment for roads, railways, communications, schools, hospitals, housing and power networks across the UK by 2024-25. This includes the largest ever investment in English strategic roads, with over £27Bn between 2020 and 2025, as well as a £10.9Bn increase in housing investment to support the commitment to build at least one million new homes by the end of the Parliament. A detailed breakdown of this £640Bn commitment will be provided in the National Infrastructure Strategy, which the Chancellor said will be published later in the spring.

Alex Smith, partner and head of construction at law firm, Shakespeare Martineau, said of the budget overall: “The honouring of the Conservatives manifesto pledge to increase infrastructure capital expenditure to £600Bn over the next five years is great news in principle for the construction sector.

“What will be key for the industry and country as a whole, to encourage growth over the next decade, will be the investment priorities chosen by the government, whether this is rail, road, housing or technology.

“Hand in hand with this goes an increased focus by businesses on environmental social governance. We need real estate and construction projects which support the UK both commercially and build holistic communities fit for the future.

“Whichever priorities are chosen, the government must deliver on its promise to level up the UK, ensuring everyone has the same chances and opportunities in life, wherever they live.”

Flood defences were high on the agenda, following the devastation seen due to the winter storms. Mark Robinson, Scape Group chief executive, commented: “Confirmation that the Chancellor will double the amount of funding available for flood defences to protect homes and businesses comes as welcome news. Much of our water infrastructure is from the Victorian era and desperately needs to be maintained and upgraded, but revenue expenditure had risen by just £3M over the last ten years. This investment will be ineffective though, unless we think critically about how we work together. Harnessing the knowledge and expertise of our experts and collaborating to operate across boundaries to deliver essential infrastructure must be a priority.”

On ACM removal, an additional £1Bn commitment to assist in the removal of of unsafe ACM cladding from residential buildings has been welcomed, by both the victims of the Grenfell disaster and the sector. Helen Hewitt, CEO of the British Woodworking Federation (BWF) said: “We welcome the government’s commitment to a £1bn building safety fund which will allow urgent work to be undertaken to make the UK’s housing safer. However, in order to safeguard millions of people, funding must also include provision for the replacement of fire doors as well as cladding removal.”

On homebuilding stimulus packages (including social housing interest rate cuts, and funding for brownfield site building), Helen Hewitt said: “Measures announced by the Chancellor today are an important boost to UK housebuilding, and presents a number of opportunities for the woodworking and joinery manufacturing sector which produces integral components including windows, doors and staircases.”

Clive Docwra, Managing Director of leading construction consulting and design agency McBains, said: “The construction industry will also applaud the commitment to spend over £600Bn on infrastructure over the next five years, which includes a £10.9Bn increase in housing investment and target of 300,000 new homes a year – although we wait to see the further detail of these plans.

“In particular, we would have liked to see the Chancellor go further than announcing a £400M brownfield fund to support the development of new homes: a review of the greenbelt would have been a bolder step.”

CEO of Gleeson Homes James Thomson – private developer of affordable housing in the North and Midlands said: “Given the Government is rightly committed to generating greater prosperity and opportunity in the North of England, making home ownership a reality for people on low to moderate incomes must be front and centre of its domestic policy agenda.

“Homeownership can be genuinely transformational in changing lives and cuts across all socio-economic backgrounds. The aims of the Government’s First Homes policy are to be applauded in helping first time buyers, but the detail must be carefully thought out. It is crucial that the viability of developing new homes is properly considered within the planning and development process to facilitate much needed delivery for this market.”

On plans to ‘level up’ across the country, Mark Robinson CEO of Scape Group, said: “I welcome fresh devolution deals for Yorkshire and plans to ‘level up’ the North. The Northern Powerhouse and the Midlands Engine have been hallmarks of a better way of working – making cities outside of London some of our most important wealth generators nationwide. More power and funding in the hands of decision makers closer to the ground can only be beneficial, by speeding up decisions on major projects as we move to ‘build a better Britain”.”

Looking at the government’s commitment to net-zero emissions, Antony Bourne, President, Industries at IFS, said: “Investment in electric car charging infrastructure and consumer incentives to move to greener options like EVs and Plug-in Hybrids is wise, and will encourage more consumers to transition to electric vehicles (EVs) as intended.

“The government’s decarbonisation agenda is a crucially important policy area as we look to transition into a period of sustainable growth. But to maintain the UK’s leadership position in renewable power generation and reduce our reliance on fossil fuels, we need to think about how we manage assets across the energy generation sector throughout their full lifecycle, as well as investing in net new technologies.”

Graham Wright, EY Infrastructure Tax Partner, commented: “Despite saying relatively little about the detail of the promised infrastructure revolution, the Chancellor has delivered a further confidence boost to investors and the construction sector today. Hopefully, this will kick-start a continuing trend of renewed investment and activity.

“Beyond this Budget, the Government and business will need to work together to identify ‘shovel ready’ projects and the resources and capabilities available to deliver them.”

However, the skills crisis and access to skilled workers remains a huge concern for the industry, with many commentators struggling to see how these ambitions will be achieved without a skills ready sector.

Comments from Rhys Harris, associate director – engineering, process & construction at the Morson Group: “Infrastructure spending was a real centrepiece of today’s Budget as the Chancellor laid out his commitment to unlocking construction and innovation throughout the country.

“But to get Britain building and unleash the economy’s true potential, it is crucial that we have access to the right talent at all levels to ensure that businesses and their supply chains can attract and retain the right skillsets as and when they need them. Skills are the biggest barrier to us delivering on this ambition, therefore, Government, businesses, education providers and talent solution specialists like ourselves must form strategic partnerships to create short and long-term skills frameworks and action plans – be it technical apprenticeships, upskilling, reskilling and attracting talent from overseas – that ultimately build active and agile talent pools that are the backbone of every healthy economy.”

Martin Hottass is Managing Director of Technical Training at City & Guilds: “It is reassuring to see from today’s Budget that the Government is taking steps to progress critical infrastructure projects, however the Government must ensure that there are plans in place to address the skills crisis we are facing in the infrastructure sector. We hope to see this addressed in the National Infrastructure Strategy which will be published later this year.

“With a number of large-scale projects on the horizon for UK infrastructure, from HS2 to Northern Powerhouse Rail as well as several projects to increase green energy and upgrade crumbling railway infrastructure in the North of England, we need to significantly increase the amount of talent coming into the industry or we won’t have the workforce needed to deliver these ambitious plans. We are already facing a skills crisis in the sector, according to data from Energy & Utility Skills published earlier this year, 26% of the 800,000 unfilled vacancies in the sector are down to skills shortages. It is critical that the Government acts now to upskill a new generation of much needed skilled engineers and technicians.

“Against a backdrop of low unemployment in the UK and with Brexit and more stringent immigration control on the horizon, it is essential that we look to the millions of underutilised people that were identified in our recent research Missing Millions. By retraining people in badly paid insecure work or in careers at risk of automation as well as opening up opportunities for people with caring responsibilities we can not only fill skills gaps but also significantly improve social mobility in the country. Only by directing sufficient funds and investing in improvements to existing adult education policy will we be able to stem the growing skills gaps and direct necessary labour into a sector that’s crying out for skilled talent.”

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