The March budget marks a crucial moment for the country and all eyes will be on the chancellor to see if he delivers for the construction sector, says ACE’s Matthew Farrow.
The upcoming budget takes place at a crucial moment for the country. While vaccine roll-out offers a glimmer of a stability in the medium to long-term, in the more immediate future we are looking at a fragile sector that has seen construction contract by 17% in 2020.
More positively, both the chancellor and the prime minister have publicly backed our industry since the start of Covid-19, and ideas of “building back better” naturally play to our sector’s strengths. What is needed now, as we hopefully start to emerge from the pandemic, is to start to make this agenda a reality.
ACE’s submission to the chancellor focused on two ways we can help to do so – the reshaping of our urban centres and delivering a net zero built environment – as well as a series of safeguards and measures to support our members in the short-term.
The pandemic has accelerated a number of long-standing and systemic issues, such as the decline of town centre retail or stagnant coastal communities and has thrown up the need for more flexible spaces in response. It has also highlighted the importance of mental health, wellbeing and proximity to the natural environment.
Our policy framework needs to incentivise investment for this new world and we highlighted the importance of making the upcoming infrastructure bank an effective vehicle for local regeneration – perhaps drawing on the recent CLC proposals for a Greener Regeneration Investment Fund – and argued for a shifting of development towards brownfield where possible, as well as support for environmental net gain.
We see the delivery of a net zero built environment as a necessity, but also through the investment required, an opportunity to kickstart recovery. In the year of COP26, I hope the chancellor will take the steps we’ve outlined to demonstrate our leadership on the international stage which included recommendations for a policy framework that encourages our moves to net zero, tax incentives for development which reinforce carbon neutral aims and more support for low-carbon innovation.
None of this will be possible without immediate support for the sector. With cashflow beginning to be squeezed across the supply chain, an increase in disputes is expected. This is why the government needs to be open to considering short-term support for the construction sector, specific tax incentives to stimulate demand in the medium-to long term and boosting confidence in the pipeline of projects – a recurring recommendation from ACE but if implemented correctly tomorrow would bring invaluable stability to our sector and the construction industry more widely.
Multi-year settlements for HS2 and the school and hospital building programmes outlined at the 2020 spending review were welcome and provide a strong foundation to build on in this budget. More of the same in other areas would be a more than welcome move by the chancellor and would help provide the confidence our sector needs to play a leading role in wider recovery.
Matthew Farrow is director of policy for ACE.