Budget delivers a mixed tonic for construction sector
26th March 2013
Now the dust is beginning to settle on Budget 2013, and the initial headlines can be examined in more detail, my overriding feeling is that more could have been done to help the construction sector, but it could also have been far worse.
The Help to Buy scheme inevitably grabbed the attention and it was good to see the chancellor recognise that more help was needed in the housing market. The First Buy and New Buy schemes have only had a limited impact so far and something needed to be done to address the fundamental issue of frustrated second steppers unable to move up the ladder due to lack of equity and not having a large enough deposit.
Just how effective this measure will be, and how quickly the benefits will filter through to the construction sector, remains to be seen. It was encouraging that the first aspect of the scheme, interest free loans for those moving to new build properties, would kick in almost immediately on April 1, though we’ll have to wait until January 2014 for the government to put funding in place for the mortgage guarantee aspect of this initiative.
Though we can’t pin all our hopes on the housing market, there are already weak signs of a recovery with repossessions at a five year low, the number of first time buyers rising for the first time in four years, and affordability improving.
Help to Buy will now underpin this and ultimately, the construction industry and all trades that support construction of new houses in the UK should benefit.
The question I would ask though is that even if the housing market recovers, will it be enough to sustain a recovery for the construction sector as a whole? I would say most people working in the built environment sector, myself included, were expecting to hear further announcements on large-scale, and also smaller targeted, infrastructure projects.
Granted, a lot of new infrastructure has already been announced and Mr Osborne will point to projects such as HS2, as well as investment in roads and the energy network. In fairness, he did commit an additional £3billion a year for infrastructure projects, but only from 2015-16. And this is a major gripe in the industry – the time it takes between new spending announcements and how quickly this translates into project start dates and new jobs.
Recent analysis by the Guardian found that less than a quarter of the government’s hundreds of national infrastructure projects, including road, rail and energy schemes, would be completed during this parliament.
Some previous budget pledges on infrastructure have failed to materialise at all and critics will question what has happened so far with the £4.7 billion of capital expenditure promised in 2011 and the £5.5billion promised last year. Has this really made any impact yet?
As ever the proof of the pudding will be in the eating, and working in the built environment recruitment arena means we are well placed to witness the early signs of a recovery, so I look forward to the next 12-months with a great deal of interest.