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Rocky road ahead! Reaction to the Autumn Statement 2022.

Industry comments on Jeremy Hunt's Autumn Statement, “The Chancellor’s budget is a mixed bag for construction"
Rocky road ahead! Reaction to the Autumn Statement 2022.

Richard Beresford, chief executive of the National Federation of Builders (NFB):

“The Chancellor’s budget is a mixed bag for construction. Stamp duty cuts remain until 2025, red diesel access has not been reinstated but electric vehicles will lose zero-rated road tax, energy independence has been made a priority, and investment zones may be watered down to focus on innovation, not placemaking.

However, two rabbits were pulled out of the hat, on which the NFB lobbied for. Capital and infrastructure budgets will be protected, and a new ‘Energy Efficiency Taskforce’ has been announced. These supply-side strategies offer positive opportunities and work pipelines for construction, and we look forward to inputting into how an energy efficiency strategy can be  sustained by business and consumers, rather than always requiring government funding.”

Despite highlighting that ‘infrastructure allows wealth and opportunity to spread across the nation’, committing to Sizewell C nuclear power thus giving investors certainty, citing a necessity for competition to break up monopolies, and championing a desire for skilled workers to mirror the achievements in Japan, Germany and Switzerland, the Chancellor did not focus on the need for wholesale planning reform as the underpinning factor for any economic and social recovery.”

Construction Leadership Council Co-Chair Mark Reynolds:

“We fully support the Government’s ambition to improve the energy efficiency of buildings nationwide while slashing carbon emissions. The CLC will give our fullest possible support to the Energy Efficiency Taskforce, ensuring that this work can be delivered as quickly and affordably as possible.

“The Government has responded to the key issues raised by industry. Our role now is to work together to drive the productivity gains and efficiencies that will underpin future economic success. Better construction productivity and better-built assets will drive growth and improve productivity across the economy and public sector”.

“With the wider economy facing steep increases in unemployment over the coming years, we have the opportunity to make construction an employer of first choice, offering higher salaries than almost any sector outside financial services and a committed programme of work.”

Construction Products Association Economics Director Professor Noble Francis:

“While the additional funding for energy efficiency from 2025 is welcome news, this funding is for further years after the current £6.6 billion finishes and clearly delivery in 2030 still signifies a longer-term goal for Government rather than a quick win. The detail of delivery for energy efficiency is crucial, given previous flops in Government policy, and the CPA will closely follow further details as they emerge. Retrofitting our existing housing stock is crucial both for growth in the sector and to meet our net zero targets.

The commitment to infrastructure projects at both a local and national level will be welcome news to the industry, given some calls to reduce HS2 to Birmingham to help avoid tax increases. However, the announcement that funding for infrastructure would be “maintained in cash terms” in times of double-digit construction cost inflation means that we will see less activity down on the ground, particularly for financial constrained councils. Levelling Up through investment in infrastructure is a crucial way in which the construction industry can support wider economic growth, as well as its own, so it is vital that it is fully funded.

For housing, the stamp duty cut is likely to have only a marginal impact given the greater issue of interest rate rises and negative housing market sentiment. As a result, substantially more will be needed to stimulate both housebuilding over the coming years.”

John Doyle, CEO of Voicescape:

“The statement from the Chancellor was positioned as a ‘balanced path to stability’, and any focus on protecting those ‘most exposed to high inflation’ is welcomed.

“The confirmed 7% cap on social housing rent, while at the upper end of what was floated to the sector, will provide some protection to those most exposed to high (CPI) inflation currently at 11.1%. However, rent increases must be balanced to reflect the current policy landscape in the sector, considering multiple areas requiring continued investment, from welfare reform to the supply of affordable housing stock, the prevention of homelessness and other critical support services – particularly in a cost-of-living crisis. 

“Analysis presented by the CIH found that a 7% cap on rent rises would have a potential impact on operating expenditure between 5-7% for local authorities and 3-5% for housing associations. This means that registered providers will be forced to make incredibly difficult decisions on business-critical priorities to make the savings required due to the drop in operating expenditure from April 2023.”

Richard Petty, Head of Affordable Housing at JLL:

“We also need certainty on what the government’s policy on rents will be beyond 2023 – the long-term has a far greater bearing on valuations than just next year. Lenders and investors in RPs’ bonds need that clarity to give them the confidence to make billions of pounds worth of long-term financial commitments to the sector.

“We also need to remember this is a cap, not a fixed increase. Some boards might choose to do less. As a board member myself, I appreciate that all boards will find it hard to strike the right balance between their financial covenants, investment in homes and services, and affordability for their residents.

“So, it’s good news for valuations now, but I’m afraid there is still plenty to worry about.”

Paul Woodward, Finance Director for Dorset-based affordable housing specialist AJC Group:

“For developers such as us who do have live sites, the cost of delivering much-needed EPC-A and B-rated homes has sky-rocketed. We are currently delivering 230 affordable, open-market, and build-to-rent homes at seven sites across the Wessex region. The cost of labour, materials, plant and machinery is incomparable to the original budget forecasts. We are very aware of how much this uncertainty is slowing down housebuilding across the country.

“The newly announced tax increases in real terms for workers and businesses will further hinder growth. For the foreseeable future, we will continue to pay all AJC Group employees a £200 per month cost of living bonus to help meet the rising cost burden every household is currently facing.

“In the wake of such an eventful geo-political climate and a cost-of-living crisis, we very much hope 2023 will deliver some economic stability so that the UK can climb out of recession. The affordable and private sector housing industry needs the confidence to progress with investment decisions and continue to strive towards delivering the 300,000 new homes per annum that the UK desperately needs.”

Sally Thomas, CEO of the Scottish Federation of Housing Associations:

“While we welcome the UK Chancellor’s announcement on an increased windfall tax for energy firms and increased investment in energy efficiency from 2025, today’s statement confirms that the support for energy bills will become less generous from April. 

“In that context, while the uprating of social security in line with inflation will provide some help to those most in need, it simply doesn’t go far enough. With soaring food and fuel costs, the benefit cap and the two-child limit should have been removed as a minimum. Housing Associations and Co-operatives will always provide help to tenants who are struggling financially, but there must be significantly more support from the UK Government.”

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