The Devil is in the detail/the proof is in the pudding. Whichever cliché you pick, this Budget above any in living memory will be judged by its outcomes rather than its announcements.
But it was certainly good to hear the rubber stamping of the widely expected extension of stamp duty exemption, and its much-needed support for house building output that will continue be a stimulant for the residential sector.
Also among the announcements was the confirmation of the new infrastructure bank that will invest in public and private projects, with an initial capitalisation this spring of £12bn, something the chancellor ‘expects’ to support at least £40bn of total investment in infrastructure. Immediately following this was the promise of funding for new port infrastructure to build the next generation of offshore wind projects in Teesside and Humberside, although it was unclear as to whether this would be funded via the infrastructure bank.
Linked, in coastal regeneration theme at least, was a statement on free ports, with eight new locations announced alongside promises of simpler planning, infrastructure funding to improve transport links, cheaper customs with favourable tariffs, VAT/duties and lower taxes. In addition, there were unspecified tax breaks to encourage construction and private investment and job creation. Let’s not forget however, that free port initiatives are not new to the UK, as my article on port construction for Barbour ABI in October last year makes clear, and it will be the implementation and interconnectedness with the surrounding economies and cities that’s likely to be critical for their long-term viability and relative successes.
For example, aside from freight, Martin Mannion, a director at independent port consultant MML said UK ports were set to benefit – and therefore expand – due to further investments in offshore wind farms. “Economies of scale and technology have kicked in to make it a more cost-effective market. It’s more attractive for investors full-stop and subsidies have been weaned away.”
For ports, this means the construction of heavy load-out quays for the modules required for construction as well as operations and support bases for the farms once they are completed. It’s certainly an area which firms that supply to, or deliver, portside infrastructure should be keeping a close eye on, quite aside from those that actually build the farms.
The Budget announcement also contained the previously reported inducement for apprenticeships with the government providing a rise of £1,000, to a figure now of £3,000, to be paid to firms per trainee. Although a move in the right direction, it is of course unlikely to effectively patch construction’s chronic skills gap.
Some of these budgetary aspects came up when I asked Chris Davies, joint MD at DRS Bond Management last week, as to what he felt might actually come to pass among the various asks in the Construction Leadership Council wish-list letter that the CLC sent to the chancellor in January.
“I think the CLC are broadly supportive of the challenges that the government faces coming out of the other side of Covid,” he said. “They could have gone down the magic money tree route and asked for the earth, the moon, the stars and the sun – like the cancellation of interest and possibly capital for an extended period on some of the CBILS loans.
Yes, they could have gone further and asked for more, but at the end of the day, the name of the Construction Leadership Council is on the tin as it were – they’re not a trade union body. They’re here to make balanced, reasonable requests, given the virtually half a trillion of debt that’s been added to the UK balance sheet as a result of Covid.”
In any event, while the short-term effects of these tax and spending plans remains to be seen, their seismic reverberations will likely be shaping the economy for years to come.