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Construction industry reacts to George Osborne Spending Review announcements

What are your peers saying about the Spending Review announcements?

What it means for the industry at large:

“Today’s announcements are good news for the construction sector, formally committing funds to vital infrastructure projects such as HS2, the Northern Powerhouse and London wide transport.

“The confirmation of funding for key projects will enable the construction industry to plan for the future to deliver strategic projects in an innovative and efficient manner”

CECA chief executive Alasdair Reisner


“Increased investment in prisons, roads and schools is good news especially since the new figure of £23bn on school building over the course of the parliament is £2bn more than previously announced in 2013.

“Indeed the chancellor’s promise to deliver 400,000 affordable homes to “rent” and “buy” should be welcomed if it is achievable and it pushed housebuilder stocks ever higher, although it must be said a stretched industry will struggle to find the talent to build in such numbers.

“On the other side, the penal stamp duty rise on the buy to let market will not be welcomed by property professionals and contractors alike and his decision to exclude “corporate investors” seems to fly in the face of previous announcements.

“For those working in energy it has to be said the “reform” of the Renewable Heat Incentive to save £700m, and a replacement for ECO - a new scheme that will save £30 off the bills for energy customers - does not sound promising.”

Gleeds Worldwide chairman Richard Steer

Housing takes centre stage

“Huge projects and 400,000 homes is great news for the UK’s sustained economic growth, but we can only get Britain building by urgently attracting and training a skilled workforce to deliver much needed new infrastructure.

“On this matter the Government is supportive through its firm commitment to apprenticeships and large transport projects including HS2, rail electrification, road building and the regional development opportunities they bring.

Where political certainty and stability are lacking - as remains the case with energy efficiency and airport capacity - investors cannot plan for the future with the same confidence, however, overall today’s statement is definitely a step in the right direction for the industry.”

WSP | Parsons Brinckerhoff UK COO and MD for transportation, infrastructure and property Mark Naysmith


“This could be a seminal moment for the Government, and the start of a building programme that actually delivers.

“By committing billions of pounds to building new homes, the government has set itself some ambitious targets that it must not fall short of.

“It must understand that new homes must be built in locations with good transport links, social infrastructure such as hospitals and schools, and leisure and employment facilities. Great places are also those which have a variety of housing types to suit different demographics, and the Build to Rent sector must not be pushed aside in blind pursuit of making us a nation of homeowners.

“Today’s announcements mean nothing unless the government invests simultaneously in placemaking, and it must not be blinkered in its pursuit of new homes if it wants to create sustainable communities at the same time.”

British Property Federation chief executive Melanie Leech

“Efforts to promote home ownership must be additional to, not instead of, support for genuinely affordable homes for rent. The Chancellor has totally ignored the challenges we face London, where his Starter Homes will cost up to £450,000. Housing at that price cannot be said to be affordable by any reasonable person. These are homes for the richest few with a discount paid for by the taxes of Londoners who could never dream of being able to afford one. It’s a brilliant deal for the already wealthy but will do nothing to help Londoners on low and middle incomes access secure, affordable housing whether rented or owned.”

Labour’s London Assembly Housing Spokesperson, Tom Copley AM


“Today the Chancellor was right to ‘choose housing’ by prioritising investment in new affordable homes amounting to a £7bn public investment in new homes - a concerted effort to give aspirational home owners a helping hand onto the housing ladder.

“Nevertheless, ‘George the Builder’ will need a new generation of ‘real’ builders to make his vision for housing a reality. We’re already seeing housing developments starting to stall because the cost of hiring skilled tradespeople is threatening to make some sites simply unviable.

“Unless we see a massive uplift in apprenticeship training in our industry, there won’t be enough pairs of hands to deliver more housing on this scale. We’re keen for the government to tread carefully when applying the new proposed Apprenticeship Levy to the construction industry.”

“SME developers will have an important role to play in delivering the smaller scale sites across the country.”

FMB chief executive Brian Berry

Property positivity in commercial too

“With the Chancellor’s announcement today predicting an on-going upturn in economic growth, it seems George Osborne has ensured continued inward investment into the country’s real estate.

“Specifically, we can expect an increase in investment into our regions, with figures announced showing that job creation in some UK regions exceeds that of the capital, and the announcement of further devolved powers for larger regions and cities.

“That the devolution announcement allows local authorities to have full control of their business rates and lets them keep and reinvest receipts from housing stock sold, only adds to the appeal of regional real estate investment, as does increased investment into regional transport infrastructure.

“In terms of assets, we are likely to see investment in offices and commercial property, but also into residential property as we see professionals keen to live near to where they work. We know investors are actively looking for better value investments outside of London, so today’s budget is a win-win for regional real estate.”

UK Head of Real Estate for KPMG Andy Pyle


But mixed responses to sustainability

“The chancellor was keen to emphasise the Government’s green credentials ahead of Paris, but they are going backwards on one of the most cost-effective opportunities - improving the energy efficiency of our existing housing stock. The cuts to ECO and RHI will see more jobs lost in the industry and vulnerable households will continue to be trapped by unaffordable energy bills.

“Upgrading the UK’s draughty homes is a key infrastructure challenge which can reduce pressures on our energy system, bring down consumer bills and ease the burden of cold homes on NHS budgets. The chancellor repeatedly talks about productivity, but here he is just discouraging investment and destroying a market.”

UK Green Building Council chief executive Julie Hirigoyen

“The industry has received a number of mixed signals and we need certainty of direction - the government’s backing of nuclear and coal’s phase-out by 2025 have been welcome steps forward.

“The announcement that this will stop was a missed opportunity to explain in more detail how we are going to keep the lights on in 2025.

“The question remains whether gas alone could fill the gap. Nuclear is not a done deal and there’s still time before construction begins at Hinkley Point, Wylfa and Moorside during which there can be further delays and disruptions.

“With COP21 now here we need to focus on having a long term energy plan to meet our carbon emissions target. We need to start investing in energy storage technologies to support our renewable industry. Building Britain’s future must be done in a sustainable way.”

WSP | Parsons Brinckerhoff UK managing director for energy & industry Ian Maclean


“What is lacking today is government leadership for our sector to push on and make the changes necessary to our buildings.

“It is bewildering to see more time being spent on ‘energy innovation’ when it’s absolutely clear what needs to be done to buildings to improve their energy efficiency. More amber lights would seem to indicate more procrastination.

“We will be watching very carefully to see if the proposed cuts at the Department of Energy and Climate Change impact upon the delivery of measures designed to improve energy security, reduce energy consumption and deal with carbon emissions.”

Tuffin Ferraby Taylor Partner and head of sustainability Mat Lown

Social housing suffering?

“The social sector has been coping admirably with the effects of previous Budgets but this latest review highlights further trouble ahead for local authorities and raises concerns over a developing crisis for the country’s most vulnerable.

“While it is clearly much needed, the near £7bn push to build affordable housing will not assist those who currently struggle to afford homes but instead boost professionals who might need a little extra help to get on the property ladder.

“Alongside this, as cuts continue to social care budgets - cuts that are unlikely to be covered by the two per cent council tax levy announced today - there is a very real threat that local authorities won’t have the resources to support those in the lower economic tier of society.”

Specialist local authority law firm LBM partner Sarah Mansfield

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