Chancellor Jeremy Hunt’s second fiscal statement since becoming chancellor has been met with mixed reactions from the UK construction sector. While there were some positive announcements, concerns have been raised about the lack of visibility and certainty regarding the infrastructure and construction pipeline, which could lead to a risk of recession in the industry.
The Construction Leadership Council (CLC) had called for stability to combat inflation, but the industry has been let down on the infrastructure investment front. The sector contributes 9% to the UK economy each year, with 30% of this coming from the public sector. However, without visibility of the pipeline, the sector’s ability to plan and mitigate inflation is undermined.
The CLC has urged the government to publish its Infrastructure and Construction Pipeline as a matter of urgency, as delays and uncertainty on major projects such as HS2, the New Hospital Programme, Lower Thames Crossing, and Northern Powerhouse Rail could have a major impact on the sector’s supply chain and put SMEs at risk of collapse.
On a positive note, the government has launched Great British Nuclear (GBN) to increase resilience in the energy market and committed up to £20bn for carbon capture, utilisation and storage (CCUS), which should give confidence in nuclear-related infrastructure investment. In addition, GBN will launch the first technology choice process for small modular reactors (SMRs), paving the way for a new viable option for low-carbon energy.
The industry was hoping to hear more from the chancellor on how it will be involved in delivering the government’s ambitions. While there was some positive news on capital allowances, with companies being able to write off the full cost of investments into some plant and machinery, the CLC was in favour of larger incentives on “green investments” that will help drive the sustainability agenda.
The chancellor also doubled down on retrofit commitments to address the UK’s ageing housing stock, but the industry was hoping for more tangible action behind the commitments made last year.
On the skills front, it was positive to see immigration made easier for construction workers, with the Migration Advisory Committee recommending that five construction occupations be added to the Shortage Occupation List. The government is also putting funding and weight behind enticing those who have left the workforce to return through “returnerships” targeting the over-50s.
However, the lack of clarity on the infrastructure and construction pipeline has left the sector uncertain about how it will help the government meet its economic priorities of halving inflation, growing the economy through better-paid jobs, and reducing the UK’s national debt. The construction industry desperately needs certainty and stability on the pipeline of works, as it is the key to planning ahead and deploying resources, people, and materials to mitigate inflation.
