How construction will be affected by the new budgetMarch 5, 2021 News
The Government’s most recent financial statement for the 2021 Spring Budget was released on 3rd March 2021. The Chancellor outlined a bold plan aimed at stabilising the economy and supporting homeowners as the country heads out of lockdown – but what does all of this mean for the construction industry?
The pandemic is still at the forefront of the budget, with the chancellor announcing that he would extend the furlough scheme and implement a 6% corporation tax increase set for the top 10% of companies from 2023.
For construction, one of the UK’s biggest sectors, the budget has increased the focus on MMC; while supporting the future generation who are looking to get a foot on the property ladder.
Here is what the budget means for the construction industry this year:
MMC & Infrastructure
Modern Methods of Construction (MMC) has received continued supported from the government to increase building rates in the UK. And in the budget, it was announced £10 million of seed funding will be provided to accelerate the delivery of MMC homes this year. The budget has been allocated to the taskforce led by The Ministry of Housing, Communities and Local Government (MHCLG).
The Taskforce will be located in Wolverhampton and consist of world-leading experts from the government and across the industry to quicken the time scale of adopting MMC. The Taskforce will work closely with local authorities to bring MMC initiatives into construction and achieve ambitious proposals.
Also, the government will commission a new National Infrastructure Commission (NIC) study on towns and regeneration, looking at investment for towns in England and considering how to maximise the benefits of infrastructure policy.
The housing market
House sales remain a key focus in the 2021 budget. The ‘Help to Buy’ scheme is back with initiatives previously announced in 2020 being extended. This aims to increase the number of homeowners, rather than renters, which will in turn place an increased demand on properties.
To fulfil this, two key initiatives were announced:
- The freeze on stamp duty will be extended to the 30th June, before moving to a lower cap of £250,000 until the end of September, and then for properties up to £125,000 until the end of October.
- A mortgage guarantee, where home buyers with only a 5% deposit will be offered a mortgage and be able to buy. These 95% mortgages will be available from April 2021 and will be offered by a large proportion of the major lenders for properties worth up to £600,000.
Is the future is green?
The budget also saw a focus on switching greener practices across the UK, and these changes will impact construction and building services.
The announcement saw a new UK Infrastructure Bank located in Leeds which will see £12 billion capital, with the aim of funding £40 billion worth of projects. The Chancellor placed emphasis on reiterating the need for commitment to green investment, which the Infrastructure Bank should be able to support.
A further £20 million to fund the development of floating offshore wind farms indicating steps are being taken to encourage a greener landscape across the UK.
Overall while the budget is predominantly focussed on recovering from the pandemic, there is a degree of optimism for the construction industry, especially with the focus on MMC development.