20th March 2016
The Budget 2016: four takeaways for the construction industry
Now that the dust from this year’s government budget announcement has settled, we can look behind the headlines and analyse the finer detail.
This year’s budget was a controversial one, with much of the media noise focusing on the sugar tax and cuts to disability benefits. For those in the construction industry, the main takeaways were very different. Here’s a quick round-up of the biggest changes announced by George Osborne that will affect the construction industry.
#1 Infrastructure and flood defences
The 2016 Budget reiterated the government’s support for the National Infrastructure Commission, and promised initial funding for HS3 (Manchester to Leeds) and Crossrail 2. £300 million has been earmarked for transport improvements in the north of England, including an upgrade to the M62, a Trans-Pennine tunnel under the Peak District and improvements to the A66, A69 and M60.
There’s also an extra £700 million promised for flood defences by 2020-21, with new or improved flood defences planned for Leeds, Cumbria, York, and the Calder Valley. An additional £130 million has been set aside for repairs to infrastructure that were damaged in the winter storms and floods, partly funded through an increase in Insurance Premium Tax.
Concerns remain about follow-up funding and lack of information on the timescales involved in these infrastructure projects.
#2 A fall in the tax burden for businesses
Osborne also announced that big changes would be made to business rates – with many SMEs set to benefit. Small Business Rate Relief will be doubled permanently (from 50% to 100%). Thresholds will rise so that premises with a rateable value of £12,000 or below will receive 100% relief, and those with a value of between £12,000 and £15,000 will receive tapered relief. 600,000 businesses will therefore pay no business rates at all, and another 50,000 will benefit from the tapered relief.
The threshold for the standard business rates multiplier will also increase, meaning that more SMEs will fall under a lower multiplier. The government estimates that this will take 250,000 properties out of the higher bracket.
Corporation tax will be cut to 17% by 2020.
#3 No change to fuel duty
Construction companies will also be pleased to learn that fuel duty has been frozen again, despite widespread rumours that the chancellor would have to raise it to gain additional tax revenue. The government claims that pump prices are 18p per litre lower than they would have been if the fuel duty escalator had remained in place.
#4 More land for housing
Following the announcement in the autumn statement that publicly owned land would be freed up for private development, the budget brought news that the government would work with local authorities to help release land for 160,000 homes.
The Starter Homes Land Fund will provide local authorities with funding to clean up brownfield sites to help deliver homes.
Additionally, the budget reiterates government support for new garden cities and towns, removing barriers between local authorities to help them work together on plans to build new settlements.
Overall, this budget saw an extension of the themes we first saw in the autumn statement, but there was certainly less emphasis on the ‘we are the builders’ theme that the chancellor used so often in his last announcement.
As ever, for more construction news, views and analysis, stay tuned to the Integrity Software blog.