TODAY, Chancellor of the Exchequer Rishi Sunak announced a Spring Budget 2021 based on three principles.
He restated a commitment to do “whatever it takes to support the British people and businesses through this moment of crisis.” His second aim is to begin fixing the public finances and lastly to begin building the future economy.
The main points are:
An extension of the Coronavirus Job Support Scheme to September 2021 across the UK. From July employers will contribute 10% of furlough payments. For August and September, employers will pay 20% of furlough payments.
For the self-employed, the Self Employment Income Support scheme is to continue until to September 2021. For the 600,000 people who filed a tax return in 2019-20 and were previously excluded from the scheme, they are now able to claim for the first time.
There’s £5 billion for new Restart Grants starting in April. It gives a one off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England. Grants of £6,000 are to be available for businesses re-opening earlier.
A Recovery Loan Scheme for businesses of all sizes offers loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million to help their recovery.
Extension to the VAT cut to 5% for hospitality, accommodation and attractions was announced until the end of September. This is followed by a 12.5% rate for a further six months until 31 March 2022.
Corporation Tax will increase to 25%, in 2023. Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19% and a taper above £50,000 to be introduced on profits up to £250,000.
In April 2021, a new Super Deduction Scheme will cut companies’ tax bill by 25p for every pound they invest in new equipment. It will give tax relief of 130% on the investment value until 2023.
A £375 million UK-wide ‘Future Fund: Breakthrough’ will invest in highly innovative companies such as those working in life sciences, quantum computing, or clean tech, that are aiming to raise at least £20 million of funding.
An Infrastructure Bank is to open in Leeds with £12bn capital to invest in £40bn worth of public and private projects.
£15bn of green bonds to help finance the transition to net zero by 2050.
New visa scheme for highly qualified talent from overseas.
Apprenticeships & Training
Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000 for all apprenticeships. A new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector. Funding was pledged for 40,000 more traineeships in England, for 16-24 year olds in 2021/22 academic year.
A new Help to Grow scheme will offer up to 90% of the cost of management training. Small businesses will be offered free training in digital technology and up to £5,000 to cover the cost of digital software. Up to 130,000 companies will be able to benefit.
An extension was announced to the temporary cut in Stamp Duty Land Tax in England and Northern Ireland. Until September, the nil rate band will remain for properties sold at under £250,000.
A new mortgage guarantee scheme will enable all UK homebuyers to secure a mortgage up to £600,000 with a 5% deposit.
NFRC – ‘On the right track’
Chief Executive of NFRC, James Talman, said: “The Chancellor has set out a solid investment-led economic roadmap in his Budget that supports the UK economy as it comes out of lockdown and into recovery. He is right to focus on tax incentives, many of which will help boost construction – particularly the extension to the cut in Stamp Duty, the ‘super deduction’ for companies that invest in plant and machinery, and the enhanced ‘Structures and Buildings Allowance’ at Freeports.”
“However, the Chancellor can and must go further to encourage investment – not only to help the economy grow but to ensure we make our buildings fit for the future. To spur on investment in the upgrading of commercial buildings, he should extend his ‘super deduction’ policy so that it applies not only to plant and machinery but to buildings too. This will help businesses to not only bring down their energy bills but also to support the UK to reach its net-zero target.”
“The increase and extension of the payment for employers who take on an apprentice to £3,000 is extremely welcome and will provide much-valued support for those companies that invest in the careers of today and tomorrow.”
RICS – ‘Shot in the arm’
Christian Cubitt, Head of UK Government Affairs at RICS, said: “With the country finally able to begin looking beyond COVID-19 thanks to the vaccination programme, this budget delivers the incentives needed that will help build our way toward economic recovery.
“From getting thousands more young people onto the housing ladder to breaking ground on transformative projects backed by a new UK Infrastructure Bank, the billions invested represent a shot in the arm for the sector and the levelling up agenda.
“Extending the business rates holiday and discounting these costs for the rest of the year is another positive step, particularly for small business that have arguably been hit hardest by the global pandemic.
“When it comes to stamp duty what we really need to see, and what RICS has been calling for, is a full and thorough review of all property taxation. We will also continue to call for a VAT cut for builders looking to retrofit existing homes – an important step in really helping to deliver a greener Britain.”
CITB – ‘Right support’
CITB Policy Director Steve Radley said: “With the recovery from the crisis in sight, this welcome investment in infrastructure, traineeships and the new flexible apprenticeships, similar to our own shared apprenticeships scheme, will help support thousands of people into the construction industry just as employers are looking to hire them. Many employers reluctantly opted out of taking on an apprentice last autumn and extending the incentive to employ them is the right support at the right time.
“Extending traineeships will build stronger links with Further Education and build a bridge into apprenticeships and jobs for many young people.
“Government should build on this by quickly delivering on its pledge to help Apprenticeship Levy payers transfer their unspent funds to where they are needed, giving many smaller firms the firepower to drive the acceleration in apprenticeships to deliver the jobs-led growth the PM has promised.”
MHA MacIntyre Hudson – ‘Rush to Buy’
Brendan Sharkey, Head of Construction and Real Estate at MHA MacIntyre Hudson, says, “It is rare to listen to such an encouraging budget and confidence will have increased markedly across the construction sector after hearing the Chancellor speak. The extension of Stamp Duty relief makes perfect sense given the backlog of housing purchases. The tapering of relief through to April 2022 takes the angst out of deadlines while stimulating the number of transactions and new builds, which is all good news for the economy.
“In fact, when this is combined with the Chancellor’s new government mortgage guarantee scheme we could see an unprecedented rush to buy. So the only question is whether the developers can meet the demand as it takes time to bring stock to the market.
“Finally the super deduction scheme will be a real shot in the arm for businesses looking to invest; those investing will be able to reduce tax that is paid and presumably where tax losses are sustained they will be carried back. This could prove to be the stimulus for offsite manufacture to increase volumes of houses built as well as modern methods of construction.”
Association for Consultancy and Engineering – ‘Encouraging’
ACE CEO Hannah Vickers said: “The Chancellor today rightly combined ongoing support for business with steps to ensure we ‘build back better’. The built environment sector is the engine room of the economy and the freeports and city deals announcements are exactly the sort of holistic, low carbon regeneration programmes we need to simultaneously create jobs, level up opportunities and hit net zero.
“But the Infrastructure Bank must also play its part. The Treasury’s scoping document setting out how the Bank will operate is encouraging, taking on board the Construction Leadership Council’s Regeneration proposals. The trick for the bank will be to use its powers to enable ambitious integrated regeneration investments across the UK, whilst avoid getting fixated on individual project deals.”
FMB – ‘Missed Opportunity’
Brian Berry, Chief Executive of the FMB, said: “In the year of COP26, the Chancellor missed an opportunity in today’s Budget to show global leadership with a long-term plan to make our homes greener, healthier, and more affordable to run. The Government’s commitment to green growth must include backing for a National Retrofit Strategy – an oven-ready infrastructure plan that will tackle climate change, level up and create jobs. While we welcome the funding announced for the UK Infrastructure Bank, we expect to see it use its focus on climate change and regional growth to back Britain’s army of small builders who stand ready to help build back better, and greener.”
NBS – ‘Recognised Essential Technology’
Colin Smith, Executive Chairman, NBS said: “It’s the 21st century and digital tools are rapidly becoming as ubiquitous on construction projects as bricks and mortar. The Government has recognised the essential part technology plays in helping the country recover and the world-class work done by many British technology companies. Its support will help these businesses drive the industry forward in the direction it needs, ensuring ‘digital adoption’ remains top of the construction agenda.
“As a North East employer, we want our workforce to be as strong as possible. The support the Government has shown with its ‘Help to Grow’ scheme will not only help tackle the skills shortage that exists in this sector but it will allow people to ‘level up’ and access better quality jobs. The need for digital upskilling has never been greater – providing discounted training opportunities to SMEs and their staff is a positive step forward for future proofing the industry.”
Saint-Gobain – ‘Provides Reassurance’
Ross Baxter, MD of Saint-Gobain said: “The housebuilding and construction industry are an essential part of the UK economy and its resilience has been severely put to the test over the past 12 months. I welcome the Chancellor’s positive announcements, which seek to provide reassurance to manufacturers, suppliers and house builders as well as homebuyers.
“The two-year tax deductible on investments will allow us to drive forward with our plans for continuous improvement, growing both our services and product portfolio. Meanwhile, mortgage guarantees and the extension of the stamp duty holiday until 1 June will keep the market moving and provide continuity of work for everyone in the sector, so we can deliver on the ambition to build back better.”