Some love the sound of the promised boost to infrastructure and housing development; others fear the sugar rush will exacerbate inflation rates. One or two (but surprisingly few) were concerned about the downgrading of environmental considerations.

Highlights include the promise of specially designated investment zones across England, where businesses will get massive tax breaks and not be constrained by normal planning regulations.

It has been suggested that the European Habitats Directive will be suspended in these areas, making it open season on newts and bats.

To determine the location of these investment zones, the government is talking to 38 local authorities across England, from Cumbria to Cornwall. Nothing has been said about quantity or size.

Setting out his growth plan in the House of Commons this morning (Friday) as part of a mini-budget, chancellor of the exchequer Kwasi Kwarteng also announced the death of IR35. The 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) will be repealed from 6th April 2023, he said. From this date, workers providing their services via an intermediary will once again be responsible for determining their employment status and tax obligations.

The planned rise in national insurance has been scrapped, as promised during prime minister Liz Truss’ campaign to win the Conservative party leadership (and thus become prime minister).

The basic rate of income tax is to be cut from 20% to 19% in April 2023, a year earlier than planned. The 45% tax band for the highest earners will be abolished at the same time, bringing the top rate down to 40%.

Land tax stamp duty is also being cut. The first £250,000 of a property’s value will not be subject to stamp duty (the current threshold is £125,000) and for first-time buyers the threshold is being raised from £300,000 to £425,000.

The Annual Investment Allowance, which gives 100% tax relief on investments in plant and machinery to be ‘permanently’ set at £1m. It had been set to expire on next April. There is no suggesting of it being extended to plant hire companies, however.

While the commitment to a net zero carbon economy by 2050 remains, the government plans to review how that should be achieved. It has tasked Chris Skidmore MP to lead ‘an independent review into how to deliver its net zero commitment while maximising economic growth and investment, supporting energy security, and minimising the costs borne by businesses and consumers’. He has just three months to complete the task.

The Growth Plan also see new legislation to speed up infrastructure delivery, reducing the requirements of environmental assessments, watering down the habitats and species regulations and short-cutting the consultation process. It also plans to make it easier to change development consent order (DCO) applications after they have been submitted. This follows delays to the Lower Thames Crossing project after the Department for Transport’s DCO application was thrown out by the Planning Inspectorate in November 2020 for being incomplete and has yet to be resubmitted, nearly two years later.

It also wants to change the judicial review system to stope road building plans being challenged in the courts.

There was no mention of a national retrofit strategy to improve the energy efficiency of the UK’s housing stock – something for which the construction industry has been lobbying.

The Growth Plan has already generated much comment from across the construction industry. Here is a selection.

Industry response

David Hawkes, head of policy at the Institution of Civil Engineers, said: “ We welcome the government's renewed commitment to major infrastructure projects. The proposed Planning and Infrastructure Bill to accelerate many important programmes of work and contribute to economic growth is gratifying, not least as the slow pace of planning for major infrastructure is acting as a barrier to the UK’s net zero ambitions.

“However, we need more clarity from the government on how its infrastructure delivery plans will align with the country's net zero and other environmental ambitions. Any economic benefits that we gain must continue to reinforce and prioritise our environmental objectives for our sector, and our country, to achieve long term success. In the midst of a climate crisis, we cannot afford to ignore the environmental implications of infrastructure.”

Philippa Spence, managing director of consulting engineer Ramboll UK, said: “There was a shadow over the good news of the generous energy support packages announced by Kwasi Kwarteng today for those concerned about the UK’s environment. The commitment to reform the planning process risks unwinding key environmental protections unless these are retained. The planning system does need reform, but not at the cost of our environment, already one of the most biodiversity depleted in Europe. The government must seek to achieve efficiency and environmental enhancement simultaneously.

 “Kwasi Kwarteng promised to ‘unleash the power of the private sector’ and enable growth through a number of measures including tax cuts. To truly unleash the potential of industries supporting the green energy transition will also require clear policy signals that this is a long-term commitment, such as enabling onshore wind rather than resurrecting fracking. We have one of the best green energy opportunities globally and there is no doubt that with the right support, it will generate significant growth.”

Patricia Moore, UK managing director of Turner & Townsend, said: “The chancellor has signalled the government’s desire for a substantial change in policy direction to galvanise the economy, and a number of measures will bring some immediate relief to many across the UK.  

“However, structural change is more challenging and there are practicalities to overcome.  Long-term planning is necessary to deliver the energy infrastructure for a secure, sustainable power mix in the UK. But to stay the course on net zero, government strategy must look at reducing energy use, not just the impact of energy bills. A structural shift is needed in how we insulate and operate our buildings to make them more efficient. This requires accelerating investment in a market for retrofit in the UK that can become self-sustaining, encouraging new skills, economic growth, and a greener built environment.

“Just as with energy, the government’s commitment to get Britain building by streamlining major programmes across transport will bring excitement for some corners of the country.  Yet planning processes are only one part of the puzzle.  The real test will be in supporting a successful route to delivery. Government has a critical role to play in establishing best practice across sectors to help reform what the chancellor highlighted as a fragmented system in major infrastructure.  Significant investment is needed in building the skills and capacity to get programmes set up right from the start and delivered in a joined-up way.

“The new ‘investment zones’ have the potential to drive investment in the skills and sectors we need for growth – primarily advanced manufacturing capability and green jobs. The government must work closely with industry to maximise the impact of these zones if they are going to inspire greater regional funding and boost businesses and jobs.”

Gillian Charlesworth, chief executive of the Building Research Establishment (BRE), said: “We were disappointed to see that today’s mini-budget contained no measures to improve the energy efficiency of our homes and buildings. While the government’s energy price guarantee is a welcome intervention to protect vulnerable households this winter, there is no guarantee that the volatile global gas market will steady any time soon. We need long term solutions to the energy price crisis which end our dependence on foreign supplies of fossil fuels, reduce overall energy demand, and support the drive to net zero.

 “Retrofitting our building stock is an immediate and cost effective solution that can deliver this.  Heat and energy use in our buildings makes up a quarter of the UK’s greenhouse gas emissions, and we are rapidly running out of time to address this if we are to meet our net zero obligations by 2050. Setting out a clear and credible plan to decarbonise our homes and buildings is an immediate step the government can take to tackle the cost of living crisis, act on climate change and demonstrate global leadership.”  

Many had no qualms at all about the planning reforms and the watering down environmental protections. They just want less hassle and less tax.

Construction Equipment Association chief executive Suneeta Johal said: “Our industry has welcomed the chancellor's announcement today to overhaul planning restrictions, get rid of EU regulations and environmental assessments. The chancellor said the new bill will ‘unpick the complex patchwork of planning restrictions and EU-derived laws’. Further announcements are expected in the coming weeks, we hope as an industry he will stick to his pledge of prioritising infrastructure projects and energy – speeding up building. This announcement is, however, reminiscent of government announcing fast-track planning reforms back in December 2020 – therefore the jury remains out until we have ‘concrete’ reform plans in place.

“The announcement of government setting up ‘investment zones’ across 38 areas in the UK is also welcome as it will encourage new growth with offers to ‘new’ businesses of zero business rates and stamp duty waived.

 “The decision to make the annual investment allowance, which gives 100% tax relief on investments in plant and machinery to be ‘permanently’ set at £1m, is what manufacturers and association representatives have been requesting for some time, so this is most welcome – it’s good to have stability which will allow forward planning and encourage investment.

“The reversal of the national insurance rise and the cancellation of the planned rise in corporation tax has been well received.  The corporation tax rise had not yet been implemented so freezing something that hasn’t happened yet does not encourage growth - so there’s no ‘reduction’ – the situation remains the same. The standard income tax rate deduction to 19p in 2023 is encouraging – but we would have liked to see business rates reduced.”

Othersalso wished the government would go further, faster.

Wates Group public sector director Stephen Beechey said: “We welcome the chancellor’s plan for growth today and are pleased that the government has taken vital steps to curb the cost of living pressures for both households and businesses... We are particularly pleased with the announcement of  new investment zones, which will allow businesses like Wates to deliver the much needed housing, schools and hospitals across these areas.

 “While we support much of this programme, we believe the government can take bolder steps to encourage the private sector to deliver growth through net zero projects, such as energy efficiency, which would further tackle the cost of living crisis we face today.”

Some wondered who was going to do all this construction work that is about to come flooding through.

Construction Industry Training Board chief executive Tim Balcon said: “Today’s announcement to accelerate infrastructure delivery and introduce investment zones along with stamp duty changes are all factors that will boost the construction industry. However, with a quarter of a million workers already forecast to be needed by 2026, it is more important than ever to see investment in skills and training and continued collaboration between CITB, industry, and government to meet construction's skills needs.”

Eddie Tuttle, director of policy, public affairs and research at the Chartered Institute of Building, had similar concerns. He said: “The cost of living crisis had to be a priority in this mini budget, and whilst we are supportive of some of the measures, we are concerned so many are consumer led and only for the short-term. The chancellor’s cash-driven incentives will provide some much needed relief here and now but won’t solve the problem, and this deep-rooted long-term issue needs a long-term solution developed through joined up policy making.

“We have for some time been calling on government to implement a national retrofit strategy to improve the energy efficiency of UK homes, for example through better insulation and reducing heat loss from doors and windows. Hopefully, the announced reduction in stamp duty will free up cash for some home buyers and enable them to make such changes.  These types of retrofit measures will drive down energy consumption and bills, while also improving the health and wellbeing of residents in the retrofitted homes. Such a strategy would also help contribute to the UK’s legally binding carbon targets, create new jobs, and deliver growth across the country. It should be noted however that not all retrofit schemes require expensive or disruptive work and simple home improvements and maintenance such as fitting draft excluders to doors and lagging pipes can all make a big difference.

“Our members are professionals from across the construction sector and they regularly tell us one of the biggest issues to tackling the cost of living crisis is the lack of available skilled workers to install and maintain more cost-efficient household energy systems. The industry will be a key component to help drive growth in the coming months yet well publicised issues and cost pressures in construction, alongside the threat of inflation and weak economic growth are potential challenges it needs to be able to plan for.

“The government must learn from the failures of the Green Homes Grant, which failed to see significant uptake in part due to the focus on short termism and a lack of skilled individuals to deliver on scale. We recommend they invest in both long-term and immediate strategies to recruit, retain, and progress workers within the sector, and incentivise retrofit measures as a way to reduce energy bills, keep homes warm and tackle the net zero crisis.”

MJ Gleeson chief executive James Thomson is another who wants more deregulation and even fewer planning restrictions.  “While reducing energy costs is an obvious concern to the government, the lack of reference to the role the housebuilding sector can play in this was surprising – cutting red tape and creating an environment to allow the sector to flourish would. [We are] pleased to see reference to developing the current planning framework, and we await further detail and clarity over the role of investment zones ,” he said.

He added: “Despite this, significant investment will still be needed in the planning system to mitigate increasing delays – Gleeson hopes for a relaxation of rules and red tape that currently prevents housebuilders from providing much needed new-build properties. As part of this cutting of red tape, Gleeson hopes for a development of the current biodiversity requirements that make it easier to develop a greenfield site than brownfield.”

Zainab Dakhil, a residential property partner at law firm Cripps, warned that the reduction in stamp duty land tax (SDLT) might not be without risk, saying. "The reduction in stamp duty and increase in thresholds for first time buyers will be very welcomed by those struggling to jump onto the property ladder or those looking to buy but struggling to save due to the increased costs of living and rising interests rates.

"However, whilst it may appear to help the bottom end of the market, it does little to address the lack of supply and as we saw during the SDLT holiday, buyers flooding the market only caused increases in property prices, making it further unlikely that buyers could afford a suitable property.  It is also a shame in my view that the government has not given concessions to those able to buy more expensive properties. A lot of those have homes to sell so may be encouraged to do so if stamp duty savings applied to them too."

Matthew Pratt, chief executive of house-builder Redrow, wished more stamp duty reform had been announced. “If we want a housing market that works for everyone, we need people to be able to move both up and down the ladder,” he said. “In its current form, stamp duty eats into people’s deposits, impacting affordability and ultimately penalising those looking to relocate for work or wanting to downsize as part of retirement plans. Stamp duty needs to be reformed to help the housing market work more effectively and to stimulate more transactions, which will in itself drive tax generation throughout the home buying supply chain of estate agents, solicitors, removals, furnishings etc.

“Whilst we welcome today’s change, we would encourage the government to consider further steps to reduce the stamp duty burden by reducing the tax bands across all levels, and introducing a lower, flat rate of tax for all homes.”

Brendan Sharkey, head of construction and real estate at accountancy network MHA, was not impressed. “When it comes to stamp duty relief the help for first-time buyers is positive but it is very disappointing there was no specific relief for downsizers. Encouraging more people to downsize would free up more family-sized homes,” he said.

“Also, this stamp duty reduction won’t work as well as previous reductions made during the pandemic. In 2020 and 2021 people had savings and an incentive to move given we all had to spend more time at home. Today trying to stimulate the housing market is going to run head first into inflation and higher interest rates. In addition, the previous SDLT cut was a ‘holiday’, where there is a set window of time to benefit from the cut, whereas a permanent cut provides less of an incentive to act quickly. What we see in the market currently is that developers are still optimistic about future sales, they don’t need another incentive.”

He added: “Reforming and streamlining the planning system sounds like a good idea but the trouble is the government has said it has this ambition at many previous budgets and nothing ever happens. So the industry will believe this when it sees it.”

Adrian Anderson, director of property finance specialist Anderson Harris, said: “We have a scenario where the government are trying to turbo charge the economy with huge tax cuts while the Bank of England are trying to put the brakes on with high interest rate rises.  I think many of us will find this scenario very confusing.

“Are the measures announced by the government today sending mixed messages? Does the left hand know what the right is doing? The measures announced will help put more money into the economy in the short term. However, it does not solve the main issue for many of us which is soaring interest rates and a cost of living crisis. If interest rates continue to rise quickly, many borrowers will have far less disposable income and there will be many who may be unable to pay their mortgages.”

Graham Harle, chief executive of construction consultant Gleeds, said: “The government has gambled on growth and if this brings confidence to the those operating in our sector then it is good news, but I remain to be convinced with much of the detail yet to be revealed. The announcement on investment zones and cuts in stamp duty is to be welcomed. However, many of the planned tax cuts are merely a continuation of current policy or a reversion to where we were last year – the corporation tax rise they have reversed is not even in force yet, and National Insurance only rose in July. So how will more of the same bring about change and boost growth? Energy, materials, and labour are the main challenges for our sector, and as far as those operating in it are concerned this is a sticking plaster budget when the patient needed major surgery.

“We needed to see investment in retrofitting existing building as a long-term aim to save energy, more tax breaks for training, and a relaxation of immigration rules for specialist trades to help expand an industry that is approaching 250,000 vacancies. I appreciate that this was only a holding statement from a new government, but I don’t believe it will inject the confidence we need.  Ironically, with sterling recently at a 37 year low, there has never been a better time for foreign capital to invest in Britain.” 

Architect Trevor Morriss, principal at the architecture practice SPPARC, said: “The introduction of investment zones with more flexible rules to support planning and development is a positive indication that the government wants to get Britain building, however, we desperately need consistency in policy and approach to ensure delivery.”

However, he added that, such had been the high turnover of ministers in recent years, the current lot had better act quickly to get anything done before they are moved on. “Over the last 12 years we’ve had 13 housing ministers. This is the fourth in 2022. New legislation like the Levelling Up Bill has fallen off the statute books faster than the time it takes to receive permission for new development. The revolving door of new decision-makers and doubt that casts on promises of change is damaging to our economic growth and long-term prosperity — so we must see the government act swiftly to deliver in the months ahead to fulfil the much needed outcome,” he added.

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