Renovation nation

The consensus on the Budget appears to be that the Chancellor had very few options. With growth forecasts downgraded yet again, borrowing up and the deficit essentially unchanged, he has little room for manoeuvre.

After an £11bn departmental “underspend” in 2012/13, public sector spending is set to be even more tightly controlled, with £11.5bn worth of savings (or cuts, depending on your politics) to be found in the June spending review.

Measures for growth amounted to a stimulus for the housing market by underwriting some mortgage lending, a cut in corporation tax (but not for two years) and an increase in spending on infrastructure, also from 2015.

“Infrastructure” was the budget buzzword. It appears 57 times in the Treasury’s Budget Report, compared with construction, which is mentioned just three times. Of course infrastructure investment usually involves some construction but the key issue is timing.

Research by The Guardian shows that less than a quarter of the Government’s projects will be completed during this parliament. The regularly updated “pipeline” of more than 500 infrastructure projects lacks start dates for many schemes. As the paper puts it, the national infrastructure plan includes “dozens if not hundreds of schemes that will not start buying equipment and materials or employing labour until long after the next general election.”

The UK certainly needs long-term investment in infrastructure but the economy, and in particular the construction sector, needs a stimulus now.

It’s instructive to read reactions to the budget from some of the organisations involved in the sector.

Here’s the RICS on infrastructure:

“The £3bn a year announced by the Chancellor is welcome but will not come on stream until 2015-16 – far too late for many businesses that are struggling now. Our members have told us repeatedly that the success of infrastructure projects are about delivery on the ground. RICS believe Government should spend more time and resource in supporting business to gain access to these public sector projects.

“The Government has largely failed to realise that infrastructure projects don’t need to be big to be effective in creating growth. In fact small might very well be beautiful. Across the regions and the  nations it’s the smaller repair, maintenance and upgrade projects which can be picked up by medium and small construction businesses. Rail maintenance and school refurbishment are just  two areas where a small amount of capital investment would quickly deliver great benefits.”

… and the Federation of Master Builders on housing:

“The FMB worries that the measures announced today may not go far enough to allow smaller builders to deliver the energy-efficent new homes Britain needs. Britain’s SME builders are in need of relief after years of shrinking workloads and rising costs. More than three-quarters of our members recently told us that the most important thing the Government could do to revitalise the home repair, maintenance and energy-efficiency markets would be to cut VAT. This would also provide a level playing field when competing with builders who choose to avoid charging VAT.”

In austere times, maintenance and repair always suffer. While new, large-scale projects are being proposed and (eventually) funded, the everyday infrastructure on which we all rely is being neglected – from roads to rail, from houses to hospitals.

Put this together with the need to make buildings of all types more energy efficient and you have a once in a generation opportunity to tackle the maintenance backlog, to upgrade and to improve performance. Surely that’s worth investing in?

Transition to a low carbon economy

While FMs across the world were celebrating World FM Day yesterday, I was at a parliamentary reception in London, hosted by the Aldersgate Group. In its own words this is a “high level coalition of progressive businesses, environmental groups and MPs” which argues for high environmental standards as part of economic growth and international competitiveness.

Held on the back of the group’s ‘Accelerating the transition: priorities for the first 100 days of the new government’ report, launched just before the election, last night’s reception focused on the emergency budget and what it offered those wanting to see a more rapid move to a low carbon economy.

It also came the day after the revised directive on the energy performance of buildings (EPBD) was published in OJEU. The directive requires member states to ensure that all new buildings are nearly zero- energy buildings by the end of 2020, with a deadline two years earlier for all public buildings. The directive must be transposed intoUKlaw by July 2012.

With so many detailed spending decisions deferred to the autumn spending review, it was unlikely we were going to hear any surprise announcements but the mood music was certainly encouraging.

Former Labour Cabinet Minister Lord Smith of Finsbury, now Chair of the Environment Agency, said business understands that theUKneeds to move to a low carbon economy; it wants Government to lead the way but it also wants clarity and certainty – two commodities currently in short supply.

Chris Huhne, Secretary of State for Energy and Climate Change, said the budget had reaffirmed the commitment to a carbon price floor and the government’s first flagship bill (due by the end of the year) would offer a “green deal” for housing, including a major retrofitting programme.

The Aldersgate Group is an eclectic mix – any organisation which counts Friends of the Earth, Biffa, John Edmonds, Willmott Dixon and the RSPB amongst its members is bound to have a wide perspective.

Tom Burke, founder of E3G and environmental policy advisor to Rio Tinto, raised the stakes. “We won’t wreck the economy making the transition,” he said “but we will wreck some business models.”

If all the revenue raised by “green taxes” goes to reduce the deficit, said Burke, then we won’t invest in the infrastructure of a low carbon economy – including CC&S and electric vehicle recharging networks – that the private sector is unlikely to provide.

It was heartening to know that the new government will be held to account by a non-party political “coalition” with a clear aim and the expertise to pursue it.