Chancellor George Osborne said his 2012 budget would reward work and back business. With the biggest sustained reduction in business tax rates for a generation, he believes it’s a major “advertisement for jobs and investment in Britain”, but what will the budget mean for the construction industry?
Business leaders have been cautiously positive. Simon Walker, director general of the Institute of Directors, said while it was a “bold move on corporation tax”, Mr Osborne must “go much further if he wants to fire up the engines of the economy”.
For the construction industry there were a number of points of interest:
New “growth friendly” planning laws were promised along with new infrastructure to help business prosper. There will be extra funding for construction firms to build new homes, but at the same time, the 1% stamp duty rate for first-time buyers, on properties costing between £125,000 and £250,000, is being reintroduced. This stamp duty “holiday”, which has run for two years, was considered by the chancellor to be “ineffective” in getting more people onto the property ladder.
At the other end of the ladder, the Chancellor is cracking down on stamp duty evasion on luxury homes and a new rate of 7% was introduced on homes worth more than £2m.
The Chancellor stated that he wanted to see “investment in our world-leading energy sector, including renewables”, along with the government’s National Infrastructure Plan investment in “roads, railways, clean energy and water, and broadband networks”. This was welcomed by the renewable energy industry, which has complained in recent months that previous anti-green rhetoric from the Chancellor was creating policy uncertainty, delaying investments, and driving up the cost of capital.
However, in a clear nod to backbench Conservative MPs opposed to renewable energy subsidies, Osborne stressed that he would seek to deploy renewable energy at the lowest possible costs to energy bill-payers. “Renewable energy will play a crucial part in Britain’s energy mix,” he said. “But I will always be alert to the costs we are asking families and businesses to bear. Environmentally sustainable has to be fiscally sustainable too.”
Osborne’s business tax changes are designed to have a positive effect on SMEs and he proposes a simpler tax system which “businesses can easily navigate” and will radically change administration of tax for the smallest firms. The government will be consulting on simplifying tax for firms with turnover up to £77,000.
At the time of going to press the industry was still busy digesting the full implications of the Chancellor’s statement, but let’s hope some of his rhetoric trickles down to feed those green shoots of recovery we’ve all been in search of.
Heather Campbell
Editor
