黑洞社区

If Rishi Sunak was nervous as he gave his summer economic update last week, he didn鈥檛 show it.

The sharp-suited chancellor was typically composed as he delivered what was to all intents and purposes an emergency budget, one which tossed another 拢30bn onto the government鈥檚 already stratospheric covid-19 tab.

But with the Institute for Fiscal Studies warning the UK鈥檚 budget deficit could hit 拢350bn this year 鈥� double the previous record set in 2009 at the height of the financial crisis 鈥� Sunak is taking the country deep into uncharted territory.

Still, many say he had no other option. Numerous Tory grandees usually averse to splurges of any kind have heaped praise on the measures 鈥� including former chancellor and vintage Thatcherite Norman Lamont, who said after last week鈥檚 statement that Sunak had 鈥渘o choice but to turn on the spending taps鈥�.

The chancellor may have seemed unruffled but when even traditional conservatives are backing the biggest increase in public borrowing since the second world war, you know things must be pretty bad.

The construction industry鈥檚 response to his statement last week has been, mostly, warm. Perhaps that鈥檚 because a grateful sector has received its fair share of support from the government since the covid-19 pandemic began and the good news has largely continued.

New spending commitments included 拢3bn to make public sector buildings and social housing greener, a stamp duty holiday lasting until 31 March next year, a raft of incentives to support trainees and apprentices and, the most eye-catching of the lot, a promise to pay employers who bring back furloughed staff 拢1,000 per employee 鈥� provided they鈥檙e still there by January. Considering that many struggling sectors like aviation received little or nothing from the package, it鈥檚 no surprise that Arcadis chief executive Mark Cowlard says: 鈥淐onstruction came out as a real winner.鈥�

Also announced was the Construction Leadership Council鈥檚 talent retention scheme, which will see a free online portal launched to help thousands of staff made redundant 鈥� and the number is growing by the week 鈥� to find new employment and remain in the industry.

鈥淐onstruction came out as a real winner.鈥�

Mark Cowlard, Arcadis chief executive

Mace chief executive Mark Reynolds calls the programme, which will be funded until the end of this financial year, a 鈥渃ritical lifeline鈥� and the portal will also enable temporary employee loans between firms, while also giving workers from other sectors a route into construction.

Chief executive of the Civil Engineering Contractors Association Alasdair Reisner calls it a 鈥渇antastic initiative that will safeguard our sector, which is both highly skilled and requires the retention of skills to operate at its full potential鈥�.

The scheme will run alongside the government鈥檚 support for trainees and apprentices, which will see employers paid 拢2,000 per apprentice for people aged under 25 and 拢1,500 for those aged over 25. Sunak also promised 拢100m to triple the number of places in sector-based work academies. Reisner says he 鈥渟trongly welcomed鈥� the support, which managing director of Interserve Paul Gandy adds 鈥渨ill ensure that the UK construction sector can revamp its skills systems to support the government鈥檚 vision鈥�.

Sunak鈥檚 announcement of a stamp duty holiday has also received a largely positive response.

Christian Cubitt, director of communications and engagement at the Royal Institute of Chartered Surveyors, says the cut is a 鈥渕uch needed catalyst鈥� which will 鈥渉elp invigorate the home buying and selling market鈥� while the chief executive of regional housebuilder Larkfleet Group, John Anderson, predicts it will 鈥渋nject urgency into a fragile market鈥�.

鈥淒one well, it has the potential to kickstart a retrofit revolution across the country, but, done badly, this could cause more harm than good to people鈥檚 homes and to the industry.鈥�

Julie Hirigoyen, UK Green 黑洞社区 Council chief executive

Adding to the praise, Redrow chief executive Matthew Pratt says: 鈥淸It will have a] domino effect, also supporting suppliers, subcontractors and consultants to the housebuilding industry, as well as boosting businesses supplying goods and services related to moving home such as furnishings, white goods and many others.鈥�

But Pratt is among those raising concerns that the end of the stamp duty holiday in March, which coincides with the scaling back of the Help to Buy initiative, could lead to a 鈥渃liff-edge鈥� for house buyers.

And some have questioned whether the stamp duty holiday is really needed in the first place. Many housebuilders have seen startling rebounds in their sales figures since the lockdown was relaxed as pent-up demand was released.

In a trading update last week, Persimmon said reservations on private sales in the six weeks after it reopened sales offices in the middle of May were up 30% on the same period last year. And Scottish housebuilder Springfield reported record-breaking sales in the first week after its sales offices reopened on 29 June.

The timespans covered may only be a matter weeks but Jan Crosby, UK head of infrastructure, building and construction at KPMG, wonders if the move was necessary: 鈥淭he stamp duty cut may not have been needed. More important is providing longer term clarity on Help to Buy.鈥�

Sunak鈥檚 promise of 拢3bn for green schemes has also received a fair amount of flak. Many firms have noted how the funds are dwarfed by similar schemes in France, which has dished out 拢13.5bn, and Germany, which has pledged an enormous 拢39bn green package.

鈥淚 yet again find myself saying 鈥榳e look forward to more detail in the autumn鈥�.鈥�

David Barwell, Aecom chief executive

The chancellor鈥檚 offering is a 鈥渞elatively paltry pot,鈥� according to Angela McGinlay, managing director of green fit-out firm Daikin UK. Similarly underwhelmed, group managing director of Wates, Paul Chandler, says: 鈥淭he big challenge for the government in this area is one of ambition.鈥� The numbers aren鈥檛 insignificant, he says, but warns: 鈥淭he impact may not be as transformational as the government may hope.鈥�

A notable lack of specifics in the announcement has not helped Sunak in this regard. Julie Hirigoyen, chief executive at the UK Green 黑洞社区 Council, kept it short with her assessment. 鈥淲e urgently need more detail,鈥� she says.

She adds: 鈥淒one well, it has the potential to kickstart a retrofit revolution across the country, but, done badly, this could cause more harm than good to people鈥檚 homes and to the industry.鈥� And RIBA president Alan Jones says: 鈥淚t must be the start, not the end, of an ambitious strategy to create a sustainable built environment.鈥� Conspicuously absent from all of Sunak鈥檚 construction-related measures was a VAT cut.

鈥淭he impact may not be as transformational as the government may hope.鈥�

Paul Chandler, Wates group managing director

But it would be unfair to characterise the industry as roundly disappointed. Last Wednesday鈥檚 statement was, after all, more of a signal of intent rather than a detailed plan, and all firms were quick to applaud the scheme at least in principle.

It鈥檚 certainly more than can be said for Sunak鈥檚 headline-grabbing pledge to pay employers 拢1,000 for each employee brought back from furlough. With firms required to retain staff continuously until January before they can pick up the bonus the following month, there are fears the incentive is too meagre to have a meaningful impact. Worse, many have pointed out that the cash could be claimed by firms who planned to bring back their staff anyway, potentially wasting billions of taxpayers money.

Ranjit Dhindsa, head of employment at law firm Fieldfisher, says: 鈥淢ost businesses have planned what they were going to do on the assumption there was no bonus. Furthermore, the condition that employment has to be maintained till January is also quite difficult. A lot of employers can鈥檛 plan that far ahead yet.鈥�

But this potential misstep aside, Sunak鈥檚 injection of billions into the private sector has gone down about as well as you might expect.

Considering the level of borrowing already amassed during and even before the covid-19 pandemic, last week鈥檚 statement could well be viewed with misty-eyed nostalgia by the time the next budget comes around. What stopped last week鈥檚 statement from being a full budget in Treasury terms is that it wasn鈥檛 accompanied by an Office for Budget Responsibility forecast. Without this backdrop, Sunak was essentially free to announce huge spending pledges unencumbered by an official assessment of the economic reality. In the autumn, the chancellor will be delivering a full budget alongside this forecast, which, by most accounts, is likely to be fairly apocalyptic.

In a weary response to last week鈥檚 package, Aecom chief executive David Barwell says: 鈥淚t was clear from the outset that much of the chancellor鈥檚 speech would be reiterating the prime minister鈥檚 commitment to infrastructure without providing any further detail. I yet again find myself saying 鈥榳e look forward to more detail in the autumn鈥�.鈥�

Soundbites and slogans only take an industry so far. Boris Johnson鈥檚 government has delivered enough of these in the past few weeks. What people like Barwell and his peers want to see is how all this might work in reality. To paraphrase one of the more memorable soundbites from recent history, one used by then presidential candidate Bill Clinton in the 1992 US election: 鈥淚t鈥檚 the detail, stupid.鈥�