Industry responds to UK Budget announcement

In the UK, the Chancellor George Osbourne announced the 2014 Budget yesterday. Of relevance to the cement industry was the decision to extend the help to buy scheme until 2020, planned investment in infrastructure and a change in the energy costs of heavy industry. The Budget plans for the building of 120 000 new homes, including 15 000 in a new Garden City in the southeast of England.  Mr Osbourne also spoke of plans for the high speed rail line, a £270 million guarantee for the Mersey Gateway Bridge, funding to improve the M4 motorway in South Wales, as well as additional funds for repairs to damaged flood defences and roads.

Mr Osbourne said: “Modern infrastructure is part of a successful economy. So too is a modern industrial strategy. If Britain isn’t leading the world in science and technology and engineering, then we are condemning our country to fall behind.” He added: “To make sure we give young people the skills they need to get good jobs in this modern world, we’ve doubled the number of apprenticeships and I will extend the grants for smaller businesses to support over 100 000 more. And now we’ll develop new degree level apprenticeships too.”

Industry feedback

Chris Temple, PwC UK engineering & construction UK lead, commented: “House building needs a significant push, so it is good to see the £500 million investment into small house building firms, which has obvious employment connotations too.” He added, “The confirmed new garden city in Ebbsfleet will be of great appeal to young professionals looking for property in the commuter belt. The £150 million investment for people to build their own homes works well in parallel to the Help to Buy scheme – perhaps now people looking to get onto the property ladder will consider buying a plot at auction and starting from scratch?”

Brian Berry, Chief Executive of the Federation of Master Builders, said: “Access to finance is a major stumbling block for viable SME house builders so this government intervention is much needed as many major banks are still reluctant to lend for small residential developments. This additional support will provide the necessary finance to small house builders and help increase the overall supply of new housing through a well-functioning SME sector.”

Berry added: “Unfortunately today’s Budget overlooks the need to make our existing homes an infrastructure investment priority. A reduction in VAT to 5% on housing renovation and repair is the simplest and most effective way to empower home owners to refurbish their properties to make them more energy efficient and cheaper to run. This cut in VAT would provide a £15 billion economic stimulus over five years and up to 95 000 jobs which are much needed while our economy is still in recovery.”

The CBI said, “the Budget will put wind in the sails of business investment, especially for manufacturers”. On apprenticeships, the CBI commented: “Apprenticeships are a crucial tool in fighting skills shortages and youth unemployment, so this additional support is very welcome – especially for small firms wanting to do more. We still need to better demonstrate the benefits of apprenticeships to young people”.

Energy

George Osbourne made the following statement regarding energy:

“First, I am capping the Carbon Price Support rate at £18 per ton of CO₂ from 2016 – 17 for the rest of the decade. This will save a mid-sized manufacturer almost £50 000 on their annual energy bill…Second, I’m extending the existing compensation scheme for energy intensive industries for a further four years to 2019 – 20. Our steel makers, chemical plants, paper mills and other heavy energy users make up 35% of our manufacturing exports and employ half a million people. This scheme helps the companies most at risk of leaving to remain in the UK.

Third, I’m introducing new compensation worth almost a billion pounds to protect these energy intensive manufacturers from the rising costs of the Renewable Obligation and the Feed-In Tariffs. Otherwise green levies and taxes will make up over a third of their energy bills by the end of the decade.

Fourth, I am exempting from the carbon price floor the electricity from Combined Heat and Power plants which hundreds of manufacturers use.”

In response, the CBI commented: “The CBI has pushed hard for this significant and much-needed energy package that will help keep manufacturing jobs in the UK, while underpinning vital investment in new energy.

“Our energy intensive industries are crucial to building a low-carbon economy and it's right the Government is taking action to mitigate the cost for these firms. But many more businesses across the country are struggling with high energy costs and these measures will help support key sectors against tough international competition.

“We now need to see action from ministers to secure an ambitious EU-wide 2030 emissions reductions target to drive investment in our low carbon future.

Hope Construction Materials response

Commenting on the Budget announcement, Amit Bhatia, Chairman of Hope Construction Materials, said: “Today’s budget announcement has revealed some interesting measures taken by the government to keep the economy moving and there are several specific aspects which I feel will work well.

“With construction regularly used as a barometer of the economy the Right to Build policy should see significant growth in house building and with it the industries that provide the materials to do so. The £500 million Builders’ Finance Fund should also kick start regeneration of social housing, leading to increased supply and with it growth.”

He added: “The £85m increase in apprenticeship investment is also good news and as the head of a business which has a strong focus on getting more young people into a profession, I believe it is something which will see real, long-term gains to employment.

“A number of new construction projects including a £270 million UK Guarantee for the Mersey Gateway have been announced and as a firm believer that the industry has turned the corner I welcome more British based projects in the coming years to continue this revival. Similarly the £140 million pledged to repair and maintain flood defences once again sees a focus on manufacturing.

“The news that the government will continue to compensate energy intensive industries for higher electricity prices is also welcome. This energy is being used to create things and drive the economy and making this more affordable for British manufacturers can only help output in the long-term.

“This is a positive budget aimed at ensuring sustainable growth and one which I welcome from a core industry perspective.”

Modern Masonry Alliance response

Mike Leonard, CEO of the Modern Masonry Alliance, said today’s announcements were an important boost to the housing industry. He said that after years of industry campaigning, the Chancellor had recognised the power of house building in driving recovery and creating jobs.

"Today the Get Britain Building campaign came of age. Five years ago 42 trade bodies called for Government to build our way out of recession. The coalition has backed our calls and today home building is at the heart of the recovery.”

Leonard added: “Today's announcement detailing lower taxes for energy intensive manufacturers of building materials, an extension to Help to Buy until the end of the decade and funding help for small builders is good news. There is of course still much to do and we will continue to drive greater local builder participation, more social homes and a recovery in the home extension market.”

He said: “Our call to Get Britain Building has been heard, we must now build on this spreading the growth and jobs that will be created throughout the UK.

“We must at the same time ensure we create the long term certainty that we need to promote inward investment into our building materials manufacturing capacity."

Edited from various sources by Katherine Guenioui

Read the article online at: https://www.worldcement.com/europe-cis/20032014/uk_budget_holds_good_news_for_cement_industry_918/