Extra support for the nuclear industry in today’s budget won plaudits from the construction industry – but some rued the lack of a clear pipeline and changes to corporation tax.
In today’s Budget (15 March) chancellor Jeremy Hunt said the UK would “not enter a technical recession this year”, according to the Office for Budget Responsibility (OBR).
Hunt’s raft of policy announcements covered energy, infrastructure and tax changes. Construction News rounds up the industry response.
Nuclear
One of Hunt’s key promises was to “address constraints in the nuclear market and support new nuclear builds”, by giving nuclear projects extra financial incentives. Hunt also announced the creation of a new organisation called Great British Nuclear.
Civil Engineering Contractors Association (CECA) director of operations Marie-Claude Hemming said the creation of Great British Nuclear was “good news for industry” as it would “encourage private-sector investment”.
“CECA has consistently argued that new nuclear power must be part of the mixed portfolio of generation the country needs to keep the lights on and create a sustainable, low-carbon future,” she added. “The foundation of Great British Nuclear must herald a new era in which the ambition of delivering new nuclear generation translates from words to action.”
WSP’s UK chief strategy officer Paul Tremble said: “Industry has made great progress in recent years to build a secure and affordable energy future for communities across the UK. Today’s recognition of nuclear power in this future energy mix is welcome, so too the support for carbon capture, usage and storage technology in tackling climate change.”
Andrew Newbery, energy partner at law firm Gowling WLG said the new focus on nuclear would make many small- and medium-reactor (SMR) firms “double down on their efforts in the UK market in priority to others”.
He added that the decision to grant extra financial incentives would also help investors decide “to invest in Sizewell C and other nuclear projects” alongside other green assets such as offshore wind farms.
Infrastructure
Pipelines of work for the construction sector have been demanded for a long time. And, although the Budget promised a pipeline, Arcadis head of strategic research Simon Rawlinson pointed out that a delay of the infrastructure pipeline until later in 2023 was “buried in the Budget”.
“This delay won’t build confidence,” he added.
While Wates public sector director Stephen Beechey welcomed the push for a pipeline, he called on the government to “give urgent consideration” to a pipeline that covers work between three and five years into the future.
“Taking this step would give industry the certainty it needs to make long-term decisions in important areas including investment, hiring and training – all of which will drive economic growth,” he added.
Energy
The Budget also focused on carbon capture, with Hunt pledging up to £20bn for carbon capture, utilisation and storage (CCUS). The announcement got a positive reaction from Mineral Products Association (MPA) chief executive Jon Prichard labelling it “welcome and important” for the cement and lime industries in the UK.
Although Landsec chief executive Mark Allan also applauded the investment, he said the Budget “could have gone even further”.
“I’d like to see the government build on the commitments they’ve made today by prioritising measures like whole-life carbon assessments and better regulation which will get to the heart of the [climate change] issue,” he said.
SMEs
SMEs are among those worst hit by the heightened inflation and energy prices that have been affecting the sector, so many were hoping for help with the high prices. But director of legal and business at the Electrical Contractors’ Association (ECA) Rob Driscoll said the increase of corporation tax from 19 to 25 per cent in April for businesses that earn over £250,000 will come while SMEs continue to face up to those challenges.
“Today’s Budget may prove to be counter-intuitive and hinder businesses’ ability to pivot into delivering our urgent net-zero targets,” he said. “The drive to net-zero hinges on skilled engineering services professionals doing the frontline work to upgrade our grid, electrify transport and heating, and connect our homes and businesses to clean energy sources.”
What was not covered
There was little mention of housing or rail, with the major rail announcement seeming to come last week in the form of delays to HS2.
Graham Prothero, chief executive of MJ Gleeson and former chief executive of Galliford Try, said the budget was a “significant missed opportunity” in terms of housing. He said there must be movement to decrease long planning-permission processes, which remain a “significant roadblock” to housebuilding aims.
Rail Industry Association (RIA) chief executive Darren Caplan, meanwhile, said the Budget left the industry “no further forward” on any measures to support decarbonisation in rail, which was “needed” to help reach net-zero.
“Over recent days the future of transformational major rail projects has become more uncertain, with, for example, a two-year delay announced for delivering the HS2 northern leg,” he added.
But he did say the funding for up to 12 new investment zones would provide “incentives for innovation and levelling up” across the UK.
Gleeds chief executive Graham Harle argued that Hunt had “more headroom to invest than he used” – particularly as the government is facing £30bn-less borrowing costs.
“I am disappointed that there were no defined measures to assist us operating in the built environment, one of the largest and most impactful sectors in the UK,” he said.
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Joshua Stein