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Positive and puzzled – BESA reacts to Budget

The Chancellor Rishi Sunak deserves credit for increasing investment in apprentices, committing to infrastructure investment and low carbon projects in the Budget, but cuts to the Green Homes Grant and failure to address the industry’s concerns of changes to the VAT regime are disappointing, according to the Building Engineering Services Association.

BESA chief executive officer David Frise

The Chancellor doubled the funding available to firms taking on apprentices of any age to £3,000 and improved the flexibility of the system by making it possible for an apprentice to work for more than one employer in the same sector. He also committed another £126m to triple the number of funded traineeships further supporting employers’ much-needed efforts to refresh the industry’s workforce, according to BESA.

The Association also welcomed the introduction of a new “super-deduction” scheme that will allow companies that buy new plant and machinery to benefit from a 130% first-year capital allowance. This means a firm that spent £10m on new eligible equipment could reduce their tax bill by £13m.

The UK’s first-ever infrastructure bank will have £12bn to fire up the country’s “green industrial revolution”, which promises support for a range of carbon reduction schemes. However, the undermining of the GHG scheme, which has effectively had its funding cut from £1.5bn to £320m was a “puzzling move”, according to BESA chief executive officer David Frise.

“It seems strange that the Chancellor did not address the industry’s surprise at the way this scheme has been cut off at the knees,” he said. “He reiterated the Government’s determination to put carbon reduction at the heart of its economic plans. However, he failed to reinstate money that had already been allocated to a scheme designed to improve the energy efficiency of 600,000 homes and support around 100,000 jobs.”

Mr Sunak ended his Budget speech by talking about the potential of clean technologies to create 'decent well-paid green jobs' and drive the economic recovery. However, the GHG voucher scheme now only has enough funding to improve around 80,000 homes.

Many across the construction sector also hoped the Chancellor would row back on the VAT reverse charge scheme, which is having a detrimental impact on supply chain cash flows.

“The emphasis has shifted to how to help companies cope with change,” said Frise.  “The Budget provides some strong signals for growth across our sector, but we would urge Mr Sunak to take another look at the issues that send out mixed messages.”

5 March 2021


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