Today’s statement revealed a chancellor with few short-term solutions for whom survival to the next general election will be an achievement in itself.
No one envies the chancellor of the exchequer. Trying to manage the UK economy against the backdrop of global pressures and an ever vocal Tory right wing must be a bit like trying to carry a delicate Ming vase, coated in olive oil, across an ice rink wearing stilettoes. One false move and it’s all going to end up in a hundred pieces.
Sadly, today’s Budget statement illustrated the art of offering hope in principle but actually doing very little to improve matters in reality.
For us working in the creation of the built environment, the three big areas of concern on which we had hoped to see support from Jeremy Hunt have got to be the construction workforce (not enough of it), infrastructure spending (much promised but increasingly neutered) and net zero (aspirational but not achievable without significant spending).
The state of the declining labour pool is beyond desperate for our sector. More than 250,000 workers have left our industry in the past few years.
What we heard from Hunt were warm words, but all tempered with the cold reality of short-term inaction
The latest UK trade skills index estimates that the UK needs to attract over 900,000 more trades and construction workers alone in order to keep up with demand over the next 10 years. It suggests that nearly a quarter of a million of those should be qualified apprentices if we are going to prevent the emerging skills gap from widening. That represents a massive 34% increase on the number completing construction apprenticeships today.
We could have seen measures to incentivise firms to hire and train; we could have seen investment in CITB-style initiatives; and we could have seen an immediate pause on the restrictions affecting EU construction workers. What we heard from Hunt were warm words, but all tempered with the cold reality of short-term inaction.
The truth is that trying to get women back into the workplace by improving child allowances is not going to immediately help a sector where – regrettably – ONS figures show women currently account for less than 15% of the UK workforce. Arguably it might make construction more appealing if childcare is available, and prevent women from leaving after having children, thus progressing higher up the ladder and improving the gender pay gap. But this is not a given and it is not immediate.
Either way, extending funded childcare to include one and two-year-olds may allow more women to stay in the industry long-term but, with a dire shortage of places as it is, it will just serve to create a greater imbalance between supply and demand. So they will be lucky to find a nursery in the first place.
Eighteen months before a general election is not a good time to invest in projects that may not bring you plaudits for another 18 years
Similarly, encouraging the over-55s with pension incentives will also be pointless when – given the physically demanding roles – it is often impossible to work past this age in the craft trades. We have fewer houses being built now than at any time since the Second World War – and we are a G7 economy. Much of this decline is due to labour costs and shortages.
Infrastructure has its own challenges. The news regarding delays to HS2 last week was not promising. The chancellor is wrestling with the fact that his red wall MPs will want to see some red meat before the next election and infrastructure spending works on the basis of long timelines. Eighteen months before a general election is therefore not a good time to invest in projects that may not bring you plaudits for another 18 years.
I greet the announcement of new investment zones with tax incentives with the some cynicism as these are very similar to the initiatives previously mooted by Liz Truss and Kwasi Kwarteng’s shortlived government. A Treasury report at the time notably said that, unless you target the tax breaks forensically, then you end up paying huge amounts of money to subsidise economic activity that is happening anyway. Nice idea in principle, not so easy to manage in reality.
Finally investment in carbon capture and storage, plus the funding of mini-nuclear power stations, is a welcome and workable solution. However, it is long term and impractical without major changes to the planning system.
The saddest thing was the lack of a plan, a strategy or a fiscal roadmap that indicates to business where and why they should invest
A shorter-term win would have been tax breaks for housebuilders to invest in net zero construction. Where is the serious money for retrofitting and refurbishing our old housing and commercial building stock?
The saddest thing about today’s Budget was not the enhanced corporation tax or the fact that Hunt did not use some of his £30bn in headroom due to lower borrowing costs. It was the lack of a plan, a strategy or a fiscal roadmap that indicates to business where and why they should invest.
This is a holding-pattern chancellor who is hoping that he can carry the fragile fiscal vase to the next general election without it crashing to the ground like his predecessor’s.