In his pre-Budget report earlier this week, Chancellor Alistair Darling outlined that he would be bringing forward cash from the 2010-11 budget to be spent on education, housing and transport projects during 2008-09 and 2009-10.
But the Construction Products Association (CPA) has made it clear that the measures, though welcome, will not prevent construction activity in the UK falling dramatically next year.
‘Even if all £3 billion was spent next year, the construction industry would still see the largest percentage fall in output since the early 1990s, brought about by the sharp fall in private sector investment in construction,’ said CPA chief executive Michael Ankers.
Ankers added the construction industry should be cautious due to ‘extremely high levels of borrowing’ – expected to top £118 billion by next year. The CPA is also concerned that Darling’s economic forecasts, on which the pre-Budget report is based, may be ‘too optimistic’.
Aukett Fitzroy Robinson chief executive Nicholas Thompson went one step further saying he had ‘little confidence’ in Darling’s measures to rescue the UK from the financial crisis.
‘This long-term commitment to public debt is a real concern,’ said Thompson. ‘However, I was pleased to see the repatriation of foreign dividends will be tax-free from next year. I’m sure this will encourage companies to seek work from more buoyant economies abroad while retaining their presence in the UK.’
Smaller practices are more open to the measures introduced, especially those heavily involved in residential work.
Alex Ely of mæ architects said: ‘The cut in VAT will certainly help, but more encouraging for us is the increase in spending for social housing. We do a lot of work with housing associations and we have a few jobs which just need the funding.’
RIBA president Sunand Prasad added: ‘Giving small architectural practices more time to pay their tax and National Insurance bills and extending government guarantees of small-business loans are welcome practical measures in these difficult times.’