Chancellor’s pre-Budget speech sees construction industry given major boost
Chancellor Alistair Darling announced that he will bring forward £3 billion in public spending in his pre-Budget report today (24 November).
The capital spending has been brought forward from 2010-11 into 2009-10 and 2008-09 for ‘housing, education, transport and other construction projects’ that will ‘support industries and jobs across the country’.
£775 million to offset the impact of the downturn on housing and regeneration;
£800 million to be spent on the priority schools capital programme;
£442 million to improve higher education facilities and infrastructure;
£150 million for insulating houses.
The measure was welcomed by the Construction Products Association (CPA). CPA economics director Noble Francis said: ‘The £3 billion should lessen the impact of the anticipated drop in construction over the next two years.
‘However, even if all £3 billion were to be spent next year, construction output would still be expected to fall.’
Darling also announced that he will slash VAT from 17.5 per cent to 15 per cent as expected.
According to Darling, the cut will provide consumers with an extra £12.5 billion, but people in the highest tax band will see their rate rise to 45 per cent, while all National Insurance payments will go up by 0.5 per cent from 2011.
The moves have been taken to avoid the possibility of a particularly ‘long and deep’ recession, Darling said, as Britain’s economy was expected to shrink by 2009.
The chancellor cut economic growth forecasts for the next year from 2.75 per cent to between -0.75 and -1.25 per cent, the biggest downward revision on record.
Darling said the government would also pump in an extra £20 billion, 1 per cent of GDP, funded primarily by hefty government borrowing, as well as approximately £5 billion in ‘efficiency savings’.
Shadow chancellor George Osborne accused the government of ‘bringing the country to the verge of bankruptcy’ by effectively doubling national debt.