Transcript The 2011 budget as it impacts construction

CIC Economics and Policy Forum
The 2011 Budget and Construction
Simon Rawlinson | March 2011
= £100 million
Source: HM Treasury
30 March 2011 |
Contents
■ Key themes
■ Macro-economic background
■ Key measures
■ Impact on sectors
■ Plan for growth and the place for construction
■ Joining up the dots
30 March 2011 |
So this is our plan for growth.
We want the words:
‘Made in Britain’
‘Created in Britain’
‘Designed in Britain’
‘Invented in Britain’
To drive our nation forward.
A Britain carried aloft by the
March of the Makers
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What should a Plan for Growth Address?
• Supply-side
constraint
• Market failure
• Increasing the
competitiveness of
the tax system
•
•
•
•
•
•
Transport and Energy Infrastructure
Low carbon infrastructure
Industrial capacity
Commercial space
Research and development Infrastructure
Housing
•
•
•
•
•
Cost of delivery of infrastructure
Funding
Training and career development
Ease of engagement
Planning and regulation
•
•
•
Competitiveness and certainty of business
taxation
Simplicity of operation
Support for investment and operation
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Key themes
■ Catch-up Britain
– Relative competitiveness
– Attraction as a location to innovate and grow
– Improving the UK’s export orientation
– Developing a flexible, well-educated workforce
■ The Government’s room for manoeuvre
■ Pace of Policy Change
■ The Elephants in the room
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Macro-economic background
■
GDP Growth down-graded in the short
term
10.0
Product
Output (2000 prices)
Structural deficit is planned to eliminated by 2014/15
2011 GDP
2.6
2.3
2.1
1.7
FY
2010/11
2011/12
2012/13
2013/14
2014/15
The economy is planned to rebalance around investment and
growth
4.0 trade
net
Total
10
41
61
88
110
6.0
-2.0
80
2.8
2015/16
126
10.0
30
20
09
29
95
0.0
20
07
23
59
20
05
2.9
20
03
21
38
20.0
2015/16
20
01
2.9
19
99
22
19
97
4
2.5
2014/15
19
95
6
19
93
19
83
19
81
19
79
19
77
Taxes
1.7
2013/14
19
91
growth
Spending
2012/13
19
89
0.0
GDP
2011/12
19
87
FY
19
85
2.0
19
75
■
30.0
Gross Domestic
Nov ‘10
Mar‘11
June ‘10
8.0
19
73
■
Fiscal tightening
Forecastaccelerates
June ‘10
19
71
■
30
-10.0
-4.0
-6.0
-20.0
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Macro-economic risks
■
Size of the output gap
■
Impact of inflation
Source: NIESR
BoE
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Key Budget Measures
Competitiveness and incentive
Certainty for investment
■ Key measures - taxation
–
Corporation Tax
–
Improvements to tax administration
–
Increases in Entrepreneur’s Tax Relief
–
Fuel duty escalator replaced by Fair Fuel Stabiliser
■ Key measures – increasing capacity
–
Simplified Regulation of the SME sector
–
Support to the advanced manufacturing sector
–
50,000 apprenticeships
–
24 University Technical Colleges - £150 million
–
R&D tax credits for SMEs
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Key Budget Measures
Competitiveness and incentive
Certainty for investment
■ Key measures – energy and climate change
–
Green Investment Bank
–
Carbon floor
–
Extension of carbon change arrangements
–
Zero-carbon home definition
■ Key measures – stimulating private sector demand
–
Simplified taxation of REITs
–
Reform to Stamp Duty land tax
–
Simplified planning
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Impact on Sectors
Housing and Regeneration.
Education
•
•
•
•
• £150m for University Technical Colleges
• £100 for R&D infrastructure
Homebuy - £200m
Stamp Duty Land Tax
Planning reform
Renegotiated s106
Local Government
Transport
• Enterprise zones and TIF arrangements for business
rates
• Impact of s106 negotiation on ability to deliver
existing programme
• Fair Fuel Stabiliser
• £200m rail investment
• £100m road repairs
Energy and Carbon Change
• Carbon Floor
• Green Investment Bank
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Plan for Growth – Key Strands
Competitive taxation
Best place to start and grow business
•
Move back up international competiveness rankings
•
Lowest corporation taxes in the G7
•
Reduce domestic regulatory burdens
•
Best location for Corporate HQ in the EU
•
Increase finance available for start-ups and expansion
•
Simpler and more certain taxes
•
More responsive and certain planning
Export orientation
Educated and flexible workforce
•
Top destination for Foreign Direct Investment
•
More apprenticeships
•
Increased exports in key markets
•
•
Increased employment in the private sector
Support to top Universities to have the highest number of
top institutions outside of the US
•
Increased investment in the low carbon economy
•
Increased participation of 16-24 year olds
•
Narrow education attainment gap
•
Lowest regulatory burden on employment in the EU
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Plan for Growth – Planning
■ Planning decisions should prioritise growth and jobs
■ A powerful presumption in favour of sustainable development
■ A pro-growth National Planning Policy Framework
■ Businesses able to engage in the neighbourhood planning process
■ Localised targets for the re-use of previously used land
■ Consultation on conversion from commercial to residential
■ Streamlined planning system including a 12 month guarantee (including
appeals)
■ Fast track planning for major infrastructure
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Plan for Growth – Regulation
■ 3 year moratorium on new regulation for micro-business
■ Scrapping of regulations costing £350m per year
■ Consultation on reducing the Regulation Stock
■ Simplification of employment legislation
■ Changes to Health and Safety regulation and practice
■ Revisions to EU regulation and Regulatory Culture in EU
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Plan for Growth – Construction
■ Publication of a long-term forward view of projects and programmes
■ Reforms to construction procurement to drive a cost reduction of up to 20%
■ First Buy programme aimed at helping 10,000 housebuyers
■ Accelerated release of public sector land for development
■ Reforms to SDLT to increase institutional demand for residential
■ Removal of entry barriers to REITs
■ Review of regulations and codes
■ Confirmation of the Zero Carbon Homes standard to apply from 2016
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Joining the Dots
x

x


?
2010
2011
2012
2013
2014
Housing - Public
30.0
-13.0
-15.0
-9.0
-7.0
Housing - Private
12.0
2.0
2.0
4.0
7.0
Public nonhousing
24.3
-11.1
-16.7
-16.5
-7.8
Infrastructure
20.6
3.0
4.3
2.9
2.8
Industrial
4.8
4.1
6.5
9.3
7.8
Commercial
-5.8
0.1
3.2
6.9
2.5
Total new work
9.0
-1.7
-1.0
1.6
3.1
Source: CPA
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Joining the Dots
■ The hard decisions were made in the November CSR – but implementation
has barely started yet
■ The Chancellor is likely to have little wiggle room throughout the CSR
period – there can be few budget surprises in the future
■ The 2011 budget is fiscally neutral but supportive of business
■ Long term changes introduced as part of the plan for growth have a
surprising upside for construction
■ Construction is part of the solution in the Plan for Growth – not a target for
support.
30 March 2011 |