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Will the budget offer green shoots for the construction sector?

Will the budget offer green shoots for the construction sector?

As a key contributor to the British economy, the government is promising to offer a lifeline to the construction industry through additional investment in housing, lending schemes and infrastructure spending. Recruitment consultancies ask whether the new proposals will produce results.

In an attempt to boost the slowing housing market the Chancellor has set out plans to help low-to-middle income families get on to the property ladder though the & lsquo;Help to Buy’ scheme as well as releasing more funds for the building of affordable homes.

George Osborne outlined plans to offer future homeowners interest-free loans of up to 20% of the purchase price for newly built properties up to &pound600,000. This will sit alongside a mortgage guarantee scheme to support &pound130bn worth of new mortgages from January 2014.

Other measures designed to stimulate house building include an additional allocation of &pound225m for 30,000 new affordable homes to be delivered through the Housing and Communities Agency and an additional &pound800m commitment to the Buy to Rent scheme.

Jason Bowler, CEO of specialist recruitment firm, Resourcing Group comments & lsquo;after cuts in recent years, the new budget is proposing to give the housing construction market a boost through the & lsquo;Help to Buy’ scheme. Although developers, particularly SMEs will need reassurance that the new mortgage guarantee programme will be available to them. Previous schemes such as & lsquo;NewBuy’ failed to help many smaller contractors as they were difficult and costly to access.’

Despite previous attempts to stimulate lending many SME contractors are still finding it hard to secure financial backing from lenders. David McLean-Reid, CEO of Eden Brown is hopeful that the & lsquo;Help to Buy’ scheme will be a step in the right direction to encourage investment within the housing construction sector.

& lsquo;A strong construction industry is a key way to stimulate the economy and get people into work it’s encouraging to see the government is recognising this in the new budget.’

A lifeline for employment

A proposal which is of particular interest to the recruitment industry is the new employment allowance which will offer a hiring incentive for companies in an attempt to boost employment. From April 2014, all businesses will be able to employ one worker on a salary of &pound22,400, or four employees on the minimum wage, without paying any employer NICs.

SMEs with fewer than 10 employees will no longer pay any National Insurance Contributions.

David McLean-Reid commented & lsquo;the new employment allowance will offer a lifeline to small companies in the construction industry looking to expand. The Chancellor should be commended for rewarding SMEs who are working hard to grow and create jobs.’

Investment in infrastructure

As well as additional funding for the housing sector, the Chancellor has released &pound3bn for building projects such as road, rail and energy schemes. One project that will benefit will be a &pound150m to provide mobile phone coverage in rural areas.

CEO of Resourcing Group, Jason Bowler comments & lsquo;It will remain to be seen what the impact of this commitment will be, funds will not be made available until 2015-16 and there is little indication of which projects will benefit. The government has consistently fallen short of fulfilling its infrastructure promises in recent years.’

& lsquo;Despite reservations from the industry, this new commitment to infrastructure is recognition from the Chancellor that recent capital spending cuts may have been too sharp.’

David McLean-Reid, CEO of Eden Brown sums up, & lsquo;although the commitment to investment in affordable housing and infrastructure projects is limited we are hopeful that the & lsquo;Help to Buy’ scheme will offer a boost to the construction industry as a whole by stimulating lending within the housing industry.’

& lsquo;The new employment allowance will reward SMEs looking to expand in the construction sector, encouraging growth and job creation.’

The budget has had mixed reactions from construction sector leaders including the National Housing Federation and the Federation of Master Builders however they should be optimistic that the March budget offers green shoots after a harsh winter.


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