Thursday, 6 December 2012

Chancellor's Autumn Statement: Highlights

London: 5th December 2012 George Osborne’s autumn statement has recognised the construction and building industry as key to the economic growth of the country. The response from the industry has been largely positive.

The major sector that has benefited is infrastructure with a £5bn investment.

However, many have been disappointed that an opportunity has been missed to help the government’s own Green Deal energy-efficiency initiative by not introducing further incentives, such as, a lower rate of VAT on housing repair, maintenance and improvement work. This would have encouraged homeowners to take advantage of the Deal rather than largely ignoring it.

Another missed opportunity related to housing is the lack of additional funding for affordable housing or even a commitment to improve the ease of getting a mortgage to encourage an increase in the number private new homes being built.

On the plus side, manufacturing companies who are able fly the flag abroad with innovation and leadership have been given additional support - especially those looking to move into emerging countries and seeking foreign investment.

Another less obvious area that will benefit the building products sector is the canceling of the proposed fuel tax increase. This will help keep the running costs of sales professionals across the country down as well as the costs incurred in the transportation of goods from manufacturers to merchants and merchants to building sites.

We were also pleased to hear Mr. Osbourne's comments on job creation and employment in the country as compared to the rest of Europe.

Please find below a transcript of some key points from the statement:

"We made a promise as a country that we would spend 0.7% of our gross national income on international development – and I am proud to be part of the first British Government in history which will honour that commitment, and honour it as promised next year. We will not, however, spend more than 0.7% - so as we did last year, we will adjust the DfiD budget to reflect the latest economic forecasts.

"In the medium term these savings across Whitehall will help departments maintain the right trajectory for the years that follow the spending review – and help us to pay off the deficit in future. In the short term, I’m switching these current savings into capital – all the money saved in the first two years will be re-invested as part of a £5 billion capital investment in the infrastructure of our country. It is exactly what a government equipping Britain to compete in the modern global economy should be doing.

"We’re committing an extra billion pounds to roads, including four major new schemes to":

  • Upgrade key sections of the A1, bringing the route from London to Newcastle up to motorway standard.
  • Link the A5 with the M1.
  • Dual the A30 in Cornwall.
  • Upgrade the M25, which will support the biggest port developments in Europe, and I pay tribute to my HF for Thurrock for campaigning to achieve this.

"We’ve already set out plans this autumn for a huge investment in rail, and my RHF the Transport Secretary will set out in the new year plans to take High Speed 2 to the North West and West Yorkshire.

"I today confirm a billion pound loan and a guarantee to extend the Northern Line to BatterseaPower Station and support a new development on a similar scale to the Olympic Park.

"We’re confirming funding and reforms to assist construction of up to one hundred and twenty thousand new homes and delivering on flood defence schemes in more cities.

"In addition to the third of a billion pounds announced this autumn for British science, we are today announcing £600 million more for the UK’s scientific research infrastructure.

"And since improving our education system is the best investment in a competitive economy, I am today committing £270 million to fund improvements in further education colleges and one billion pounds to expand good schools and build 100 new free schools and academies.

"Scotland, Wales and Northern Ireland will get their Barnett share of additional capital spending put at the disposal of their devolved administrations.

"On top of this £5 billion of new capital spending in infrastructure and support for business, we are ready to provide guarantees for up to £40 billion more – today I can announce that projects worth £10 billion have already prequalified.

"We’re offering £10 billion worth of guarantees for housing too".

New Homes Tax / Stamp Duty / Housing Allowance
"We’ve already raised stamp duty on multi-million pound homes and next week publish the legislation to stop the richest avoiding stamp duty. But we won’t introduce a new tax on property. This would require a revaluation of hundreds of thousands of homes.

"In my view it would be intrusive, expensive to levy, raise little and the temptation for future Chancellors to bring ever more homes into its net would be irresistible. So we’re not having a new homes tax.

"Local Housing Allowance rates, that are a central component of Housing Benefit, will be uprated in line with the existing policy next April and then we will cap increases at 1% in the two years after that.

"For this measure, 30% of the savings will be used to exempt from the new cap those areas with the highest rent increases".

"As Lord Heseltine also recommends, we are going to support industries and technologies where Britain has a clear advantage.

"With my RHF the Business Secretary’s support, we will extend our global lead in aerospace and support the supply chains of advance manufacturing.

"We are also taking big steps today to support British companies who export to new emerging markets in Asia, Africa and the Americas. I am increasing the funding for UK Trade and Investment by over 25% a year, so it can help more firms, build the capacity of British chambers overseas, and maintain our country’s position as the number one destination in Europe for foreign investment and we are launching a new £1.5 billion export finance facility to support the purchase of British exports".

"We’re going to help our construction industry too. The proposal from my colleagues that we create a long grace period before newly completed buildings have to pay empty property rates is a sensible one and we will introduce it next October".

Petrol Costs
"And we’ve helped motorists with the cost of petrol. We’ve cancelled the last Government’s escalator – and I’m moving inflation-only rises to September.

"There is a 3 pence per litre rise planned for this January. Some have suggested we delay it until April.
I disagree. I suggest we cancel it altogether.

"There will be no 3 pence fuel tax rise this January. That is real help with the cost of living for families as they fill up their cars across the country.

"And it will help businesses too. It means that under this Government we’ll have had no increase in petrol taxes for nearly two and a half years. In fact they have been cut".

"One area where the British economy has done much better than forecast is in creating jobs. Since early 2010, the private sector has created 1.2 million new jobs - 600,000 more than was predicted and youth unemployment has been falling. Instead of peaking at 8.7%, the OBR now expect unemployment to peak at 8.3%.

"This at a time when the unemployment rate in Spain is 26%. In France it is almost 11%. And across the whole eurozone it is almost 12%. Employment, already at a record high, is set to go on rising each year of the forecast. For every one job less in the public sector, two new jobs are expected to be created in the private sector. And Britain now has a greater proportion of its people in work than either the eurozone or the United States.

"Mr Speaker, more jobs means that the impact of the weaker than forecast GDP on the public finances has been less than some might have expected".

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