Budget 2021: climate action and levelling up must sit at the heart of the recovery
The Government has delivered its Budget in the House of Commons and announced its spending plans for the coming year.
UK Managing Director Patricia Moore comments on construction's role as the engine for a more equal and more sustainable recovery.
The Budget is hotly awaited in construction – and there will be many who were hoping for a greater name-check for the sector today. While the Chancellor’s speech might appear tamer in its references to ‘build, build, build’, the reality is that that our industry has already had its orders from Government around our role as the engine for a more equal, more sustainable recovery.
The UK entered its first COVID-19 lockdown almost a year ago. As we look more optimistically towards the relaxing of restrictions and a successful vaccine programme to keep the virus in check, today's Budget is a reminder that we are not simply seeing a return to 'normal'.
The headlines around the Chancellor's speech will focus on tax rises – for businesses and for households. While the figures from the OBR forecast a quicker recovery than first anticipated, the immensity of the impact of COVID-19 is clear to see.
The challenges of the recovery are not just fiscal though. Record-breaking borrowing and the sharpest recession for 300 years needs to be addressed alongside two long-term but critical issues. The first is tackling the widespread inequality in the UK – exacerbated by the recession but long highlighted by the UK2070 Commission. The second is the climate emergency.
Today we saw further signs of the kind of creativity that we need to build back better. The commissioning of the new UK Infrastructure Bank in Leeds will grab attention from investors, and it pits the country ahead of many nations mulling similar measures. By comparison, the creation of a new Sovereign Green Savings Bond for individuals is a reminder that to tackle net zero, we cannot just focus on institutional investors, but need a grass-roots revolution in how we finance our future.
But this was not a Budget for infrastructure – and the Government will argue that it has done the hard work on that already. Momentum behind rail and road programmes has continued since the announcement of Project Speed last year and these will play a vital role in connecting communities across all four nations. However, hard infrastructure needs to be supported by more subtle economic links too.
The unveiling of eight new Freeports, including the East Midlands and Teesside, which will help support the levelling up agenda through jobs and inward investment – with benefits to a long supply chain beyond the confines of a physical port zone. So too will the new Government economic campus planned for Darlington.
With the headquarters of our business in Leeds, our 75-year-old roots in Darlington and a strong presence in the north east we also welcome these announcements.
Reevaluating real estate
For real estate, the Chancellor’s statement heralds innovative moves, but we need to watch for more radical reform that could – and should – be still to come. The extension of the stamp duty holiday will help maintain momentum in housebuilding, but the real game-changer would be the review of property taxation that is being mooted – and called for.
Further short-term business rates relief today should not distract from outcome of the business rates review, still postponed, which is an opportunity to be bold about how we help reshape our towns and cities post COVID-19 – prioritising placemaking, adapting to new occupier demands and accommodating new ways of working.
The role of construction
For construction, the phrase that featured far less than may have been expected was net zero. From past announcements and commitments, we know that this is a major challenge for our sector. Our industry is in the unique position of being one of the UK's biggest contributors to carbon emissions, while also being the engine for growth and common thread across all these announcements.
We bear the responsibility both to deliver the infrastructure and change that helps shape a modern, post-pandemic economy, while doing it in a way that effectively measures, evaluates and reduces our carbon impact.
This makes it imperative that the recovery drives a root and branch reform of UK construction – from how we create skills and job opportunities for the country's 1.75m people who are out of work, to how we source and use materials in ways that are more ethical and sustainable than in the past.
While we heard less on this theme today, the call has been taken up by Government and alongside these announcements, departments have been working to get the industry match-fit for its starring role in the recovery – from prioritising shovel-ready projects through the work of the National Infrastructure Commission, to promoting more sustainable models of procurement, management and delivery in the Construction Playbook and the forthcoming update to the IPA’s Project Routemap.
The success of the Chancellor's commitments today will rely on the successful adoption of the tools of this reform agenda for construction, but also its spirit and vision.