NEWS EXTRA
CONSTRUCTION INVESTMENT: THE BEST ROUTE THROUGH POST-LOCKDOWN WILDERNESS
Spending money on boosting the construction industy is the best way to repair the damage the Covid-19 pandemic has done to the economy, Mike Leonard tells BMJ.
“WE’VE HAD THE job retention scheme, now it’s time for the job creation scheme,”
So says Mike Leonard, CEO of Building Alliance, and one of the drivers behind the relaunched Get Britain Building campaign. Leonard has been working with the City of Birmingham University, where he is Visiting Professor of Manufacturing and Construction. With Dr Steve McCabe, Associate Professor at the Institute for Design and Economic Acceleration, Leonard has co- authored The Build Back Better: Covid-19 Economy Recovery Plan. Research carried out in 2018 by the University and The Building Alliance calculated that building 300,000 homes a year using, as much as possible, British-made building materials and local builders, would generate an economic ‘uplift’ of more than £90 billion for the UK.
“Dealing with a virus that has affected every country in the world has come at a phenomenal cost to the economy,” Leonard says. “Consumer confidence has been severely dented due to a drop in disposable income. Predictions of an annualised decline in Gross Domestic Product of over 10% and that jobs lost may take years to be replaced, suggest that recovery may take years rather than months. This is profoundly worrying for a country that was working towards a positive post-Brexit future.” One solution, as has been demonstrated after previous economic crisis, is to use investment in infrastructure and construction as the means by which to reflate the economy. Construction has been proven to achieve a multiplier effect. According to the Royal Institution of Chartered an £11.27bn
investment in construction and a series of strategic decisions around new home building can kick start the UK’s economic recovery and deliver a £33bn return for the Government.
The Build Back Better: Covid-19 Economy Recovery Plan features a blueprint for a safe return to construction, a set of recommendations to help stimulate demand for new homes and home improvement, and details on how to build essential infrastructure and train a new generation of skilled workers – acting as a catalyst for growth and delivering income for HMRC. The plan also calls on the Government to stand by its commitment to “do everything it takes” to fight the virus and support the UK economy, by investing £11.27bn in a wide- reaching programme, designed to create mass employment and produce a £33 billion return. Each of the key recommendations in Build Back Better: Covid-19 Economy Recovery Plan will have a positive correlation with a return to economic activity in the UK. Stimulating Demand for New Build homes: Consumer confidence will have been severely damaged by Covid-19. The suspension of Stamp Duty for purchases up to £300k and the extension of the Help to Buy scheme until 2025 will help to stimulate demand by first-time buyers and increase capacity by building new homes. Leonard
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says: “A mortgage support package providing 50% reduction in re-payments for the first 12 months for all first-time ‘new build’ mortgages up to £250000 completed by December 31st 2021 would drive the market and create thousands of jobs.” Offering such help to 100,000 first time buyers could save them £6,300 a year, giving a total cost for one year of £630 million Social Housing: The need for social housing provided by local authorities to replace the severely depleted stock is well understood. Provision of well-constructed social housing in the inter-war and post second-world-war is regarded as one of the country’s major achievements in underpinning improvements in living standards and social mobility. “The objective should be to construct 30,000 houses per year for the next two years. We estimate the cost of this would be £2.25 billion for one year, £4.5bn for two.” Infrastructure: The range of infrastructure projects such as HS2 are vital to rebalancing the economy and enabling long term sustained inclusive growth. Leonard says that expediting them could cost £1bn.
Decreasing VAT on Home Improvements: With the UK free of EU constraints from 2021 the Government will have the flexibility to adjust the VAT rate to provide an incentive to the 65% of owner occupiers and
Continues on page 8
www.buildersmerchantsjournal.net June 2020
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