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CIC Economics and Policy Forum The 2011 Budget and Construction

CIC Economics and Policy Forum The 2011 Budget and Construction. Simon Rawlinson | March 2011. = £100 million. Source: HM Treasury. Contents. Key themes Macro-economic background Key measures Impact on sectors Plan for growth and the place for construction Joining up the dots.

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CIC Economics and Policy Forum The 2011 Budget and Construction

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  1. CIC Economics and Policy ForumThe 2011 Budget and Construction Simon Rawlinson | March 2011

  2. = £100 million Source: HM Treasury

  3. Contents • Key themes • Macro-economic background • Key measures • Impact on sectors • Plan for growth and the place for construction • Joining up the dots

  4. 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

  5. What should a Plan for Growth Address? • Supply-side constraint • 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 • Market failure • Increasing the competitiveness of the tax system • Competitiveness and certainty of business taxation • Simplicity of operation • Support for investment and operation

  6. 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

  7. Macro-economic background • GDP Growth down-graded in the short term • Fiscal tightening accelerates • Structural deficit is planned to eliminated by 2014/15 • The economy is planned to rebalance around investment and net trade

  8. Macro-economic risks • Size of the output gap • Impact of inflation Source: NIESR Source: BoE

  9. 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

  10. 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

  11. Impact on Sectors • Housing and Regeneration. • Homebuy - £200m • Stamp Duty Land Tax • Planning reform • Renegotiated s106 • Education • £150m for University Technical Colleges • £100 for R&D infrastructure • Transport • Fair Fuel Stabiliser • £200m rail investment • £100m road repairs • Local Government • Enterprise zones and TIF arrangements for business rates • Impact of s106 negotiation on ability to deliver existing programme • Energy and Carbon Change • Carbon Floor • Green Investment Bank

  12. Plan for Growth – Key Strands

  13. 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

  14. 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

  15. 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

  16. Joining the Dots x  x   ? Source: CPA

  17. 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.

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