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5 December 2012
The National Federation of Builders gave a cautious welcome to some of the measures announced in the Autumn Statement.
The construction industry is forecast to see growth in 2014. This will likely be a result of the recent government investments in infrastructure, planning and housing which will have started to yield benefits by that time. However, the UK economy will continue to experience austerity until 2018.
Access to finance
The government will create a business bank that will make it easier for SMEs to access finance.
Julia Evans, chief executive of the National Federation of Builders, said: “The proposed £1 billion business bank would suggest an improvement on previous initiatives as lending to construction firms continues to fall. A host of government initiatives designed to boost lending to SMEs – from the Enterprise Finance Guarantee Scheme and the National Loan Guarantee Scheme through to Project Merlin and Funding for Lending - have failed, and they have failed construction SMEs particularly badly. With refusal rates for loans to SMEs running at a third and banks reluctant to lend at all to sectors they see as high risk, such as construction, SME builders and contractors face a double whammy in their fight to access the finance they need to grow. However, until we know how the bank will function and who will benefit, it is difficult to be particularly optimistic.”
Local Enterprise partnerships
The chancellor pledged to begin implementing Lord Heseltine's recommendations that growth funding should be increasingly placed into a single pot and channelled down to a local level where local enterprise partnerships (LEPs) should be enabled to play a central, strategic role.
Julia Evans said: “The NFB welcomes the adoption of ambitious plans to beef up the role and the resources of LEPs and begin to channel business support funding through them. Reducing the number of different funding streams leads to greater clarity and reduces bureaucratic overheads. The construction sector is pivotal to achieving the robust regional growth and job creation which are the goals of all LEPs and the sector needs to play a greater role in driving forward the success of LEPs.”
Extra spending on schools and colleges
The chancellor announced an additional £980 million to fund 100 new academies and free schools and expand good schools in areas with the greatest pressure on places. An additional £270 million of capital investment to improve buildings and facilities in further education colleges in England was also announced.
Julia Evans commented: “On balance this new money is very welcome. We recognise that this will direct a significant amount of funding into construction. As such, it will be a cost effective way of stimulating economic activity and regional economies. Moreover, investment in education is an investment in our future international competitiveness. On both fronts, this puts us on a much stronger footing for the future.”
The government will provide an extra £300 million for the Affordable Homes programme to provide 15,000 affordable homes and bring 5,000 empty homes back into use.
Julia Evans, added: “This additional funding will provide a welcome boost for the repair, maintenance and improvement sector. For every home that is built, there is potential for the creation of two additional jobs in refurbishment. This is a good use of money that generates jobs, keeps buildings in use and addresses the shortage of housing.”