Ramboll. Budget Day Reactions. A477. Image: Simon West Photography
A need for real leadership
In uncertain times, UK businesses are looking for certainty, assurances and stimulus they can translate into action. Commenting on today’s budget Ramboll managing director, Mathew Riley says “Years of under investment and policy failures by successive governments are the root cause of today’s shortfall in our social infrastructure. So whilst the Chancellor may feel pleased with his stimulus to technology and housing, this government will be judged on results.
“We have run out of time for endless reviews where nothing happens, we need real leadership to deliver 300,000 homes a year. This government’s track record is not promising – they seem unable to make a decision on additional runway capacity in the South East and growing rail requirements across England and Wales.
“Ultimately, this investment is too little and will constrain productivity in the UK. This is not a Budget to be proud of.”
The housing shortfall
As anticipated, housing featured heavily in the budget with a raft of new housing funds. Andy Goddard, Principal at Ramboll Environ’s Bath office welcomed the housing measures but added “I hope to also see in due course a commitment to brownfield development as part of an integrated sustainability approach. This can help urban planners to not only create new liveable communities, but also provide a net environmental benefit through land regeneration, biodiversity and resource management. Such forward-planning should be an integral part of the government’s plan for our housing future.”
“While the new measures are welcomed we did miss a clear opportunity”, comments Ramboll director, Tom Shaw “There were a number of new positive measures announced for housing in the Budget today, but what was disappointing was the lack of specifics that would encourage the construction industry to embrace offsite techniques? Increasing housing supply to 300,000 per year requires offsite construction methods – without it we have no chance of meeting these targets by 2025.
“London Assembly chair for planning, Nicky Gavron made a plea prior to the budget for funds to specifically deliver more housing by utilising offsite techniques. This was notably absent in the Chancellor’s budget and represents a missed opportunity to deliver dedicated funds to increase much needed supply chain capacity in the offsite sector. Offsite construction, with reduced timescales and increased quality, will enable faster delivery of these ambitious targets. This shows a lack of joined up thinking.”
Mathew Riley added “House-building may well be at the highest level since the crash, but it is obvious we still need more homes. Our government needs to be more agile in releasing land and planning for growth. As an industry we need to step up and play our part in delivering smart and efficient solutions, to help policy-makers. This means modernising the way we collaborate and delivering design, engineering and construction the way it should be."
The productivity gap
As an industry we are behind others, so we need to transform and “embrace the future”. Announcements into investment in education to create a workforce with high tech skills will prove valuable, with £20m for FE Colleges, £40m to train maths teachers, £600 math premium for schools. This is coupled with a national retraining scheme, the first priority of which is to boost digital skills and support expansion of the construction sector with a £30m fund to support digital skills and distance learning courses. With productivity a key industry issue, rapid advances in digital design and the ability to fully utilise data create opportunities to revolutionise the construction industry and massively benefit from time compression. “Digital design techniques combined with offsite construction will transform productivity and deliver these high quality solutions in record time. The Chancellor’s investment in construction and digital skills training is valuable and will play a vital role in helping boost the UK’s infrastructure.” comments Mathew Riley
Oil and gas
The government has re-stressed its commitment to the principles for oil and gas fiscal policy. A paper has been published on enabling oil and gas companies to transfer tax histories to facilitate the transfer of late life oil and gas assets; this is a world first. Draft legislation is due in spring 2018, and transferable tax histories are expected to be available from 1st November 2018.
The government is also set to launch a technical consultation on allowing a petroleum revenue tax deduction for decommissioning costs incurred by a previous licence holder. This will support transfers of assets where the seller retains the decommissioning liability.
Finally, the government will introduce legislation to clarify that all tariff income earned by petroleum licence holders is within the ring fence corporation tax regime. This will support the government’s commitment to extend the Investment and Cluster Area allowances to include income from tariff receipts.
Matt Davies, Ramboll Environ's UK Managing Director, commented: “The Chancellor’s ‘innovative’ new oil and gas tax regime, aimed at bringing new entrants into the sector, is welcomed. The tax support will incentivise investment in new development, stoking demand for environmental impact assessments, permit work, and compliance advice. It should also encourage those holding existing assets. This will help to increase productivity and working towards ‘maximising economic recovery’.
“As a result we expect to see increased drivers for exploration and extraction in the North Sea, as well as the continuation of existing projects among established players and new entrants in the sector. Tax breaks for the transfer of oil and gas assets should stimulate more merger and acquisition (M&A) activity, which also bodes well for the industry.”
A cleaner, more sustainable future
Bram Miller, Director at Ramboll’s Southampton office welcomed announcements relating to a move towards driverless cars and cleaner transport, “The Chancellor said today that ‘we owe it to our children to ensure that the air they breathe is clean’ and we agree that air quality must be a key concern in the years to come. We welcome the government’s £400m investment in charging infrastructure, the £100m plug-in car grant and a further £40m for research into charging for electric cars, and their overall commitment to work towards driverless vehicles. We feel that if this investment is targeted intelligently, with the right technology in the right locations, it can not only improve air quality but also contribute to reducing carbon emissions and noise pollution.
Electric vehicles will bring significant new demand for electricity – so the plan to proliferate charging points around the country must be carefully considered to make sure that these points are properly distributed. Additionally, this is an opportunity to restrict the use of highly polluting vehicles in areas of poor air quality, going beyond congestion charges to really protect the air of our city centres in particular. This must be an eventual goal for the government if they are to embrace electric vehicles.”
Finally, commenting on the pledge to rid the country of litter from single-use plastics, Abby Bartram, Senior Consultant at Ramboll Environ's Exeter office said "We’re pleased to hear the Chancellor highlight the importance of protecting our marine environments and his commitment to the UK becoming a world leader in tackling the issue of plastic littering our planet and oceans. We fully support the idea of creating a circular economy for the use of plastics in packaging, which may include traditional schemes that encourage re-use such as bottle refilling, as well as the development of biodegradable and recyclable alternatives to single-use plastics. We would also like to see innovative ideas and development to change the current approach to the singular use of plastics.