Our verdict? Hammond’s first Budget proved to be a bit of a damp squib for construction. Additional investment in education, while welcome and very necessary, is relatively small – both in scale and ambition. Only 30 of the additional 140 new free schools announced on Wednesday are due to open their doors to students by September 2020. Overall, public sector capital investment between 2017/18 and 2021/22 is around £4bn lower than announced in the Spending Review less than six months ago.
Changes to national insurance levied on the self-employed workforce, and the reduction in the tax free dividend allowance for those working via a limited company, will, if implemented, have a disproportionately large affect on the construction sector at a time when wage inflation is high and rising materials costs are weighing on project viability.
An under the radar commitment to increase devolution to London is potentially a positive – allowing greater autonomy for the right decisions to be made for the Capital. Exploration of a new approach to infrastructure funding, and a hint that the administration of the Capital’s business rates could form part of a future devolution plan, are developments we will monitor with interest.
If you would like a copy of our note, please get in touch with Kelly Forrest, our Head of Research and Insight .