CPA responds to mini-budget
23 September 2022
Described in advance as a mini-budget, chancellor Kwasi Kwarteng’s statement this morning quickly aroused reaction, and has been described as the most tax-cutting for generations in order to stimulate growth.
Amongst other measures, he has also sought to bolster the property market by increasing the threshold at which people start paying stamp duty on house purchases.
Following on from his earlier letter asking the chancellor to take moves that would help the construction industry, Kevin Minton, chief executive of the Construction Plant-hire Association (CPA), has given his response to various elements that were announced today.
“We welcome the government’s renewed focus and commitment to growth. The chancellor has provided a framework for the construction industry to work with in the interim. Setting the Annual Investment Allowance (AIA) at a permanent level of £1 million is a welcome step in boosting business investment and echoes our calls for certainty and consistency in the tax system.
“The creation of investment zones is a promising step in looking to spread economic growth across the country and we are keen to see further details on how this takes shape in the coming months.
“The government’s commitment to deliver high quality infrastructure and reform via the Planning and Infrastructure Bill has the potential to boost construction; however, we need to see these steps become a reality. Successive governments have tried to reform the planning system, with limited success.
“Following our calls for the Super Deduction Allowance (SDA) to be kept on a temporary basis, we are keen to see what further plans the Treasury has for the SDA and any potential successor – the Growth Plan in its current guise does not cover additional ideas or information on business investment incentives following the Treasury’s own consultation this summer.
“With the announcement earlier this week from the business secretary Jacob Rees-Mogg on the six month energy support package for business, it is good to see the government start to tackle the concerns of the construction industry.
“It is important we have further clarity and consultation with government to ensure the construction industry remains at the forefront of the government’s focus and drive for sustained growth.”
Looking more widely, many will be waiting to see how the economy performs. Immediately after the chancellor’s statement, some City analysts suggested that the tax cuts (including a 1p basic rate reduction and scrapping the 45p top income tax rate) would mean higher borrowing costs and further interest rate rises, and perhaps reduced public spending.
Certainly, various business groups have reacted positively to the mini-budget, including the CBI (Confederation of British Industry) which called it “a turning point for our economy”.
Kwasi Kwarteng described it as “a new approach for a new era”. We’ll see.
● Also responding to the statement, Suneeta Johal, chief executive of the Construction Equipment Association (CEA) said: “The reversal of the national insurance rise and the cancellation of the planned rise in corporation tax has been well received. The corporation tax rise had not yet been implemented so freezing something that hasn’t happened yet does not encourage growth - so there’s no ‘reduction’ – the situation remains the same. The standard income tax rate deduction to 19p in 2023 is encouraging – but we would have liked to see business rates reduced.
“The Energy Bill Relief Scheme and wholesale energy prices to be capped for just six months was very disappointing. There is an offer of a review in March 2023 for struggling businesses, however, this is not enough, business should have been afforded the two-year freeze granted to domestic energy users.
“This has been hailed as a bold budget for business – we can only hope that this is not a budget of smoke and mirrors from government, but a growth plan to release the huge potential in our sector.”