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Labour landslide: industry comments

5 July 2024

Labour landslide: industry comments

Following Labour’s landslide victory in yesterday’s general election, the HAE has called for the party to stand behind the previous government’s full expensing pledge after its landslide victory.

In the 2024 spring budget, Chancellor Jeremy Hunt promised to produce draft legislation that would extend full expensing to assets beyond own-use into leased assets.

Full expensing currently allows companies to write off 100% per cent of the cost of buying plant and machinery, equivalent to a 25% tax saving for capital expenditure. For every million pounds a company invests, it gets £250,000 off its tax bill.

Introduced on a temporary basis in 2021, and called the ‘super deduction’, Jeremy Hunt made it a permanent tax break in last year’s autumn budget.

As it only applies to companies investing in machinery for their own use, and not to hire companies that hire out or lease their machinery, the system does not currently benefit the hire industry.

Mark Bradshaw, Public Affairs Manager for HAE EHA (Hire Association Europe & Event Hire Association), said: “The UK hire industry is a vital enabler of construction, facilities management and infrastructure resilience and we are keen to work closely with Keir Starmer’s new government. Specialist hire businesses also help deliver world class sporting, music and business events as well as supply to hospitals and schools and across the public sector.

“To continue doing so, we want to see a fairer and modernised approach to incentivising capital investment. Hire companies are currently not eligible for full expensing, something that could unlock much further investment in newer equipment, helping to decarbonise faster, boost productivity and support UK manufacturers and jobs. We have already had positive conversations with Labour representatives and now that the new government is in place, we hope to continue driving this forward for our members, urging the government to set a date for expanding full expensing so that our members can effectively plan ahead.

“The current system is outdated and unworkable for a modern market where approximately 75% of equipment used in construction is hired as and when it is needed. This is an established feature of construction and wider procurement. It is much more cost-effective and efficient for firms to operate in this way, unfortunately the tax system just hasn’t caught up yet.

“Updating the system will also help more firms implement decarbonisation plans. Our HAE and EHA members have embraced the opportunities of decarbonisation and there are great examples of innovative and business-leading initiatives. More end customers want to see tangible evidence of hire businesses making this journey. Tax incentives would help, as the initial costs of purchasing greener equipment are often greater than conventional assets.

“That is where full expensing can play a part. Hire businesses are investing in cleaner and more efficient items and, by working with suppliers, there is scope to bring forward new equipment and power sources.”

Mark Bradshaw said that another key area that the association wants the new government to address as a priority is machinery theft and fraud.

“We know that much of what is taken from our sector is used in turn to fund organised and pernicious criminal activity. At HAE, alongside other organisations, we’re helping to fund a national policing unit focused on this threat. We want the new policing minister to meet with hire businesses to discuss what more can be done.

“Like many sectors, hire has an ageing workforce and we are eager to attract new people to develop a career in hire. HAE members have reached out to ex-offenders, former military personnel, adult returners and young people in school and college about the opportunities that exist.

“We support a new approach to funding apprenticeships and skills development and welcome Labour’s drive to break down barriers to opportunity through high-quality apprenticeships and specialist technical colleges.”

Also commenting on the election result, Chris Cassley, Policy Manager with the CPA (Construction Plant-hire Association) said:  “The new government must work with the construction industry in addressing critical issues such as decarbonisation and reaching net zero, improving productivity and business investment, building the new homes that we desperately need and renewing our ageing infrastructure.

“All of this requires a long-term vision and consistency from government in how policies are developed and implemented. Providing the stability and economic foundations needed for lasting economic growth comes only from engagement with industry in understanding the challenges companies face – and how they can be overcome.

“As new ministers and officials take up their roles in the coming days, the CPA looks forward to working with the new government in achieving this aim,” he added.

Similarly, following the election result, the CEA's (Construction Equipment Association’s) Director of Operations, Viki Bell, has commented on the result from an industry perspective.

"As the CEA, we are ready to engage actively with the new Labour government to address the crucial challenges and seize the opportunities highlighted in our 2024 Manifesto. The commitment to decarbonisation, digital transformation and skills development outlined in Labour's platform aligns closely with our industry's goals,” she said.

“Labour’s plans to introduce a new industrial strategy, developed in partnership with businesses through an Industrial Strategy Council, will leverage Britain’s strengths in life sciences, digital, creative industries, financial services, and clean power. This collaboration will drive growth and innovation, benefiting the construction equipment industry and the wider economy.

“The party’s promise to build 1.5 million new homes in England over the next five years is a remarkable initiative that will stimulate demand in the construction equipment sector, a level of housebuilding not seen since the 1960s. This very ambitious target and reforms in housebuilding economics and bureaucracy will likely boost private sector participation, benefiting our industry significantly,” continued Viki Bell.

“Decarbonisation remains a critical priority for us. Labour's substantial investment of £23.7 billion in green measures during the next parliament emphasises the central role of green policies in driving growth and prosperity.

“We anticipate robust support from the Labour government in advancing innovative technologies, including electric and hydrogen-powered machinery. Establishing a national alternative fuel infrastructure is essential, and we look forward to contributing to these transformative efforts.

"The party’s plan to allocate £1.7 billion a year for the Great British Energy company aims to accelerate the roll-out of renewables and nuclear power, creating 650,000 jobs by 2030. This initiative will drive industrial renewal, lower energy bills and ensure secure, clean energy supplies, promoting a stable environment for construction projects.

“The digitalisation of our industry is another important area. We are ready to collaborate on harmonising digital legislation and enhancing cybersecurity measures. Addressing the skills gap is imperative for maintaining our competitive edge and we are eager to work with Labour to attract and develop the next generation of talent.

“Lastly, we urge the new government to ensure regulatory stability and alignment with European standards, vital for maintaining our international competitiveness. Together, we can adopt a sustainable, innovative, and prosperous future for the UK construction equipment sector," she said.

● At the time of writing, with two results awaited from the total of 650 constituencies, Labour has won 412 seats, the Conservatives 121 and the Liberal Democrats 71, amongst the main parties. Labour has so far achieved an enormous majority of 174 seats.

Photo: Paul Bloch/Pixabay


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