It has been an interesting first few weeks at the FIS and I’d like to thank everybody who has welcomed me, opened their doors, made contact, and given me their thoughts on the sector, the future and how FIS can best help. UK Construction Week was a cracking way to really start to open up the debate.
Uncertainty and the economic backdrop are at the fore of most conversations. Whilst the immediate pipeline looks good, we have started to see a bit of a tightening in the commercial sector and in education and health (some of this still stalled from the Carillion collapse). This has varied regionally and been offset by growth in, particularly, private housing, but broadly speaking, I’m expecting that we will be fairly flat over the next period, unless something gives.
In the coming weeks, there are two pivotal events that will determine how the future will play out. Firstly, the Brexit negotiations will feature a political declaration about the future relationship between the UK and Europe. As the talks unfold, we may have more clarity, but (and I hope that I am wrong) I suspect that this will not be a clear pathway and that wrangling and posturing will continue through to March, if not at an EU level, then within our own parliament.
We also have the Budget and this is where we should be focusing more of our attention – it’s sure to have the bigger and faster impact in the short term. So, what was I expecting from Mr Hammond? Well, firstly, as the Prime Minister trailed in her conference speech, after a decade of Austerity, the purse strings will be released. Before we get too excited and announce Austerity is Dead, in this age of uncertainty, I’m not expecting to see wholesale reform. I suspect Austerity will continue, but in a new form – Austerity will be more Undead.
This is a very political Budget; we normally get these when an election is due. Whilst an election in the next 12 months isn’t impossible, this is more to do with the current government working hard to remain popular with itself, let alone the rest of us! The NHS was a focal point of the Brexit debate and it can be no surprise that the NHS will be a big beneficiary of any easing.
It was a Budget of few surprises but one with a little for everyone. This, in itself, isn’t too surprising as it wasn’t your typical mid-term budget with a government needing to curry favour. Fuel duty freezes are a staple, but it was encouraging to see a focus on apprenticeships with SME contributions reducing from 10 per cent to 5 per cent.
There does seem to be a rebalancing to focus on supply rather than demand side issues in housing with a reasonable period allowed for weening the market off Help to Buy. There is an encouraging focus on redeveloping town centres and funds supporting a more strategic approach to addressing the balance of retail and homes – a focus on homes above shops could provide a real boost to available space for housing (400,000 homes according to the FMB).
There are also some positives in there such as rate relief to support retail investment. You need to look after across to the findings of the Letwin review to see the full picture for housing. Sir Oliver has exonerated the big house builders from land banking and is seeking to drive the biggest planning reform that we have seen since the 60s. This strategic approach makes sense and while I’d still like to see more direct investment from government, combined with an extra £500m for the Housing Infrastructure Fund and support for smaller builders could help to boost build out rates and drive change in the market.
So, as political rumours abound, one that tickled me is that the Budget had to be pulled forward (due to the Brexit issues) and was planned for the last Wednesday in October (Budgets are normally on the Wednesday). Our ever-astute political masters realised, however, that this would be Halloween and the press would have a field day with all the puns. Do you see what I did there!