Building on Success? UK Construction and the 2018 Budget

The building trade has always needed to keep a sharp eye on the Budget. Between a looming skills shortage and an uncertain Brexit deal, firms across the industry were looking to Chancellor Philip Hammond to throw his weight behind them this year. Here are a couple of the key headlines:

PFI and PF2 are out

Private Finance Initiatives, according to Mr. Hammond, simply haven’t been good value for money. Partnerships between the public and private sectors are still very much part of the picture, but not in the form of current PFI or PF2 deals.

The Chancellor talked about PFIs failing to “transfer risk” to the private sector – wording that’s already raising a few hackles – but existing contracts will still be honoured.

Tax breaks for non-residential buildings

New, permanent tax relief is coming in for non-residential structures, in the form of a Structures and Buildings Allowance.

Buildings can qualify once put into professional use, to the tune of 2% per year on eligible construction costs.

Renovation and conversion of existing commercial structures can also qualify. Some of the cash for this is coming from adjusting the special writing down rate to 6%.


With his sights set on 650,000 new homes, Mr. Hammond pumped an additional £500 million into the Housing Infrastructure Fund.

The fund now stacks up to a grand total of £5.5 billion overall. “Strategic partnerships” with housing associations are apparently set to deliver 13,000 homes in England, while SME homebuilders will have the support of up to £1 billion in British Business Bank guarantees.

Lifting the local authority borrowing cap could see a new generation of council house building.


£30bn of road spending was announced including a £25.3bn allocation for the second Road Investment Strategy (RIS2), which will be delivered by Highways England between April 2020 and March 2025.

A further £3.5bn is set aside for National Roads Fund for UK-wide and local major road schemes between 2020 and 2025, funded by vehicle excise duty.

Local authorities have been granted an extra £420m to fix potholes and carry out other repairs to infrastructure, along with £150m to carry out minor works on local road junctions.

What does it all mean?

As the UK’s last Budget as an EU member, there was a lot to chew over. Frozen fuel duty and a focus on roads will be welcome, as will some strong moves on the housing crisis.

The death of PFI is a concern to many, though – along with incoming rules on private firms with self-employed workforces.

Greater investment in the construction industry, both for minor works and major development projects is good news.

Spending commitments for the regions and money earmarked for transforming our high streets should provide some a boost to construction employment opportunities and spreading out job creation across the country.

Ideally these promises will encourage more people to join or return to the industry alleviating the current skills shortage by linking this investment to training and job creation, such as the £695m funding package to train three million new apprentices this parliament.

There’s cautious talk of a “no-deal” Brexit requiring a fiscal rethink, but it does seem that UK construction is at least being taken seriously.



Bradly Post, Managing Director of RIFT tax refunds

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